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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. Use it as a filter, don’t trade directly.
SEASONALITY: WEEK AFTER JUNE TRIPLE WITCHING WAS BEARISH
See 06/18 Market Recap for more details.
INTERMEDIATE-TERM: OFFICIALLY STILL UP BUT BEARISH BIASED AS MORE TOP SIGNALS PILING UP
Officially the intermediate-term trend is still up because there’re no lower high and lower lower yet on the SPX daily chart, and the 2 main intermediate-term model SPY ST Model and Non-Stop Model in the table above are still in buy mode. However, since there’re already 2 signals arguing for a market top so all I can say are I’m bearish biased toward the intermediate-term trend. If down day again tomorrow (or rise not much) then there could be the 3rd top signal triggered – the weekly Bearish Engulfing which successfully called the April top (see 04/30 Market Recap). So a down day tomorrow will make the possibilities much higher that the market has topped.
0.0.2 Combined Intermediate-term Trading Signals, I mentioned this top signal yesterday, a broken trend line usually means a market top. The trend line held today so the trend line broken should be confirmed.
6.3.2b Major Distribution Day Watch, this is a bad news today. See blue dashed lines (means there was a short-term rebound thereafter) and red dashed lines (means there’s no short-term rebound thereafter), 2 Major Distribution Days within 5 days, most likely mean an intermediate-term downtrend. Of course, since there’re more blue dashed lines so short-term more likely we’ll see a rebound.
SHORT-TERM: EXPECT A REBOUND AS EARLY AS TOMORROW
I expect a short-term rebound for 5 reasons:
6.3.2b Major Distribution Day Watch, I’ve mentioned this in the intermediate-term session above, the chances for a short-term rebound are higher. Plus 6.3.2a Major Distribution Day Watch mentioned in today’s After Bell Quick Summary, there’re 67% chances a green day tomorrow.
In today’s After Bell Quick Summary, I also mentioned if SPX down 4 days in a row then there’re more than 70% chances a green day the next day. The chart below shows all the recent cases when SPX down 4 days in a row. All I can say are that indeed we may see a short-term rebound. But if your luck is not good then buy dip today would be miserable, so I don’t mean to imply that you should buy this dip, just if you happen to have a trapped long position, wait for 2 more days to bet your luck may not be a very bad idea.
0.2.2 Extreme Put Call Ratio Watch, see green dashed lines, CPC/CPCE/CPCI too high at the same time means panic, therefore market could be bottomed.
1.0.0 S&P 500 SPDRs (SPY 60 min), the RSI in this chart is very reliable, especially when there’s a positive divergence.
0.2.1 10Y T-Bill Yield, bullish reversal bar looks promising. Yield usually leads the market.
