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Monday, October 4, 2010

10/04/2010 Market Recap: What does QQQQ down 6 consecutive days mean?

  TREND MOMENTUM COMMENT
Long-term 2 of 2 are BUY  
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 SELL 6 of 6 are NEUTRAL The trend is down but I hold no short overnight.
GANN DAY MOON:SOLAR CYCLE CONCLUSION
10/10-10/11 10/07 : 10/08 09/28 Next pivot date: 09/28 – 10/05, 10/11
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.
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.
BEARISH 1.0.6 SPY Unfilled Gaps: 18 unfilled gaps, the max was 18.
09/23 Market Recap: AAII is way too bullish.
09/23 Market Recap: SPX 3 down days in a row means 79% chances to close below 09/23 close in 10 days.
6.1.9a Extreme ISEE Index Readings Watch: ISEE Indices & ETFs Only Index > 100, pullback?
6.5.2b Month Day Seasonality Watch and 6.5.2c Week Seasonality Watch: Bearish this week.
6.4.3a SPY Bearish Reversal Day Watch: Bearish at least short-term?
09/27 Market Recap: AAPL is now too stretched.
10/01 Market Recap: AAII bull ratio (4-week average) too bullish.
10/01 Market Recap: Commercial (smart money) short Nasdaq 100 heavily according to COT Report.
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 1.9*ATR(10)

SHORT-TERM: DIRECTION NOT CLEAR, COULD BE A BEAR FLAG IN THE FORMING THOUGH

The drop today may mean nothing as the price is still within the consolidation area I’ve been blah blah those days, so the short-term direction still is not clear. I won’t be surprised if the market is up huge tomorrow because during a trend transition period a reversal of reversal of reversal (add another hundred of reversal of reversal here if you like) is very common. So before the market could keep going on one direction at least for a few days, all I can say are that market is in a topping process and right now bear is attacking because a Bear Flag could be in the forming which means the price more likely will continue on the downside.

SPY60min 

I bet most of you haven’t noticed that QQQQ has been down 6 days in a row now. This definitely is not a good sign as in a strong uptrend you don’t even see QQQQ down more than one day. The chart below (highlighted in red) should illustrate what I mean – down 6 days in a row usually happened  in the middle of an intermediate-term down slope.

QQQQDown6ConsecutiveDays 

QQQQ down 6 days in a row, buy at today’s close, sell 1, 2, 3, 4, 9, 10 days later since 1990, from the back test summary below, you can see that down 6 days in a row didn’t guarantee an up day tomorrow or the day after tomorrow, neither did it guarantee a bright future in 2 or 4 weeks and the drawdown during the 4 weeks period could go as high as 13%.

QQQQDown6ConsecutiveDaysBackTestSummary 

INTERMEDIATE-TERM: SEEMS 11%+ RISE GUARANTEED BEFORE YEAR END, I’M SKEPTICAL HOWEVER

See 10/01 Market Recap for details.

SEASONALITY: OCTOBER IS BULLISH

See 10/01 Market Recap for October Seasonality chart.


HIGHLIGHTS OF THE OTHER ETFS IN MY PUBLIC CHART LIST
TREND COMMENT
QQQQ *DOWN 4.1.1 Nasdaq 100 Index (Weekly): NDX to SPX ratio too high.
IWM *LA
CHINA  
EMERGING UP 4.1.6 iShares MSCI Emerging Markets (EEM Weekly): EEM to SPX ratio too high.
CANADA *LA
BOND LA
EURO UP
GOLD UP
GDX *DOWN 4.3.1 Market Vectors Gold Miners (GDX Weekly): GDX to SPX ratio too high.
OIL UP *Bearish reversal bar, pullback?
ENERGY *LA
FINANCIALS *LA 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.
MATERIALS *DOWN
  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. 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 specific buy/sell signals will be given in this report except the mechanical signals such as SPY ST Model.
  3. * = New update.
  4. Blue Text = Link to a chart in my public chart list.
  5. LA = Lateral Trend.
Posted by Cobra at 8:40 PM
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