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Comments 110714 - Fri, Nov 7th, 2014 -:- 6 : 01 : 53

The Dow continued to push higher, gaining 69 points to close at 17,554. Volume on the NYSE was moderate, coming in at 101 percent of its 10 day average. There were 188 new highs and 64 new lows.

There was another very small change in the A-D oscillator yesterday. This was the second consecutive small change reading for the oscillator and given that the BLS will release the October Jobs Report numbers at 8:30 this morning, it's likely the announcement will result in a Big Move.

The real question is whether the Big Move will be up or down.

At this point, the 'e' wave of the Ending Diagonal Pattern appears to be nearing completion. The upper trend line of the pattern suggested that the Dow would reach the 17,500+ level. We're there now. However 'e' waves have a tendency to 'throw over' as they move toward their final top, and this is what appears to be happening now. From the pattern, there is no way to tell where this wave will end. But history tells us that when these 'sky rocket' waves do end, they never end well. The Dean's List, PT Indicators, and Tide remain positive. As long as these indicators remain positive I must remain Bullish. But at this point, I'm extremely cautious about putting any new money to work. I believe that it's too late to be establishing new long positions and too early to start shorting.

While the Dow was having a nice day, the NASDAQ was essentially flat.' It still has not exceeded its recent high.' There could be two reasons for this: The first is that the index is in the process of developing an Exhaustion Gap - Enveloping Pattern for a top. The second is that it could be consolidating for another small move higher. This short-term pattern should be resolved very soon.

Yesterday's internals were very weak for a Dow that gained 69 points. Those 64 new lows are something to note. If you recall the numbers we were seeing earlier this summer, when the market was last in a rally mode, the daily new lows were running in the teens. Now they're averaging in the 60s. This is not a sign of a healthy market.

I'm also including a chart of the NASDAQ-100 (QQQ) today to give you another perspective on the market's health. By this time, I'm sure you're familiar with the diverging P-volume. But you might want to look at the VA Pct. Note how when the 'c' wave rally started in late May, the VA Pct. was very strong. It started to weaken as the Q's moved higher into September. But during the current rally leg, the VA Pct. is almost non existent. Volume is the fuel that enables markets to move higher. And as the attached chart clearly shows, this one could be running out of gas.

Because of all this I'm on the sidelines, waiting for the announcement.

That's what I'm doing, h


As always, the Professor never makes recommendations. The information is provided on an educational basis so you can have informed discussions with your financial advisors and/or accountants about your individual investment decisions.

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.