Live Update

Sunday, May 30, 2010

05/28/2010 Market Recap: Rebound Not Dead Yet

  TREND INDICATOR MOMENTUM INDICATOR COMMENT (Click link to see chart)
Long-term 3 of 3 are BUY    
Intermediate 3 of 3 are SELL 5 of 5 are NEUTRAL Non-Stop Model is in SELL mode
Short-term 1 of 1 are SELL 6 of 6 are NEUTRAL SPY ST Model is in SELL mode
MOON PHASE SOLAR TERM DATE GANN DAY CYCLE
06/12 New Moon 06/06 06/05-06/07, 06/11-06/14 Week of 06/04, 07/31, 08/20-08/23
BULLISH 0.2.1 10Y T-Bill Yield: Bottomed?
0.1.1 SPX Intermediate-term Trading Signals: CPC MA(10) too high.
0.2.2 Extreme Put Call Ratio Watch: CPC MA(5) too high.
8.1.1 Normalized NATV/NYTV: Bottomed? 
6.3.2c Major Distribution Day Watch: Bottomed?
05/20 Market Recap: Intermediate-term Indicator Score from sentimentrader is too low.
8.1.0 Normalized NYTV: Bottomed?
6.3.1 Major Accumulation Day Watch: Bottomed?
*05/28 Market Recap: II survey shows too many people are expecting a correction.
BEARISH 0.1.1 SPX Intermediate-term Trading Signals: Ascending Broadening Wedge? Target: 1008 to 1019.
0.2.3 NYSE McClellan Oscillator: Positive divergence missing, so one more down leg ahead?
CONCLUSION  
SPY SETUP ENTRY DATE STOP LOSS INSTRUCTION: Mechanic signals, back test is HERE, signals are HERE.
TRADING VEHICLE:
SSO/SDS, UPRO/SPXU, RSP
ST Model Last trade: Shorted at 05/06 close, covered at 05/21 close with gains.
Reversal Bar    
NYMO Sell    
Non-Stop 05/11 S N/A *Partial profit on 05/28.
Others    
OTHER ETFs TREND *DTFMS COMMENT – *New update. Click BLUE to see chart if link is not provided.
QQQQ DOWN
IWM DOWN
CHINA DOWN *Bearish reversal bar rejected at MA(20), be careful, could rest the low.
EMERGING DOWN *BUY
EUROPEAN DOWN *BUY 4.1.7 Vanguard European VIPERs (VGK Weekly): Bearish 1-2-3 formation, target $35.54. *The price is now too low below MA(200) though.
CANADA DOWN *Bearish reversal bar rejected at important MA, be careful.
BOND UP SELL
EURO DOWN *Breakout trend line then pullback to test the low then rebound, bottomed?
GOLD UP 4.3.0 Gold Trust Shares (GLD Weekly): Head and Shoulders Bottom, target $129.99.
GDX UP
OIL DOWN
ENERGY DOWN *potential bearish 1-2-3 formation setup triggered, target $50.51.
FINANCIALS DOWN *BUY
REITS DOWN
MATERIALS DOWN  

*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.
*DTFMS = Dual Time Frame Momentum Strategy. The signal is given when both weekly and daily STO have the same buy/sell signals. Use it as a filter, don’t trade directly.

CHANGE NOTE: I’ve removed all the cycle related charts in my public chart list because it’s a little bit difficult to maintain the cycle chart in stockcharts, besides stockcharts doesn’t have the calendar day mode. So from now on I’ll use other software to do the time analysis (Screenshot below to tell you that I’m very serious in time analysis as it’s just one piece of my many time analysis charts). For your convenience, I’ve added time related rows in the table above. The benefit for doing this is if the date deduced from various angles happens to be the same date, then it could be highlighted to imply its importance. For example, now, 06/06 (+-) is shown simultaneously via different method, so it should be very convincing that it’s a date of some importance.

TimeAnalysisChart

SEASONALITY: THE FIRST TRADING DAY IN JUNE IS BULLISH AND THE MEMORIAL DAY WEEK IS BULLISH 

According to the Stock Trader’s Almanac, the first trading day in June, Dow up 9 of last 11.

The chart below is from Bespoke, looks like the next week (Memorial Day week) is bullish.

memdayweek

Again the chart below is from Bespoke, June has been the 2nd worst month of the year over the last 20 years.

JuneThe2ndWorstMonth

The June seasonality chart below is from sentimentrader.

JuneSeasonality 

INTERMEDIATE-TERM: MAIN PULLBACK TARGET AROUND 1008 TO 1019, II SURVEY MAY MEAN A HUGE REBOUND AHEAD

Temporarily maintain the intermediate-term target around 1008 to 1019 (See 05/21 Market Recap for more details).

