09/13/2010 Market Recap: 5 Unfilled Gaps within 8 Trading Days

TREND MOMENTUM COMMENT Long-term 2 of 2 are SELL   Intermediate 3 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 6 of 6 are NEUTRAL The trend is up, I hold partial long overnight. GANN DAY MOON/SOLAR CYCLE CONCLUSION 9/10, 9/21 09/08 / 09/08 9/5, 9/6 Next pivot date: 09/07 – 09/10, 09/21 – 09/23

BULLISH BEARISH 0.2.2 Extreme Put Call Ratio Watch: CPCI too high, topped? 0.2.5 NYSE Total Volume: Volume too low, topped? 6.4.6a QQQQ Black Bar Watch: Black bar, top is close? 6.4.4 SPY Price Volume Negative Divergence Watch: Price volume negative divergence. *1.0.6 SPY Unfilled Gaps: 17 unfilled gaps, the max was 18.

SPY SETUP ENTRY DATE STOP LOSS INSTRUCTION: Mechanic signals, back test is HERE, signals are HERE. TRADING PLATFORM: SSO/SDS, UPRO/SPXU Non-Stop 09/07 L N/A ST Model

*Please make sure you understand how to use the table above. The purpose of this report is to provide info so contradictory signals are always presented.

SHORT-TERM: STILL EXPECT PULLBACK, NOT SURE WHEN AS THE MARKET MAY STILL HAVE A FEW DAYS UP

I still expect a short-term pullback because all the top signals listed in 09/10 Market Recap are still valid. However, unless something terrible happens unexpected otherwise the market most likely may up or at least consolidate for a few days before actually pulling back. The reason is still, a strong up momentum like what the market shown today won’t be reversed all of sudden, a fading process (which could be a series of small up or down consolidation days) is generally needed if we’re still on earth. Trading wise, it’s simple, first of all, short is for aggressive traders only because so far the intermediate-term trend is up. Secondly, if you really really want to short, a general pattern is to wait for the breakdown of the trend line then a failed back test of the bull extremes as shown in chart below. For now, the trend line is still intact so the risk is very high to short now.

 

What worth to blah blah today is that COMPQ formed 5 unfilled gaps within 8 trading days. The similar case happened only during the 2009 Santa Rally, see 12/24/2009 Market Recap, when COMPQ formed 5 consecutive unfilled gaps within 6 trading days. The chart below illustrates what happened thereafter. Well, for your info only, I have no intension to imply that we’re going to repeat exactly the same this time.

 

Another stuff worth blah blah is SPX was up 1.1% while TNX down 1.9% on the same day, which looks very bearish since TNX usually leads. However back test since year 2000 doesn’t show any bearish edges so this shouldn’t be the reason to be bearish.

 

INTERMEDIATE-TERM: BULLISH, BUT HOW BULLIS IS TO BE REASSESSED

See 09/10 Market Recap for more details.

SEASONALITY: SEPTEMBER IS BEARISH, THE TRIPLE WITCHING FRIDAY IS BULLISH

See 09/03 Market Recap for September seasonality.

Also according to Stock Trader’s Almanac, the September Triple Witching, Dow up 5 straight and 6 of last 7.

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): NDX to SPX ratio too high.
IWM	UP
CHINA	UP	Head and Shoulders Bottom in the forming?
EMERGING	UP	4.1.6 iShares MSCI Emerging Markets (EEM Weekly): EEM to SPX ratio too high.
EUROPEAN	UP
CANADA	UP	TOADV MA(10) too high, may pullback further.
BOND	*LA	*3.0.0 20 Year Treasury Bond Fund iShares (TLT Daily): rebound from multiple support. More up?
EURO	LA
GOLD	*LA
GDX	*LA	4.3.1 Market Vectors Gold Miners (GDX Weekly): GDX to SPX ratio too high and Bearish Engulfing.
OIL	UP	*Black bar under MA(50), pullback?
ENERGY	UP
FINANCIALS	UP	4.4.2 Financials Select Sector SPDR (XLF Weekly): Head and Shoulders Top in the forming?
REITS	*UP	4.4.3 Real Estate iShares (IYR Weekly): Home builder is lagging and IYR to SPX ratio too high.
MATERIALS	UP

*LA = Lateral Trend.