04/21/2010 Market Recap: Will the 3rd time be the charm?

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 5 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 0.2.3 NYSE McClellan Oscillator: Negative divergence. 1.0.6 SPY Unfilled Gaps: 17 unfilled up gaps. (max was 18) 0.1.1 SPX Intermediate-term Trading Signals: Could be an Ascending Broadening Wedge in the forming. BULLISH 4.1.0 S&P 500 Large Cap Index (Weekly): Head and Shoulders Bottom, target 1246. BEARISH 0.1.1 SPX Intermediate-term Trading Signals: CPCE and CPC MA(10) too low. 4.0.4 Dow Theory: Averages Must Confirm: NYHILO too high. 4.1.0 S&P 500 Large Cap Index (Weekly): BPSPX too high. 0.2.2 Extreme Put Call Ratio Watch: CPCE MA(5) too low. CPCI too high.  8.1.5 Normalized CPCE: New record low. 04/14 Market Recap: Smart/dumb confidence spread at sentimentrader is too large. 04/14 Market Recap: Too many bearish extreme signals at sentimentrader. 0.0.2 Combined Intermediate-term Trading Signals: CPCE broke the trend line, so top confirmed? 6.2.3 VIX:VXV Trading Signals: A little bit too low. CONCLUSION 04/19 – If it’s the same post Major Distribution Day pattern then the market was bottomed.  Just with the put call ratio this extreme, I don’t know how the market is going to handle it? In wait and see mode.

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 04/08 low Reversal Bar 04/20 L 0.9xATR(10)   NYMO Sell *04/21 S 0.8xATR(10) Non-Stop     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   Morning Doji Star? Not sure. CHINA ?   Big red bar always led to more red days, so expect more pullbacks. EMERGING UP   Morning Star, so more rebound? CANADA UP   4.1.5 iShares CDN S&P/TSX 60 Index Fund (XIU.TO Weekly): BPTSX is too high. BOND DOWN   DOLLAR UP Head and Shoulders Bottom, target $24.28. 4.2.1 US Dollar Index Bullish Fund (UUP Weekly): Hollow red bar, rebound? GOLD UP   GDX UP   OIL UP ENERGY UP   FINANCIALS UP   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: NO UPDATE 

CYCLE ANALYSIS: THE NEXT IMPORTANT DATE IS 05/06

See 04/16 Market Recap for more details. Please don’t read too much into cycle analysis, and I’m also not sure if the market will pullback from 04/20 (+-) to 05/06 (+-). All I know is that the next potential turn date is 05/06 (+-) which could either be a top or a bottom depending on how the market marches to that date.

INTERMEDIATE-TERM: EXPECT ROLLER COASTER AHEAD

See 04/16 Market Recap for more details.

SHORT-TERM: EXPECT SOME WEAKNESS OR AT LEAST A FEW DAYS OF CONSOLIDATION AHEAD

Nothing to say today, just hopefully some of you need see the signals in my table everyday, so I assume that I have to post something everyday so that you can see the table. The bottom line, my guess is the rest of the week won’t be very bull friendly.

6.4.3 SPY Reversal Day Watch, this is the main reason to expect some weakness in the short-term. From the chart below we can see that whenever SPY formed a reversal day (open high close in red), there was usually some weakness ahead, at least a few days consolidation. And what makes today very special is that it’s the 3rd reversal day since the Feb rally, so the question is: will the 3rd time be the charm?

 

The statistics below is from Bespoke, also argues that the rest of the week won’t be very bull friendly.

 

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.