Professor’s Comments May 16, 2014
Posted by OMS at May 16th, 2014
The Dow fell 167 points, closing at 16,447. Volume was moderate on the decline, coming in at 112 percent of its 10 day average. There were 53 new highs and 55 new lows.
Even though yesterday’s decline was pretty strong, it did not break any trend lines or destroy any of the current patterns that are in play. It still appears that yesterday’s decline was part of a wave 2 correction within a wave structure that should complete near or above 17,000.
The Dean’s List remains positive and as long as it says positive, I will maintain my positive bias. The DMI on the Dow turned negative yesterday, so during the day I started checking in with The Professor. The most he had was 7 longs and 2 shorts, so he did not confirm the DMI change.
Yesterday’s decline on the Dow stopped right at its 50 day moving average. As long as prices stay above the 50, it’s likely that the current uptrend will continue. If the Dow starts to break below the 50, currently near 16,400, it will start to complicate the pattern. This is the scenario I talked about two weeks ago when I cautioned that if the Dow broke 16,300, it would likely fall to 16,000. This is still a possibility.
All of my breadth indicators are currently negative, with an A-D oscillator reading of -106.33. In other words, the market is oversold, but not yet at extreme levels so we could see more downside before the correction completes.
So with 2 of the 3 PT indicators on the Dow being negative, negative breadth indicators and a positive Dean’s List, we have mixed signals.
When the signals are mixed, the market is usually in a corrective phase or starting a transition. At this point, I don’t see anything to tell me that a new downtrend is starting, so I have to believe that the decline of the past two days is corrective.
And once the correction completes, the market should resume it’s climb toward 17,000.
Watching.
That’s what I’m doing.
h
BTW, I’m still watching for DUST to break above 25.20. It got as high as 25.10 yesterday before closing at 24.81. A move above 25.20 should challenge 27.24. And if this level is broken, the decline in gold to the 1150 level should be well underway.
Market Signals for 05-16-2014 |
|
---|---|
DMI (DIA) | NEG |
DMI (QQQ) | NEG |
COACH (DIA) | NEG |
COACH (QQQ) | POS |
A/D OSC | |
DEANs LIST | POS |
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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Category: Professor's Comments