06/02/2010 Market Recap: Could see more back and forth ahead

TREND INDICATOR MOMENTUM INDICATOR COMMENT (Click link to see chart) Long-term 3 of 3 are BUY     Intermediate 3 of 3 are SELL 4 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. 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 *SELL CHINA DOWN EMERGING DOWN BUY EUROPEAN DOWN BUY 4.1.7 Vanguard European VIPERs (VGK Weekly): Bearish 1-2-3 formation, target $35.54. CANADA DOWN SELL BOND UP   EURO DOWN GOLD UP *SELL 4.3.0 Gold Trust Shares (GLD Weekly): Head and Shoulders Bottom, target $129.99. GDX UP *SELL OIL DOWN ENERGY DOWN SELL FINANCIALS DOWN   REITS DOWN *SELL MATERIALS DOWN SELL

*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.

SEASONALITY: THE MEMORIAL DAY WEEK IS BULLISH BUT JUNE HAS BEEN THE 2ND WORST MONTH OF THE YEAR OVER THE LAST 20 YEARS

See 05/28 Market Recap for more details.

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

Maintain the intermediate-term target around 1008 to 1019 (See 05/21 Market Recap for more details) but since II survey shows too many people are expecting a correction, so if the past II survey pattern repeats again this time, it’s possible that we might see huge rebound, even new high before the real correction kicks in. See 05/28 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: EXPECT MORE BACK AND FORTH AHEAD

1.0.0 S&P 500 SPDRs (SPY 60 min), what we’ve been seeing those days is a typical back and forth pattern in attempt to break though the long term MMA (pink). And that’s why we saw the market up and down alternately day by day.

 

The most recent similar pattern was seen in February – back and forth before break through on the upside.

 

So, this kind of up one day then down one day situation is not necessarily bearish. Actually it means a temporary balance between bulls and bears. Eventually the balance will be broken resolving in either up or down.

The question is up or down? Well, all I can say are:

1. Bulls are trying to break through, at least is more hopeful than not trying.
2. Signals are bull friendly as there’re lots of bottom signals accumulated in the table above.
3. Most likely we’ll see more back and forth for ahead.

Why we’ll see more back and forth ahead? 2 reasons:

I’ve mentioned the big WOW in today’s After Bell Quick Summary, the Nasdaq Intraday Cumulative TICK is way too high. The previous 7 times I mentioned this was in 05/26 Market Recap, 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, the market all had a pullback thereafter.

 

Another unique thing today is a Major Accumulation Day (NYSE Up Volume to NYSE Down Volume Ratio >= 9) happens immediately after a Major Distribution Day (NYSE Down Volume to NYSE Up Volume Ratio >= 9). All the past cases were listed in the chart below. So far with no exception, a down day the next day and the trigger day’s low eventually will be tested even though the market was bottomed in some cases.