Professor’s Comments May 23, 2014
Posted by OMS at May 23rd, 2014
The Dow rose another 10 points, closing at 16,543. Volume was moderate on the rally, coming in at 92 percent of its 10 day average. There were 119 new highs and only 16 new lows.
It appears that wave 3 up is starting. It’s still early, but now all of the PT indicators on the NASDAQ (QQQ) have turned Green and the index has entered the trend mode. The QQQ and QLD are both on the Dean’s List. The SPY still needs to have its P-volume turn positive. The Dow (DIA) is lagging and showing a negative DMI and P-volume.
So with the Nasdaq starting to show strength, I’m going to focus on technology and some of the smaller cap stocks.
For the past few weeks, I have been about 75-80 percent invested, saving a few bucks for stocks in sectors that could lead the market higher. Yesterday, I started putting some of that money to work.
I bought a few more shares of UWM when the 60s turned positive. The ETF is still Red on the Daily charts and is NOT on any of my Lists, so I’m proceeding with caution. However UWM is coming off a nice TLB pattern. It bounced off support from the early February low and now appears poised to start a move higher. Yesterday the stock closed at 77.59. If I’m right about wave 3 up starting, UWM should start to move higher in the days ahead. There are several targets for the ETF, depending on how one counts the lows. The first target is at 83.52 with the second just shy of the 90 level. I have been nibbling away at UWM and now have a 1/3 position at an average cost of about 75.75. If the PT indicators on the Daily charts turn positive, I will complete my trading position.
Just remember that at this point UWM is only a trade. The stock is in an Uptrend, but with negative PT indicators on the Daily’s, I will have to dump the shares I purchased IF the indicators on the short -term bars turn negative. Ordinarily I would not buy partial poitions in a stock like this. However in this case, because I believe the overall market is heading higher, and both the NASDAQ and Russell 2000 have patterns with the most potential, I’m willing to take an early shot with small purchases based on the 5s and 60s. So far it’s worked out. But before I do anything else, I need to see Green on the Daily’s.
The other stock I’m watching and starting to accumulate is Amgen (AMGN). Last week, I mentioned that I was watching the two sisters, AMGN and Biogen (BIIB). Both of these stocks are in the Biotech Sector which has been lagging despite the strength in the Healthcare Sector. However, things could be changing.
Last night, Emeritus highlighted Biogen for the Honor Roll. In other words, he saw something to indicate that it could be starting a trend. I’m including a chart of Biogen so you can evaluate it for yourself. At first glance, you might reject a stock like BIIB, because the PT indicators are negative. But BIIB is actually in an Uptrend, and on the Member’s Watch List, so the Dean is also seeing some strength. It also has a well developed TLB pattern with relatively narrow Bollinger Bands.
Here’s the thing: IF BIIB can move higher in the next few days, it will likely ‘Jump the Ropes’ and see its PT indicators turn positive. Amgen is in the exact same position. However AMGN is NOT on the MWL yet. But its DMI has already turned positive and it has EXTREMELY narrow Bands.. So all I’m doing now is waiting for the MACD and P-volume to turn. I have been buying tiny amounts of AMGN based on the 5s and 60s. My average cost for these trading shares is near 112. It also has two targets of 119.71 and 127.25. For now, I’m just gonna go with a target just above 120.
I’m currently about 85-90 percent invested, and wading into a few ‘spec’ positions with the rest of my money.
That’s what I’m doing,
h
Market Signals for 05-23-2014 |
|
---|---|
DMI (DIA) | NEG |
DMI (QQQ) | POS |
COACH (DIA) | POS |
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