Professor’s Comments November 18, 2014
Posted by OMS at November 18th, 2014
The markets were mixed again. The Dow rose 12 points, closing at 17,648. The OTC and the Russell 2K both closed down, falling 17 and 10 points respectively. Volume on the NYSE was moderate, coming in at 92 percent of its 10-day average. There were 155 new highs and 43 new lows.
The markets fell early after Japan announced that it was officially in recession. However while the Dow recovered its early losses, most traders stayed on the sidelines as concern rose about President Obama using his executive authority to change the enforcement of immigration laws. Republicans warned that any such move could derail efforts to pass a long-term spending bill by the 11 December deadline. And as we have seen in the past, anytime the political parties start talking about a potential government shut-down, it usually produces a cloud over the markets.
I expect to see more of this political dialog in the weeks ahead as the distribution process in the market continues.
Yesterday the A-D oscillator finished the day with a reading of 16.58. I checked the oscillator when the Dow was down about 30 points and the reading was below zero. So it won’t take much of a down day to turn this key indicator negative. The A-D oscillator on the OTC market actually turned negative yesterday, closing with a reading of -17.17. The Summation Index on the OTC market also turned negative, so now 2 of the 4 breadth indicators on the OTC are negative. Like I said, the Generals are still saying ‘charge’, but the troops are not responding. This is what usually happens at market tops.
The Dean’s List, PT indicators, and Tide are all positive. However with all of the major indexes at or near all time highs, this is not the time to be buying stocks. The market internals are starting to weaken and turn negative. Another day or so like yesterday and we could see a Tide change. If this happens, I will start looking for inverse ETFs to trade from the Dean’s List. IF you’re still not sure about what I will be doing in the day’s ahead, I suggest you re-read the Comments I posted on 14 November.
Shares of TWM rose 0.72 cents yesterday. The P-volume continues to show positive divergence which tells me that the Russell 2K will likely lead the market lower. However TWM is still not on the Dean’s List and the PT indicators are still Red, so it’s still a bit early to establish trading positions based on the Daily’s. On the other hand, the PT indicators on the 60s have turned positive after a TLB pattern, so aggressive traders might want to watch for a ‘Rope Jump’ on the 60s. If TWM moves above 44 now, it will tend to confirm what I’m starting to see on the OTC market.
Gold was flat yesterday, resting after a big move the previous day. Gold and silver shares continue to move up on the Dean’s List. If you look closely at GLD on the 60s, you will see a clear TLB pattern that led to a ‘Rope Jump’ last Friday. Yesterday’s ‘rest day’ pullback was likely the wave 2 of the sequence. If I’m right about the pattern, wave 3 up should be next, This should take GLD to the 118 level. Yesterday GLD closed at 114.22.
If gold is going to start a major rally from current levels, GLD will need to turn positive on the Daily’s and then perform a ‘Rope Jump’ taking it above 121. The current divergence in P-volume is supporting this potential move. On the other hand, UUP, the U.S. dollar ETF is still on the Dean’s List. I would really like to see this ETF drop off the List before getting aggressive with gold.
Watching for a Tide change.
That’s what I’m doing,
h
Market Signals for 11-18-2014 |
|
---|---|
DMI (DIA) | POS |
DMI (QQQ) | POS |
COACH (DIA) | POS |
COACH (QQQ) | POS |
A/D OSC | |
DEANs LIST | POS |
BREADTH | POS |
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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Category: Professor's Comments