Professor’s Comments October 21, 2015

Posted by OMS  at October 21st, 2015

The Dow rose early, hitting a new rally high before closing 13 points lower at 17,217.  Volume was moderate, coming in at 92 percent of its 10-day average.  There were 66 new highs and 21 new lows.

It’s possible that Major Wave 2 topped during yesterday’s early rally.  The attached 15 minute chart of the Dow (DIA) depicts a 5 wave Ending Diagonal pattern which could be the final waves of a 3-3-5 flat pattern for Major Wave 2 up.  If Major Wave 2 up is complete, stocks should start to decline very soon.

I will be watching the 15 min bars on the DIA today to see if the Money Flow indicator starts to turn negative.  If it does, there is a good chance that the market has topped.

I will also be watching two levels on the attached chart to confirm that a top is in.  The first is the 171 level (red 2) which is the interim low between the first two highs of the final wave up.  If the 171 level is broken, the next target is the 168.72 level, which is where the Ending Diagonal began.

Stocks remain overbought with last night’s reading of the A-D oscillator coming in at 148.

Also, there was another small change in the A-D oscillator, so we need to be on the lookout for another Big Move within the next 1-2 days.

Yesterday’s decline also caused TWM to re-appear on the Dean’s List turning the List back to neutral.  So now I will start looking for a Tide change before adding shares of inverse index ETFs to my holdings.

After making a ‘Rope Jump’ on 14 October, GLD continues to trade near its 200-day moving average.  Yesterday the ETF rose 0.77 cents to 112.33.  If you look closely at the trading action since 14 October, it appears that the ‘Blade’ of a small Hockey Stick is forming.  And as the ‘Blade’ forms, it continues to pull the 50-day moving average up toward the 200.  This is EXCATLY what I want to see.

As this ‘Blade’ completes, the 50 should move above the 200 putting gold into an Uptrend.  This moving average cross is something to watch for as it would signal the start of Major Wave 5 up, a move that should take gold to new highs.

Watching the 15 min bars.

That’s what I’m doing,

h

Market Signals for

10-21-2015

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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