Professor’s Comments September 5, 2013

Posted by professor  at September 5th, 2013

The Dow rose 99 points, closing at 14,932. Volume on the rally was above average, but lighter than yesterday. I would have liked to see more volume on a 99 point rally day. There were 70 new highs and 35 new lows. The increasing number of new highs caused the Hi-Lo indicator to turn positive.

Also turning positive for the first time since 26 July were the A-D oscillator and the Summation Index. This means that the majority of stocks on the NYSE are now in Up trends.

The Professor finished the day by highlighting 40 stocks that could be starting Up trends. The number of stocks he has been highlighting continued to increase during the day, and was only 10 short of the 50 required for a Buy Signal.

So as of today, we have three VIX Buy Signals on the board. The Dean’s List is still negative, but QQQ and QLD, the two positive NASDAQ ETFs, have re-appeared. The PT indicators are still negative, and the Professor is wide awake.

All of the above are signs that wave 3 up could be starting. But it’s still a bit too early to tell.

Given that the BLS will be releasing the August Jobs report on Friday which could have a significant effect on the markets. I don’t want to be doing much trading until I see the numbers. As I mentioned earlier, IF the jobs report is strong, it could cause the Fed to start its tapering program early. The next FOMC Meeting is scheduled for 17-18 September. Right now the betting line favors a tapering announcement after the meeting. But I believe most of the anxiety about tapering is already baked into the cake. The only issue I see now is how and when the Fed’s accommodation program will end. So IF Washington can come up with a responsible solution to the Syrian issue, the markets should start to rely more and more on the pattern, which still suggests a rally above 16,000.

Today I will be mostly watching the stocks being highlighted by Emeritus for the Honor Roll. Yesterday, DECK had a nice pop after being highlighted. Remember, Emeritus is a trend algorithm, and IF overall market is starting an impulse wave 3 up, the stocks that he is highlighting now should be among the leaders.

I have been accumulating positions in SLB, GILD and JCI. All of these stocks have developed nice Blades that should support higher prices. But they are still trapped in their consolidation zones. All I’m doing now is waiting to see IF they can start breaking out of these zones. If they do, I would expect them to be highlighted by Emeritus, along with many others. When Emeritus starts to highlight 6-8 stocks or more, it will be another clue that wave 3 up is starting.

Watching.

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

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