Professor’s Comments October 13, 2015

Posted by OMS  at October 13th, 2015

The markets were mixed yesterday.  The Dow rose 47 points, closing at 17,132.  The SPX and NASDAQ also closed slightly higher, with the Russell 2K down about a point. Volume on the NYSE was almost 22 percent lower than Friday’s volume.  This was the lowest volume since 9 September, and could be an indication that the current rally is running out of steam. There were 59 new highs and 11 new lows.

Not much changed with yesterday’s trading. The markets remain overbought and it still appears that they are very close to completing Major Wave 2 up.

The A-D oscillator came in with a reading of 248.5.  This is the fourth consecutive reading over 200, indicating an EXTREMELY overbought market.  I do not expect prices to remain at current levels with these EXTREME overbought readings.

At this point, the SPX, NASDAQ, and Russell 2K are still below their 17 September highs.  So even though the Dow has made a higher high, the other three major indexes have not. This Bearish divergence is also evidenced by other signs. 

For example, yesterday, the SPY reached a 21 day high which was not confirmed by On Balance Volume. Bearish divergence like this often precedes a major price reversal.

With an overbought market showing signs of decreasing and diverging volume, all I’m doing now is waiting for the markets to roll over.

That’s what I’m doing,

h

Market Signals for

10-13-2015

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The Hockey Stick Pattern
The Creation of Waves and Trends
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