Why “temporarily”?  Because the II Survey below again shows too many people are expecting a correction. I hope you still remember that in the January correction, also because II Survey shows there’re too many people expecting a correction, so my guess at that time was we might see huge rebound, even new high before the real correction. So far the II correction pattern worked amazingly (see red vertical lines). So will it work again this time – a big rebound ahead? Well, I have no idea, I just want you to know that it’s possible especially there’re so many bottom signals pilled up in the table above.

IICorrection 

Trading wise, because SPY ST Model and Non-Stop Model are still in sell mode, so the strategy is still to sell the bounce. However since now we know it’s possible that the market may rebound huge, so don’t be too aggressive in selling the bounce. Personally, I’ll add into or initial a new position only when my first position is profitable, with absolutely no average down. In this way, if the selling bounce is wrong, I won’t lose too much.

 

WARNING: If you don’t understand the true meaning of overbought/oversold, please skip the session below. Generally, you should try your best not to trade against the trend. Trading purely based on overbought/oversold while against the trend is lethal to the health of your account. Before going further, please make sure you understand how to use the table above.
SHORT-TERM: COULD REBOUND TO AROUND 06/06 (+-), SPY TARGET $114.40

Still expect a short-term rebound. Maintain the time and target mentioned in 05/27 Market Recap. The chart below uses the Fib confluences area to calculate the possible target. Both time and target also fit what I’ve mentioned in 05/27 Market Recap.

ReboundTarget 

I’ve found as much as 7 EXCUSE to expect a rebound:

1. As mentioned in the seasonality session above, the first trading day in June and the Memorial day week are bullish.

2. Table above has accumulated too many bottom signals. All those signals have survived a lot of market extremes and proven to be reliable.

3. 1.0.0 S&P 500 SPDRs (SPY 60 min), as mentioned in 05/28 After Bell Quick Summary, could be a Bull Flag in the forming.

SPY60min

4. 0.1.0 SPY Short-term Trading Signals, for 3 times in a row, white bull bar is larger than the red bear bar which means bears are weaker because they couldn’t recover whatever has lost to the bulls in the previous day. Besides, a general rule of thumb, the market often makes 2 attempts to do something. If it fails 2 times (05/21 and 05/25), it often does the opposite, so we see the market rebounded after 05/25. Now if the market will turn down, most likely it will try 2 times to breakout above. If 05/27 is the very first try, then at least there’ll be a second try to retest the 05/27 high before rolling over.

SPYShortTerm

5. In 05/24 Market Recap, I mentioned “beware of VIX weekly STO sell signal”. Now the STO sell signal is confirmed, see red dashed lines, the signal even worked  in the 2008 crash.

VIXWeekly

6. 3.1.0 Currency Shares Euro Trust (FXE Daily), this is a typical breakout then pullback to kiss the channel good bye pattern, it’s a long setup, so euro could rebound which is good for the stock market.

FXEDaily

7. If interested, click the links to take a look at some weekly charts. Lot’s of weekly Hammer formed which means bullish reversal 60% of the time: 4.1.1 Nasdaq 100 Index (Weekly), 4.1.2 Russell 2000 iShares (IWM Weekly), 4.1.6 iShares MSCI Emerging Markets (EEM Weekly), 3.4.1 Real Estate iShares (IYR Daily), 3.4.2 Materials Select Sector SPDR (XLB Daily).

Friday, May 28, 2010

05/28/2010 After Bell Quick Summary

OK, the month end seasonality didn’t work this time. So neither will be the very very bullish Monday? Anyway, there’s no proof yet the very very Bullish Monday had stopped working, at least according to the Stock Trader’s Almanac , first trading day in June, Dow up 9 of last 11.

1

The bottom line, although no follow through for yesterday’s huge up but there’s no technical damage yet on the SPY intraday chart. I guess we still could see some push up ahead. Enjoy your long weekend!

