05/05/2010 Market Recap: More Signals Arguing for a Rebound

TREND INDICATOR MOMENTUM INDICATOR COMMENT (Click link to see chart) Long-term 3 of 3 are BUY     Intermediate 2 of 3 are SELL 5 of 5 are NEUTRAL Non-Stop Model is in BUY mode Short-term 1 of 1 are SELL 5 of 6 are NEUTRAL SPY ST Model is in SELL mode

ATTENTION 1.0.6 SPY Unfilled Gaps: 15 unfilled up gaps (max was 18), 2 unfilled down gaps.  0.1.1 SPX Intermediate-term Trading Signals: Could be an Ascending Broadening Wedge in the forming. BULLISH 0.2.3 NYSE McClellan Oscillator: NYHGH new high could mean SPX new high ahead. 0.2.0 Volatility Index (Daily): More than 20% above MA(10). *0.1.2 QQQQ Short-term Trading Signals: NAMO oversold. *6.4.6b QQQQ Hollow Red Bar Watch: Bottomed? BEARISH 04/20 Market Recap: Record high Climax Buying. 04/20 Market Recap: Weekly Bearish Engulfing could mean a top. 0.1.0 SPY Short-term Trading Signals: Diamond Top, target $114.38. CONCLUSION 0.0.2 Combined Intermediate-term Trading Signals, although the primary sell signal is not yelling yet, but sometimes NYSI and BPSPX sell signals did work, so be careful here.

SPY SETUP ENTRY DATE STOP LOSS INSTRUCTION: Mechanic signals, back test is HERE, signals are HERE. TRADING VEHICLE: SSO/SDS, UPRO/SPXU ST Model *Short tomorrow if: 1. SPY breaks below today’s low at $115.97. AND 2. SPY tomorrow’s open > tomorrow’s close. The stop loss will be 1.9 x ATR(10). Be careful, as I’m not sure if the timing is good to sell short here. Reversal Bar     NYMO Sell     Non-Stop     VIX MA ENV       OTHER ETFs TREND TRADE COMMENT – *New update. Click BLUE to see chart if link is not provided. QQQQ *DOWN   *Confirmed bearish 1-2-3 formation, so the trend is down. IWM *DOWN   *Confirmed bearish 1-2-3 formation, so the trend is down. CHINA DOWN   EMERGING DOWN   EUROPEAN DOWN   CANADA *?   *Breakdown below a huge consolidation area, doesn’t look good. BOND UP   ChiOsc is a little too high plus black bar, could pullback. EURO DOWN   YEN DOWN     GOLD UP   4.3.0 streetTRACKS Gold Trust Shares (GLD Weekly): Head and Shoulders Bottom, target $129.99. Also there’s a small Head and Shoulders Bottom, target $121.96. OIL *DOWN *Bearish 1-2-3 formation or Double Top, target $36.68. ENERGY UP   FINANCIALS *DOWN   *Bearish 1-2-3 formation, target $15.29. REITS UP 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.

SEASONALITY: MONDAY AND FRIDAY ARE BULLISH

See 04/30 Market Recap for more details.

CYCLE ANALYSIS: COULD BE A CYCLE BOTTOM AROUND 05/07 TO 05/10

There’re several cycle due on 05/07 and 05/10, plus as mentioned in 04/16 Market Recap, 05/05, 05/06 and o5/07 are important Gann Days, especially the 05/06 also is an important solar term date, so chances are good that the market could make a turn within those dates. So far they look like a cycle bottom.

1.0.7 SPX Cycle Watch (Daily), 1 cycle due on 05/10.

 

1.0.9 SPX Cycle Watch (60 min), 2 cycles due on 05/07 and 05/10.

 

INTERMEDIATE-TERM: EXPECT ROLLER COASTER AHEAD OR THE MARKET COULD BE TOPPED

See 04/30 Market Recap for more details.

SHORT-TERM: EXPECT A REBOUND SOON BUT AFTER THAT USUALLY THERE’LL BE A 2ND LEG DOWN

For the short-term forecast I’ve already given in today’s After Bell Quick Summary: Expect a rebound within a day or two but after that there could be another leg down. The chart below illustrates the usual 2 legs down pattern often seen on a relatively bigger pullback. As of today the SPX had around 5.3% pullback which fits for the definition of a relatively bigger pullback, so it’s logic to expect 2 legs down at least.

 

More “excuses” to expect a rebound are listed below. However, let me make this clear again: the market report is different from the trading report, whose main focus is to provide information so it may look like the bias is always against the current trend. Please make sure you understand how to use the table above.

0.1.2 QQQQ Short-term Trading Signals, NAMO oversold, see green dashed lines, chances are good a rebound is very close. NAMO as well as NYMO are quite reliable indicators.

 

6.4.6b QQQQ Hollow Red Bar Watch, hollow red bar usually means a bottom.

 

6.2.5b VIX Body Completely Out Of BB Watch, VIX body completely out of BB top could mean at least a rebound the next day. See back test below, buy at today’s close, sell at tomorrow’s close, the winning rate is 68% since the year 2002.

 

6.1.1b Extreme CPC Readings Watch, CPC >= 1.01, way too bearish which means that bulls have 84% chances for tomorrow.