07/23/2010 Market Recap: Key Week the Next Week

TREND MOMENTUM COMMENT Long-term 1 of 2 are SELL     Intermediate 2 of 3 are BUY 5 of 5 are NEUTRAL SPY ST Model in BUY mode; Non-Stop in BUY mode Short-term Model is BUY 3 of 5 are NEUTRAL Long on 07/23, hold over weekend because mini target isn’t met, not because the model says safe to hold over weekend. GANN DAY MOON/SOLAR CYCLE CONCLUSION 07/24, 07/27 07/25 / 07/23 07/26, 07/31, 08/02 Next pivot date: 07/26 – 08/03

BULLISH *0.2.1 10Y T-Bill Yield: ROC30 < –9, so bottomed? BEARISH *0.2.3 NYSE McClellan Oscillator: Overbought. *0.2.6 NYSE - Issues Advancing: Overbought.

SPY SETUP ENTRY DATE STOP LOSS INSTRUCTION: Mechanic signals, back test is HERE, signals are HERE. TRADING PLATFORM: SSO/SDS, UPRO/SPXU Non-Stop 07/15 L N/A Be sure to check 8.2.2a to 8.2.2g to understand the risks. ST Model 07/20 L Breakeven

*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: THE LAST TRADING WEEK OF RECENT MONTH WAS GENERALLY BEARISH

The next week is generally bearish for 2 reasons:

6.5.2c Week Seasonality Watch, the last week of each month since August 2009 was generally bearish.

6.5.2b Month Day Seasonality Watch, the last 2 trading days of each month since Sep 2009 were mostly bearish.

 

Also according to Stock Trader’s Almanac, the first nine trading days of August are historically weak.

So to summarize about, the seasonality is not bull friendly in the following 3 weeks.

INTERMEDIATE-TERM: THE 2ND LEG DOWN COULD START AS EARLY AS THE NEXT WEEK

So far I don’t see any solid evidences arguing for the 3 of primary wave 3 huge bull, so I’ll temporarily maintain the forecast for expecting a 2nd leg down at least to test the 07/01 low. See 07/02 Market Recap and 07/16 Market Recap for the details. Starting from the next week until the first several days in August, it’ll be a critical time to test my skill of forecasting a pivot date. Because starting from the next week, there’ll be lots of pivot dates due per all the techniques I’ve learnt, plus the NYMO and T2122 to be mentioned in the short-term session later, so theoretically or textbook-ly, the market would begin the 2nd leg down some time the next week.

1. If indeed one of my pivot dates forecast is correct, the 2nd leg down may last to 08/23.
2. If none of my pivot dates works, the market simply keeps rising, then we may see the March 2010 kind of mad cow again, because the same thing happened in March 2010 when none of my pivot date worked.

The chart below, plus all the important dates listed in the table above, is my main sources for the pivot date forecast.

 

The list below details how I got those pivot dates. You can skip them if not interested. As for what the logic is behind them, is beyond the scope of this report, so please forgive me for not explaining them.

1. 07/26 is Fib 38.2% from 04/26 high to 07/01 low.
2. 07/26 or 07/27 is 8 to 9 trading day cycle due date since 05/13.
3. 07/24 and 07/27 are multiple Gann Day confluences date.
4. 07/25 is Full Moon.
5. 07/23 is Solar Term date.
6. 07/31 is 100% Fib extension from 10/11/2007 all time high to 03/06/2009 bear low.
7. 08/02 is Fib 23.6% from 03/06/2009 bear low to 04/26/2010 bull high.
8. 08/03 is Fib 50% from 04/26 high to 07/01 low.

Combining all the pivot dates above and considering the NYMO and T2122 to be mentioned in the short-term session later, I still prefer 07/27 the Turnaround Tuesday would be the day.

The chart below shows my estimation for the price target. In short, the rebound could end between 1111 to 1121.

 

The list below details how I got those price targets. You can skip them if not interested. As for what the logic is behind them, is beyond the scope of this report, so again please forgive me for not explaining them.

1. 1111 is Fib 61.8% of 07/01 low to 07/13 high projected on 07/20 low.
2. 1111 is Fib 61.8% of 06/08 low to 06/21 high projected on 07/20 low.
3. 1111 is Fib 61.8% of 05/13 high to 07/01 low.
4. 1111 to 1115 may contain MA(200) the next week.
5. 1113 is Fib 50% of 04/26 high to 07/01 low.
6. 1115 is Fib 161.8% of 05/25 low to 06/03 high.
7. 1118 is Fib 100% of 05/06 low to 05/13 high projected on 07/01 low.
8. 1121 is Fib 100% of 05/25 low to 06/03 high projected on 07/20 low.
9. 1121 is Fib 50 of 10/11/2007 all time high to 03/06/2009 bear low.

SHORT-TERM: COULD SEE BIG PULLBACK SOON

For short-term, I expect to see a pullback very soon, probably not small pullback. Except the WOW mentioned in 07/22 Market Recap, the NYMO is way too high now, see chart below, whenever the NYMO was this high, a little bit bigger pullback was on the way.

 

T2122 is my ultimate weapon for watching the overbought/oversold condition. Although it’s yet extreme enough, but sure neither far away, so maybe it’s the time for bulls to take some profits, well, just in case.

 

HIGHLIGHTS OF THE OTHER ETFS IN MY PUBLIC CHART LIST

	TREND	COMMENT – *New update. Click BLUE to see chart if link is not provided.
QQQQ	UP	4.1.1 Nasdaq 100 Index (Weekly): Bearish 1-2-3 formation, target 1565.
IWM	*UP
CHINA	UP
EMERGING	UP	4.1.6 iShares MSCI Emerging Markets (EEM Weekly): Bear Flag?;*EEM:$SPX too high.
EUROPEAN	UP	4.1.7 Vanguard European VIPERs (VGK Weekly): Bearish 1-2-3 formation, target $35.45; Bear Flag?
CANADA	DOWN	4.1.5 iShares CDN S&P/TSX 60 Index Fund (XIU.TO Weekly): Bearish 1-2-3 formation, target $15.30.
BOND	UP	*Testing trend line.
EURO	UP
GOLD	DOWN	4.3.0 Gold Trust Shares (GLD Weekly): Head and Shoulders Bottom, target $129.99.
GDX	DOWN
OIL	UP	4.4.0 United States Oil Fund, LP (USO Weekly): Bear Flag?
ENERGY	UP	4.4.1 Energy Select Sector SPDR (XLE Weekly): Bearish 1-2-3 formation, target $43.14.
FINANCIALS	DOWN
REITS	UP
MATERIALS	UP