Professor’s Comments July 31, 2014 Update

Posted by OMS  at July 31st, 2014

This morning, the market was shocked by Argentina’s debt default after hopes for a deal with holdout creditors fell through.  Events like this tend to trigger oversized declines in equities, especially when the breadth is already negative and declining.

So where are we now?  Well for starters, my ‘trade’ in TWM is performing beautifully.  It hit a high of 48.37 early this morning and its now at 47.94.  I continue to hold.

In this morning’s comments, I mentioned that DXD and SSD, the inverse index ETFs for the Dow and SPX appeared on the Dean’s List.  And right after the open, all of the PT indicators on the DXD turned positive.

However so far, even though the Dow has turned negative, the PT indicators on the S&P500 (SPY) and the Nasdaq 100 (QQQ) remain positive.  The 1:15 run of the Dean’s List still shows QQQ and QLD on the List.

As long as these indexes remain positive and on the List, it is possible that the market can turn around and start to rally back to the 2000 level on the SPX.

The Professor agrees.. The 13:30 run only shows 16 stocks as trending down. So he’s not all that excited about a new down trend starting.

Remember, we’re still in a triangle, and once the market realizes that what happened in Argentina is not likely to impact US equities in the longer term, the next leg up from EXTREME oversold conditions could start at anytime. 

The TWM trade has reached it’s mid-point on the way to 51.  If you want to start protecting some of your profit…I have no problem with that.  Remember, this is only a ‘trade’.  We’re not falling in love yet.  If after TWM Jumps the Ropes, and it starts to move into an up trend, that’s when I’ll fall in love.  Not now.  Now I’m only trading, and when I trade, I always think about taking small profits and letting the rest ride.

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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