Professor’s Comments September 30, 2015
Posted by OMS at September 30th, 2015
The markets were mixed yesterday. The Dow rose 47 points, closing at 16,040. The NASDAQ fell 27 points and the S&P500 was basically flat at 1884. Volume was moderate, coming in at 106 percent of its 10-day average. There were 3 new highs and 507 new lows. Wow, that’s a lot of new lows!
After yesterday’s opening pop of 117 points on the Dow, the index traded sideways making several small up-down-up moves that appeared to be the legs of a corrective a-b-c flat pattern. If this is the case, the market will likely need one more rally leg today before it starts to decline again. The rally could take the Dow another 100+ points higher, with the S&P rising to about 1910.
If you analyze yesterday’s intraday’s moves, you will see that they basically formed a small Hockey Stick pattern. The initial 100+ point opening pop was the ‘Stick’ and with the rest of the day’s trading forming the ‘Blade’. So to estimate a target for the next leg higher to complete the pattern, we need to add 117 points to yesterday’s low. Just remember that everything we’re talking about here is part of a corrective Hockey Stick pattern and not the start of a new rally leg.
Last night 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. However because the Hockey Stick pattern allows for a 100 point move to the upside today, I can’t be sure if the Big Move will be up or down, once today’s pop is complete. Remember too that today is the last day of the month, and the last day of the quarter, so the mutual funds will be active re-balancing their portfolios. This re-balancing usually has a positive bias that will help fuel any rally today. Just remember that any end of month positive bias will turn negative once the calender turns tomorrow..
All of my indicators remain negative with my two trend indicators remaining in the trend mode. Because of this, I still must view any rally today as another shorting opportunity.
Yesterday, the 2-period RSI Wilder on the Dow rose to 30.54. Given that I will be doing another PT Class tonight, I just wanted to take a few moments today to remind students of the Rifle Trade technique I use to trade the market during down trends.
Remember when we Rifle Trade, we wait for times when the market is in a well defined trend…like it is now, and then use the 2-period RSI Wilder times to add to our position. So today, IF the Dow pops early and causes the 2-period RSI Wilder to become overbought, you might want to think about what you learned in the PT Class.
That’s what I’m doing,
h
UPDATE:
With the SPX nearing 1910, I’m looking to buy a few November Puts.
TWID,
h
Market Signals for
09-30-2015
DMI (DIA) | NEG |
DMI (QQQ) | NEG |
COACH (DIA) | NEG |
COACH (QQQ) | NEG |
A/D OSC | SM CHG |
DEANs LIST | NEG |
THE TIDE | NEG |
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
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.
Category: Professor's Comments