Live Update

Sunday, October 31, 2010

10/29/2010 Market Recap: Consolidation was generally not good for bulls

  TREND MOMENTUM COMMENT
Long-term 2 of 2 are BUY  
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 6 of 6 are NEUTRAL The trend is up, I hold both long and short over the weekend.
GANN DAY MOON:SOLAR CYCLE CONCLUSION
10/26, 11/04 11/06 : 11/07 Next pivot date: 10/25 – 10/27, 11/04
BULLISH 0.1.1 SPX Intermediate-term Trading Signals: Head and Shoulders Bottom breakout, target 1242.
09/27 Market Recap: 9 POMO within 20 trading days means 14%+ up in 3 months.
10/01 Market Recap: Positive September plus mid-term election means 11%+ up to year end.
10/05 Market Recap: 16 more trading days upswing?
10/26 Market Recap: Average 2.7% gain during the 8 trading days surrounding midterm election.
10/29 Market Recap: The last 2 months of year are bullish.
BEARISH 1.0.6 SPY Unfilled Gaps: 20 unfilled gaps, the max was 21.
10/15 Market Recap: AAII bull ratio (4-week average) too bullish.
10/15 Market Recap: Commercial (smart money) short Nasdaq 100 heavily according to COT Report.
10/08 Market Recap: Up off-season usually means down earning season.
10/22 Market Recap: Institutions are selling into strength.
10/19 Market Recap: AAPL is way too stretched.
10/15 Market Recap: Euro may retreat which may cause US$ carry trade unwind.
6.4.0 SPX and NYMO Divergence Watch: New high on negative NYMO readings, topped?
4.1.0 S&P 500 Large Cap Index (Weekly): NYSI STO(5,3,3) sell signal.
6.1.9b Extreme ISEE Index Readings Watch: ISEE Indices & ETFs Only Index <= 30, top close?
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 Partial profits on 09/24.
ST Model 09/24 L 10/19 Low
NYMO Sell 10/28 S 2*ATR(10) Reference only, not meant to be followed.

P.S. The weekend report is delayed because I spent lots of time on Mechanical Trading Systems for ETFs. From now on I’ll give those signals in the ETF table at the end of my daily recap. I think this is one step forward for an objective analysis which unlike before that I had to manually judge if the trend was up or down and because of different time frame, the info was rather useless and in case you’ve noticed that I’ve vacillated between different ways of giving specific signals for quite a long time. I sure hope this’d be the last time I vacillate around.

SHORT-TERM: CONSOLIDATION, THE DIRECTION IS NOT CLEAR, BUT I’M BEARISH BIASED

SPX has been fluctuating around 1184 for 2 weeks, most likely after the FOMC the next week, the range will be broken. Although theoretically a breakout from a consolidation range is bilateral but from the chart below, looks to me a consolidation was generally not good for bulls. I hope you still remember in 10/05 Market Recap, I mentioned a 16 trading day up swing after the 10/05 breakout. Well, it’s fulfilled on 10/27 and now we have another 7 bar consolidation…

ConsolidationAgain 

From the weekly chart below, obviously it’s now way too stretched, so bet on a huge up the next week may need some imagination (and I sure hope YES WE CAN could deliver so that I could retire earlier on a yacht of my dream).

SPXWeeklyWLSHWeekly 

Time analysis also argues that the next pivot high could range from 11/04 to 11/08 for 5 reasons:

  1. Multiple Gann Day due from 11/04 to 11/08.
  2. Day 6 of each month since year 2000 was more likely a pivot day.
  3. New Moon on 11/06.
  4. Solar Term date on 11/07.
  5. Non Farm Payroll on 11/05 which according to 6.5.1b SPX and NFP was more likely a pivot day.

TimeAnalysis 

Also according to the chart above, there’s a possibility that the pivot high was already in on 10/25. Personally, I’m not sure about this, because from Euro chart below, it looks more likely there’s one more push up ahead, although judging from the UUP volume surge, the push up might be the final push. The 3rd possibility on the chart above is to up until at least 11/12 and SPX 1215, for this, since it’s after 11/04 so we may have to discuss this later.

UUPDaily 

So to summarize above, the pivot high could be in the next week (or early the next next week). I expect a pullback of some kind. And whether the pullback is for short-term or intermediate-term, we’ll have to wait and see.

