11/27/2009 Market Recap: None Confirmation

Summary:

The market is building a top, not sure where exactly the top is though.

Expect short-term rebound, not sure though.

	TREND	MOMENTUM	EMOTION	COMMENT - Sample for using the trend table.
Long-term	Up		Disbelieve
Intermediate	Down	Neutral
Short-term	Down	Neutral
SPY SETUP	ENTRY DATE	INSTRUCTION	STOP LOSS	Mechanic trading signals for reference only. Back tested since 2002.
ST Model		*Long if green Monday. Again I have no confidence in this trade.		*Stopped out long position with loss. No confidence in this trade.
Reversal Bar		*Long if green Monday. Again I have no confidence in this trade.		*Stopped out long position with loss. No confidence in this trade.
NYMO Sell	11/24 S	*Adjust Stop Loss	Breakeven
VIX ENV
Patterns ect.

INTERMEDIATE-TERM: BUILDING A TOP

The Dubai drama may mean nothing. But it could be seen as one of topping signs. I think I mentioned this sign before: False alarm before the market really tops – sudden drop followed by complete recovery as if nothing happened, this actually reflects the market’s nervousness. Another sign is up and down swings like what’s happening now. We all know that the up and down of the market actually reflects the supply and demand, if demand is high then there won’t be any up and down swing, the market simply goes straight up. Only when supply and demand reach equilibrium, will the market begin to show up and down swings. And since supply and demand are equal now, there’s a chance that the market will drop. The bottom line, I believe that the market is building a top, just I don’t know if the top was in already or there’s another new high.

7.1.2 NYSE Advance-Decline Issues, lots of none confirmation.

 

7.1.1 Primay and Secondary Indices Divergence Watch, lots of none confirmation too.

 

ISEE Index, unlike the previous 2 times, this time it has 4 red cycles so this could mean that the pullback could be larger than the previous 2 times.

 

Investor's Intelligence Sentiment Survey, too few bears among newsletter writers.

 

SHORT-TERM: COULD BE A REBOUND

There’re lots of reversal bars (hollow red or solid black) on many of daily charts, so the market could rebound on Monday. I’m not sure if those reversal bars formed simply because of the special holiday schedule though.

0.0.2 SPY Short-term Trading Signals.

2.0.0 Volatility Index (Daily).

3.1.0 PowerShares DB US Dollar Index Bullish Fund (UUP Daily). I think the black bar means a very short-term pullback, but because the ChiOsc is way too low now, on a little bit longer term, the dollar should rebound.

3.4.1 United States Oil Fund, LP (USO Daily).

 

INTERESTING CHARTS: NONE

11/27/2009 After Bell Quick Summary

If you happened to read the 11/25 Quick Summary comment area you probably knew that today simply repeated the rule that has been playing for so many many times: Whenever US is in holiday/weekend the world tanks on some bad news but the next day when US opens, it won’t tank at all, sometimes it even rises. Plus it’s only a half trading day so I don’t know if the reversal bars I saw everywhere on the daily chart do mean a green Monday or not. The bottom line, a Rectangle formation seems in the forming which has 68% chances of breakout on the upside, but before the price breakout on either side, it’s still a range bounded market so don’t get too bullish or too bearish.

Also there’s one trick pointing to a green Monday: 23 out of 34 times (68%) a green day after a Major Distribution Day (NYDNV:NYUPV > 9).

 

Enjoy your weekend!

11/26/2009 Quick Update

Well, since some people are asking. Let’s take a quick look at SPX e-minis: Looks like a Triple Top is in the forming, the text book target is around 1054. Now the neckline at 1083 holds well. If it’s broken tomorrow then the next important support to watch is 1068.

Since tomorrow is very special – only half day trading so I’m not sure if indeed the above neckline broken means anything important. Just from the extremely bullish ISEE Index readings and Investor's Intelligence Sentiment Survey readings below, I’ll think twice buying this dips.

11/25/2009 After Bell Quick Summary (no market recap tonight)

One trick today: when ISEE Indices & ETFs only index > 100, 19 out of 25 times (76%) a red day the next day (most likely, see red arrows) or the next next day (blue arrows).

I know some of you would remind me of the trick about when both SPX and VIX closed in green, well, only 59% times a red day the next day as I don’t usually mention any trick with winning rate below 60%. Considering it’s just a half day trading on Friday, I doubt if this trick works or not this time.

The bottom line, watch the dollar. It broke below its recent trading range today while EURO broke above an Ascending Triangle with the text book target much much higher. But strangely, the market wasn’t up huge on this dollar pullback like it did on Monday. Not sure if this is simply because of a pre-holiday effect or the dollar goes too far to be a good news anymore.

Will dollar crash from here and how it affects the stock market are remained to be seen. But right now the most important thing is to enjoy your Thanksgiving! No market recap tonight. My next update will be on weekend. Cheers!