08/01/2011 Market Outlook (Last Engulfing Bottom)

SHORT-TERM: REBOUND, IF ANY, IS SELL

For three reasons, I believe, rebound, if any, is sell:

• The Last Engulfing Bottom formed on the SPY daily chart means bearish continuation 65% times. The chart below, highlighted in red, are the recent cases when Last Engulfing Bottom (at at least 5-day low) was formed, clearly we can see all were in the middle of a down swing.

• Non-Stop signalled a sell today, I hope you still remember that in 07/15 Market Outlook, I proved that such a sell signal was correct 25 out of 27 (93%) times. In another word, there’re only 7% chances today’s low was the low. By the way, those who follow Non-Stop, tomorrow should close long and if you’re aggressive trader, may consider open a short.

• As mentioned in 07/29 Market Outlook, SPX down 5 or more days in a row means today’s low will be revisited eventually.

INTERMEDIATE-TERM: IN DOWNTREND, SPX TARGET MARCH LOWS AT 1249

A Double Top could be formed on the SPX daily chart, therefore the target could be the March lows at 1249.

SEASONALITY: BEARISH FIRST 9 TRADING DAYS OF AUGUST

See 07/29 Market Outlook for more details. Also please see 07/29 Market Outlook for day to day August seasonality chart.

ACTIVE BULLISH OUTLOOKS:

• 07/01 Market Outlook: Bullish July.  Also one more evidence in 07/05 Market Outlook. Failed!
• 07/07 Market Outlook: New NYHGH high means SPX higher high ahead. Failed!

ACTIVE BEARISH OUTLOOKS:

• 07/20 Market Outlook: Multiple evidences arguing for more pullbacks ahead. Also 2 more evidences in 07/25 Market Outlook.
• 07/22 Market Outlook: Bearish on AAPL, therefore QQQ as well.
• 08/01 Market Outlook: Rebound, if any, is sell.

SUMMARY OF SIGNALS FOR MY  PUBLIC CHART LIST: 

TREND MOMENTUM COMMENT Long-term 2 of 2 BUY Intermediate 5 of 5 SELL 5 of 5 NEUTRAL Cobra Impulse in SELL mode; Non-Stop in *SELL mode. Short-term DOWN 6 of 6 *NEUTRAL

TREND COMMENT QQQ & Weekly UP 4.1.1 Nasdaq 100 Index (Weekly): SOX lags, be careful. IWM & Weekly DOWN   SSEC & Weekly DOWN   EEM & Weekly UP   XIU & Weekly DOWN   DAX & Weekly DOWN   TLT & Weekly UP   UUP & Weekly DOWN GLD & Weekly UP   USO & Weekly UP   XLE & Weekly UP   XLF & Weekly DOWN IYR & Weekly DOWN 4.4.3 Real Estate iShares (IYR Weekly): XHB lags, be careful. XLB & Weekly DOWN

* = 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.