Professor’s Comments October 1, 2015
Posted by OMS at October 1st, 2015
The Dow rose 235 points, closing at 16,285. Volume was moderate, coming in at 104 percent of its 10-day average. There were 6 new highs and 219 new lows.
It appears that yesterday’s rally was part of retracement wave ‘c’ of an a-b-c pattern for wave 2 up of 3 down. Like many of you, I was watching the 15 min bars yesterday for an indication that wave 2 was ending. However the Money Flow indicators on the DIA, SPY, and QQQ never went negative which tells me that wave 2 up might have a bit more to go before it completes.
It was pretty obvious from watching the Money Flow indicators that a lot of end-of month window dressing was taking place yesterday. This should end after today as the window dressing completes and the bias starts to turn negative.
Last night I had another PT Class during which I talked about Rifle Trades. The rules for a Rifle Trade are pretty simple. We look for times when a stock or an index are in a trend on the Daily chart, and then wait for the 2-period RSI Wilder to tell us when it’s a good opportunity to go hunting. So with the markets in clear downtrends, I noted that the 2-period RSI Wilder on the Dow closed with an overbought reading of 75.57. If the market rallies today, the Wilder will become even more overbought.
So with this RT set-up, you might want to start watching the 60s or even the shorter term bars for an entry point to start shorting the indexes.
Another thing to watch is crude oil. If you listen to the commentators on CNBC or Fox News, you would think that crude oil is going to zero. But that’s NOT what the current chart is saying.
The OIL chart shows that a nice Hockey Stick Pattern with tight Bands has developed after a TLB Pattern. This is NOT a pattern that suggests lower prices.
For the past few days, OIL and USO, the two crude oil ETFs, have moved onto the Dean’s List. Right now, the MACD and Money Flow indicators are still negative. However IF they turn positive from this pattern, we could see a nice rise in crude oil prices during the next few weeks.
Watching for wave 2 up to complete.
That’s what I’m doing,
h
Market Signals for
10-01-2015
DMI (DIA) | NEG |
DMI (QQQ) | NEG |
COACH (DIA) | POS |
COACH (QQQ) | NEG |
A/D OSC | |
DEANs LIST | NEG |
THE TIDE | NEG |
SUM IND | NEG |
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