Summary:
Still overbought with some not so good signs so better not to bet heavily on the long side.
| Trend | Momentum | Comments - Sample for using the trend table. | |
| Long-term | Down | Idea for trading intermediate-term under primary down trend. | |
| Intermediate | Up | Overbought* | Some buy signals still need further confirmation. |
| Short-term | Up | Overbought |
Yes, the intermediate-term is on the BUY, but a pullback is still high likely at least in a short-term, so still suggest no to heavily bet on the long side.
2 reasons for expecting a short-term pullback:
T2103 from Telechart, Zweig Breadth Thrust, the overbought on this chart is quite accurate.
T2121 from Telechart, 13 Week New High/Low Ratio, the readings today is very extreme even in bull market.
6 not so good signs, they may or may not work though:
1.1.4 Nasdaq 100 Index Intermediate-term Trading Signals, price up 3 days in a row while volume down 3 days in a row, this kind of pattern usually leads a short-term pullback.
3.4.1 United States Oil Fund, LP (USO Daily), overbought, the same as above, price up 4 days in a row while volume down 4 days in a row, should pullback soon.
3.1.0 PowerShares DB US Dollar Index Bullish Fund (UUP Daily), oversold, should rebound soon. 3.1.1 PowerShares DB US Dollar Index Bullish Fund (UUP 30 min), oversold plus positive divergence, the reasons for a rebound is more clear on the 30 min chart. Since US dollar and the stock market are trending in opposite direction recently, so the rebound of the US dollar may mean a pullback in the stock market.
1.1.0 Nasdaq Composite (Daily), COMPQ rose today but SOX dropped big, this is not a good sign. Also there’re too many unfilled gaps on COMPQ daily chart.
5.3.0 Financials Select Sector SPDR (XLF Daily), financials were lagging recently, now a Bearish Tri Star pattern could be formed which means a further pullback.
From Seasonality, the following several days will not be so bull friendly.
Cobra,
ReplyDeleteGreat job as always. Quick TA question:
How long does it take for divergences to play out such as UUP in today's readings?
15m? 30m? 60m? I've noted that the 60m can take a day or two and are usually the strongest signs. But the 15m and 30m turn before which can allow you spot the divergences a bit earlier. But I'm not sure how long they typically play out in. Plus I've noted that the 15m and 30m can sometimes give false signals especially if the divergence is on individual stocks. Divergences on indices usually are more accurate even for the smaller time frames. Let me know if you agree with my observation.
Thanks, Rik.
Rik, I really don't know how long it takes for a divergence to play out. Sometimes it even doesn't work, so I usually use it as a warning.
ReplyDeleteYes, I agree with you, divergences work better on indices.
How do we adjut the seasonality days? For example the 6th is a Saturday...this year, so given that its the msot bearish day historically in June...can we expect that to be a Friday or Monday?
ReplyDeleteAll the days listed are trading days, so the 6th day is June 8.
ReplyDeleteyeah I am expecting the big drop to occur on that date as well, and so on. Hey Cobra, what is your take on Gold and Oil? Not sure if I have seen to many commodity stocks on your charts.
ReplyDeletebtw the S&P is supposed to downgrade a handful of commercial real estate bonds on June 8th.
ReplyDeletehttp://money.cnn.com/2009/06/02/news/ratings.reckoning.fortune/?postversion=2009060204
ReplyDeleteSorry June 9th.
There is a bit too much attention played to the $SPX, imo. The $INDU is a leading index and is backtesting both the 200 month MA right now and the old Bull Channel. I think the turn is damn close. Damn close.
ReplyDeletehttp://social.stocktock.com/profiles/blogs/big-picture-a-kiss-goodbye