03/08/2010 Market Recap: Still Overbought

TREND INDICATOR MOMENTUM INDICATOR COMMENT (Click link to see chart) Long-term 3 of 3 are BUY     Intermediate 3 of 3 are BUY 4 of 6 are NEUTRAL SPY ST Model is in BUY mode Short-term 1 of 1 are BUY 6 of 8 are OVERBOUGHT

BULLISH 1.0.2 S&P 500 SPDRs (SPY 60 min): Could be Head and Shoulders Bottom, target 119.42. BEARISH 1.0.2 S&P 500 SPDRs (SPY 60 min): 15 unfilled gaps. (max was 15) 1.1.0 Nasdaq Composite (Daily): 9 unfilled gaps. (max was 9) 2.3.4 Nasdaq Total Volume/NYSE Total Volume: Too high, topped? 2.4.2 NYSE - Issues Advancing: overbought. 2.4.4 NYSE McClellan Oscillator: overbought. T2122 4wk New High/Low Ratio: overbought. See chart here. CONCLUSION Could short after seeing a daily reversal bar (Open > Close), for aggressive traders only.

SPY SETUP ENTRY DATE STOP LOSS INSTRUCTION: Mechanic signals, back test is HERE, signals are HERE. TRADING VEHICLE: SSO/SDS, UPRO/SPXU ST Model 02/26 L breakeven Reversal Bar 02/26 L *03/04 low *Adjust Stop Loss. NYMO Sell       VIX MA ENV

OTHER ETFs COMMENT – *New update. Click BLUE to see chart if link is not provided. QQQQ IWM ChiOsc too high. CHINA Big red bar usually means more pullback ahead. EMERGING CANADA *Bearish reversal bar, could pullback. FINANCIALS REITS MATERIALS *Black bar, could pullback. ENERGY Broadening Top in the forming, the breakout direction is unknown. OIL *Bearish reversal bar, could pullback. GOLD DOLLAR Head and Shoulders Bottom. ChiOsc too low. *Hollow red bar, could rebound. BOND

INTERMEDIATE-TERM: RISE TO 03/08 THEN PULLBACK TO 03/16?

See 03/05 Market Recap as multiple Gann days are due around 03/08 and 03/16 and the market is pretty overbought so the logic guess is it could pullback from around 03/08 to around 03/16.

Overall according to the past II pattern, I believe eventually we’ll see a bigger correction. Just for now except for the Gann theory arguing that 03/08 could be a major top,  I have no other evidences supporting an imminent big correction.

SHORT-TERM: OVERBOUGHT

Still expect a pullback. Besides lots of overbought signals (See table above), the distribution (red) curve of the latest Institutional Buying and Selling Trending (courtesy of stocktiming) chart has reached an extremely low position again, see black lines, at least recently whenever the distribution curve was this low, there was a little big correction thereafter.

 

2.0.0 Volatility Index (Daily), the filled black bar could mean a reversal up which is not good for the stock market. By the way, VIX was down 17 out of the past 18 days which had never happened since 1990.

 

1.0.9 SPX Cycle Watch (60 min), just a reminder, there’re again 2 cycles due tomorrow intraday, mostly apply to very short-term though.

 

STOCK SCREENER:  For fun only, I may not actually trade the screeners. Since SPY ST Model is in BUY mode, only LONG candidates are listed. For back test details as well as how to confirm the entry and set stop loss please read HERE. Please make sure you understand the basic risk management HERE.

Since the intermediate-term direction is not clear, so no stock screeners from now on until the dust settles.