INTERMEDIATE-TERM: BEARISH BIASED, PIVOT DATE EITHER ON 10/25 OR AROUND 11/04

Maintain the intermediate-term bearish view. We may have passed the pivot day on 10/25 or the next pivot day could be 11/04. Below are summaries of all the arguments supporting my intermediate-term bearish view:

  1. As mentioned in 10/15 Market Recap, commercial (smart money) holds record high short positions against Nasdaq 100.
  2. As mentioned in 10/15 Market Recap, AAII bull ratio (4-week average) is way too bullish.
  3. As mentioned in 10/22 Market Recap, institution selling keeps increasing.
  4. As mentioned in 10/08 Market Recap, statistically, a strong off-season could mean a weaker earning season.
  5. As mentioned in 10/22 Market Recap, NYSI Weekly STO(5,3,3) sell signal means choppy ahead.

Below are some of the most recent charts mentioned above.

NDXCommercialComboAAIIBullRatio4WeekAverageInstitutionalSellingAction  

 SEASONALITY: LAST 2 MONTHS OF YEAR ARE BULLISH

The chart below is from Bespoke, should be clear enough.

BespokeNovemberSeasonality 

HIGHLIGHTS OF THE OTHER ETFS IN MY PUBLIC CHART LIST

SIGNAL COMMENT
QQQQ 10/15 L
NDX Weekly %B too high with negative divergence. NASI weekly STO(5,3,3) sell signal.
IWM
IWM Weekly
CHINA 07/15 L Primary downtrend line breakout not confirmed.
CHINA Weekly *High %B with negative divergence plus stalled under primary bear trend line. Pullback?
EEM *Could be a Symmetrical Triangle in the forming, so one more push up?
EEM Weekly
XIU.TO 08/31 L
XIU.TO Weekly Testing Fib 61.8%.
TLT 1-2-3 trend change confirmed, the intermediate-term trend is down. ChiOsc is too low though.
TLT Weekly
FXE *Could be a Symmetrical Triangle in the forming, so one more push up?
Pay attention to volume surge on UUP, US$ may very close to a bottom.
FXE Weekly Stalled at Fib confluences area.
GLD *Watch for potential 1-2-3 trend change! Bump and Run Reversal in the forming?
GLD Weekly
GDX 10/29 L *Watch for potential 1-2-3 trend change!
GDX Weekly
USO *Could be a Bull Flag in the forming.
WTIC Weekly
XLE 6/15 L
XLE Weekly %B too high with negative divergence.
XLF 10/15 L
XLF Weekly Head and Shoulders Top in the forming?
IYR *Testing trend line support.
IYR Weekly Home builders are lagging.
XLB 10/20 S
XLB Weekly

  1. 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.
  2. Position reported in short-term session of the table above is for short-term model only, I may or may not hold other positions which will not be disclosed.
  3. Conclusions can be confirmed endlessly, but trading wise, you have to take actions at certain risk level as soon as you feel the confirmation is enough. There’s no way for me to adapt to different risk levels therefore no trading signals will be given in this report except the mechanical signals such as SPY ST Model.
  4. * = New update; Blue Text = Link to a chart in my public chart list
  5. Trading signals in OTHER ETFs table are mechanical signals. See HERE for back test results. 

Mechanical Trading Systems for ETFs

For record only. As you all know that I’ve already had a major mechanical trading system called SPY ST Model for trading SPY/SSO/UPRO/ES. Now I take one step further by incorporating more mechanical trading systems for ETFs reported routinely in my daily market recap.

WhichField

All the signals are for general direction references only although all of them are back tested to make sure the idea at least worked in the past. Charts below are back test summaries. I’ll keep adding more as well as improving the existing ones. Hope you find them a little helpful.

QQQQTradingSignals
GDXTradingSignalsXLFTradingSignalsXLETradingSignals
XLBTradingSignalsTSETradingSignalsSPXTradingSignals

Friday, October 29, 2010

10/29/2010 After Bell Quick Summary

The bottom line, the short-term trend is up, I hold both long and short over the weekend.

Bearish biased toward the next Monday because still both VIX and SPY closed in green which means 10 out of 13 chances a red day the next day. And no, the 1st trading day of November is not bullish as most of you might think at least recent year, as according to Stock Trader’s Almanac, Dow down 4 of the last 4.

1

Enjoy your weekend! Oh, I bought lots of Chocolate for the trick or treat, but unfortunately, I almost finished all of them myself, with a little help from my mom of course. Just heard from TV that 90% adults steal the trick or treat candy from their kids, hmm, feel much better now.

