Professor’s Comments June 27, 2014
Posted by OMS at June 27th, 2014
The Dow fell over 100 points early, then recovered most of those points to close down 21 at 16,846. Volume was moderate, coming in at 92 percent of its 10 day average. There were 166 new highs and 18 new lows.
Yesterday’s late afternoon recovery is an indication that the market could still have one more small rally left in it before the next down leg toward 16,300 begins. We are now entering the end of the month, end of quarter, time period where mutual fund managers start to re-balance their portfolios. This is usually a very Bullish time period for the markets.
The Dean’s List remains positive and as long as he keeps all of the positive index ETFs on his List, I will remain positive….but cautious. At this point I’m not buying stocks. I’m waiting for a better opportunity.
Remember, the DMI on the Dow (DIA) turned negative two days ago, joining the P-volume in negative territory. The MACD remains positive. With a negative DMI, I have been running The Professor during the day to see if a new down trend was starting. Early yesterday, when the Dow was down over 100 points, I checked in with The Professor. He told me not to worry about a new down trend starting as he only had 4 shorts to go with his 5 longs. The reason I’m mentioning The Professor today is because I use The Professor to verify a DMI change. Unless the Professor verifies the turn, it’s likely a false signal that will be reversed within a few days. So it’s still possible that the current rally wave that started in mid-May is not complete.
Along those lines, there was another small change in the A-D oscillator yesterday. The change was only 9 points, so we need to be on the lookout for a Big Move within the next 1-2 days. If the ‘Big Move’ is to the upside, it could start a small rally into next week and take the Dow back to the 16,950-17,000 level. But that’s about all I would expect on the upside.
On the other hand, IF the ‘Big Move’ is down, it would likely turn all of my indicators negative and start a significant down trend toward 16,300 or below.
I don’t like the odds with either scenario right now and plan to remain on the sidelines.
BTW, I’m enclosing two charts with today’s Comments so you can get a feeling for the RS of the various the sectors. Right now, 88 percent of the sectors I monitor still have positive T-Scores. Energy remains the strongest sector by far. This is followed by the Utes and Transports. The weakest is Software and Services. With 88 percent of the sectors still positive, I’m just watching to see if they are going to start rolling over. If they do, it will be another clue that a significant downturn is starting.
That’s what I’m doing,
h
Market Signals for 06-27-2014 |
|
---|---|
DMI (DIA) | NEG |
DMI (QQQ) | POS |
COACH (DIA) | POS |
COACH (QQQ) | POS |
A/D OSC | SM CHG |
DEANs LIST | POS |
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