09/20/2010 Market Recap: Head and Shoulders Bottom Breakout?

TREND MOMENTUM COMMENT Long-term 2 of 2 are SELL   Intermediate 3 of 3 are BUY 4 of 5 are NEUTRAL SPY ST Model in BUY mode; Non-Stop in BUY mode. Short-term Model is BUY 5 of 6 are NEUTRAL The trend is up, I hold partial long position over night. GANN DAY MOON/SOLAR CYCLE CONCLUSION 9/23 09/23 / 09/23 Week of 09/24 Next pivot date: 09/21 – 09/23

BULLISH 09/17 Market Recap: Down 3 weeks then up 3 weeks, the 8th and 9th week is statistically bullish. *0.1.1 SPX Intermediate-term Trading Signals: Head and Shoulders Bottom breakout, target 1242. BEARISH *1.0.6 SPY Unfilled Gaps: 18 unfilled gaps, the max was 18. AAII is way too bullish.

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 09/20 L 1.9*ATR(10) *Long on any pullback tomorrow, the stop loss will be 1.9*ATR(10).

*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: MINI PRICE TARGET SPX 1158, TIME TARGET 09/21

No argue, the market chose to breakout on the upside, therefore if we’re still on earth then since a forward accelerating car must slow down before it can be reversed so we should see more up days ahead, until a small bar consolidation area (means slow down) is formed before a top of some kind could be seriously considered. The chart below shows the mini price and time target in the most bearish view. I don’t mean that the market will follow this bearish view, I mean if the market sill has some upside room even in the most bearish view, then bulls should be pretty safe before the price and time target are met. As the 09/21 in the chart fits well with the 09/21 to 09/23 time window I mentioned in 09/17 Market Recap, so if the trend really is about to be changed, then most likely it should be in 09/21 to 09/23 time window instead of 10/05. Again, this is the most bearish view, assuming 09/21 to 09/23 is THE TOP. If you believe that the intermediate-term should be 2 to 3 leg up, then 09/21 to 09/23 time window is nothing, although market may still pullback around this time window but that could be an overbought pullback happens to be within this time window.

 

The last but not the least, still suggest not getting too bullish in the short-term, as although the market up huge today but all the negative divergences in chart 1.0.0 S&P 500 SPDRs (SPY 60 min) are not fixed. The chart still looks bearish to me.

 

INTERMEDIATE-TERM: STATISTICALLY BULLISH FOR THE NEXT 2 WEEKS

We could see 2 to 3 legs up while now is the very first leg up. See 09/17 Market Recap for more details.

SEASONALITY: WEEK AFTER SEPTEMBER TRIPLE WITCHING DOW DOWN 6 OF LAST 7

According to Stock Trader’s Almanac, week after September Triple Witching, Dow down 6 of last 7. Five in a row 2002 – 2006 with heavy losses 2002 – 2005. Also see September’s Triple Witching for more statistics.

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
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 plus lots of reversal like bars, pullback?
BOND	LA
EURO	LA
GOLD	UP	*Bearish reversal bar plus black bar, pullback?
GDX	LA	4.3.1 Market Vectors Gold Miners (GDX Weekly): GDX to SPX ratio too high and Bearish Engulfing.
OIL	*LA
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.