04/20/2009 Market Recap: The rally might be over

	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	According to $NYA50R and $CPCE, the market might be topped.
Short-term	Down*	Neutral to oversold*

Report Focused On	Buyable dip or the market topped?
Today’s Summary	Expect a rebound at least tomorrow morning. Expect more selling to come.

Today we have two signals to support the rally since 03/07 is most likely over, a decent correction may have started.

2.8.0 CBOE Options Equity Put/Call Ratio, double confirming line breakout means – at least it has been 100% accurate in the past – the rally is over.

7.1.0 Use n vs n Rule to Identify a Trend Change.  3 up days vs 1 down day while the downside movement is more significant, so bears won and uptrend is weakening.  Bulls only chance is break above SPX 875 tomorrow, which seems quite tough to me.

 

Very short term the market could at least rebound tomorrow morning because of the deeply oversold conditions.  In addition, Turnaround Tuesday might cause the market to close in green eventually.  However, that’s it.  Many evidences are showing that more selling will follow.

Firstly let’s see how oversold the market is in the very short-term.

1.0.2 S&P 500 SPDRs (SPY 60 min).  STO and ChiOsc are both way oversold, so the market may rally in the morning.  Note that none of the previous four up gaps have been filled, so bulls should not become too excited if the market gaps up again tomorrow morning.

1.0.4 S&P 500 SPDRs (SPY 15 min), RSI and STO oversold plus a few positive divergences also support a potential rebound in the short term.

5.3.1 Financials Select Sector SPDR (XLF 30 min).  Financials sold off too much and might get corrected tomorrow.

Ok, now let’s see why more selling is to come.

1.1.4 Nasdaq 100 Index Intermediate-term Trading Signals, intermediate-term still overbought.

T2120 from Telechart, 26 Week New High/Low Ratio, surprisingly it got overbought today.  This must be corrected.

2.4.2 NYSE - Issues Advancing，NYADV lower low.  This means that very likely SPX will close lower than today’s close some time later.

7.1.3 Major Accumulation/Distribution Days.  Major Distribution Day seldom comes alone, usually there’'ll be a 2nd one to follow.

 

Lastly, let’s take a look at 0.0.0 Signal Watch and Daily Highlights to “feel” a little bit about the steady, gradual changes of the market (especially if you read this chart everyday). Well, at least the short-term oversold conditions are not very extreme, are they?