03/22/2010 Market Recap: Bullish Reversal!

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 6 are NEUTRAL

ATTENTION 2.4.4 NYSE McClellan Oscillator: Negative divergence. 1.1.0 Nasdaq Composite (Daily): Non confirmation between SOX and COMPQ. BULLISH 1.0.2 S&P 500 SPDRs (SPY 60 min): Head and Shoulders Bottom, target 119.42. 2.4.4 NYSE McClellan Oscillator: NYHGH new high means SPX new high ahead. BEARISH 1.0.2 S&P 500 SPDRs (SPY 60 min): 15 unfilled gaps. (max was 16) 1.1.0 Nasdaq Composite (Daily): 9 unfilled gaps. (max was 10) 0.0.9 Extreme Put Call Ratio Watch: Top signal triggered. CPCE MA(5) too low. 0.0.3 SPX Intermediate-term Trading Signals: CPCE MA(10) too low. 4.0.4 Dow Theory: Averages Must Confirm: NYHILO too high. 03/17 Market Recap: Dumb money confidence too high. 03/17 Market Recap: Too many bearish extremes among all sentimentrader indicators. 2.3.4 Nasdaq Total Volume/NYSE Total Volume: *A little too high. 6.2.3 VIX:VXV Trading Signals: *VIX to VXV ratio is way too low. CONCLUSION Bearish signals are accumulated enough to justify a short sell. for aggressive traders only. 03/19, Bearish Engulfing, could be another short sell chances, good luck bears!

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 03/09 low Reversal Bar 02/26 L   *Stopped out of long position with gains. NYMO Sell     *Sell signal not confirmed. VIX MA ENV     OTHER ETFs MID TERM SHORT TERM COMMENT – *New update. Click BLUE to see chart if link is not provided. QQQQ UP ? IWM UP ? CHINA DOWN ? EMERGING ? ? CANADA UP ? 4.1.5 iShares CDN S&P/TSX 60 Index Fund (XIU.TO Weekly): 2 Doji under important resistance. Lots of negative divergence plus BPTSX is overbought which had led to a 2 weeks pullbacks in the past. FINANCIALS UP ? REITS UP ? MATERIALS ? ? OIL & ENERGY ? ? GOLD & GDX DOWN DOWN DOLLAR UP ? Head and Shoulders Bottom, target $24.28. BOND DOWN UP Could pullback soon as it hits resistance and ChiOsc is too high.

*Please make sure you understand how to use the table above. The main purpose of this report is to provide information so contradictory signals are always presented.

SEASONALITY: WEEK AFTER TRIPLE WITCHING, DOW DOWN 15 OF LAST 22, ALSO MARCH IS KNOWN AS A TURNING MONTH

CYCLE ANALYSIS: COULD BE A CYCLE TOP WITH MINIMUM 6.5% DOWN SWING

INTERMEDIATE-TERM: EXPECT ROLLER COASTER AHEAD

See 03/19 Market Recap for more details.

SHORT-TERM: BULLISH REVERSAL! MARKET COULD REBOUND FURTHER IF NO BIG DOWN TOMORROW

As mentioned in today’s After Bell Quick Summary, the big rally today conforms with the past “post Bearish Engulfing day” pattern so according to this pattern, the market should start to drop tomorrow, or consolidate (or small rise) for a few days before pulling back.

 

My guess is the market may consolidate (or small rise) here for a few days before dropping, because the “post Bearish Engulfing day” pattern is pure speculation, after all the char should weight more, while on today’s chart bullish reversal bars are everywhere, so the chances for the market to keep advancing are very good. 2.0.0 Volatility Index (Daily), the blue rectangles illustrate what had happened in the past when VIX bearish reversal bar like today was formed. Of course, I don’t expect the market to rise big either because the VIX to VXV ratio below is way too low. Take a look at a longer history view on 6.2.3 VIX:VXV Trading Signals then you’ll know what I mean.

 

If the market chooses to keep rising, then it could rise to around 03/25. See chart below. Apply the Fib extension from 2007 all time high to 2009 March low, interestingly, all important Fib nodes, 25%, 38.2%, 50% and 61.8% are important turning points, so logically the market could turn on 03/25 which happens to be the Fib 75%, another important Fib node. Of course, if the market starts to drop BIG tomorrow, then it could pullback till 03/25 before any meaningful rebound.

 

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.

Looks like it’s too late to long stocks now as the market is way too overbought. Waiting for a better chance.