Professor’s Comments February 11, 2014

Posted by OMS  at February 11th, 2014

The Dow rose 8 points, closing at 15,802.  The SPX rose 3 points to close at 1800.   Volume  on the NYSE was light, coming in at only 85 percent of its 10 day average.  There were 66 new highs and 16 new lows.

The market didn’t tell us much yesterday because of the low volume sideways trading. There are still two possible scenarios that could occur during the next few weeks.

The first (my main scenario) is that the current rally is a wave 2 corrective rally that should top near 16,000 on the Dow.  Right now, my Lists and Indicators support this scenario.  Also, the fact that the Dow traded below its 200 day moving average last week (a negative ‘Rope Jump’) supports this wave 2 scenario.

The second scenario is that the current rally is part of a larger rally that could take the Dow back up to the 17,000 level during the next few months.  This was my original scenario until it was interrupted by last weeks decline.

One of the reasons that the Dow 17,000 scenario is still alive is because the SPX and NASDAQ DID NOT ‘Jump the Ropes’ on last week’s correction.  And because of this, there is a possibility that last week’s decline was only a wave 4 correction, with one more large wave 5 rally to come.

At this point, the Dow has retraced 38 percent of the decline since the 31 December top, and is currently sitting in no mans land between the 50 and 200.  If it retraces 50 percent of the decline, which is a normal wave 2 retracement, the Dow should trade back up to 15,971 where the 50 is currently located.  This will be a critical point to watch because IF the Dow starts to break above 16,000, all of the indicators PT indicators will turn back to GREEN.  And then IF The Professor starts to signal that the DMI turn is valid, odds are that the DOW could be on its way toward 17,000.

But right now, there is no way to tell.  The only thing I can tell you is that current odds favor a continuation of the rally.

Last night the Dean’s List started to strengthen and turn positive with the addition of QQQ, SPY and the two positive leveraged ETFs, QLD and SSO.  However I kept the light on the cockpit RED because the DXD is still on the List.  If the DXD drops off, I’ll change the indicator to Green.  The cockpit indicators remain mixed. Both Money Flow indictors (The Coaches) are positive, but the DMIs are still negative.

With mixed indicators and a Dean’s List that is also mixed, I must remain cautious.  If the Dow trades closer to 16,000 and the indicators do not support additional rally, I’ll start looking at the short side. But not now.

Last night, Thor Industries,THO, was added to the Member’s Watch List as requested by a new subscriber.

BTW, there was a ‘relatively’ small change in the A-D oscillator of 15+ points.  So the volatility that we have seen in the past few weeks could continue.  Be careful.

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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