05/11/2010 Market Recap: 2 Reversal Bars in a Row

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

ATTENTION 1.0.6 SPY Unfilled Gaps: 11 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 0.2.1 10Y T-Bill Yield: Bottomed? 0.1.3 Nasdaq 100 Index Intermediate-term Trading Signals: NADVN too high. 0.2.2 Extreme Put Call Ratio Watch: CPC MA(5) too high. 8.1.0 Normalized NYTV: Bottomed? *0.1.1 SPX Intermediate-term Trading Signals: CPC MA(10) too high. BEARISH 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 05/06 S 1.9xATR(10) Reversal Bar     NYMO Sell     Non-Stop 05/11 S N/A *Better use this setup as a guide instead of strictly following it. Since it’s now in sell mode, so be careful long and perhaps to short any bounces is not a very bad idea. OTHER ETFs TREND TRADE COMMENT – *New update. Click BLUE to see chart if link is not provided. QQQQ DOWN     IWM DOWN     CHINA DOWN   EMERGING DOWN     EUROPEAN DOWN   4.1.7 Vanguard European VIPERs (VGK Weekly): Bearish 1-2-3 formation, target $35.54. CANADA DOWN   *2 reversal bars in a row, doesn’t look good. BOND UP   *0.2.1 10Y T-Bill Yield, 2 reversal bars rejected at resistance so yield could pullback while bond could rebound. EURO DOWN   4.2.1 Currency Shares Euro Trust (FXE Weekly): Testing major support. Also too low below MA(200) now. YEN ?   ChiOsc is a little too high. 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. *ChiOsc is a little too high. OIL DOWN *2 reversal bars in a row, doesn’t look good. ENERGY DOWN   *2 reversal bars in a row, doesn’t look good. FINANCIALS DOWN   *2 reversal bars in a row, doesn’t look good. 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: NO UPDATE

SPX TIME AND TARGET ANALYSIS: THE PULLBACK COULD LAST TO 05/23

See 05/10 Market Recap for more details.

INTERMEDIATE-TERM: 05/06 LOW WILL BE BROKEN BUT NO EVIDENCE SAYS THIS IS A START OF A NEW BEAR MARKET

See 05/07 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: 2 REVERSAL BARS IN A ROW, DOESN’T LOOK GOOD

Nothing new to say, TEMPORARILY maintain the forecast of expecting a 2nd leg down (See 05/10 Market Recap for more details). However, I must make this very clear: the so called 2nd leg down is a general pattern we often see on a strong trend. Besides this, I have no other evidences to support the view except the time seems not enough as the total pullback time so far (11 trading days) is shorter than that of June 2009 (18 trading days) and January 2010 (13 trading days). While from the table above, however, signals are arguing that the market may have bottomed. So which one is going to be, I need see tomorrow to get more clues.

0.1.0 SPY Short-term Trading Signals, Spinning Top plus hollow red bar, so now SPY has 2 reversal bars in a row, which doesn’t look good. If you’ve paid attention to the table above, then you shall see there’re several sectors with 2 reversal bars in a row as well. So the feeling is not good for bulls.

 

If we see the market pullback hard tomorrow to confirm today’s 2 reversal bar pattern (please pay attention to this IF condition), then be careful, it could be the 2nd leg down, and theoretically, the possible target, see chart below is  around 1008 to 1016 area (I’m not saying the market will reach that area tomorrow).