Live Update

Wednesday, September 30, 2009

09/30/2009 Market Recap: SPX Swing Trade Model II Sell Signal

Summary:

CPCE argues for an intermediate-term top again. Need follow-through tomorrow though.

SPX Swing Trade Model II Sell signal.

QQQQ black bar may mean a short-term top is very close.

  TREND MOMENTUM   COMMENT - Sample for using the trend table.
Long-term Up      
Intermediate Down* Neutral   Sell signal needs further confirm.
Short-term Down* Neutral    
SETUP DATE TRADE STOP LOSS Mechanic trading signals for reference only. Back tested since 2002.
SPX ST Model I 08/21 Buy next open 09/25 Low Win: 48%, Gain/Loss Ratio: 2.3, Ann Return/Trade: 58% yr
SPX ST Model II 09/29 Sell next open 09/29 High Win: 49%, Gain/Loss Ratio: 2.6, Ann Return/Trade: 74% yr
         

INTERMEDIATE-TERM: SELL SIGNAL TRIGGERED

0.0.3 SPX Intermediate-term Trading Signals, because both MACD and NYSI are on the short side, so I downgraded the intermediate-term to down from up。

2.8.0 SPX:CPCE, trend line broken, so this guy yells for a top again, needs hold the trend line at least tomorrow though.

CPCE

My SPX Swing Trade Model II issued a sell short signal today. Below is the back test summary since 2002. Well, it’s only a mechanical signal, back test worked good doesn’t guarantee it works in the future.

SPXSTModel2Summary SPXSTModel2

SHORT-TERM: COULD BE NOT FAR FROM A TOP

1.1.3 QQQQ Short-term Trading Signals, black bar means:

1. Gap down open tomorrow. No guarantee a red close though.

2. Not far from a short-term top. I see people are talking about a Symmetrical Triangle formed on 1.0.3 S&P 500 SPDRs (SPY 30 min). From the Elliott Wave point of view, this usually means a Wave 4, therefore there could be a Wave 5 to do the final push up. This doesn’t conflict with what the QQQQ black bar says, as it only says “close” to a top. From the QQQQ chart below, we can see that indeed there’re some cases that after a black bar, QQQQ made a new high before pulling back.

QQQQShortTerm SPY30min

INTERESTING CHARTS:

1.2.0 INDU Leads Market, INDU lower low before SPX may mean SPX will break below the Sep 25 low soon.

INDULeadsMarket

Today’s Russell 3000 Dominant Price-Volume Relationship is 1525 stocks price down volume up (I think Don Worden reported it wrong in his report today), this is a bearish reading. In the chart below I’ve marked all the recent cases that had similar “1500 stocks price down volume up” relationships.

PriceDownVolumeUp

09/30/2009 After Bell Quick Summary

The bottom line, after the SPY got a little reversal bar yesterday, it got a follow-through today with yet another reversal bar (opened high but closed in red). As predicted in the yesterday’s report, yes, oil was strong and dollar was weak, but even so they didn’t save the day. Plus a black bar was formed on QQQQ daily chart (the previous discussions are here). Considering all these factors, I’d be a little cautious here.

I have one trick today: CPCI > 1.55, 10 out of 16 (63%) times a green close the next day. This trick didn’t work well recently – wrong 3 out of 4 time. And among those 3 wrong convictions, the CPCE was all below 0.60, so it could be the factor it didn’t work well. But today, we have CPCE readings far above 0.60, so maybe this time CPCI will work. Let’s see.

CBOE CPCIWatch

Tuesday, September 29, 2009

09/29/2009 Market Recap: All About the Dollar

Summary:

No conclusion tomorrow. Chart pattern points to the downside but US$ may pullback which could lift the market.

  TREND MOMENTUM   COMMENT - Sample for using the trend table.
Long-term Up      
Intermediate Up Neutral    
Short-term Up Neutral    
SETUP DATE TRADE STOP LOSS Mechanic trading signals for reference only. Back tested since 2002.
SPX Major Swing 08/21 Buy next open 09/25 Low Win: 41%, Gain/Loss Ratio: 2.9, Ann Return/Trade: 55% yr
     
         

INTERMEDIATE-TERM: NO UPDATE

1.2.1 Dow Theory: Averages Must Confirm:

  1. BPSPX, NYA200R, NYHILO too high. There was about 10% correction in year 2004 when these 3 were this high.
  2. TRAN hasn’t confirmed the INDU’s high yet.

SHORT-TERM: US$ IS THE KEY

As mentioned in the After Bell Quick Summary, a reversal day on SPY daily chart may mean that it’ll be up huge but in most cases there were pullbacks or some consolidation then pullback. 1.0.4 S&P 500 SPDRs (SPY 15 min), chart pattern wise, could be a Head and Shoulders Top in the forming so it also argues a possible further pullback.

