Professor’s Comments April 7, 2016

Posted by OMS  at April 7th, 2016

The Dow rose 113 points, closing at 17,716.  Volume was moderate, coming in at 108 percent of its 10-day moving average.  There were 125 new highs and 11 new lows.

I really don’t have much to say today.  The market still appears to be in the process of putting in a top.  The cockpit indictors remain mixed and until they actually roll over, I really don’t see any compelling reason to be involved with the market. 

My trend indicators are still positive but falling, so it’s likely that the kind of choppy, sideways trading we’ve seen for the past few days will continue for a few more days.  It’s very possible that the current pattern is morphing into a rising bearish wedge.  If this is the case, then we should see the Dow push slightly higher today before pulling back to develop the final two legs of the pattern. These legs would be wave ‘d’ down and then final wave ‘e’ up. 

I know it’s frustrating, but what’s happening now is normal.  The market has entered its distribution phase.  Everywhere I look I see major divergences between price and volume, money flow, and momentum.  But this distribution phase can last for a while.  It takes time for the Big Boys to unload all of the stock they have accumulated over the past few months.  And during this time, they try to keep the market well bid so they can dump their stock at the best possible prices.  This is why we continue to see rallies like the one we had yesterday.  

But the divergences that are occurring are usually a very important tell.  I believe that it’s only a matter of time before the market will start to fall.  And that time could be fast approaching.

So I remain patient and on the sidelines.

That’s what I’m doing,

h

Market Signals for

04-07-2016

Not sure of the terminology we use? Check out these articles

The Hockey Stick Pattern
The Creation of Waves and Trends
FAQ

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.