10/18/2010 Market Recap: No Title

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 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? BEARISH 1.0.6 SPY Unfilled Gaps: 19 unfilled gaps, the max was 20. 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. 10/15 Market Recap: Institutions are selling into strength. 6.2.3 VIX:VXV Trading Signals: Record low. 0.2.2 Extreme Put Call Ratio Watch: CPCI too high, topped? 6.2.2a VIX Trading Signals (BB): Short setup triggered on 10/13. *10/13 Market Recap: % SPX stocks 1 std dev above MA(50) is too high. 6.1.9a Extreme ISEE Index Readings Watch: SPX will close below 1176 within 2 days? 10/15 Market Recap: ISEE Index is way too high. 10/15 Market Recap: AAPL is way too stretched, it may rise after ER but would fall later. 10/15 Market Recap: Euro may retreat which may cause US$ carry trade unwind.

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 *10/05 Low *Adjust stop loss.

SHORT-TERM: HOW AAPL ER AFFECTS THE TREND WILL HAVE TO SEE TOMORROW

The market retreated after the AAPL ER in AH, whether it affects the short-term trend, will have to see tomorrow. Basically, there’s no intraday lower low yet, so although bears may have some hopes but no optimistic yet. The only good news for bear is if regard today’s intraday high as the retest of the previous high, since bulls had tried twice and failed so now the market could try the opposite direction especially if bears could make a lower low tomorrow.

 

Percent of SPX stocks 1 std dev above MA(50) still is too high, see highlighted in red, choppy ahead at least.

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 10/15 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, VIX:VXV is too low and 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.

SEASONALITY: NO UPDATE

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

HIGHLIGHTS OF THE OTHER ETFS IN MY PUBLIC CHART LIST

1. The market appears a little stretched as lots of ETFs weekly %B are way too high.
2. With possible Euro pullback next week, watch potential weakness on commodity related ETFs like XLE, XLB and XIU.TO.

	TREND	COMMENT
QQQQ	UP
NDX Weekly		NDX to SPX ratio too high. %B too high. Neither had any edges though.
IWM	*UP	Bearish Engulfing?
IWM Weekly		%B too high.
CHINA		Head and Shoulders Bottom breakout, target 3083. *Rejected by downtrend line, watch…
CHINA Weekly		Extremely high %B.
EEM	UP
EEM Weekly		EEM to SPX ratio too high, %B too high. Neither had any edges though.
XIU.TO	*UP	TOADV MA(10) too high. Combining with weekly chart, pullback?
XIU.TO Weekly		Fib 61.8% plus %B too high with negative divergence.
TLT	DOWN	1-2-3 trend change? So TLT could be in an intermediate-term downtrend. Be careful.
TLT Weekly
FXE	LA	Bearish Engulfing, pullback? Combining with weekly chart, watch for possible trend reversal.
FXE Weekly		Stalled at Fib confluences area, %B too high with negative divergence, too high above MA(40).
GLD	UP
GLD Weekly		%B too high.
GDX	DOWN
GDX Weekly		GDX to SPX ratio too high, %B too high with negative divergence.
USO	*UP	Could be a Bull Flag in the forming.
WTIC Weekly
XLE	UP	Hollow red bar plus filled black bar. Combining with weekly chart, pullback?
XLE Weekly		%B too high with negative divergence.
XLF	*UP
XLF Weekly		Head and Shoulders Top in the forming?
IYR	*DOWN
IYR Weekly		Home builders are lagging.
XLB	UP	Black bar, pullback?
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 offer 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; UP/DOWN = Short-term trend; L A = Lateral Trend