Thursday, October 28, 2010

10/28/2010 Market Recap: NYMO Sell Setup Triggered

  TREND MOMENTUM COMMENT
Long-term 2 of 2 are BUY  
Intermediate 2 of 3 are BUY 3 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 both long and short overnight.
GANN DAY MOON:SOLAR CYCLE CONCLUSION
10/26 10/22 : 10/23 Next pivot date: 10/21 – 10/22, 10/25 – 10/27, 11/04
BULLISH 0.1.1 SPX Intermediate-term Trading Signals: Head and Shoulders Bottom breakout, target 1242.
09/27 Market Recap: 9 POMO within 20 trading days means 14%+ up in 3 months.
10/01 Market Recap: Positive September plus mid-term election means 11%+ up to year end.
10/05 Market Recap: 16 more trading days upswing?
10/26 Market Recap: Average 2.7% gain during the 8 trading days surrounding midterm election.
BEARISH 1.0.6 SPY Unfilled Gaps: 20 unfilled gaps, the max was 21.
10/15 Market Recap: AAII bull ratio (4-week average) too bullish.
10/15 Market Recap: Commercial (smart money) short Nasdaq 100 heavily according to COT Report.
10/08 Market Recap: Up off-season usually means down earning season.
10/22 Market Recap: Institutions are selling into strength.
10/19 Market Recap: AAPL is way too stretched.
10/15 Market Recap: Euro may retreat which may cause US$ carry trade unwind.
6.4.0 SPX and NYMO Divergence Watch: New high on negative NYMO readings, topped?
4.1.0 S&P 500 Large Cap Index (Weekly): NYSI STO(5,3,3) sell signal.
6.1.9b Extreme ISEE Index Readings Watch: ISEE Indices & ETFs Only Index <= 30, top close?
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 Partial profits on 09/24.
ST Model 09/24 L 10/19 Low
NYMO Sell *10/28 S 2*ATR(10) *Short trigged on 10/28. Reference only, not meant to be followed.

SHORT-TERM: NYMO SELL SETUP TRIGGERED WHICH HAD 68% WINNING RATE

As mentioned in yesterday’s report, if bulls cannot decisively breakout 10/25 high while pullback in the middle then bears may have some hopes. So today’s action gave bear a little hope, however a breakdown below 10/27 low is a must, only in this way, a pair of lower high and lower low could then be formed thus implying a possible trend change. So tomorrow or the next week, the show is either on 0/25 high or 10/27 low. Let’s see whichever break first.

TrendChangeWatch 

Overall, I’m not optimistic about bulls. The reason is too many reversal like bars are now on SPY daily chart, although most likely the market may go nowhere until 11/03 FOMC Quantitative Easing II announcement.

SPYShortTerm 

6.4.0 SPX and NYMO Divergence Watch, I’ve mentioned this chart before. When SPX is at or very close to a new high while NYMO is already in red, it could mean a top of some kind. The reason I mention this chart again is because today SPY Open > Close, so officially triggered the NYMO Sell Setup which uses similar principle to catch the top. The setup now has 68% winning rate, not bad, so see table above, from today on, I’ll follow up this setup to see how it performs this time.

SPXNYMONegativeDivergenceWatchNYMOSellSetupVisualBackTest 

INTERMEDIATE-TERM: BEARISH BIASED, PIVOT DATE EITHER AROUND 10/22 OR 10/26 OR 11/04

Maintain the intermediate-term bearish view, the pivot date could be either around 10/22 or 10/26 or 11/04, see 10/15 Market Recap for more details. Below are summaries of all the arguments supporting my intermediate-term bearish view:

  1. As mentioned in 10/15 Market Recap, commercial (smart money) holds record high short positions against Nasdaq 100.
  2. As mentioned in 10/15 Market Recap, AAII bull ratio (4-week average) is way too bullish.
  3. As mentioned in 10/22 Market Recap, institution selling keeps increasing.
  4. As mentioned in 10/08 Market Recap, statistically, a strong off-season could mean a weaker earning season.
  5. As mentioned in 10/11 Market Recap, statistically VIX at 1 month low going into October was not a good sign.
  6. As mentioned in 10/15 Market Recap, US$ may rebound which is not good for the broad market.
  7. As mentioned in 10/19 Market Recap, AAPL MACD is now too stretched which could mean a top for QQQQ.
  8. As mentioned in 10/22 Market Recap, NYSI Weekly STO(5,3,3) sell signal means choppy ahead.

