Professor’s Comments November 26, 2014

Posted by OMS  at November 26th, 2014

The Dow fell 3 points, closing at 17,815.  Volume was moderate, coming in at 96 percent of its 10-day average.  There were 197 new highs and 25 new lows.

Not much changed yesterday.  All the major indexes remain at or near the top of well-defined termination patterns, with significant negative divergences appearing in many of the technical indicators.  The only thing necessary for a decline to start is a trigger.  Because the Thanksgiving Holiday week usually has a Bullish bias associated with it, I do not expect any significant decline to start until the first week in December.

On the other hand, there was a small change in the A-D oscillator yesterday, so we need to be on the lookout for a Big Move within the next 1-2 days.

The Dean’s List, PT indicators and The Tide remain positive.  As long as these indicators remain positive, it’s likely the market will maintain its Bullish bias.

The PT indicators on several gold related issues I follow turned Green yesterday.   GDX rose 0.82 to 20.42 after its P-volume turned positive.  The ETF has formed a small ‘Blade’ near its 200 day moving average and appears ready to make an assault on the 50.  If GDX can start to move above 20.50, it’s likely the next move will be a ‘Rope Jump’.  At this point, I own a few shares of GDX as I continue to watch gold.

Remember, gold is still in a downtrend so I’m keeping my position small until I see signs of a trend change.  One of the first signs will be a ‘Rope Jump’.  Right now, it’s still very early in the turn-around process.  However, the larger pattern in gold (the metal) suggests that it could be completing a Major Wave 4 Patten.  If this is the case, then the next wave up could take gold to significantly higher levels.  Right now gold is trading near 1200.  If I’m right about the pattern, the next move up should be a rally above 1300.  If this happens and gold breaks above 1340, it would confirm the wave count which should enable to metal to move to the 1900 level over the next 18-24 months.

This is why I’m very interested in gold now and have started to accumulate a few shares.  Remember the SIGN:  Gold shares are on The Dean’s List, with a pattern (TLB), and the PT indicators are starting to turn positive.  After I see a TLB Pattern, I start to buy a few shares as a trading position when the indicators turn positive.  Large positions are NOT allowed!  This is because I still don’t know if the turn-around will happen.  So I only buy a trial position.

As long as the indicators remain positive, I will keep my trial position and look for a ‘Rope Jump’ to indicate Wave 1 of the turn-around process. If the PT indicators turn negative at any point in the move, I’m out!

That’s what I’m doing.

h

P.S.  My next Update will be the WSR.

Not sure of the terminology we use? Check out these articles

The Hockey Stick Pattern
The Creation of Waves and Trends
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