Professor’s Comments July 25th, 2013
Posted by professor at July 25th, 2013
The Dow fell 25 points, closing at 15,542. Volume was slightly heavier than normal, coming in at 108 percent of its 10 day average. There were 208 new highs and 62 new lows.
Yesterday’s increase in the number of new lows is a sign that the wave 2 correction could be starting. However the increase did not cause the Hi-Lo indicator to reverse course.
We did NOT get the Big Mover predicted by the small change in the A-D oscillator yesterday, so we need to be on the lookout for one today. BTW, with back to back small change reading occurring on both last Friday and Monday, it would be very unusual if we did not get a Big Move today.
And because I anticipate that the Big Move will be to the downside, like I said yesterday, this is not the time to be buying equities. That’s because one of two things could be happening. The Big Move could be a wave 4 correction within wave 1 up. Or it could be the start of wave 2 down. In either case, I don’t want to be buying equities.
Right now the Dean’s List is still very long, but it’s not very strong. Lots of Relative Strength readings of 1s and 0s on the List, with DIA and QQQ near the bottom. If the Dean’s List turns negative, it would tell me that wave 2 down is starting. So, I’m going to be patient and wait to see what the Dean does.
One of the things I did trade yesterday was TBT, the inverse Bond ETF. In my comments yesterday, I mentioned two targets for the ETF, and right out of the gate, TBT hit the first one of 75.39. The second, 75.95, was reached just after the 1pm mark, as TBT moved toward 76.55, its high of the day. It was pretty nice to watch TBT do exactly what it was supposed to do. TBT closed at 76.55, up 1.87 for the day.
OK, so what does that tell us about TBT? Hmmm? Well, think about it for a second. I bought this batch of TBT as a Rifle Trade. I planned to buy and manage it on the 60s. On Friday and Monday, I saw first two legs of a small Hockey Stick t Pattern develop. I figured these to be waves 1 and 2 up. So yesterday’s breakout from the small Blade was likely the start of wave 3 up. This wave should continue through today, possibly longer. After wave 3 completes, we should see a small wave 4 pullback, to be followed by a wave 5 up to complete the pattern. Right now you’re probably thinking that because I mentioned the wave count, you’re going to have to count waves. No! Don’t worry about the waves. You don’t need to worry about them at all in a Rifle Trade. From here on, if you’re trading TBT, all you need to do is watch the 60s. When the Rifle Trade is over and the indicators turn Red, get out of the trade and go polish your Rifle. Simple. But keep that rifle handy. As long as TBT stays Green on the Daily’s there’s a good possibility that we’re gonna need it again.
With Emeritus silent again last night, and the cockpit indicators mixed, there is a good possibility that the wave 2 correction is beginning.
I’m just going to watch today. Like I’m been saying, I expect a pull back to start anytime now.
That’s what I’m doing,
|Market Signals for 07-25-2013|
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Category: Professor's Comments