SPY60min

Thursday, May 27, 2010

05/27/2010 Market Recap: 2 Major Accumulation Day within 5 Days

  TREND INDICATOR MOMENTUM INDICATOR COMMENT (Click link to see chart)
Long-term 3 of 3 are BUY    
Intermediate 3 of 3 are SELL 5 of 5 are NEUTRAL Non-Stop Model is in SELL mode
Short-term 1 of 1 are SELL 6 of 6 are NEUTRAL SPY ST Model is in SELL mode
BULLISH 0.2.1 10Y T-Bill Yield: Bottomed?
0.1.1 SPX Intermediate-term Trading Signals: CPC MA(10) too high.
0.2.2 Extreme Put Call Ratio Watch: CPC MA(5) too high.
8.1.1 Normalized NATV/NYTV: Bottomed? 
6.3.2c Major Distribution Day Watch: Bottomed?
05/20 Market Recap: Intermediate-term Indicator Score from sentimentrader is too low.
0.1.3 Nasdaq 100 Index Intermediate-term Trading Signals: NYDNV too high.
8.1.0 Normalized NYTV: Bottomed?
1.1.1 NYSE Composite Index Breadth Watch: NYADV:NYDEC MA(10) bottomed?
*6.3.1 Major Accumulation Day Watch: Bottomed?
BEARISH 0.1.1 SPX Intermediate-term Trading Signals: Ascending Broadening Wedge? Target: 1008 to 1019.
CONCLUSION  
SPY SETUP ENTRY DATE STOP LOSS INSTRUCTION: Mechanic signals, back test is HERE, signals are HERE.
TRADING VEHICLE:
SSO/SDS, UPRO/SPXU, RSP
ST Model Last trade: Shorted at 05/06 close, covered at 05/21 close with gains.
Reversal Bar    
NYMO Sell    
Non-Stop 05/11 S N/A *Might be a good idea to take partial profits here.
Others      
OTHER ETFs TREND *DTFMS COMMENT – *New update. Click BLUE to see chart if link is not provided.
QQQQ DOWN    
IWM DOWN    
CHINA DOWN BUY 2 green bar in a row usually means more on the upside.
EMERGING DOWN   Bearish 1-2-3 formation, target: $32.13
EUROPEAN DOWN   4.1.7 Vanguard European VIPERs (VGK Weekly): Bearish 1-2-3 formation, target $35.54.
CANADA DOWN  
BOND UP   ChiOsc is way too low.
EURO DOWN SELL ChiOsc is way too high.
YEN UP  
GOLD UP   4.3.0 Gold Trust Shares (GLD Weekly): Head and Shoulders Bottom, target $129.99.
GDX UP  
OIL DOWN  
ENERGY DOWN   Bearish 1-2-3 formation, target: $46.47
FINANCIALS DOWN   Bearish 1-2-3 formation, target: $12.99
REITS DOWN  
MATERIALS DOWN    

*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.
*DTFMS = Dual Time Frame Momentum Strategy. The signal is given when both weekly and daily STO have the same buy/sell signals.

SEASONALITY: THE LAST TRADING WEEK OF MONTH WAS BEARISH SINCE AUG 2009
 

See 05/21 Market Recap for more details.

INTERMEDIATE-TERM: PULLBACK TARGET AROUND 1008 TO 1019, NEXT TIME WINDOW AROUND 06/06

1.1.1 NYSE Composite Index Breadth Watch, in yesterday’s report, I mentioned 2 possibilities (see 05/26 Market Recap for more details):

  1. Rebound immediately starting from today then after that one more leg down to form a positive divergence before bottoming.
  2. Keep dropping for a few days to form a bottom directly.

Looks like the market chose to rebound immediately today. Since the positive divergence is still missing, so there could be an one more leg down ahead, therefore I will temporarily maintain the intermediate-term target around 1008 to 1019 (See 05/21 Market Recap for more details).

NYADtoNYDECRatio 

0.0.2 Combined Intermediate-term Trading Signals, if you simply follow the the Non-Stop model, it has only 48% winning rate, but if you could take a partial profit in the middle then the winning rate could go as high as 70%. Take a look at the chart below, the simplest way to know when to take a partial profit is whenever a DESCEN trend line is broken. Now it’s about the time, if you haven’t taken any profit before. Don’t let a profit turn into a loss.

NonStop 

WARNING: If you don’t understand the true meaning of overbought/oversold, please skip the session below. Generally, you should try your best not to trade against the trend. Trading purely based on overbought/oversold while against the trend is lethal to the health of your account. Before going further, please make sure you understand how to use the table above.
SHORT-TERM: COULD REBOUND TO AROUND 06/06 (+-), SPY TARGET $114.40

6.3.1 Major Accumulation Day Watch, one more bottom signal today – 2 Major Accumulation Day (NYSE Up Volume to NYSE Down Volume > 9) within 5 days. See dashed green lines, with no exception, there’s a good rally thereafter. I weight a lot on this signal, plus lots of bottom signals already piled up in the table above, so it looks very likely the market has bottomed, well, at least for the short-term. There’s a catch though. See NYMO at the bottom, unlike all the past cases, a visible positive divergence is still missing, so similar to mentioned above in the intermediate-term session, this could mean that there’ll be one more down leg ahead. Just for now, let’s temporarily pretend not to see it.

