04/26/2010 Market Recap: NYHGH New High Again

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 4 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: 16 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. *0.2.3 NYSE McClellan Oscillator: NYHGH new high could mean SPX new high ahead. 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. CONCLUSION

SPY SETUP ENTRY DATE STOP LOSS INSTRUCTION: Mechanic signals, back test is HERE, signals are HERE. TRADING VEHICLE: SSO/SDS, UPRO/SPXU ST Model 02/26L 04/19 low *Stopped out of long position with gains. Reversal Bar   NYMO Sell     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 overbought and too high above MA(200). 0.1.0 SPY Short-term Trading Signals: Ascending Triangle breakout, target $51.48. ChiOsc a little too high. IWM UP   ChiOsc a little too high. 4.1.2 Russell 2000 iShares (IWM Weekly): Too high above MA(200). CHINA ?   EMERGING UP     CANADA UP   BOND DOWN   0.2.1 10Y T-Bill Yield: Breakout of a Bull Flag, so yield could up while bond will be down. DOLLAR UP GOLD UP   GDX UP   OIL UP ENERGY UP   4.4.1 Energy Select Sector SPDR (XLE Weekly): Breakout! FINANCIALS UP   ChiOsc a little too high. 4.4.2 Financials Select Sector SPDR (XLF Weekly): Too high above MA(200). REITS UP MATERIALS UP

*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: MOSTLY THE MONTH’S LAST TRADING WEEK WAS RED SINCE AUG 2009

See 04/23 Market Recap for more details.

CYCLE ANALYSIS: THE NEXT IMPORTANT DATE IS 05/06

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. See 04/16 Market Recap for more details.

INTERMEDIATE-TERM: EXPECT ROLLER COASTER AHEAD

Although so far the earnings season appears OK (I was expecting sell on news), but still maintain the forecast for a roller coaster intermediate-term ahead. Two major reasons:

6.1.0 Extreme CPCE Readings Watch, see blue dashed lines, extremely low CPCE means a choppy ahead.

T2111 from Telechart, percent of stocks 2 std dev above MA(200) is a little bit too high. See the blue curve representing SPX, it becomes very choppy whenever T2111 is too high (above the blue horizontal line).

From the weekly T2111 below we can see that the current T2111 reading is at very extreme level which in the past also means a choppy market ahead.

 

SHORT-TERM: EXPECT A NEW HIGH AHEAD BUT MAY SEE SOME SHORT-TERM WEAKNESS FIRST

As mentioned in the 04/23 Market Recap, whenever NYHGH (NYSE New 52 Week Highs) is extremely high, a red day is more like the next day. However the market could only be topped when a negative divergence is formed on the NYHGH first, so accordingly the NYHGH new high means SPX will have a new high ahead. Today we saw a new high and got a red day therefore conforming the pattern. As of tomorrow, we might see a similar pattern (a red day and a SPX new high tomorrow or some day later) because the NYHGH reached a new high again today.

6.4.3a SPY Bearish Reversal Day Watch, by definition today is a bearish reversal day although the gap up in the morning was a little too small. Anyway, the chart also argues for a short-term weakness, expect either pullback or consolidation ahead.