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*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
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: NEED SEE TOMORROW, BULLS STILL HAVE CHANCES
The drop today simply conformed the past pattern, so has fulfilled the very short-term forecast in 05/21 Market Recap: May not see very bullish Monday, need wait until Tuesday.
Why I said that today’s drop simply conformed the past pattern?
0.1.0 SPY Short-term Trading Signals, today is very similar to what happened on 02/08 – the 02/05 Friday bullish reversal followed by 02/08 red Monday and the market skyrocketed higher thereafter. Now we had a bullish reversal the last Friday, then a red Monday today, so if we see a green day tomorrow, then at least there’s a chance that the market may repeat what had happened after 02/08.
I’ve mentioned the chart below in 05/21 Market Recap. Now take a closer look again, if a Major Distribution Day (NYSE Down Volume to NYSE Up Volume > 9) was followed immediately by a Major Accumulation Day (NYSE Up Volume to NYSE Down Volume Ratio > 9), then no exception, the day after the Major Accumulation was always a red day. So again today’s drop simply conformed the past pattern. We have to wait until tomorrow to see in which direction the market will go – keep dropping or resuming the rebound.
I guess some bears may not understand why I’m so cautious, since SPY ST Model and Non-Stop Model are in SELL mode and apparently it’s not very easy for them to switch back to BUY mode in a day or two. Well, take a look at 4.1.3 Volatility Index (Weekly), sure, today is not Friday so officially the STO sell signal hasn’t confirmed yet, but once it’s confirmed, see dashed red lines, it even predicted well the rebound in the 2008 Oct crash. So beware.
As for tomorrow, despite the usual very red AH, so far I can see that bulls still have chances:
- As mentioned in today’s After Bell Quick Summary, when both VIX and SPX closed in red, there’re 77% chances a green day tomorrow. This trick is very reliable.
- 1.0.1 S&P 500 SPDRs (SPY 15 min), could be a kiss channel goodbye, so again bulls may have chances tomorrow.