SPY15min

On the other hand, this time, US$ is bulls’ hope: 3.1.0 PowerShares DB US Dollar Index Bullish Fund (UUP Daily), solid black bar may mean a pullback of the US$ and 3.4.1 United States Oil Fund, LP (USO Daily), hollow red bar may mean that oil could rebound. These 2 factors are “bull friendly”.

UUPDaily USODaily

The conclusion is no conclusion. Let’s see how the market unfolds tomorrow.

INTERESTING CHARTS:

If there’s no wonder tomorrow, the it’ll be the SPX’s 7th straight up months. The chart below is all I could get from www.stockcharts.com about all the past cases when SPX was up more than 7 months in a row. Period.

SPXMonthly

09/29/2009 After Bell Quick Summary

I don’t see any tricks except that today is a small reversal day: Gapped high but closed in red. The following chart lists all the similar occurrences since the March bottom. See for yourself. By using my tongue (well, since I’m a cobra), however, I “sense” SPY is either at a start of a very powerful push up or most likely due for at least a short-term pullback (after a few days consolidation sometimes).

SPYReversalDayWatch

Monday, September 28, 2009

09/28/2009 Market Recap: Is up on light volume bearish?

Summary:

Up on light volume is not bearish at least recently.

Bullish Abandon Baby was formed on QQQQ, IWM daily chart.

The bear's only chance is US$ which could be up tomorrow.

  TREND MOMENTUM   COMMENT - Sample for using the trend table.
Long-term Up      
Intermediate Up Neutral    
Short-term Up* Neutral    
SETUP DATE TRADE STOP LOSS Mechanic trading signals for reference only. Back tested since 2002.
SPX Major Swing 08/21 Buy next open 09/25 Low* Win: 41%, Gain/Loss Ratio: 2.9, Ann Return/Trade: 55% yr
NYMO Sell 09/23 Sell next open 09/25 High Short-term play. Stopped out on 09/28 with gain.
         

INTERMEDIATE-TERM: NO UPDATE

Bottom line, 1.2.1 Dow Theory: Averages Must Confirm, at least I don’t have that imagination to expect SPX to go much higher when BPSPX, NYA200R and NYHILO are all at record highs.

SHORT-TERM: UP,BEAR'S ONLY CHANCE IS THE US$.

I’ve saw “suspicious” comments about up on light volume already. Well, at least nowadays, who cares about the volume? The green curve below is “SPY percent change to volume percent change ratio” and the cyan bars are marked whenever the green curve was very high, in another word whenever the SPY was up huge on light volume. Looks like in all the cases the SPY was bullish thereafter.

Change2VolRatio

1.1.3 QQQQ Short-term Trading Signals, 1.3.0 Russell 2000 iShares (IWM Daily), Bullish Abandon Baby, up 70% of the time.

QQQQShortTerm

All the above plus CPCI and ISEE index mentioned in the After Bell Quick Summary, it does look like bulls are ready for another huge run. Well, the bear still has a hope – that is the US$:

3.1.2 PowerShares DB US Dollar Index Bullish Fund (UUP 30 min), looks like a bullish pattern to me plus 3.3.0 streetTRACKS Gold Trust Shares (GLD Daily), the black bar may mean that UUP has good chances to close up tomorrow.

UUP30min GLDandUUPWatch

Overall, I believe short-term is bullish but be aware of US$.

INTERESTING CHARTS: NONE

09/28/2009 After Bell Quick Summary

I see 2 tricks, both point to a green close tomorrow.

CPCI > 1.55, 10 out of 15 times recently a green close the next day.

CBOE CPCIWatch

ISEE Indices & ETFs Only Index < 50 and ISEE Equities Only Index > 160, 8 out of 12 times recently a green close the next day. And if excludes days when CPCE <= 0.56, then the winning rate is even much higher – 8 out 9 times.

ISEE ISEEWatch

Liquidity and Institutional Accumulation/Distribution

The following charts are from www.stocktiming.com.

Liquidity Inflows and Outflows

2

Institutional Accumulation/Distribution

3

Sunday, September 27, 2009

09/25/2009 Market Recap: Testing Support

Summary:

SPY sits above multiple supports. Whether the market will repeat 8/17 again remains to be seen.

CPCE top signal not confirmed.

Cycle turn date is due, looks like a bottom.

The only doubt for bulls are lots of still at record high Bullish Percent Index readings.

