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Sunday, May 10, 2009

05/08/2009 Market Recap: Bear Market Extremes but Mean Nothing in Bull Market

  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, market might be topped.
Short-term Up Neutral  
Report Focused On Buyable dip or the market topped?
Today’s Summary

Expect a pullback as early as Monday.

Some warning charts.

Some sentiment charts, mean nothing however if it's the start of a bull market.

1.0.2 S&P 500 SPDRs (SPY 60 min), with 7 unfilled gaps, if without any pullback, I won’t add any long positions here. Although I’m not a believer of the “gap must be filled”, but 7 gaps are too many according to the “SPY history”.

SPY60min

 

Short-term, I expect a pullback as early as Monday. Intermediate-term, I’ll show some charts in this report, which if this is still a bear market rally, then they are probably arguing for a turning point, but if this is the start of a bull market, then they may mean nothing. Well, is this a bull market? Personally, I don’t believe it. But I’m a “pure” TAer and there’s a saying if a so called “pure” TAer begins to talk FA or whatever A, then he’s likely out of excuses to support his wishful thinking, so to pretend that I’m not “wishful thinking”, I won’t talk any other A here. Just for trading consideration, I suggest paying attention to the following 2 charts.

0.0.3 SPX Intermediate-term Trading Signals, without any intermediate-term sell signal, I’d think twice of being heavily short.

SPXMidTerm

Institutional Buying and Selling Trending from www.stocktiming.com, institution accumulation > institution distribution. Again, be careful of shorting.

instbsell

 

OK, now my excuses for a short-term pullback:

T2103 from Telechart, Zweig Breadth Thrust, overbought again and I trust this chart.

T2103

T2112 from Telechart, % stocks trading 2 standard deviation above their 40-day moving average, record new high again, I don’t believe it can long last. What kind of market is it when 56% NYSE stocks are at their BB up boundary?

T2112

3.1.1 PowerShares DB US Dollar Index Bullish Fund (UUP 30 min), ChiOsc at bottom is way too low, so I believe that US$ will rebound and this is not good for the commodity and therefore commodity related sectors such as XLE. 5.2.0 Energy Select Sector SPDR (XLE Daily), XLE by the way, there’re multiple resistances ahead plus the target of Ascending Triangle is almost met, so it’s like to pullback. This also applies to Canadian market which is heavily weighted with energy related stocks, and also pay attention to 7.4.4 TSE McClellan Oscillator, McClellan Oscillator overbought plus negative divergence.

UUP30min XLEDaily TOAD

 

Some warnings bellow:

1.1.0 Nasdaq Composite (Daily), stalled at MA200 plus SOX began to underperform. 1.1.1 Nasdaq Composite (Weekly), weekly chart doesn’t look good either. Nasdaq has been a leader since the March rally, now it’s weakening, I think we should pay attention to this situation from now on.

COMPQDaily COMPQWeekly

1.2.0 INDU Leads Market, SPX is just a hair away from the Jan high while INDU is till far far away from its Jan high, if the past pattern still holds true this time, I don’t think this kind of divergence is a good sign.

INDULeads

3.0.0 10Y T-Bill Yield, after being given a top signal now it formed a reversal day under an important resistance. This might mean something significant so be aware.

TNX

5.0.2 S&P Sector Bullish Percent Index, so many sectors are overbought and even have several years new high.

BPNYA

 

Now some charts from www.sentimentrader.com. They have all reached certain extremes since the year 2007 bear market which were very useful for calling a top. But if this is going to be a bull market, from longer history, they might mean nothing, so just watch them for fun.

Smart Money/Dumb Money Confidence, worked very well in 2008.

RecentSmartDumbConfidence

But here’s a longer history chart.

SmartDumbConfidence

InsiderScore.com Buy/Sell ratio, insiders are selling into the rally, well, again, says nothing from a longer history point of view.

InsiderScore 

AMG Data Equity Mutual Fund Flow, I read a report saying the Mutual Fund Money on the sideline will chase high here because of the anxiety of being underperform so there’ll be no pullback from now on. Here’s a chart about the Equity Mutual Fund Flow which has already reached a bear market high. Yeah, again, it means nothing for a bull market.

MutualFundFlow 

AAII Bull Ratio, retailer investors are bullish, not in extreme though.

AAIIBullRatio

14 comments:

  1. Hi, once again excellent analysis. i thinking of shorting now..!!
    thanks for the hardwork.
    regards

    ReplyDelete
  2. We probably have couple days of correction and bulls gonna try to hit that 200DMA.

    ReplyDelete
  3. Hello Master Cobra:
    When I view a weekly SPX chart back to 1980, with the default MACD HISTOGRAM (12,16,9) I get the highest histogram in history!!! When I change the HISTO setting to 21,55,13 (which I learned from you), then I see we are just near 2003 highs(lows). What think you of that discrepency? Thanks a million for your dailyness.

    ReplyDelete
  4. so the conclusion is..buyable pullback or what?

    ReplyDelete
  5. Master? Hey, you got be kidding me. Anyway, HIST too high means an overbought condition but it doesn't mean a pullback.

    As for conclusion, well, you've got me. Frankly, I wish I could know. I'm holding my current long positions with some short in the water, so my plan is to wait for a pullback then decide what to do next. Probably will buy the dip and at the same time move my stop loss on my existing longs so in this way, the risk won't be too high. I'll definitely not heavily short in this case.

    ReplyDelete
  6. Boston Wealth ManagementMay 10, 2009 at 10:32 PM

    I would like to invite you as a contributor to my website, wwww.bostonwealth.net

    You can get your own contributor square and post this same data on my site. Over 1000 page hits a day on my site.

    Just click on register at bottom left hand corner of website!

    ReplyDelete
  7. Boston Wealth ManagementMay 10, 2009 at 10:33 PM

    I would like to invite you as a contributor to my website, www.bostonwealth.net

    You can get your own contributor square and post this same data on my site. Over 1000 page hits a day on my site.

    Just click on register at bottom left hand corner of website

    ReplyDelete
  8. Thanks Cobra. I appreciate your willingness to remain "Neutral" in these toppy markets. So many gaps and several really good fakeouts are driving me nuts, but I keep coming here and reading your stuff and it keeps me sane. Thanks for all you do.

    ReplyDelete
  9. After a rally, a 50% sell off.
    http://www.zuam.ch/pdf/Article/afterarally.pdf

    ReplyDelete
  10. "We're going to run out of steam," Manus Cranny, market commentator from MF Global, said. "We've had a fantastic 9-week run, nothing lasts forever."

    ReplyDelete
  11. Today is overbought-workoff day. Tomorrow market continue way to meet 200DMA?

    ReplyDelete
  12. No idea, very interesting thing is there's no single TICK bellow -1,000 today so far. This means an orderly retreat. If we close again in green then it might be a bear trap. If we close in red then prehaps another red day could be expected.

    ReplyDelete
  13. Cobra,
    Good call on a down day. We closed down. Now what? Looks like MACD is trying to cross down on QQQQ (but not SPY). Lots of negative spin in the media. Controlled dump?
    Jack

    ReplyDelete
  14. Orderly retreat as I said because no single TICK reads bellow -1,000 today. Suspect more selling to come but I may change my mind after gathering more data tonight.

    ReplyDelete

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