12/04/2008 Market Recap: NYSE TICK

Today the market dropped down, but it doesn't look so bad, at least it is bears' turn to show their strength.  Two up days versus two down days, if tomorrow low cannot break Monday low, the strength of bears will be approved to be weak.  In another words, as long as the Monday low holds, still the bounce is alive.  Will the Monday low hold?  Possibly, because the TICK today was too negative, and Yen and Bond were too high.  It is hard to imagine how high these two things could fly, and it is reasonable to doubt if the selling off will test the November low.

0.0.2 SPY Short-term Trading Signals.  The pattern looks a bit like symmetrical triangle, and 75% of chance is break out at the upside.  Note the green dashed line, once TICK closes below -1000, the possibility of bouncing back on the next day is very high.  Of course, the market may dip down sharply first and reverse during the day.

2.1.2 NYSE - TICK (30 min).  Note the blue bold line, which happens when it reaches the green horizontal line?  The worst scenario is to sell off further until the blue line forms a double bottom or positive divergence.  Just for clarification, I doubt the potential selling off but by no means the market could bounce back immediately.

3.0.3 20 Year Treasury Bond Fund iShares (TLT Daily).  Take a look at this chart, unbelievable.

3.2.0 CurrencyShares Japanese Yen Trust (FXY Daily).  Almost a new high, it is overbought.

 5.0.1 Select Sector SPDRs.  Recently XLY and XLF are strong.  It is good that the past losers are becoming stronger.  Does anyone believe the rally of XLY and XLF was caused by short squeeze?  If no short squeeze, the strength is real.

6.0.3 Sector Relative Strength.  For more information, take a look at the relative strength.

12/03/2008 Market Recap: Head and Shoulders Bottom?

Today the market looks quite bullish, but I am not entirely satisfied because two up days failed to cover the loss on Monday.  On the 5-min charts of SPY and QQQQ the pattern looks like a head and shoulders bottom, or at least a cup with handle, furthermore there is no significant overbought signals in the short term, bulls might have a chance tomorrow.

0.0.0 Signal Watch and Daily Highlights.  On the overview of all signals, mid-term ones are green, short-terms are surprisingly neutral except for overbought NYMO.  Under this scenario, I would rather rely on patterns and tend to believe bulls have a chance tomorrow according to head and shoulders bottom.  Over the intermediate term, I think the trend is up according to signals and the basic strategy is to buy dip.  However, no clear buyable dip signal showed up in recent two days based on 8.1.1 Buyable Pullback Rule.

 0.0.2 SPY Short-term Trading Signals.  Take a look at the follow chart and see why I am not satisfied.  Today's candle isn't small and not a bearish one either, thus I have no concrete conclusion.  By the way, two inside bars are like a compressed string, no matter which direction it bursts out it would be dramatic.

1.0.3 S&P 500 SPDRs (SPY 60 min).  You may see a big head and shoulders bottom, and the small one is located at the top right corner where the blue circle marks.

2.1.0 S&P 500 SPDRs (SPY 5 min).  Again, a small head and shoulders bottom.  Neckline might not be convincible, but cup with handle patten should also work which is a continuation pattern.

1.3.7 Russell 3000 Dominant Price-Volume Relationships, 1163 stocks price up volume down, not a good news.

3.0.3 20 Year Treasury Bond Fund iShares (TLT Daily).  TLT rallied again, and it's overbought, plus volume declined for three days, plus doji today, it might want to take a rest which is bullish to the stock market.

3.2.0 CurrencyShares Japanese Yen Trust (FXY Daily).  Japanese Yen may also pull back which is bullish to the stock market.

3.4.1 United States Oil Fund, LP (USO Daily).  Note the green dashed line, every time STO reaches there it will bounce back.  Furthermore, the sell volume is magnifying which also means an exhaustion in some extent.  Therefore the crude oil may possibly bounce back, which is bullish to the stock market.

As a summary, over the short-term odd may be at bulls' side.

1.4.3 S&P/TSX Composite Index (15 min).  Canadian market looks like a double bottom.  If crude oil bounces back, TSX may follow as well.

12/02/2008 Market Recap: Inside Day

Today is an inside day, which means today's candle is completely inside the body of yesterday's candle.  I actually don't like this candle very much, especially the small white candle after a huge red candle (note: this kind of candle is called Harami, which has a strong indication of reversal.  However the second candle is better to be small for accurately predict the coming trend in a typical Harami setup, while today's candle is a bit too big).  Based on the simple strength judgement model, today's rally has not covered yesterday's loss, which means the up strength is weak.  Therefore tomorrow is the key, the market has to rise massively in order to avoid a potential roll over afterward, at least the gap formed on Monday is better to be filled.  Take a look at 0.0.2 SPY Short-term Trading Signals, a small white candle tomorrow won't work, red candle is no good either, only the big white candle is good.  Also notice that the NYADV and NYMO are very close to overbought, which means bounce still has life even we see a big white candle, but the market could still pull back in the short term.

A not so good news we have today: 1.3.7 Russell 3000 Dominant Price-Volume Relationships, 1343 stocks price up volume down.  This is quite bearish although I think it should not be over analyzed.  The statistics shows that the market could drop down tomorrow or as late as the day after tomorrow.  The reason that the data should not be over analyzed is because 1266 stocks price up volume up, which is the most bullish price-volume relationship.  Maybe two data can cancel each other in some extent.

1.0.3 S&P 500 SPDRs (SPY 60 min).  The pattern on 60-min chart looks like a head and shoulders bottom, and the theoretical target is 105.76 which is October high.  This may not mean anything, we can put the chart aside and see how it works out some time later.  In real practice, I found that patterns such as double top, symmetrical triangle, etc, are quite accurate.  However the prerequisite is to break the blue neck line on order to confirm the pattern.

3.1.0 US Dollar Index (Daily).  Let's see one more example where the up strength is weaker than the down strength.  US dollar has bounced back up for three days, but it failed to cover the loss in previous three days, and today it formed a bearish dark could cover, so I think US dollar with drop.  The correction of US dollar favors commodities, while the strong Japanese Yen and declining US dollar are bearish to the stock market.  3.2.0 CurrencyShares Japanese Yen Trust (FXY Daily), Yen seems having broken out the symmetrical triangle, although it is a bit overbought it still looks quite strong.

12/01/2008 Market Recap: The 2nd worst down day in 2008

Today is very bad.  I expected a pullback but eventually it turned out to be a crash, and in fact it is the second biggest down day after Oct 15th 2008.  To make it even worse, 2.4.2 NYSE - Issues Advancing which is quite accurate is still overbought, and this means there is hopeless to see a rally in the short term.  I looked through my whole chart book and cannot find a single signal which makes bulls potentially relieved.

1.0.3 S&P 500 SPDRs (SPY 60 min).  The last hope of bulls is the gap support at the bottom.  However I don't know if it will hold.

 1.0.4 S&P 500 SPDRs (SPY 15 min).  RSI is extremely oversold, so the market may bounce back up in the early morning.  However, remember that after the same magnitude of RSI oversold, the market didn't rally after Nov 6th and kept dropping until close.  Today's scenario is very similar with Nov 5th.

2.4.2 NYSE - Issues Advancing, still overbought.

3.0.3 20 Year Treasury Bond Fund iShares (TLT Daily).  The bond is flying to the sky.  Once again, it approves that when the bond market doesn't agree with the stock market, the former is more convincible.  You will know more after reading 3.0.5 SPY and TLT.