Professor’s Comments August 27, 2013

Posted by professor  at August 27th, 2013

The Dow fell 64 points, closing at 14.946.  Volume was extremely light, coming in at  85 percent  of its 10 day average.  Light volume on a down day is a positive sign for where we are in the pattern.  There were 93 new highs and only 19 new lows.

Stocks started off on a positive note yesterday, but couldn’t hold their early gains.  There was no BANG, which is what I would expect at the start of Wave 3 up.  So it appears that the bottoming process for Wave 2 continues.

It is also possible that Wave 3 up has started and yesterday’s pullback was part of a small Wave 2 retracement.  If this is the case, then we could see more downside follow through today.  The decline could fall all the wav back to the recent low of 14,880 and still be part of Wave 3 up.

But at this point, the wave count doesn’t really matter.  What matters is what the Professor is telling us.  And right now, with only 21 new longs last night, he’s saying the next rally wave has not started.  Remember, he needs to highlight at least 50 stocks before I start getting aggressive with my stock purchases.

Right now, I’m mostly waiting.

The stocks that I have started to accumulate with Rifle Trades all held up nicely yesterday.  These include RCL, SLB and JCI.  All have either formed or are forming (RCL) nice HS Patterns that should support higher prices once Wave 3 up begins.  If the market wants to retest 14,880 in the days ahead, I would expect these stocks to trade sideways to slightly down, and continue to form their Blades.

Gilead Sciences, GILD, finally had all of its PT indicators turn positive on the Daily’s yesterday, as the P-Volume moved above its moving average.  So now I’ll be looking to establish a Basic Position in GILD, on any pullback. The stock now has all of the elements of the SIGN in place.  It’s on the Member’s Watch List, has a pattern, and now has positive indicators.

One thing we need to remember as we approach the end of the month is the bias.  End of month trading usually has a very positive bias, and I would expect this month to be no different, especially considering that this weekend is the Labor Day Holiday and the end of the quarter.  So given where we are in the overall pattern, together with the positive end of month bias, I’m still watching for signs that Wave 3 up is starting.

The Dean’s List is still mixed with the positive Nasdaq ETFs, QQQ and QLD, present.  However the inverse Dow and S&P 500 ETFs, DXD and SDS, are still on the List, as is SKF, the inverse Financial ETF, so there is a chance that the markets could test recent lows.  Wave 3 up will not be confirmed until all of the inverse index ETFs drop off the List and the positive index ETFs appear.

As long as the Dow stays above 14,850, odds are that a bottom is forming.  If it starts breaking below 14,850, I’ll need to reassess.  Something else could be happening.

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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