  TREND MOMENTUM   COMMENT - Sample for using the trend table.
Long-term Up      
Intermediate Up Neutral    
Short-term Down Neutral    
SETUP DATE TRADE STOP LOSS Mechanic trading signals for reference only. Back tested since 2002.
SPX Major Swing 08/21 Buy next open 09/10 Low - Win: 41%, Gain/Loss Ratio: 2.9, Ann Return/Trade: 55% yr
NYMO Sell 09/23 Sell next open *09/25 High + Short-term play, Win: 52%, Gain/Loss Ratio: 2.3, Ann Return/Trade: 174% yr
         

INTERMEDIATE-TERM: AT CRITICAL POINT, TO UP OR TO DOWN? I HAVE NO IDEA.

Bottom line, it looks very like 09/03/2009 Market Recap: Some positive signals, except that there’s no VIX ENV buy signal yet. The paid services I subscribed are divided into 2 groups, one argues the huge down leg has already started and the other argues that there maybe one more push ahead. I have no idea who’s right. Let’s wait and see.

1. 0.0.2 SPY Short-term Trading Signals, closed right above multiple supports, so a rebound looks expected while even breakdown, bulls still have lots of supports below.

SPYShortTerm

2. 2.8.0 SPX:CPCE, trend line didn’t hold, so the top signal is not confirmed.

CPCE

3. 1.0.7 SPX Cycle Watch (Daily), a cycle is due, looks like a bottom to me.

SPXDailyCycle

So above all look good for bulls. The only not so “bull friend” stuff is 5.0.5 S&P Sector Bullish Percent Index I (Weekly) and 5.0.6 S&P Sector Bullish Percent Index II (Weekly), quite a few record high readings need to be corrected, so it definitely requires some imaginations to expect the market to go much much higher without taking a breath first.

BPI1 BPI2

SHORT-TERM: A FEW POSITIVE DIVERGENCES

1.0.4 S&P 500 SPDRs (SPY 15 min), lots of positive divergence, plus CPCI mentioned in the After Bell Quick Summary and plus possible “Sell on Rosh Hashanah, Buy on Yom Kippur” play, so a “Yom Kippur rebound” on Monday is likely.

SPY15min

Seasonality from www.sentimentrader.com, the last 3 trading days are “bull friendly”.

Seasonality

INTERESTING CHARTS: NONE

Friday, September 25, 2009

09/25/2009 After Bell Quick Summary

One trick today: CPCI > 1.55 which means a green close next Monday. CPCI has been wrong twice recently. This greatly reduced its successful rate and it now represents only 64% chances. Also on the recent 3 failed cases, the CPCE were all closed less than 0.60 and today we had CPCE sit at 0.58, so personally I won’t read too much into this CPCI thing. The bottom line, I have no proof so far that the pullback is over but at the same time the CPCE trend line I talked in the last night’s report didn’t hold today, so I have no proof that on the intermediate-term the market was topped either.

CBOE CPCIWatch

Enjoy your weekend!

Thursday, September 24, 2009

09/24/2009 Market Recap: CPCE Calls for a Top Again

Summary:

CPCE calls a market top again.

SPY short-term is down with initial target around $103.38.

  Trend Momentum Comments - Sample for using the trend table.
Long-term Up    
Intermediate Up Neutral  
Short-term Down* Neutral  
My Emotion Down*    

INTERMEDIATE-TERM: TREND STILL IS UP BUT CPCE ARGUES FOR A TOP NOW

2.8.0 SPX:CPCE, a market top signal was triggered today. To confirm the top the trend line must hold at least for a few days.

CPCE

Bottom line: 1.2.1 Dow Theory: Averages Must Confirm, the 2 days pullback was not enough to fix the record high overbought level recorded on NYA200R, BPSPX and NYHILO.

DowTheory

SHORT-TERM: SPY INITIAL PULLBACK TARGET COULD BE AROUND $103.38

1.0.3 S&P 500 SPDRs (SPY 30 min), because a lower low was formed and a MACD sell signal was triggered, therefore I downgraded the short-term from up to down. The initial target could be around $103.38.

SPY30min

INTERESTING CHARTS:

3.1.0 PowerShares DB US Dollar Index Bullish Fund (UUP Daily),  record volume today. No idea bullish or bearish, just most paid services I subscribed are bullish on US$ now.

UUPDaily

3.4.2 United States Oil Fund, LP (USO 30 min), RSI is way too oversold so there could be a short-term rebound. Just if you believe the US$ is bullish then on the intermediate-term oil should be bearish.

USO30min

09/24/2009 After Bell Quick Summary

I have one trick today: ISEE Indices &ETFs Only Index < 50 and ISEE Equities Only Index > 160, 8 out of 11 times recently a green day next day. Actually, if skips the day when the CPCE <= 0.56 at the same time then this trick worked 100% times. And today the CPCE closed way above 0.56 so what’s going to be tomorrow? Will this trick still work 100% time?

ISEE ISEEWatch

Bottom line – I have no proof that the selling is over.