SEASONALITY: LAST TRADING WEEK AND LAST 2 TRADING DAYS OF EACH MONTH SINCE AUG 2009 WERE BEARISH

See 10/22 Market Recap for more details.

For October Seasonality chart please refer to 10/01 Market Recap.


HIGHLIGHTS OF THE OTHER ETFS IN MY PUBLIC CHART LIST
COMMENT
QQQQ
NDX Weekly NDX to SPX ratio too high. %B too high with negative divergence.
IWM
IWM Weekly %B too high with negative divergence.
CHINA *Primary downtrend line breakout not confirmed.
CHINA Weekly Extremely high %B.
EEM
EEM Weekly EEM to SPX ratio too high.
XIU.TO
XIU.TO Weekly
TLT 1-2-3 trend change confirmed, TLT could be in an intermediate-term downtrend. ChiOsc is too low though.
TLT Weekly
FXE
FXE Weekly Stalled at Fib confluences area, %B too high with negative divergence, too high above MA(40).
GLD
GLD Weekly
GDX *BPGDM buy signal.
GDX Weekly
USO *Could be a Bull Flag in the forming.
WTIC Weekly
XLE
XLE Weekly %B too high with negative divergence.
XLF
XLF Weekly Head and Shoulders Top in the forming?
IYR *Testing trend line support.
IYR Weekly Home builders are lagging.
XLB
XLB Weekly %B too high with negative divergence.
  1. 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.
  2. Position reported in short-term session of the table above is for short-term model only, I may or may not hold other positions which will not be disclosed.
  3. Conclusions can be confirmed endlessly, but trading wise, you have to take actions at certain risk level as soon as you feel the confirmation is enough. There’s no way for me to adapt to different risk levels therefore no trading signals will be given in this report except the mechanical signals such as SPY ST Model.
  4. * = New update; Blue Text = Link to a chart in my public chart list

10/28/2010 After Bell Quick Summary

The bottom line, the short-term trend is up, I hold both long and short overnight.

Bearish biased toward tomorrow because once again both VIX and SPY closed in green which means 10 out of 12 times recently a red day the next day.

1

Also if the following seasonality charts work again, then tomorrow should be a red day because only a red tomorrow can fulfill those seasonality charts.

23

On the bull side, tomorrow is the so called Bullish Friday as bulls have had 9 straight up Fridays ever since the current rally started.

4

Wednesday, October 27, 2010

10/27/2010 Market Recap: More Rebound?

  TREND MOMENTUM COMMENT
Long-term 2 of 2 are BUY  
Intermediate 3 of 3 are BUY 3 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 trapped short overnight.
GANN DAY MOON:SOLAR CYCLE CONCLUSION
10/26 10/22 : 10/23 Next pivot date: 10/21 – 10/22, 10/25 – 10/27, 11/04
BULLISH 0.1.1 SPX Intermediate-term Trading Signals: Head and Shoulders Bottom breakout, target 1242.
09/27 Market Recap: 9 POMO within 20 trading days means 14%+ up in 3 months.
10/01 Market Recap: Positive September plus mid-term election means 11%+ up to year end.
10/05 Market Recap: 16 more trading days upswing?
10/26 Market Recap: Average 2.7% gain during the 8 trading days surrounding midterm election.
BEARISH 1.0.6 SPY Unfilled Gaps: 20 unfilled gaps, the max was 21.
10/15 Market Recap: AAII bull ratio (4-week average) too bullish.
10/15 Market Recap: Commercial (smart money) short Nasdaq 100 heavily according to COT Report.
10/08 Market Recap: Up off-season usually means down earning season.
10/22 Market Recap: Institutions are selling into strength.
10/19 Market Recap: AAPL is way too stretched.
10/15 Market Recap: Euro may retreat which may cause US$ carry trade unwind.
6.4.2c Extreme TICK Readings Watch: TICK too low, lower low or lower close ahead? Failed!
0.0.2 Combined Intermediate-term Trading Signals: CPCE trend line breakout, topped? No confirmed!
6.4.0 SPX and NYMO Divergence Watch: New high on negative NYMO readings, topped?
4.1.0 S&P 500 Large Cap Index (Weekly): NYSI STO(5,3,3) sell signal.
*6.1.9b Extreme ISEE Index Readings Watch: ISEE Indices & ETFs Only Index <= 30, top close?
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 Partial profits on 09/24.
ST Model 09/24 L 10/19 Low

SHORT-TERM: COULD SEE MORE REBOUND STARTING AS EARLY AS TOMORROW

We could see more rebound starting from as early as tomorrow, the reason is the VIX black bar looks toppy, so VIX could pullback, which means more rebound on the stock market. If the rebound could close above or the high decisively high above SPX 10/25 high then bears still have no hope, otherwise, if the rebound failed in the middle, especially breakdown below today’s low then bears may finally see some lights on the other side of the tunnel. So, let’s see how the market rebound first.

