07/06/2010 Market Recap: Weak Rebound

TREND INDICATOR MOMENTUM INDICATOR COMMENT (Click link to see chart) Long-term 1 of 2 are BUY     Intermediate 3 of 3 are SELL 3 of 5 are NEUTRAL Non-Stop Model is in SELL mode Short-term 1 of 1 are SELL 5 of 5 are NEUTRAL SPY ST Model is in SELL mode GANN DAY MOON/SOLAR CYCLE & TIME FIB CONCLUSION 07/07-07/11 07/11 / 07/07 07/31, 08/20-08/23 Next pivot date: 07/07-07/11

BULLISH 6.3.2c Major Distribution Day Watch: MDD > 35, bottomed? 0.1.1 SPX Intermediate-term Trading Signals: NYADV MA(10) oversold. 4.0.4 Dow Theory: Averages Must Confirm: NYA50R oversold. BEARISH 4.1.0 S&P 500 Large Cap Index (Weekly): Head and Shoulders Top plus Bearish Engulfing, target 861.

SPY SETUP ENTRY DATE STOP LOSS INSTRUCTION: Mechanic signals, back test is HERE, signals are HERE. TRADING PLATFORM: SSO/SDS, UPRO/SPXU ST Model 07/01 S 1.9xATR(10) May not be a good timing, so be careful. Reversal Bar     NYMO Sell     Non-Stop(RSP) 06/30 S N/A Be sure to check 8.2.2a to 8.2.2g to understand the risks.

*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: JULY IS THE BEST PERFORMING DOW AND S&P MONTH OF THE 3RD QUARTER

See 07/02 Market Recap for more details.

INTERMEDIATE-TERM: REBOUND (IF ANY) THEN MOST LIKELY THERE’LL BE A 2ND LEG DOWN

See 07/02 Market Recap for more details.

SHORT-TERM: MOST LIKELY THE JULY 1ST LOW WILL BE REVISITED

Nothing to say today. Please take a look at today’s After Bell Quick Summary. Neither bulls nor bears have much edge for tomorrow when SPX down 5 days the rebound for 1 day. So I have no idea about whether the rebound was over or not. However, chances are pretty good that the 07/01 low will be revisited eventually.

Posted below are all the cases since year 2000 when SPX was down 5 days in a row then rebound for 1 day. Two things I’ve noticed:

1. The low before the rebound is not THE LOW. Soon or later it’ll be revisited. This fits well with my forecast for expecting a 2nd leg down.
2. The rebound today is the 3rd weakest (SPX up 0.54%). This feels bad as seldom did an important bottom start with a rebound this weak. The 1st and 2nd places were on 05/14/2001 and 02/25/2004 (see blue cycles). Both happened on an uptrend, although the SPX was down 5 days in a row but the pullback size was very small, so actually neither cases could apply to what happens now.

   

HIGHLIGHTS OF THE OTHER ETFS IN MY PUBLIC CHART LIST
*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.

	TREND	*DTFMS	COMMENT – *New update. Click BLUE to see chart if link is not provided.
QQQQ	DOWN		NAADV MA(10) oversold. 4.1.1 Nasdaq 100 Index (Weekly): Bearish 1-2-3 formation, target 1565.
IWM	DOWN		Ascending Broadening Wedge, target $54.97.
CHINA	DOWN
EMERGING	UP
EUROPEAN	UP		4.1.7 Vanguard European VIPERs (VGK Weekly): Bearish 1-2-3 formation, target $35.45.
CANADA	DOWN		TOADV MA(10) oversold. 4.1.5 iShares CDN S&P/TSX 60 Index Fund (XIU.TO Weekly): Bearish 1-2-3 formation, target $15.30.
BOND	UP
EURO	UP	BUY
GOLD	UP	SELL	4.3.0 Gold Trust Shares (GLD Weekly): Head and Shoulders Bottom, target $129.99. Be careful of the non-confirmation of SLV and GDX.
GDX	UP	SELL	4.3.1 Market Vectors Gold Miners (GDX Weekly): GDX:$SPX is too high.
OIL	DOWN	SELL
ENERGY	DOWN		4.4.1 Energy Select Sector SPDR (XLE Weekly): Bearish 1-2-3 formation, target $43.14.
FINANCIALS	DOWN		4.4.2 Financials Select Sector SPDR (XLF Weekly): Sitting on very important support.
REITS	*DOWN		4.4.3 Real Estate iShares (IYR Weekly): Pay attention to XHB weakness!
MATERIALS	DOWN		4.4.4 Materials Select Sector SPDR (XLB Weekly): Double Top, target $23.27.