04/13/2010 Market Recap: VIX BB Sell Setup

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 OVERBOUGHT Non-Stop Model is in BUY mode Short-term 1 of 1 are BUY 6 of 6 are NEUTRAL SPY ST Model is in BUY mode

ATTENTION 2.4.4 NYSE McClellan Oscillator: Negative divergence. BULLISH 4.1.0 S&P 500 Large Cap Index (Weekly): Head and Shoulders Bottom, target 1246. BEARISH 1.0.2 S&P 500 SPDRs (SPY 60 min): 17 unfilled gaps. (max was 17) 1.1.0 Nasdaq Composite (Daily): 9 unfilled gaps. (max was 10) *0.0.3 SPX Intermediate-term Trading Signals: CPCE MA(10) too low. 4.0.4 Dow Theory: Averages Must Confirm: NYHILO too high. 1.1.0 Nasdaq Composite (Daily): NDXA50R is way too high. 4.1.0 S&P 500 Large Cap Index (Weekly): BPSPX too high. *0.0.9 Extreme Put Call Ratio Watch: CPCE MA(5) too low. 04/05 Market Recap: Too much call buying. See 04/09 Market Recap for the most recent data. 8.1.5 Normalized CPCE: New record low. 04/06 Market Recap: Smart/dumb confidence spread is too large. 04/06 Market Recap: Too many bearish extreme signals at sentimentrader. 04/08 Market Recap: Intermediate-term Indicator Score at sentimentrader is too high. 6.2.3 VIX:VXV Trading Signals: New record low. CONCLUSION So far no bearish signals worked but they are simply too many. I won’t attempt any short until the next NYMO Sell setup is triggered. Still hold the SPY ST Model long position, but no more equities long will be added.

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 *03/31 low *Adjust stop loss. Reversal Bar   NYMO Sell     Non-Stop     Newly added setup, will give signal on this setup the next time it’s triggered. OTHER ETFs TREND TRADE COMMENT – *New update. Click BLUE to see chart if link is not provided. QQQQ UP   4.1.1 Nasdaq 100 Index (Weekly): BPNDX too high. IWM UP     CHINA ?     EMERGING UP     CANADA UP   4.1.5 iShares CDN S&P/TSX 60 Index Fund (XIU.TO Weekly): BPTSX is too high. BOND DOWN   *Black bar, could pullback. Not sure if it’s a good short here though as the up push was very strong. DOLLAR UP *Good buy? Head and Shoulders Bottom, target $24.28. *Reversal like bar (open low close high), could rebound? GOLD UP   GDX UP   Ascending Triangle, target $54.2. *Hammer and held the Ascending Triangle breakout point, could rebound? OIL UP *Doji on MA(20), could rebound? ENERGY UP   FINANCIALS UP   4.4.2 Financials Select Sector SPDR (XLF Weekly): Fib confluences area from $16.76 to $16.97 could be the target. Up 9 weeks in a row tied the past record of streak up weeks. REITS UP MATERIALS UP   4.4.4 Materials Select Sector SPDR (XLB Weekly): BPMATE 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: THE LATER HALF OF THE WEEK IS GENERALL BULLISH

According to the Stock Trader’s Almanac:

1. 04/15 income tax deadline, Dow down only 5 times since 1981.
2. April expiration day, Dow up 11 of last 13.

CYCLE ANALYSIS: CYCLE TOP COULD BE AROUND 04/11 TO 04/15

See 04/08 Market Recap for more details.

INTERMEDIATE-TERM: EXPECT ROLLER COASTER AHEAD

Nothing new, according to the II Survey, too many people expected a correction, so the stock market should rise to a new high first before actually pulling back. Basically, my guess is that we’ll repeat the year 2004 roller coaster pattern. See 03/19 Market Recap for more details.

SHORT-TERM: A STRONG EARNINGS OFF-SEASON USUALLY MEANS A WEAKER EARNINGS SEASON

See 04/09 Market Recap, the statistics about the Earnings Season plus the cycle analysis and plus too many bearish extremes accumulated in the table above, so my guess is that we’ll see typical sell on news in the coming earnings season.

Nothing to say today, although the bearish extremes keep piling up but the market simply keeps going up, I have no idea how this is going to end. If you really really want to catch this mad cow, see small tips market by “*” in the table above, trying currency, bond and commodity stuff may avoid the possible pullback on equities.

Some people are asking 6.2.2a VIX Trading Signals (BB), as it’s triggered today.

 

Officially when SPY ST Model is in buy mode, I won’t mention any short setup, except, of course, the NYMO Sell setup. Now since people want to know, well, below are some simple statistics, if sell short the next day open, cover at close on the 5th day (why the 5th day? Because it shows the best results!), winning rate is 61%, hmm, not very bad.

 

% Change	Enter Date	Exit Date	Enter Price	Exit Price
-1.866252	11/19/2002	11/26/2002	90.02	91.7
-1.990742	3/27/2003	4/2/2003	86.4	88.12
-3.465456	4/17/2003	4/24/2003	88.3	91.36
2.765798	5/14/2003	5/20/2003	95.09	92.46
1.627718	7/29/2003	8/4/2003	100.14	98.51
-1.014239	9/10/2003	9/16/2003	102.54	103.58
1.321736	1/23/2004	1/29/2004	115	113.48
1.820889	4/27/2004	5/3/2004	114.23	112.15
0.772945	10/5/2004	10/11/2004	113.85	112.97
-1.096599	12/17/2004	12/23/2004	119.46	120.77
0.281827	12/28/2004	1/3/2005	120.64	120.3
-0.621847	2/4/2005	2/10/2005	119	119.74
3.099454	4/14/2005	4/20/2005	117.44	113.8
1.734389	6/20/2005	6/24/2005	121.08	118.98
-0.391169	7/19/2005	7/25/2005	122.71	123.19
1.373735	9/14/2005	9/20/2005	123.75	122.05
-1.053922	11/7/2005	11/14/2005	122.4	123.69
-0.26333	2/21/2006	2/27/2006	129.12	129.46
0.458078	3/16/2006	3/22/2006	130.98	130.38
-0.37709	8/22/2006	8/28/2006	129.94	130.43
-0.732762	10/17/2006	10/23/2006	136.47	137.47
1.046339	11/21/2006	11/28/2006	140.49	139.02
0.749963	9/20/2007	9/26/2007	153.34	152.19
2.791574	12/27/2007	1/3/2008	149.02	144.86
2.484701	2/28/2008	3/5/2008	137.24	133.83
3.620193	5/19/2008	5/23/2008	142.81	137.64
1.881687	4/14/2009	4/20/2009	85.03	83.43
2.814296	5/8/2009	5/14/2009	92.03	89.44
-1.632013	5/21/2009	5/28/2009	89.46	90.92
4.700018	7/1/2009	7/8/2009	92.34	88
0.052653	1/13/2010	1/20/2010	113.95	113.89
AVERAGE	0.673954

The summary below is why I’ll only mention the same setup when SPY ST Model is in sell mode, because the winning rate is 100% (and that’s why to follow the trend is of the most importance). Well, I know the cases are too few to draw any solid conclusion 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.

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