Professor’s Comments March 27, 2015

Posted by OMS  at March 27th, 2015

The Dow fell 40 points to close at 17,678. Intraday the Dow dropped below the key 17,620 support level, so it’s likely the Bull Market that has been in place since March 2009 is over.  Any retracement now must be considered a wave 2 retracement within wave 3 of Major Wave 1 down.   Volume was moderate, coming in at 99 percent of its 10-day average.  There were 24 new highs and 24 new lows.

Yesterday’s decline caused The Tide to turn negative.  So now The Dean’s List, The Tide and the cockpit indicators, including the two Money Flow indicators, are all negative.  However the Professor algorithm only highlighted 22 stocks as shorts, so it does not appear that a down trend is starting.

The market is very oversold now and the first minor wave of wave 3 down appears to be very close to completing. So with oversold conditions and NO new downtrend starting, it is far more likely that wave 1 down will bottom near current levels and start a small wave 2 retracement rally.  This rally should take a few days to complete and retrace to the 17,800+ level before the next impulse wave (wave 3 of 3 down) starts.

As long as the Tide, Dean’s List, and Coach remain negative, I will look to short any rally.  I believe that once all five waves of Major Wave 1 down complete, the Dow will be trading below the 16,900 level. 

The market is entering the very Bullish end-of-month time period.  So with the Dow at key support levels, the Bullish time period should help produce a small retracement rally during the next few days.

I will be watching several of the stocks that were highlighted by Emeritus recently for shorting opportunities on the 5 or 15 min bars.  If the Dow rallies back to the 17,800 level, I will also be looking for opportunities to buy DXD and QID whenever the shorter term bars give say so.

I will also be looking for an opportunity to short Apple (AAPL).  I talked about Apple last week and how it has been forming a classic THT Pattern.  Yesterday, the PT indicators on AAPL turned negative at a time when the Coach is already negative.  So IF AAPL pops during the next day or so, I will be looking to establish a short position.  Several of APPL’s suppliers, like SanDisk, SNDK, got whacked yesterday because of slowing sales and decreasing revenue.  This tells me that Apple’s sales could also be slowing.  So far, Apple has been bucking the outgoing tide for computer manufactures.  But now that the indicators have turned Red, this could be about to change. 

Apple tends to make nice long trading runs on the 30 min bars, so I’ll be watching them closely.

Looking for a rally to get short.

That’s what I’m doing.

h

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