MAD 

If indeed the market has bottomed, then the rebound target could be SPY $114.40 and the time could last to 06/06 (+-). Trading wise, I’ve already mentioned in today’s After Bell Quick Summary, because in the table above, both short-term and intermediate-term are still arguing for sell, so the strategy is still to sell the bounce, just be very very careful here.

1.0.1 S&P 500 SPDRs (SPY 15 min), this is how I get the rebound target. Head and Shoulders Bottom, the text book target is around $114.40. There’re 74%chances the target will be met.

SPY15min 

As for the time target, in 05/21 Market Recap, I mentioned the next time window is around 06/06. Also from the chart below, at least there could be 3 more trading days left for the up swing which could end to around 06/03 which is very close to 06/06.

TradingDaysWatch 

Intraday Cumulative TICK from sentimentrader, record WOW today! I really don’t know how to explain this. If simply repeats the past 6 WOWs (See 05/18 Market Recap, 05/12 Market Recap, 05/03 Market Recap, 04/29 Market Recap, 04/20 Market Recap and 04/14 Market Recap) then we should see a big pullback very soon. Personally, I still think it just reflects a certain trading behavior changes, so doesn’t mean that people are way too bullish therefore the market is destined to have a pullback. Well, we’ll see.

IntradayCumTICK

05/27/2010 After Bell Quick Summary

Head and Shoulders Bottom breakout? The text book target is $114.40 which roughly is around the January high (at $114.66).

SPY15min

The bottom line, I don’t generally trade against my own signals which still need awhile to switch back to BUY mode, so the strategy is still to sell the bounce. However, as more and more bottoming signals are piling up (I’m going to add one more tonight which weights a lot in my mind), so I’ll be very very cautious in selling the bounce from here.

The WOW I mentioned yesterday isn’t over yet, a record high is reached today (assuming of course, I calculated correctly), so I’m going to keep WOW-ing tonight. The last 6 times I WOW-ed were in 05/18 Market Recap, 05/12 Market Recap, 05/03 Market Recap, 04/29 Market Recap, 04/20 Market Recap and 04/14 Market Recap. Let’s see what it will bring us this time.

P.S. The DISQUS system seems wrong on my blog that everyone’s comments are gone. Just let you know that it’s not me who removed all your comments. I think they’ll come back eventually.

Wednesday, May 26, 2010

05/26/2010 Market Recap: Not Bottomed, But…

  TREND INDICATOR MOMENTUM INDICATOR COMMENT (Click link to see chart)
Long-term 3 of 3 are BUY    
Intermediate 3 of 3 are SELL 3 of 5 are NEUTRAL Non-Stop Model is in SELL mode
Short-term 1 of 1 are SELL 6 of 6 are NEUTRAL SPY ST Model is in SELL mode
BULLISH 0.2.1 10Y T-Bill Yield: Bottomed?
0.1.1 SPX Intermediate-term Trading Signals: CPC MA(10) too high.
0.2.2 Extreme Put Call Ratio Watch: CPC MA(5) too high.
8.1.1 Normalized NATV/NYTV: Bottomed? 
6.3.2c Major Distribution Day Watch: Bottomed?
05/20 Market Recap: Intermediate-term Indicator Score from sentimentrader is too low.
0.1.3 Nasdaq 100 Index Intermediate-term Trading Signals: NYDNV too high.
*0.1.1 SPX Intermediate-term Trading Signals: NYADV oversold.
*8.1.0 Normalized NYTV: Bottomed?
*1.1.1 NYSE Composite Index Breadth Watch: Oversold.
BEARISH 0.1.1 SPX Intermediate-term Trading Signals: Ascending Broadening Wedge? Target: 1008 to 1019.
CONCLUSION  
SPY SETUP ENTRY DATE STOP LOSS INSTRUCTION: Mechanic signals, back test is HERE, signals are HERE.
TRADING VEHICLE:
SSO/SDS, UPRO/SPXU, RSP
ST Model
Reversal Bar    
NYMO Sell    
Non-Stop 05/11 S N/A For general direction guide only.
Others      
OTHER ETFs TREND *DTFMS COMMENT – *New update. Click BLUE to see chart if link is not provided.
QQQQ DOWN    
IWM DOWN    
CHINA DOWN BUY 2 green bar in a row usually means more on the upside.
EMERGING DOWN   Bearish 1-2-3 formation, target: $32.13
EUROPEAN DOWN   4.1.7 Vanguard European VIPERs (VGK Weekly): Bearish 1-2-3 formation, target $35.54.
CANADA DOWN   TOADV MA(10) oversold.
BOND UP   ChiOsc is way too low.
EURO DOWN SELL ChiOsc is way too high.
*6.4.5 GLD and UUP Watch: GLD black bar may mean UUP up tomorrow.
YEN UP  
GOLD UP   4.3.0 Gold Trust Shares (GLD Weekly): Head and Shoulders Bottom, target $129.99.
GDX UP  
OIL DOWN  
ENERGY DOWN   Bearish 1-2-3 formation, target: $46.47
FINANCIALS DOWN   Bearish 1-2-3 formation, target: $12.99
REITS DOWN   Head and Shoulders Top? Target: $44.28
MATERIALS DOWN    

