Professor’s Comments April 24, 2014

Posted by OMS  at April 24th, 2014

The Dow had a mild correction yesterday, falling 13 points to 16,502.  Volume was light on the decline coming in at 93 percent of its 10 day average.  There were 140 new highs and only 6 new lows.

The Dean’s List is starting to lengthen telling us that the overall market is gaining strength.  The two inverse tracking ETFs for the NASDAQ and Russell 2000, QID and TWM, are still on the List, but are starting to move down.  Once these issues drop off the List, I would expect to see the markets begin a major advance toward 17,000+ on the Dow.

Yesterday’s light volume decline did not produce any new signals or highlight any stocks that I want to trade. So all I’m doing now is watching my lists for changes that will tell me where the new strength will emerge.

Energy stocks are still leading the Lists, and even though the overall markets pulled back yesterday, many of my energy stocks made new highs.

HAL reached my target for the stock, making a high of 65.11 before pulling back to close at 64.72.  I have started to aggressively manage my shares of Halliburton by selling a few shares and placing stops..Same for most of my other energy stocks.  However most of the money I have been taking off the table is now just sitting in cash.  I’m waiting to see if any sectors besides energy will start to emerge as market leaders.

Right now Big Pharma-Biotech is the second strongest sector.  But sometimes watching stocks in this sector, like Merck (MRK}, is like watching grass grow.  If the market is going to move higher as I expect, I don’t want to have a lot of money committed to stocks like Merck.  The problem I have now is that I’m not seeing any sectors besides energy and Big Pharma starting to trend. 

So I’m going to wait a bit longer before putting my profit money to work again. Besides, as I mentioned yesterday, The Professor has only produced a weak Buy Signal so far.  He seems to be saying that all of the markets have not broken out of their consolidation patterns yet.  If he starts to highlight more stocks in the days ahead, telling me that a new trend is beginning, that’s when I’ll start to get more aggressive.

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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