Professor’s Comments October 30, 2014
Posted by OMS at October 30th, 2014
The Dow fell 31 points, closing at 16,974. Volume was moderate, coming in at 96 percent of its 10-day average. There were 191 new highs and 36 new lows.
In a rather bland statement, the Fed announced that it was ending its QE bond buying program, but would keep short-term interest rates low for the foreseeable future. The statement was exactly what the market expected and as a result, there was little reaction to the announcement.
With the Fed talking away the stimulus punch bowl, the market will now have to deal with the fact that the party could be over. The next few trading days into the election should be telling.
Like I said yesterday, the market is at a very vulnerable point right now. The Wave 2 retracement appears to be complete. If you look at a 60 minute chart, the two connected a-b-c moves of the zig-zag pattern are in place. There is no trend and the market is EXTREMELY overbought.
The A-D oscillator had another reading exceeding the 200 level. This is the third EXTREME reading over 200 in the past 4 days. It will be very difficult for the market to rally under these conditions. So I expect that a pullback will start very soon. With the President’s PPT appearing to be very active now, the ‘soon’ could be as early as today or after the election. We’ll see.
All I’m doing today is watching the 60s on the QQQ and DIA. The hourly charts have been very good at calling the end of Major Wave 1 down and the start of Wave 2 up. They should provide us with the first indication that Wave 3 down is starting.
If the PT indicators on the 60s start to turn Red, it might be a very good opportunity to pick up a few shares of an inverse index ETF. But I’m going to wait for the Dean’s List and the Tide to turn negative before I commit the rest of my funds.
That’s what I’m doing,
h
Market Signals for 10-30-2014 |
|
---|---|
DMI (DIA) | POS |
DMI (QQQ) | POS |
COACH (DIA) | POS |
COACH (QQQ) | POS |
A/D OSC | |
DEANs LIST | POS |
BREADTH | 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