Professor’s Comments March 19, 2014

Posted by OMS  at March 19th, 2014

The Dow rose 89 points, closing at 16,336.  Volume was light again, coming in at 89 percent of its 10 day average.  There were 143 new highs and only 11 new lows.

The Professor highlighted another 44 new longs last night, so taken together with the 44 longs he highlighted on Monday, it’s enough to produce a Professor’s Buy Signal.

I have to admit that I would have liked to see The Professor highlight more than 50 new longs this time, however with the low trading volume we’re seen for the past few days, that’s probably unrealistic.  And given that this signal is being generated two days before the Fed announcement, when a lot of traders are still on the sidelines, the signal is probably more than we should expect.

Anyhow, I’m buying my ticket to ride.  Here’s the deal:  At this point, I have two scenarios on the board that call for higher prices.  One scenario says the market should top “under 16,588’ and the other ‘just under 17,000’.  I also have a very reliable VIX Buy Signal in my pocket.

And on top of this, I also have a positive Dean’s List with mostly positive PT indicators.  I say mostly positive, because the P-volume on the DIA and SPY continue to remain negative, as do my institutional money flow indicators.  In other words, it’s a warning that the rally could be short lived.  Sometimes, you don’t always get what you want.  The Stones said it best: “You get what you need”.  And for me to take advantage of a situation, what I needed to see was those 44 new longs from The Professor.  To quote the Stones again, it was “Satisfaction”.

But remember, we’ll get the Fed announcement at 2pm today, and if the market starts to rally off the news, the P-volumes are at a point where they could easily turn positive if traders start to put money to work.  The way most stocks are positioned now, it would not surprise me to see another Professor Buy Signal generated in the near future.

So right now, I’m holding a bunch of energy stocks with nice patterns.  I’m riding.  I don’t know if the train is going to NYC or Buffalo, but my indicators are telling me the train is heading north.  That’s the direction I want to go, so I’m riding.

I’ll decide where and when I will be getting off this train in the days ahead.  It could be closer to 16,588 or maybe even 17,000.  But for now, I’m riding.

Gold traders should pay close attention to today’s Fed announcement.  If we get another ‘taper’ as I expect, it should put significant pressure on the gold market. I believe the only thing keeping gold at current levels is the situation in Crimea.  Right now, this is the trump card for gold.  As long as Putin keeps marching his troops in front of his neighbors, gold will likely continue to attract interest. However, if he tells them to return to their barracks, I believe that gold traders will start to looking at the Fed’s tapering program and wonder why they are holding the metal at current prices.

I’m looking forward to seeing you at Class tonight.  Have your questions and stock picks ready.

That’s what I’m doing,

h

Not sure of the terminology we use? Check out these articles

The Hockey Stick Pattern
The Creation of Waves and Trends
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