Professor’s Comments September 24, 2014
Posted by OMS at September 24th, 2014
The Dow fell another 116 points yesterday, closing at 17,056. Volume was moderate on the decline, coming in at 101 percent of its 10 day average. There were only 13 new highs against 135 new lows.
I couldn’t update the Lists today because of limited internet access. However I did get a chance to look at some of the data, and it appears that the market is EXTREMELY oversold and could be setting up for a short term bounce.
I would expect the bounce to last for a few days to work off the oversold conditions. However once complete, the next decline could be the start of a significant impulse wave down. Be extremely careful now IF the market does bounce in the next few days.
With two back to back large down days, it’s starting to look like the market topped on 19 September at the 17,350 level. If this is the case, then the past two days were likely wave 1 of Wave 1 down. So IF the market does rally during the next few days, it will likely be the formation of the wave 2 ‘Blade’ in the Hockey Stick, which will set-up the impulse wave down.
The Tide continues to go out. This is not the time to be buying stocks. Please remember that the market has been working on the final legs of a Major Ending Diagonal Pattern for the past few months. This pattern MUST be respected, because Ending Diagonals have a habit of truncating. In other words, there are no guarantees that there will be additional legs higher. The top of the Major Bull Market since March 2009 could be in. With negative indicators on the Cockpit and an outgoing Tide, we need to protect ourselves.
Right now I’m holding short trading positions in TWM, DUG, and VXX, which did very nicely yesterday. If the bounce I expect does occur, I will likely use it to add to my short positions.
That’s what I’m doing,
h
I was able to find a small cafe in Venice with WiFi, and was able to update the Lists.
The Dean’s List is still positive.
h
Market Signals for 09-24-2014 |
|
---|---|
DMI (DIA) | NEG |
DMI (QQQ) | NEG |
COACH (DIA) | NEG |
COACH (QQQ) | NEG |
A/D OSC | |
DEANs LIST | POS |
BREADTH | NEG |
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.
Category: Professor's Comments