04/27/2010 Market Recap: Key Day Tomorrow

TREND INDICATOR MOMENTUM INDICATOR COMMENT (Click link to see chart) Long-term 3 of 3 are BUY     Intermediate 3 of 3 are BUY 3 of 5 are NEUTRAL 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 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. *0.2.0 Volatility Index (Daily): Too high above MA ENV(10,20), also out of BB. 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 *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). IWM UP   4.1.2 Russell 2000 iShares (IWM Weekly): Too high above MA(200). CHINA *DOWN   EMERGING *DOWN   *Bearish 1-2-3 formation confirmed trend line breakdown. So downgrade the trend to down from up. Target $39.90. CANADA UP   BOND *?   *Testing important resistance, will upgrade to up from down if breakout. DOLLAR UP *FXE breakdown to new low! GOLD UP   GDX UP   OIL *? *$WTIC tests MA(50) again, will downgrade to down from up if breakdown. ENERGY UP   FINANCIALS *Down   4.4.2 Financials Select Sector SPDR (XLF Weekly): Too high above MA(200). *Bearish 1-2-3 formation confirmed trend line breakdown. So downgrade the trend to down from up. Target $15.29. 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

See 04/26 Market Recap for more details.

SHORT-TERM: BIG RED TOMORROW MEANS MORE PULLBACK AHEAD WHILE SMALL BAR MEANS A BOTTOM

Take a look at 0.1.0 SPY Short-term Trading Signals and 0.1.2 QQQQ Short-term Trading Signals, technically, no damage yet, so the sell off today might not mean anything, need see tomorrow.

The 1.4.1 iShares MSCI Emerging Markets (EEM Daily) and  3.4.0 Financials Select Sector SPDR (XLF Daily) illustrate what I consider as technical damage: Both have formed a bearish 1-2-3 formation, confirming lower high (since 3 is lower than 1) and lower low (breakdown below 2 today forming a lower low), so officially we can say they’re in downtrend now (well, strictly speaking it depends on your time frame). Now, take a look at the SPY and QQQQ chart above again, even in the worst case, say, assume they’ll go down further, at the most they’re forming the 2 of a possible bearish 1-2-3 formation now, which is far away from confirming a downtrend, as firstly a lower high 3 is needed and after 3, a breakdown below 2 to confirm a lower low also is needed, so again SPY and QQQQ have no technical damage yet.

As illustrated in the chart below, tomorrow could be a key day: keep selling off then most likely a correction similar to the June 2009 we’ll see, while small red or green then most likely bottomed the market was (is).

My speculation about tomorrow has already been mentioned in today’s After Bell Quick Summary, for 4 reasons I expect a green day:

1. 6.3.2a Major Distribution Day Watch, the day after a Major Distribution Day is more likely a green day.
2. 6.5.1 SPX and FOMC, FOMC day (that’s tomorrow) is more likely a green day.
3. 6.5.2b Month Day Seasonality Watch, the 3rd last trading day of a month is mostly a green day.
4. 0.2.0 Volatility Index (Daily), according to the statistics about VIX surging more than 20%, very good chances the next day is a green day, at least won’t drop much.

So in another word, looks like bulls have more chances on both short and intermediate term.

In addition:

Today’s Nasdaq Intraday Cumulative TICK (courtesy of sentimentrader) is at very very extreme level so it also favors an up day tomorrow.

1.0.0 S&P 500 SPDRs (SPY 60 min), ChiOsc is way too low also says that at least we could see a rebound tomorrow morning.