Wednesday, September 23, 2009

09/23/2009 Market Recap: Bearish reversal but follow-through is needed

Summary:

One day doesn't a trend make.

It's possible a short-term top is very close or already passed.

  Trend Momentum Comments - Sample for using the trend table.
Long-term Up    
Intermediate Up Neutral  
Short-term Up Neutral  
My Emotion Wait    

INTERMEDIATE-TERM: TREND STILL IS UP

0.0.2 SPY Short-term Trading Signals, a Bearish Reversal Bar was formed today but most importantly a follow-through is needed. Otherwise it’s just an one day wonder. Theoretically as long as $99.10 holds, intermediate-term still is up.

SPYShortTerm

SHORT-TERM: STILL POSSIBLE A TOP IS CLOSE OR ALREADY PASSED

My major view is: 1.1.3 QQQQ Short-term Trading Signals and 7.3.2 SPX Cycle Watch (60 min). One says a top should be close whenever a black bar is formed and one says the market may already be topped.

Well, is today really a short-term top? Theoretically it’s not confirmed until the green line in chart 1.0.3 S&P 500 SPDRs (SPY 30 min) is broken. Pay attention to ChiOsc below, way too low, so SPY may rebound at least tomorrow morning. 1.0.4 S&P 500 SPDRs (SPY 15 min) should provide more clear view about the possibility of a rebound tomorrow morning. Anyway, the market usually needs a few days to reveal its true direction after the Fed day.

SPY30min SPY15min

INTERESTING CHARTS:

6.4.0 SPX and NYMO Divergence Watch, this chart is bearish as NYMO is negative while SPX is making a new high. For some technical reasons, I cannot back test this kind of setup yet, just a quick glance shows that the setup may not suitable for the bull market. And that’s why I simply put this chart under “Interesting Charts” for your info only.

SPXandNYMOWatch

09/23/2009 After Bell Quick Summary

I got mixed signals, so hard to guess tomorrow. Personally, I’d put more weight on cycles this time because they perfectly pined the intraday high twice and usually work well if multiple cycles converge together. Plus the prophecy raised by the QQQQ’s black bar I’ve been mentioning in the market recap those days, so chances are good that the market is in for a few days pullback.

SPX60minCycle

There’re 2 tricks today, CPCI > 1.55 for up tomorrow while CPCE <= 0.56 for down tomorrow. Who’s going to win? I have no idea. Yes, the last time CPCE won, but it’s the only instance I have, so it doesn’t mean anything.

CBOE

CPCIWatchCPCEWatch

Also remember the reversed relationship between Fed day and the day after the Fed day? We had a red Fed day today so does it mean a green day tomorrow?

SPXandFOMC

Tuesday, September 22, 2009

09/22/2009 Market Recap: QQQQ Black Bar Again

Summary:

Still possible a short-term top is very close.

US$ could rebound.

  Trend Momentum Comments - Sample for using the trend table.
Long-term Up    
Intermediate Up Neutral  
Short-term Up Neutral  
My Emotion Wait    

INTERMEDIATE-TERM: NO UPDATE

1. 1.0.0 S&P 500 Large Cap Index (Weekly), SPX is distance away from the resistance area.

2. 1.1.1 Nasdaq Composite (Weekly), hit resistance.

3. 1.2.1 Dow Theory: Averages Must Confirm, BPSPX and NYA200R are way too high. The same happened in year 2004 which had about 10% correction thereafter.

SHORT-TERM: NO IDEA TOMORROW BUT STILL POSSIBLE A TOP IS CLOSE

Tomorrow is the Fed day, day of roller coaster. As mentioned in the After Bell Quick Summary, we had 6 consecutive positive Fed day so far, while CPCE today seemed disagree a bullish day tomorrow. So which one would be? I have no idea.

My view still is 1.1.3 QQQQ Short-term Trading Signals, because no big rally today so the prophecy made by the last Friday’s black bar about coming top is still valid. Another black bar was formed today, so again it bears 2 prophecies – gap down open and a coming top. Just this time I’m not sure about the tomorrow’s gap down open, after all it’s a very special day.

QQQQShortTerm

Nothing else to say. 1.1.5 PowerShares QQQ Trust (QQQQ 30 min) and 1.3.2 Russell 2000 iShares (IWM 30 min) have lots of negative divergences, take a quick look if interested.

IWM30min

INTERESTING CHARTS:

6.4.5 GLD and UUP Watch, this one is interesting, whenever GLD had a black bar UUP would be up the next day. 3.1.2 PowerShares DB US Dollar Index Bullish Fund (UUP 30 min), this supports the view of a rebound as well, because it shows lots of positive divergences. Bullish US$ is not good for the stock market.

GLDandUUPWatch UUP30min

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