This Page Last Updated January 21, 1997 at 8:00PM
Before I get into todays OEX commentary, I would first like to put my trading opinions into perspective. I am what you call a "position trader". I don't trade for a living but I eventually I will. For now, I perform regular acts of slavery and fit my trading activity around the rest of my life. It is not my intension to do the reverse and fit my entire life around my trading activity. So I specifically designed the Trailing Indicator to allow me to spend a comfortable amount of time entering trades on the OEX and XAU indexes. Ideally I keep well informed about these indexes and only find it necessary to really concentrate hard on them when I am "in play". Under my approach, it is conceivable that I will enter about 4 different positions in any given month. My plan is to be profitable about 80% of the time. If this philosophy seems compatible with you, I invite you to watch it closely. Take today for example.....................
The OEX as of the close yesterday was officially in a BUY condition. If you recall my comments yesterday, you will remember that the Prudent Trader methodology was advising traders to exit their long positions today but also to NOT entertain any short positions. This philosophy saved you if you were bearish early on in the morning when the OEX was down -4.75 points to an intraday low of 757.02. The index did an about face and ended the day up +6.43 to close at 768.20. Again, adhering to the Prudent Trader philosophy, PROFITS WERE SACRIFICED by not attempting to go long. But that's ok because we know this is going to happen under this system. The bottom line, no money lossed today and tomorrow is another day.
Let's talk about tomorrow. Despite the +6.43 point up day in the OEX, the market condition for this index REMAINS AT BUY. Infact, the technical condition for this index deteriorated slightly in my opinion. We are even closer today to a NEUTRALITY condition than yesterday. THIS TELLS ME that we are very close to a sell off that will be rewarding to put buyers WHEN THE APPROPRIATE SIGNAL IS GIVEN. The 20 day MA has now reached the price of this index's previous peak and I would now be surprised NOT TO SEE THIS INDEX CORRECT TO THE 20 day moving average. I said in my January 18th OEX commentary that a 30 point drop in this index was possible but I now feel that an initial drop of 20 to 22 points is more likely.
If you view my technical indicators on the OEX chart, you can see that the momentum is flat when compared to the price action of the previous 5 days. The CCI indicator did not confirm todays price rise, the CCI's slow moving average (shown in mustard brown) is flattening, and the MACD Difference (shown as the cyan histogram) is also non-confirming. For what it's worth, the McClellan Oscillator actually declined today inspite of the hefty rises in the popular averages. The Summation Index is just now reaching the level where it was back in late November when the DOW was some 300 points lower! In summary, ALL IS NOT WELL IN OEX LAND. Patience is my mantra for now, but if we close down tomorrow , I suspect that a FULL SELL SIGNAL will be issued by the closing bell thursday.
Your comments are appreciated.
