Professor’s Comments March 25, 2015
Posted by OMS at March 25th, 2015
The Dow fell 105 points to close at 18,012. The large decline was likely the Big Move predicted by Monday’s small change in the A-D oscillator. Volume was moderate, coming in at 91 percent of its 10-day average. There were 110 new highs and 17 new lows.
Yesterday’s decline did three things: The first was that it completed the ‘Island Reversal’ topping pattern on the QQQ, the tracking ETF for the NASDAQ-100. It also turned the Coach, my primary Money Flow indicator for the Dow (DIA) negative. So now the Money Flow indicators on the DIA and QQQ are both negative.
The decline also turned The Tide neutral.
So now, IF a top is in, I need to see more downside follow through.
Remember, IF wave 3 down is starting, it should be impulsive. There shouldn’t be any significant retracement of yesterday’s decline. If the market chops around today and prices rise, it’s likely that wave 2 up is still not over and a small wedge or Ending Diagonal pattern is forming. If this is the case, prices will likely rise into early April topping near the 18,300+ level on the Dow.
The two things I’ will be watching during the next day or so are The Tide and the Dean’s List. As you know, I NEVER like to trade against The Tide. But now that The Tide is neutral, I can start looking for day trades to the downside. The only problem is the Dean is not giving me any. His List is still positive as all of the positive index ETFs still on the List. So I need to be patient.
And talking about patience, I did notice that UUP, the positive ETF for the U.S. Dollar has fallen off the Dean’s List. However it has not been replaced by UDN, the inverse ETF for the Dollar at this point. On the other hand, ULE, the positive ETF for the Euro has appeared on the List, so it’s likely the UDN will not be far behind.
Remember, I believe that the Dollar is also in the process of topping and once the top is in, its decline could be substantial. Right now the Dollar is trading in the high 90’s. I’m looking for its first move down to be in the low 70s, with even more decline to follow. If UDN appears on the List in the next day or so, I’m a buyer.
I also noticed that several gold related ETFs have started to appear on the List. The ETF that I’m watching now is GLD. Yesterday GLD closed at 114.57, about a point shy of its 50-day moving average. The DMI and MACD are still negative, so I’m not that interested. However if GLD falls to the 112 level now, it will become a very interesting speculation. That’s because for the first time in two months, money is now starting to flow into GLD. The Coach and P-volume on GLD are now positive, and given that gold could be in the process of completing a Major Wave 4 pattern, it will be something to watch.
I still believe that even if gold is completing its Major Wave 4, we’re not going to see a lot from the metal until later this year. However, for those who want to do some early prospecting, GLD near or under the 112 level might be something to look at.
But for now, I’m still focused on the overall equity markets. I’m just watching to see if we get additional downside follow through today. If wave 3 down is starting, the next major move should take the Dow below the 17,000 level. It should start by turning The Tide and Dean’s List negative.
If this starts to happen, I plan to get short fast using inverse ETFs from the Dean’s List. BTW, IF the market starts to fall today, I’ll be running the Dean’s List during the day to see if there any significant changes. If I notice any, I’ll let you know.
That’s what I’m doing,
h
Market Signals for 03-25-2015 |
|
---|---|
DMI (DIA) | POS |
DMI (QQQ) | POS |
COACH (DIA) | NEG |
COACH (QQQ) | NEG |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | NEU |
Not sure of the terminology we use? Check out these articles
The Hockey Stick Pattern
The Creation of Waves and Trends
FAQ
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Category: Professor's Comments