*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.
*DTFMS = Dual Time Frame Momentum Strategy. The signal is given when both weekly and daily STO have the same buy/sell signals.

SEASONALITY: THE LAST TRADING WEEK OF MONTH WAS BEARISH SINCE AUG 2009
 

See 05/21 Market Recap for more details.

Since some people wanted to know the seasonality around the Memorial Day, well, here we go. (Courtesy of sentimentrader)

holiday_memorial 

INTERMEDIATE-TERM: PULLBACK TARGET AROUND 1008 TO 1019, NEXT TIME WINDOW AROUND 06/06

See 05/21 Market Recap for more details.

WARNING: If you don’t understand the true meaning of overbought/oversold, please skip the session below. Generally, you should try your best not to trade against the trend. Trading purely based on overbought/oversold while against the trend is lethal to the health of your account. Before going further, please make sure you understand how to use the table above.
SHORT-TERM: NOT BOTTOMED BUT MAY SEE REBOUND FIRST

The drop today has fulfilled the forecast given by 6.4.1 Extreme NYADV Readings Watch about SPX will have a lower close ahead. So the last “bear insurance” is gone. Now the question becomes more important: Has the market bottomed?

Personally, I think not.

1.1.1 NYSE Composite Index Breadth Watch, NYADV:NYDEC MA(10) had a new low today, see green dashed vertical lines, either we’ll see a short-term rebound immediately starting from tomorrow then one more leg down to form a positive divergence before the market could actually be bottomed, or see green solid vertical lines, the market simply keeps dropping for a few days until broke the green dashed horizontal line below before bottoming.

NYADVvsNYDEC 

I’ve mentioned the chart below in 05/21 Market Recap, arguing market was not bottomed. I believe it’s very convincing and has proved right so far. Now take a look again, asking yourself, comparing with the past positive divergence, is the current 1 day only positive divergence enough for a bottom? At least visually, chances are not very good, right? Also according to a basic TA theory, a divergence need to maintain for certain period of time (the longer the better) to be considered reliable.

NYMO 

OK, I guess the 2 charts above should be enough to talk you into believing that the market is not bottomed. Now, back to the question raised by 1.1.1 NYSE Composite Index Breadth Watch. Which one would be? Keep dropping or rebound first then drop?

My guess is that “keep dropping” may have a little bit better chances. Three reasons:

6.5.2b Month Day Seasonality Watch, the month’s last 2 trading days were generally bearish.

MonthDaySeasonality 

Intraday Cumulative TICK from sentimentrader, big WOW again. Although I don’t believe a very high Cumulative TICK means people are way too bullish anymore (instead it should simply mean a change in trading characters), but so far the previous 6 WOWs were all deadly correct (see 05/18 Market Recap, 05/12 Market Recap, 05/03 Market Recap, 04/29 Market Recap, 04/20 Market Recap and 04/14 Market Recap), so at least I cannot deny that there’s a chance that this signal may work again this time.

IntradayCumTick 

0.2.0 Volatility Index (Daily), lots of indices and sectors daily chart are ugly today – open high close in red which is kind of a bearish reversal day. Among them, VIX daily chart is especially not friendly to bulls, looks very similar to the Hammer formed on 05/13. So be careful!

VIXDaily

05/26/2010 After Bell Quick Summary

OK, let’s see the trick for the month’s last 2 trading days work or not this time. For fun only.

1

The other thing is that I’m going to WOW again tonight assuming my calculation is correct. The last 5 times I WOW-ed were in 05/18 Market Recap, 05/12 Market Recap, 05/03 Market Recap, 04/29 Market Recap, 04/20 Market Recap and 04/14 Market Recap. Again, I seriously think it’s simply a change of trading behaviors not because that people are so bullish buying Nasdaq stocks, so the last 6 times the WOW worked were just coincidences (since we’re in a downtrend). Well, whether I believe it or not, I think I’ve shown enough respect for it by honestly reporting it every time and it’s up to you to decide whether it’s a trick or a nonsense. See you tonight.

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