| Trend | Momentum | Comments - Sample for using the trend table. Warning: This is NOT a trading recommendation! | |
| Long-term | Down | Idea for trading intermediate-term under primary down trend. | |
| Intermediate | Up | Overbought | Hold long. |
| Short-term | Up | Overbought | May need take profits. |
| Report Focused On | Buyable dip or the market topped? |
| Today’s Summary | Market overbought, expect a pullback. Bears, be prepared for the rally to reach MA200 on SPX chart. |
When you drive to a shopping mall you may notice that occasionally it’s possible to find a spot very close to the entry even when it’s very crowded, however many times you are not so lucky. TA signals are similar. Sometimes they don’t work but nevertheless that stands for high probability. In other words, TA signals may always tell you do not try to find a spot near the entry of a shopping mall when it’s crowded. Now the market is overbought again, and the previous overbought didn’t work well, what about this time then? Are we lucky enough to find a closest parking sport near the mall entry again?
0.0.2 SPY Short-term Trading Signals.
1.1.4 Nasdaq 100 Index Intermediate-term Trading Signals. Especially the NDXA50R at the bottom which is at a bull market level.
1.1.6 PowerShares QQQ Trust (QQQQ 15 min). The pattern seems like a bearish rising wedge, and there are some negative divergences in place.
1.3.7 Russell 3000 Dominant Price-Volume Relationships. 1595 stocks price up volume down is significant. Twice of price up volume down in a row is clearly a warning.
2.8.0 CBOE Options Equity Put/Call Ratio. Watch for the further rise.
3.1.1 PowerShares DB US Dollar Index Bullish Fund (UUP 30 min), ChiOsc is too low so US dollar may rebound and that will be bearish to the stock market.
T2103 from Telechart.
T2122 from Telechart.
5.3.0 Financials Select Sector SPDR (XLF Daily). This is a good news. I don’t think XLF has broken out on Friday, however the pattern looks like an Ascending Triangle and XLF may go further up. On the other hand McClellan Oscillator of XLF is a bit overbought and this indicator is quite accurate.
I notice that bears, especially bears in my blog, tend to short the market all the way up. I don’t believe this rally and I do have some signals indicating a potential market top over the intermediate term. But let’s face it, even my “disbelieve” is correct, the market usually tends to be irrational far longer than one could ever imagine. The following two charts compare the bear market in 2000 and the present situation.
- Very often the bear market rally lasts 4 to 5 weeks without a meaningful pullback. So looks like now is the first typical bear market rally since 2007.
- The target of the bear market rally is usually MA 200 (i.e. weekly MA40). Now we are only half way, aren’t we?
- In term of seasonality (Courtesy of www.sentimentrader.com), April is one of the most bullish months in a year. Do you remember the big rally in the last April?
- Institution is still in accumulation mode (Courtesy of www.stocktiming.com). Although there might be a little bit negative divergence, at least the accumulation is still stronger than the distribution, right?
Now let’s take a look at two important intermediate-term topping signals.
0.0.1 Market Top/Bottom Watch. NYA50R is very close but not there yet.
Smart Money / Dumb Money Confidence from www.sentimentrader.com. Not there yet, isn’t it?
The conclusion is that, bears are better not to be too aggressive before the trend is weakening and confirmed by N vs N rule.
Hi Cobra,
ReplyDeleteThank you for posting today's analysis early. I could not agree more with your analysis and views, right on the dot!
excellent work! Of course you knew that already.
ReplyDeleteCobra,
ReplyDeleteDo you subscribe to stocktiming.com? Just wondering if you found their service to be informative and timely. Just looked at their website, but it hard to tell. No example reports given. Too bad.
Might be your post of the year! Very well done. Thanks.
ReplyDeleteCobra: a couple of observations...
ReplyDelete1. This new format is a major, major improvement! It makes your analysis much clearer (and thus more actionable). Thank you very much!
2. In today's blog, in the section where you are discussing Chart 5.3.0 (Financial Select Sector SPDR (XLF daily), you use these words: "This is good news." Is it good news to longs, or is it good news to shorts? It appears that you have made a conscious shift away from making *non-directionally agnostic* statement like this. I'm taking a moment to bring this to your attention, Cobra, because -- in the past -- these statements have been unconscious displays of your current directional bias.
