Professor’s Comments September 19, 2013

Posted by OMS  at September 19th, 2013

The Dow rallied  for 146 points after the Fed announced that there would be no change to its current stimulus program. The index closed at 14.676, after getting as high as 15,704, up over 700 points since The Professor issued his Buy Signal.  Volume was heavy, coming in at 125 percent of its 10 day average.  There were 326 new highs and only 30 new lows.

When the Dow hit 15,700 yesterday, it was more than half way to my target of 16,300 for wave 3 up, so I decided to sell a few shares.

SLB, which had been my largest holding going into yesterday, was up more than 8 points from my initial purchase.  The stock is also about 7 points ahead of its moving average, something that usually doesn’t last long.  Because my target for the stock was in the mid-90s, it was a logical candidate to trim.  So now if the market pulls back a bit, during the next few days, I will have a few bucks to purchase other candidates.  Besides, I had been in a heavily margined position for the past week, and wanted to get back to flat. It was one thing to be heavily margined at the 15,000 level; quite another at 15,700.

I also sold a few shares of RCL yesterday, booking a nice profit to pay for my next cruise.

At this point it is hard to tell how much additional rally is left in wave 1 of 3 up before wave 2 starts to develop.  We could go up another 200-250 Dow points or pause here.  I do not believe the wave 2 correction will be much.  I was estimating the wave 1 up would end near the 1725 level on the S&P, so when the index hit 1727. I started to sell a few shares.  If the market starts to pull back from current levels, I believe the pullback will be near 1690  If we push higher, the pullback should still only be limited to about 35 S&P points.  There is also a good probability that the wave 2 correction will be sideways.rather than down.  The market is very strong now. As long as your stock continues to suport a CCI >100, it will likely stay in the tend mode. The indicator can be used as another tool for money management.

Also, because the NASDAQ is coming off a very strong, well defined Hockey Stick w/Blade Pattern, I would be more inclined to hold NASDAQ stocks now than stocks on the S&P and Dow.  Apple, AAPL,rose over 9 points yesterday, but didn’t have an especially strong day.  The PT indicators remain Red on AAPL,and it is still in a downtrend.  However, IF the stock can get a boost from its new products in the weeks ahead, and turn Green, it could pull the NASDAQ a lot higher.  At this point, both the NASDAQ and AAPL have very nice patterns.  I’m just waiting.

Most gold stocks had a big day yesterday, with Royal Gold, RGLD jumping more than 4 points to 56.   The move could be the start of a Big move to the upside, because there is a nice HSw/Blade Pattern in place.  However, one day does not make a rally, and the indicators on RGLD are still negative.  I’ll pass for now.  Just because the Fed said it would not be changing it’s stimulus policy anytime soon, the fact that tapering will start sometime in the future should put a damper on gold prices in the weeks ahead.

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

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