Professor’s Comments October 10, 2013

Posted by OMS  at October 10th, 2013

The Dow rose 26 points, closing at 14,803. Volume was slightly heavier than normal, coming in at 117 percent of its 10 day average.  There were 29 new highs and 87 new lows.

Yesterday’s small rally caused the VIX to close back under its Upper Bollinger Band of 19.98 generating another VIX Buy Signal.

The A-D oscillator improved to a reading of 171.81 which is still EXTREMELY oversold. Yesterday’s reading was only 20 points from the previous day’s reading, so it will be interesting to see IF we get a big move within the next few days. The stalemate in Washinbton continues, however because of the ‘relatively’ small change in the A-D oscillator, and now with two VIX Buy Siganls on the board, we need to remain alert for a rally. The question of course will be…is this the start of The Rally?

Right now it’s too early to tell. Nothing has changed with respect to the technical picture. It still appears that recent correction is part of a normal Wave D down within a larger Ending Diagonal Pattern.

Instead of trying to keep you eye on the entire market, you might want to keep your eyes on a few individual stocks. Stocks like Apple, AAPL. The stock popped over 6 points yesterday to 486.30, and continues to pull away from its moving averages. It’s now in an Uptrend. In the past month the stock has developed a small Blade to go along with a 50 point stick. If AAPL starts to move above 495, it could easily see the 520 level. The next target after that would be near 550, which is obtained from the interim high between the first two lows of the TLB Patterns or the larger ‘Stick’ that developed between late June and mid-August,

At this point, AAPL is starting to look like ‘The Elephant’ in the room. If it starts to move higher, it will attract a lot of attention. Watch for it to appear on the MWL and then look for a DMI turn.

I still believe that AAPL will play a major role in leading the NASDAQ higher over the next few months.

China Pete and Chemical, SNP, has a pattern that is very similar to AAPL but is less developed. For the past month, its price has been consolidating above the 50 and 200 moving averages. And because of this, every day that passes moves the 50 closer and closer to the 200. The Bollinger Bands have narrowed to the point where they are now at the narrowest point in over a year. I point this out because the last two times the Bands have narrowed to this extent, SNP made moves of over 20 points. One of these moves was up, the other down. All you had to do take advantage of these moves was to stay on the right side of the PT indicators, and let the tight Bands ‘squeeze’ the price for you.

COF, TCBI, ENTG, and HSY also have tight Bands.

Waiting and watching for the indicators to turn.

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

All of the commentary expressed in this site and any attachments are opinions of the author, subject to change, and provided for educational purposes only. Nothing in this commentary or any attachments should be considered as trading advice. Trading any financial instrument is RISKY and may result in loss of capital including loss of principal. Past performance is not indicative of future results. Always understand the RISK before you trade.