SHORT-TERM: DIRECTION UNCLEAR BUT I’M NOT OPTIMISTIC ABOUT THE MARKET
- Short-term direction is not clear, tomorrow could be the “to be or not to be” day. From the statistics mentioned in today’s After Bell Quick Summary and the Shooting Star formed on the SPY 60 min chart, I’m now more inclined to believe “not to be”.
- VIX still looks pretty much at a bottom so a rebound, if any, I still doubt how far it could go.
- Trading wise, my first priority is to sell bounce. For Cobra Impulse System, tomorrow also is the day of “to be or not to be”.
The chart below should be clear about why I’m clueless about tomorrow, either Double Bottom or Measured Move, we have to wait and see. However, the Shooting Star stalled under EMA(20) does not look good, so my guess is we might see some weakness at least in the morning.
0.2.0 Volatility Index (Daily), this is my biggest concern, not only the VIX:VXV is still too low (as I’ve been blah blah), there’re simply too many reversal like bars on the VIX chart, so chances are high that the VIX may reverse up from here which usually means bad for the stock market.
As for trading tomorrow, first of all, Non-Stop sell signal could have been triggered. I think we’d better wait for tomorrow to avoid the whipsaw. The winning rate of the model is only 50%, it relies heavily on a few winning trades that win really big to earn money in the long run, which is very typical of a trend following system. I’ve mentioned several times in the past about how to take partial profit in the middle to prevent gains to turn into losses. Please refer from chart 8.2.2a Combined Intermediate-term Trading Signals – 2004 to 8.2.2g Combined Intermediate-term Trading Signals – 2010 for how to use the trend line to help determining the exit point. If you know the trend line trick, then the recent 2 trades shouldn’t be the losing trades. Anyway, even both were lost, it doesn’t matter as I stated above, the model relies on only a few longer and more stable trend to earn money in the long run, and in those cases, the trend line trick for sure would make a premature exit, so basically it may not be a good strategy.
About Cobra Impulse System long setup I mentioned yesterday, if you followed my 15 min Open Range rule, then you might not take a long position today. The long setup is still valid for tomorrow, but there’s also a potential short setup for tomorrow. So:
- If green day tomorrow and break above today’s high then it’s a long. While if red day tomorrow and breakdown below today’s low, then it’s a short.
- If gap up open above today’s high tomorrow, please use 15 min Open Range breakout as the confirmation. While if gap down open below today’s low tomorrow, please use 15 min Open Range breakdown as the confirmation.
- If we have both higher high and lower low tomorrow, then how the day closes will determine which position to take. Green day, it’s a long while red day, it’s a short. Feel confused and complicated? Well, it’s a rare coincidence when both long and short are possible at the same time. So don’t be.
- If the short setup is confirmed tomorrow, then Cobra Impulse System will be officially in sell mode which also officially to me the intermediate-term trend is down.
INTERMEDIATE-TERM: BULLISH APRIL, SPX TARGET 1352 TO 1381, BEWARE 04/11 TO 04/14 PIVOT DATE
See 04/01 Market Recap for more details.
SEASONALITY: APRIL HAS BEEN HISTORICALLY THE MOST BULLISH MONTH OF THE YEAR
- Monday before expiration, Dow up 14 of last 21, down 4 of last 6.
- April expiration day, Dow up 11 of last 14.
- Income tax deadline, generally bullish, Dow down only 5 times since 1981.
|QQQ & Weekly||UP|
|IWM & Weekly||UP|
|SSEC & Weekly||UP|
|EEM & Weekly||UP|
|XIU & Weekly||UP|
|TLT & Weekly||DOWN|
|FXE & Weekly||UP|
|GLD & Weekly||UP|
|GDX & Weekly||04/05 L|
|USO & Weekly||UP|
|XLE & Weekly||UP|
|XLF & Weekly||DOWN|
|IYR & Weekly||UP|
|XLB & Weekly||UP|
|DBA & Weekly||UP|
- 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.
- * = New update; Blue Text = Link to a chart in my public chart list.
- UP = Intermediate-term uptrend. Set when weekly buy signal is triggered.
- DOWN = Intermediate-term downtrend. Set when weekly sell signal is triggered.