VIXDaily 

Overall, still think the market won’t go much on the upside. There’re lots of reasons mentioned in the intermediate-term session below, and today we have yet another bad sign – ISEE Indices & ETFs Only Index <= 30, see chart below, looks toppy whenever this happened.

ISEEWatch 

I showed the chart below yesterday, however ISE adjusted the ISEE Indices & ETFs Only Index reading from 24 to 40 today, so the bad sign mentioned yesterday is no longer valid. However, today’s ISEE Indices & ETFs Only Index is very low, so the ISEE Equities Only Index to ISEE Indices & ETFs Only Index ratio spikes again, see highlighted in red, still looks toppy. The chart below is basically the same thing as the chart above about ISEE Indices & ETFs Only Index <= 30. The reason I mention it here is to follow up what I said yesterday.

ISEEIndicesOnlyIndexToISEEEquitiesOnlyIndexRatio 

NTERMEDIATE-TERM: BEARISH BIASED, PIVOT DATE EITHER AROUND 10/22 OR 10/26 OR 11/04

Maintain the intermediate-term bearish view, the pivot date could be either around 10/22 or 10/26 or 11/04, see 10/15 Market Recap for more details. Below are summaries of all the arguments supporting my intermediate-term bearish view:

  1. As mentioned in 10/15 Market Recap, commercial (smart money) holds record high short positions against Nasdaq 100.
  2. As mentioned in 10/15 Market Recap, AAII bull ratio (4-week average) is way too bullish.
  3. As mentioned in 10/22 Market Recap, institution selling keeps increasing.
  4. As mentioned in 10/08 Market Recap, statistically, a strong off-season could mean a weaker earning season.
  5. As mentioned in 10/11 Market Recap, statistically VIX at 1 month low going into October was not a good sign.
  6. As mentioned in 10/15 Market Recap, US$ may rebound which is not good for the broad market.
  7. As mentioned in 10/19 Market Recap, AAPL MACD is now too stretched which could mean a top for QQQQ.
  8. As mentioned in 10/22 Market Recap, NYSI Weekly STO(5,3,3) sell signal means choppy ahead.

SEASONALITY: LAST TRADING WEEK AND LAST 2 TRADING DAYS OF EACH MONTH SINCE AUG 2009 WERE BEARISH

See 10/22 Market Recap for more details.

For October Seasonality chart please refer to 10/01 Market Recap.


HIGHLIGHTS OF THE OTHER ETFS IN MY PUBLIC CHART LIST
COMMENT
QQQQ
NDX Weekly NDX to SPX ratio too high. %B too high with negative divergence.
IWM
IWM Weekly %B too high with negative divergence.
CHINA Primary downtrend line breakout? To be confirmed.
CHINA Weekly Extremely high %B.
EEM
EEM Weekly EEM to SPX ratio too high.
XIU.TO
XIU.TO Weekly
TLT *1-2-3 trend change confirmed, TLT could be in an intermediate-term downtrend. ChiOsc is too low though.
TLT Weekly
FXE *On support.
FXE Weekly Stalled at Fib confluences area, %B too high with negative divergence, too high above MA(40).
GLD *On support.
GLD Weekly
GDX On support, BPGDM sell signal though.
GDX Weekly
USO
WTIC Weekly
XLE
XLE Weekly %B too high with negative divergence.
XLF
XLF Weekly Head and Shoulders Top in the forming?
IYR *On support.
IYR Weekly Home builders are lagging.
XLB
XLB Weekly %B too high with negative divergence.
  1. 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.
  2. Position reported in short-term session of the table above is for short-term model only, I may or may not hold other positions which will not be disclosed.
  3. Conclusions can be confirmed endlessly, but trading wise, you have to take actions at certain risk level as soon as you feel the confirmation is enough. There’s no way for me to adapt to different risk levels therefore no trading signals will be given in this report except the mechanical signals such as SPY ST Model.
  4. * = New update; Blue Text = Link to a chart in my public chart list

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