Professor’s Comments October 28, 2015
Posted by OMS at October 28th, 2015
The Dow fell 42 points, closing at 17,581. Volume was moderate, coming in at 111 percent of its 10-day average. There were 44 new highs and 118 new lows. Note that the number of new lows has started to exceed the new highs.
In yesterday’s Comments I talked about how a small wave 4 appeared to be forming within the final ‘c’ wave of Major Wave 2 up. I also said that IF this wave count was correct, then the markets could see a small wave 5 rally into Wednesday’s Fed announcement. This scenario appears to be right on track.
I also mentioned that the time period from yesterday’s close into the Fed announcement is usually very bullish. So if you got long late yesterday, planning to trade the announcement, remember to exit the trade before 2pm today. There is a very good chance that wave 5 up could complete after the Fed announcement.
Last night, Apple announced a beat on both earnings and revenues. APPL shares are currently up about 2 points in after-hours trading. This should lift the Dow into the Fed announcement. However, even though earnings rose 31% in the quarter thanks to strong iPhone sales in China, Apple’s iPad sales continue to struggle – down 20% year over year. The 20% decline was for both units and revenues. Also, even though Apple sold 48.04 million iPhones, compared with 39.27 million units last year, the number did not exceed analysts expectations. So overall, the picture was not a rosy scenario.
Yesterday’s decline turned The Tide neutral as three of the four breadth indicators turned negative. The lone holdout is the Up-Down Oscillator which is now at its lowest reading since the current rally began. If the market starts to decline after the Fed announcement, it’s likely that The Tide will turn negative.
BTW, I should also mention that the A-D Oscillator turned negative last night, the first time it’s been negative since 2 October. A negative A-D oscillator means that most stocks on the NYSE have started to move south.
So please pay attention to what the market does today. Like I said above, there is a good chance that that the Fed announcement could trigger the start of Major Wave 3 down. We’ll see.
BTW, while I was listening to Fox News yesterday, one of the commentators said that the average price of a single family home within a 60 mile radius of San Francisco was one million dollars! He attributed these high prices to Apple and the stock held by it’s high tech employees. If this is true, it makes me wonder what would happen to Bay area real estate prices if Apple shares started to experience hard times. A million dollars for a house in an earthquake zone? Really?
Waiting for the Fed announcement.
That’s what I’m doing.
h
Market Signals for
10-28-2015
DMI (DIA) | POS |
DMI (QQQ) | POS |
COACH (DIA) | POS |
COACH (QQQ) | POS |
A/D OSC | |
DEANs LIST | POS |
THE TIDE | NEU |
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