Professor’s Comments December 5, 2013 Update

Posted by OMS  at December 5th, 2013

With the Dow off 40 points and the SPX trading under 1790 again with a positive Dean’s List, there is a good possibility that tomorrow’s jobs report could produce a rally back to the 1805-1810 level. 

If we get this pop, I will start looking to short the SPX from above 1805 by buying SDS, the inverse S&P500 ETF.  This will be a Position Trade on the 60s.

The rational for the trade is that the pop could be the ‘b’ wave in an a-b-c move that could drop the SPX back down to 1740 or below.

If we get above 1805, my stop would be the recent high of 1813.55.  In other words, I’m willing to risk about 8.5 points for a potential reward of 65 points or more.

I’ll take 8:1 odds anytime ;>)

TWID,

h

BTW, this will likely be my last report until this weekend’s WSR.

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

The Hockey Stick Pattern
The Creation of Waves and Trends
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