To reiterate, you have made a lot of progress toward being directionally-agnostic in your analysis, which -- along with the addition of the template -- has produced major progress toward a cleaner, clearer blog that provides more actionable analysis.
...Keep up the excellent work, Cobra!
Cobra, sorry to disagree, but I don't buy 200 MA as the target. Why? What worked in 2000-2003 (moderate recession) will not work now (major depression). So far, 75 day MA was the resistance. I wonder if one has charts with MA 1929-1932.
ReplyDeleteOne more thing. You referenced smart/dumb money chart. You can clearly see that the extreme readings in dumb/smart money spread was what limited ups and downs in 2000-2003 (they just happend to coincide with MA200). Similar extremes limit market moves now. I dont see how we can get to MA200 while we are close to the top on sentiment reading UNLESS SP 666 was THE BOTTOM. I'm not ready to accept 666 as THE BOTTOM. Are you?
Shiva, thanks. I alway treat any good signs for bulls as good news (this, I guess is convention). I'll make it clear from now on if it's good news for bulls or bears.
ReplyDeleteYes, I personally don't believe MA200 as the target either, but let the market show us the true direction before drawing the conclustions.
As for stocktiming, I don't recommend subscribing it. It's not suitable for Trader. A long term investor maybe OK.
ReplyDeleteSentiment reads more like a Middle than a top.
ReplyDeleteIt always seems like a mistake to "Believe" in anything. In fact, Maybe the Lack of belief is a better sign than Belief.
I mean, How many of you "Believed" in a stealth Bottom. The best indicator of a good bottom(Since I don't believe in that word, let us call it a near term low), is that Everybody misses it.
But who knows it could have Been 'The Bottom'. But that is yesterday's news.
Eric, well said, thanks.
ReplyDeleteCobra:
ReplyDeleteCould you repost the 2007 charts using a 75 moving average as the above Anonymous has mentioned? If we are in a global depression, could you consider uploading the 1929-1933 and the 1937-1938 charts then perform the same analysis as you did with the dot.com period?
Who knows? Maybe FOX Business News will contact you for an interview! Then, you will be famous after Neil Cavuto interviews you!
StockCharts doesn't have data earilier than 1980.
ReplyDeleteCheck this link for MA75. http://stockcharts.com/h-sc/ui?s=$SPX&p=D&b=2&g=0&id=p52381670545&a=164850429
Thanks, but I don't want to be interviewed. I just wish one day nobody could say: HOW COULD YOU EVER BE SO WRONG! Then I'll be very happy!
Greeting Cobra,
ReplyDeleteTo clarify my previous commentary regarding your use of statements like "This is good news...":
If the conventional approach is indeed to refer to bullish news as "good news," then I encourage you to discard the conventional approach.
Seasoned traders (I'm talking about the real veterans...the ones that have been in the game for at least 10-15 years) will back me up on this: the best traders are 100% "directionally-agnostic," meaning there is no such thing as "good news." There are only developments supportive of long positions, and developments supportive of short positions. Only a small percentage of traders evolve to the point of being truly directionally-agnostic, despite the fact that it is essential to successfully trading for a living over the long term (i.e., through both bull and bear market cycles).
Cobra, if you structure your analytical framework and commentary so that it is truly directionally-agnostic, then you will both make yourself a more successful trader AND (along with the benefit provided by all the things you are currently doing so well) potentially help your readers to evolve into seasoned veterans.
Thank you for all your excellent work, Cobra! It is so gratifying to watch you learn and grow (and to teach some of us more seasoned readers some new tricks, as well)!
Thanks. I'll remember that!
ReplyDeleteGuys, instead of arguing and criticising Cobra's analysis how about focussing on the market? Read this:
ReplyDeletehttp://www.safehaven.com/article-12941.htm
uempel,
ReplyDeleteThanks for your input. I want to point out, though, that we are merely supplying Cobra with *constructive* criticism (not to be confused with the conventional negative form of criticism).
We provide Cobra with this input, because we view this blog as a vehicle for approaching trading in a collaborative fashion. By sharing our accumulated knowledge with Cobra, his analysis becomes even better. In turn, *we* learn and benefit from his constantly-improving analysis.
By the way, the interesting irony is that the topic of this blog -- trading -- is perhaps the ultimate hard-core capitalist activity, and yet we all benefit by pooling our knowledge in a somewhat socialist style. Imagine that.