01/10/2011 Market Recap: Two More Bad Signs

TREND MOMENTUM COMMENT Long-term 2 of 2 are BUY   Intermediate 5 of 5 are BUY 4 of 5 are NEUTRAL SPY ST Model in BUY mode; Non-Stop in BUY mode. Short-term 6 of 6 are NEUTRAL GANN DAY MOON:SOLAR CYCLE CONCLUSION 01/05-01/07 01/04 : 01/06 Next pivot date: 01/07

BULLISH 09/27 Market Recap: 9 POMO within 20 trading days means 14%+ up in 3 months. BEARISH 1.0.6 SPY Unfilled Gaps: 24 unfilled gaps, the max is 24. 12/20 Market Recap: Smart/Dumb money confidence spread too high. 0.2.1 10Y T-Bill Yield: ROC(30) >= 9, topped? (Due to Quantitative Easing, I’m not sure if it still works) 1.2.0 INDU Leads Market: INDU had a lower low, so SPX might follow eventually? 8.2.7b Record High ISEE Equities Only Index Readings 2010: Record high, top is close? 0.2.3 NYSE McClellan Oscillator: Hindenburg Omen confirmed. 0.1.1 SPX Intermediate-term Trading Signals: CPC MA(10) too high, so topped? 6.2.3 VIX:VXV Trading Signals: Too low, so topped? 12/31 Market Recap: Lowest ATR(10) readings in 13 years, so topped? 0.2.2 Extreme Put Call Ratio Watch: Both CPC and CPCE are low, so topped? 6.5.1b SPX and NFP: Red NFP day means the trend will turn (down). 8.2.9c QQQQ – 2002 to 8.2.9k QQQQ – 2010: Poor QQQQ performance until the end of January. 01/07 Market Recap: Seasonality wise the rest of January isn’t good. 01/07 Market Recap: Strong Off-Season means poor Earning Season. 01/07 Market Recap: SPX weekly price volume negative divergence means negative ahead. *01/10 Market Recap: SPX down 3 days in a row was a bad sign. *01/10 Market Recap: INDU down Friday and the following Monday was a bad sign.

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 Buy mode doesn’t mean long, a 2nd buy signal is needed to enter long. Short-term N/A N/A Trend is UP.  I hold long position over night.

My Thoughts A correction is just a matter of time, but until price confirms, I’d rather long than short, with caution though.

SHORT-TERM: INDU DOWN FRIDAY AND FOLLOWING MONDAY WAS A BAD SIGN, SPX 3 CONSECUTIVE DOWN DAYS WAS A BAD SIGN

As mentioned in today’s After Bell Quick Summary, SPX still stuck in a trading range so the short-term direction is unclear. However, there’re two more bad signs I’d like your attention. One is not about short-term but I’ll just put them in this short-term session.

INDU was down last Friday and today (following Monday), according to Stock Trader’s Almanac:

For over 30 years, a down Friday followed by down Monday has frequently corresponded with important market inflection points that exhibit a clearly negative bias, often coinciding with market tops and, on a few climactic occasions, such as in October 2002 and March 2009, near major market bottoms.

SPX has been down 3 days in a row which should never ever happen in a strong uptrend. The chart below highlighted all the first occurrence when SPX had 3 consecutive down days since the March 2009, you can see a clear negative bias ahead.

INTERMEDIATE-TERM: COULD BE WAVE 5 UP TO SPX 1300+, PIVOT TOP COULD BE AROUND 01/05 TO 01/12

See 01/07 Market Recap for more details.

SEASONALITY: NO UPDATE

See 12/31 Market Recap for the January seasonality chart.

HIGHLIGHTS OF THE OTHER ETFS IN MY PUBLIC CHART LIST

	SIGNAL	COMMENT
QQQQ	*01/10 L
NDX Weekly	UP
IWM
IWM Weekly	UP
CHINA
CHINA Weekly	UP	Should have set the trend to down from up but I’ll see how the market rebounds.
EEM		*Testing trend line.
EEM Weekly	UP
XIU.TO	01/06 S
XIU.TO Weekly	UP	Weekly Bearish Engulfing, be careful.
TLT		Breakout, so TLT could be bottomed. Need watch the trend line resistance though.
TLT Weekly	UP
FXE		Clear breakdown, the downtrend resumes.
FXE Weekly	DOWN
GLD		Could be an Ascending Triangle in the forming.
GLD Weekly	UP
GDX	12/17 S	1-2-3 trend change confirmed, so GDX could be topped. Be careful about gold itself.
GDX Weekly	UP
USO
WTIC Weekly	UP
XLE	06/15 L	*testing trend line.
XLE Weekly	UP
XLF	10/15 L
XLF Weekly	UP	Testing resistance which also is multiple Fib confluences area.
IYR
IYR Weekly	UP	Home builders are lagging.
XLB	01/06 S
XLB Weekly	UP	BPMATE is way too overbought.

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 trading signals will be given in this report except the mechanical signals such as SPY ST Model.
3. * = New update; Blue Text = Link to a chart in my public chart list.
4. Trading signals in OTHER ETFs table are mechanical signals. See HERE for back test results. 08/31 L, for example, means Long on 08/31.
5. UP = Intermediate-term uptrend. Set when I see at least one higher high and higher low on weekly chart.
6. DOWN = Intermediate-term downtrend. Set when I see at least one lower high and lower low on weekly chart.