Professor’s Comments November 17, 2015
Posted by OMS at November 17th, 2015
The Dow rallied for 238 points, closing at 17,483.. Volume was moderate, coming in at 93 percent of its 10-day average. There were 14 new highs and 136 new lows.
Yesterday’s rally was a lot larger than I expected for corrective wave 4 within Wave 1 down. And even though it did not change any of the cockpit indicators, it did generate a new VIX Buy Signal as the VIX closed back above its lower Bollinger Band.
So with this new VIX Buy Signal on the Board, I have to consider an alternate possibility that the market could be starting a new rally phase. This rally phase could take the Dow to new highs.
Right now, this is only an alternate possibility. It is NOT my primary scenario. However IF the cockpit indicators turn positive in the days ahead, it would give this scenario added weight.
Here’s why: Since the November high, the Dow has moved down in four waves. The next move down (wave 5 down) should drop the Dow to the 17,100 level to complete Wave 1 down. If this does not happen and the current rally wave continues, it could invade the territory of minor wave 2 down which is defined by the 9 November low of 17,688. This cannot happen if the current rally is minor wave 4 within Major Wave 1 down. If this occurs, it MUST be something else.
So the 17,688 level is key. As long as the Dow stays below this level, the odds suggest that the rally is a minor wave 4 within Wave 1 down.
Once minor wave 4 completes, the Dow should drop below yesterday’s low of 17,210 on the next leg down (wave 5 down) to complete Wave 1 down near the 17,100 level.
Then once Wave 1 down completes, the Dow should start a Wave 2 rally toward the 17,600 level. The actual target for Wave 2 up will depend on where Wave 1 down completes.
Again, this is what I expect will happen. However IF the Dow starts to move above 17,688, all bets are off. If this happens, it would project a new high to complete wave ‘e’ up, probably near the 18,500 level.
Watching.
That’s what I’m doing,
h
Market Signals for
11-17-2015
DMI (DIA) | NEG |
DMI (QQQ) | NEG |
COACH (DIA) | NEG |
COACH (QQQ) | NEG |
A/D OSC | |
DEANs LIST | NEU |
THE TIDE | NEG |
SUM IND | NEG |
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