Weekend Strategy Review September 26, 2015
Posted by OMS at September 26th, 2015
The Dow rose 113 points on Friday, closing at 16,315. It was down 70 points for the week. The NASDAQ was down 48 points on Friday and down 141 points for the week.
Friday’s trading action was a tale of two markets. The Dow popped early as expected, but then held about half of its gains into the close. On the other hand, the smaller cap technology stocks on the NASDAQ stocks and Russell 2K did not fare as well. While both indexes popped early, both closed down substantially. The candlesticks that formed on the QQQ and RUT on Friday are Bearish reversal patterns that usually lead to substantial declines.
The late decline on the NASDAQ caused its money flow indicator to turn negative again. So now, because the Coach on the Dow(DIA) remains positive (just barely), the money flow indicators on the cockpit are mixed
It appears that the small corrective wave that I talked about on Friday is complete. I expected a pop of 200+ points on the Dow and we got 264. If I’m correct about the pattern, the markets should start moving lower early next week.
The Dean’s List continues to remain negative and short. The Tide turned neutral, as the Hi-Lo indicator turned positive. No big deal as three of the four breadth indicators that make up The Tide remain negative.
Another significant item of note on Friday was that there was a small change in the A-D Oscillator of 4.45 points. This means that we need to be on the lookout for a Big Move within the next 1-2 days. Yeah, I know you’re thinking that we seem to be having moves of over 100 points on a regular basis now, so what’s the big deal?
Well, the wave count suggests that the next move down could be a wave 3 down of Major Wave 3 down. So it could be a very Big Deal!
Also, while I haven’t talked much about The Professor since he highlighted those 96 and 113 shorts early last week, during the week he continued to highlight 48 and 51 additional shorts. I remind you that in the past, whenever he highlighted 50 or more stocks to the upside, it usually produced a rally of over 750 points. So in the past six trading days, we have seen two days with about 50 shorts and 2 days with approximately 100 shorts. I don’t know about you, but this exceptionally high number of shorts certainly has my attention. And now that there is a small change signal on the Board…..be careful!
Gold stocks pulled back as expected on Friday with GLD closing down 0.68 cents at 109.81. I used the opportunity to buy back my November Calls, saving 35 cents in the process. Even though GLD pulled back, it’s money flow indicator continued to rise. The 35 period CCI remains in the trend mode at 106.5 and my new trend indicator is just shy of showing a trend starting. With both of these indicators showing a potential for GLD to trend and a robust money flow indicator, it should be enough to produce a Rope Jump’.
One of the reasons I’m starting to talk more and more about gold is because it could be getting ready for a major move up. The Major Wave 4 pattern in gold that has taken over 2 years to develop appears to be complete. If I’m right we should see gold move significantly higher into year’s end. My year end target for the metal is 1400+.
Now many of you might ask why such move could occur when everyone is talking about deflation? Well, truth is that soooo many of the institutional investors and Hedge Fund managers are short gold now that almost any international crisis could trigger a lot of short covering and produce the pop I expect. Then once this rally completes, GLD should pullback to the 200 to allow the 50 to move above the 200 and complete the turning process.
What is happening to gold now is exactly what I describe in the webinar I did for AIQ Systems on ‘Trading the Turns’. If you don’t fully understand how this process works, you might want to get a copy of the webinar from Barbara Greer at AIQ Sales, 1-800-332-2999.
Bottom Line: I remain on Crash Alert. The only gray area has to do with wave count. In other words, are the markets in wave 5 down of Major Wave 1 down or starting Major Wave 3 down. Either scenario should result in significantly lower prices. Protect yourself.
Have a great weekend.
That’s what I’m doing,
h
Market Signals for
09-28-2015
DMI (DIA) | NEG |
DMI (QQQ) | NEG |
COACH (DIA) | POS |
COACH (QQQ) | NEG |
A/D OSC | SM CHG |
DEANs LIST | NEG |
THE TIDE | NEU |
SUM IND | NEG |
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, Weekend Strategy Review