Professor’s Comments November 29, 2013

Posted by OMS  at November 30th, 2013

The Dow rose 23 points on Wednesday, closing at 16,097. Volume on the NYSE came in right at its 10 day average. There were 196 new highs and 35 new lows.

The pattern suggests that the markets could be very close to a short- term top. However even though all of my indicators are currently overbought, the momentum has not shifted to the downside yet This could start to change in the days ahead.

The Dean’s List remains strong and the cockpit indicators are positive. I will remain Bullish as long as my Lists and indicators stay positive. My strategy for the past few weeks has been very simple. Stay positive until the indicators show otherwise. However, I have been selling into the current rally and am now only about 30 percent invested.

The SPX continues to trade very close to my upside target of 1810. If my indicators, Lists and algorithms, start to turn negative, I will look for a few stocks to short, especially if the SPX breaks the 1780 level.  But in general, I am looking at any pullback as more of a buying opportunity before the markets make one more final push higher.

At this point, I’m not doing any new buying. I never like to buy stocks that are fully priced.  I like to buy them on sale, and hopefully I will get an opportunity to do that in the weeks ahead.

Right now, I’m just being patient.

One thing I might do this week is look to scalp a few gold shares on the shorter term bars. Don’t get me wrong, I am not looking to accumulate gold shares yet.  I believe they will continue to decline as gold, the metal, continues along its path toward 1150.  However, several gold stocks, like RGLD, are very oversold and appears to be near the completion of the first major leg down of a 3 wave decline. If I’m right about this, then gold stocks should see a three wave retracement rally of the first leg down.

It probably won’t be an easy trade, but because several of you were successful with the short scalp trades I posted recently with RGLD and long DUST, the inverse miner ETF, I’m alerting you to the fact that if you’re still in these trades, you might want to be careful this week.

Trading retracement waves is never easy. Just remember to shorten up on your time periods, take profits quickly and DO NOT hold anything overnight.

I will be closing out the last half of the Position Trade short I had in RGLD today.

Gold the metal, is currently trading near the 1240 level. It could trade back up toward 1290-1300 in an a-b-c retracement during the next 2-3 weeks. This retracement should form the Blade of a negative Hockey Stick Pattern that will set up the final decline toward 1150. So my strategy for gold is to look for a few short term trades trades IF gold starts to rise, and then Position Trade RGLD and a few other gold stocks as shorts if the metal gets above 1290.

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
FAQ

All of the commentary expressed in this site and any attachments are opinions of the author, subject to change, and provided for educational purposes only. Nothing in this commentary or any attachments should be considered as trading advice. Trading any financial instrument is RISKY and may result in loss of capital including loss of principal. Past performance is not indicative of future results. Always understand the RISK before you trade.