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SEASONALITY: WEEK AFTER JULY EXPIRATION, DOW DOWN 7 OF LAST 11
See 07/16 Market Recap for more details.
INTERMEDIATE-TERM: THE REBOUND STILL ALIVE BUT THE LONGER TERM CORRECTION ISN’T OVER YET
A Marubozo bar like today, opened sharply lower then closed deeply in green, usually means bullish even for the intermediate-term, so the puzzle which has been puzzling me for several days now was solved: The rebound isn’t over yet.
As why this kind of Marubozo bar is bullish? Well, I’m too tired to create some examples to prove it. The latest SPY ST Model back test summary (since 2002; still working on improving it now) below shows on average a 79% winning rate, should enough support the idea why Marubozo bar like today is bullish. However, the bigger picture, still think the correction isn’t over for too many reasons, see 07/02 Market Recap and 07/16 Market Recap, so just an one day Marubozo isn’t enough to change my view.
SHORT-TERM: COULD SEE SOME WEAKNESS TOMORROW
I’ve mentioned a little about the record high TICK readings in today’s After Bell Quick Summary. Because TICK is exchanger based, different data vendor will have different readings so please don’t argue with me that you don’t see any extreme readings on your chart. The chart below shows all 1,500 or above TICK readings available in StockCharts. As you can see, most likely a red day the next day. The samples are too small, so I also borrowed a table from the sentimentrader. Again, as I said different data vendor will have different readings so the purpose of using that table is just to convince you that chances are good that we may see a red tomorrow, as an extreme high TICK reading usually mean a buy exhaustion.
| Date | TICK | 1 Day Later | 1 Week Later | 2 Weeks Later | 1 Month Later |
| 07/15/10 | 1645 | ||||
| 09/18/02 | 1641 | -3.0% | -3.4% | -4.8% | 1.1% |
| 06/11/10 | 1638 | -0.2% | 2.4% | -1.4% | 0.3% |
| 03/21/07 | 1637 | 0.0% | -1.2% | 0.3% | 3.4% |
| 12/21/01 | 1599 | 0.0% | 0.3% | 1.4% | -1.1% |
| 06/12/07 | 1591 | 1.5% | 2.7% | 0.0% | 3.7% |
| 03/01/07 | 1579 | -1.1% | -0.1% | -0.8% | 1.3% |
| 01/03/06 | 1563 | 0.4% | 1.6% | 0.7% | 0.2% |
| 07/02/03 | 1553 | -0.8% | -0.5% | -1.2% | -1.4% |
| 03/28/07 | 1543 | 0.4% | 1.6% | 2.2% | 5.4% |
| 05/25/10 | 1541 | -0.6% | 2.3% | -1.7% | 0.0% |
| 01/03/01 | 1538 | -1.1% | -2.5% | 0.0% | 0.1% |
| 03/12/07 | 1529 | -2.0% | -0.3% | 2.2% | 2.3% |
| 06/29/06 | 1524 | -0.2% | -0.6% | -2.9% | 0.3% |
| 05/21/10 | 1519 | -1.3% | 0.2% | -3.4% | 0.7% |
| 05/17/10 | 1517 | -1.4% | -5.6% | -5.8% | -2.0% |
| 03/23/10 | 1510 | -0.5% | -0.1% | 0.7% | 2.9% |
| 06/13/07 | 1509 | 0.5% | -0.2% | -0.6% | 2.4% |
| 03/14/07 | 1502 | 0.4% | 3.5% | 2.2% | 4.7% |
| 05/14/04 | 1493 | -1.1% | -0.2% | 2.3% | 3.5% |
| 02/24/09 | 1492 | -1.1% | -9.9% | -6.9% | 5.3% |
| Average | -0.6% | -0.5% | -0.9% | 1.7% | |
| % Positive | 25% | 40% | 45% | 80% | |
The last but not the least, I’d like to remind you 2 things:
Don’t forget bearish seasonality for tomorrow and the day after tomorrow. Is seasonality useless? Well, today, for example, is well known as a turnaround Tuesday, and indeed it was, so you never know whether the seasonality work or not for tomorrow. Guess it’s no harm to know, isn’t it?
6.2.3 VIX:VXV Trading Signals, too low, so again, I don’t think the market can go too far. By the way, why too low means no good? Because VIX is for 1 month volatility while VXV is for 3 month volatility. 1 month to 3 month ratio is low means the 3 month volatility will be higher than that of now which translates into the SPX point is to say that SPX will close lower than now in 3 month. Well, just a rough idea.
HIGHLIGHTS OF THE OTHER ETFS IN MY PUBLIC CHART LIST
