02/23/2011 Market Recap: Pullback could last for 4 weeks on average

TREND MOMENTUM COMMENT Long-term 2 of 2 are BUY   Intermediate 3 of 5 are *SELL 4 of 5 are NEUTRAL SPY ST Model in BUY mode; Non-Stop in *SELL mode. Short-term 4 of 6 are NEUTRAL GANN DAY MOON:SOLAR CYCLE CONCLUSION 02/20 02/18 : 02/19 02/19 Next pivot date: 02/20

BULLISH 09/27 Market Recap: 9 POMO within 20 trading days means 14%+ up in 3 months. 4.1.0 S&P 500 Large Cap Index (Weekly): Cup with Handle, target 1428. 6.2.2b VIX Trading Signal (BB): Watch for potential buy setup. *0.1.0 SPY Short-term Trading Signals: A few short-term long signal triggered. BEARISH 4.0.4 Dow Theory: Averages Must Confirm: BPSPX is way too overbought. 4.0.1 SPX Long-term Trading Signals: Weekly EMA(13) is way too high above weekly EMA(34). 4.1.0 S&P 500 Large Cap Index (Weekly): Price is now too high above MA(200). 02/14 Market Recap: Smart/Dumb Money Confidence spread is too large.

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 *02/23: Close long and sell short, can wait for a few days to avoid whipsaw. ST Model 02/17 L Breakeven Stopped out long position on 02/22 with loss. Short-term N/A N/A Trend is DOWN. I hold partial short position overnight.

My Thoughts *The pullback since 02/22 will last for awhile but the 02/18 high will be visited again.

SHORT-TERM: NOT SURE IF THE FIRST DOWN LEG IS OVER, BUT CHANCES ARE HIGHER THAT THERE’LL BE A 2ND LEG DOWN THEREAFTER

I expect at least 2 leg down for the short-term. Because of today’s follow-through, now I have no question about this anymore. The only thing I’m not sure is whether the 1st leg down has completed? There’re some chances the answer is yes, but because the last SPY 60 min bar looks bearish plus RSI shows no sign of positive divergence yet, so 50 to 50 chances tomorrow we might have a lower low.

Two additional info I’d like your attention today:

0.0.2 Combined Intermediate-term Trading Signals, it’s primary sell, so those who follows Non-Stop model should find chances to close long in the coming days and if you want to be a little aggressive then you can short while closing the long. The model had a very impressive run by holding longs since 09/07. Another thing worth attention is that the CPCE trend line breakout is confirmed today, so chances are good that the market has topped at least for the short-term.

0.1.0 SPY Short-term Trading Signals, according to TradingMarkets, quite a few short-term long setup has been triggered. All claimed to have a winning rate above 80%+, however, I have no idea how TradingMarkets tested them as they’re against using stop loss so not sure how they handle the failed cases. Anyway, info only.

INTERMEDIATE-TERM: PULLBACK SINCE 02/22 WILL LAST FOR 4 WEEKS ON AVERAGE BUT THE 02/18 HIGH WILL BE REVISITED THEREAFTER

The 2.5%+ pullback I’ve been blah blah has finally fulfilled. A little bit late as it lasted 65 trading day, but at least now we have some clue about what’s going on the next. The table below listed all the past up 40+ trading days without 2.5%+ pullback cases. Clearly, we can see:

1. Once the pullback starts, on average it drops 5.5%, but 12 out of 16 (75%) chances, the pullback is less than 5%.
2. Pullback on average could last 25 calendar days. Only 3 out of 16 (19%) chances, the 02/18 high is THE HIGH for a long long time.
3. After the pullback, on average the 02/18 high will be revisited in 45 calendar days. Among them, 11 out of 16 (69%) chances, the rebound to new high is within 3 weeks.

So to summarize above, the pullback may last on average 4 weeks but chances are high after that the 02/18 high will be revisited.

SEASONALITY: BEARISH THE NEXT WEEK

See 02/18 Market Recap for more details.

HIGHLIGHTS OF THE OTHER ETFS IN MY PUBLIC CHART LIST

	SIGNAL	COMMENT
QQQQ	01/28 S	*Testing MA(50).
NDX Weekly	UP
IWM		*Testing MA(50).
IWM Weekly	UP
CHINA
CHINA Weekly	UP	No higher low yet but the rebound is so strong so could be in uptrend now.
EEM
EEM Weekly	DOWN
XIU.TO	02/04 L
XIU.TO Weekly	UP	Too far above MA(200), %B too high.
TLT		Could be a channel breakout, trend may about to change.
TLT Weekly	DOWN
FXE
FXE Weekly	UP
GLD
GLD Weekly	UP
GDX	02/03 L
GDX Weekly	UP
USO		Clear breakout on WTIC chart.
WTIC Weekly	UP
XLE	02/09 S
XLE Weekly	UP	Too far above MA(200).
XLF	10/15 L	*Testing MA(50).
XLF Weekly	UP
IYR		*Testing MA(20).
IYR Weekly	UP
XLB	02/09 S	*Testing MA(50).
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 daily chart.
6. DOWN = Intermediate-term downtrend. Set when I see at least one lower high and lower low on daily chart.