12/31/2009 After Bell Quick Summary

Well, what a dramatic day it was! Although the last minute sharp drop usually didn’t mean anything, we’ll probably see a rebound Monday, but I think the ES (SPX E-mini futures) 60 min chart below gives a clear overall picture: A Bearish 1-2-3 Formation was confirmed. The target area is around 1103.

As for the firework I talked about yesterday, apparently, it’s a failed setup.

Also, according to my proprietary indicator, it foresees, you, my dear readers, a happy and promising 2010. Happy New Year!

12/30/2009 Market Recap: Bull Flag

Summary:

Could be more push up tomorrow especially QQQQ.

	TREND	MOMENTUM	EMOTION	COMMENT - Sample for using the trend table.
Long-term	Up		Disbelieve
Intermediate	Up	Neutral		II Survey: *Record low number of bears. 3.0.0 TNX: Top in a month?
Short-term	Up	Neutral		0.0.9 CPC/CPCI: Topped? 1.0.2 SPY: 15 unfilled gaps. 12/23 Recap: Too many bearish extremes. 12/29 Recap: Bearish reversal day.
SPY SETUP	ENTRY DATE	INSTRUCTION	STOP LOSS	Mechanic trading signals, details are HERE.  Take profit whenever you see appropriate.
ST Model	12/21 L		Breakeven
Reversal Bar	12/21 L	*Adjust Stop Loss	12/30 Low
NYMO Sell
VIX ENV
Other Signals	12/28 S		2xATR(10)	2% stop for SPY, 4% for SDS, 5% for BGZ.

INTERMEDIATE-TERM: BREAKOUT BUT I'M NOT CONVINCED

Nothing new, breakout but I'm not convinced, see 12/24/2009 Market Recap for more details.

The latest II Survey, record low number of bears still kicking.

 

SHORT-TERM: COULD BE A PULLBACK SOON 

The Santa Rally starting from the Monday so far wasn’t impressive, the SPX rose –0.01% up to date. There’re still 3 days left until Jan 5 for the Santa Rally, let’s see if the market could bring us more pleasant surprise. The bottom line, maintain the view for expecting a bigger pullback soon. 0.0.2 SPY Short-term Trading Signals, so far repeated the same happened after a Black Bar in the past, and so I expect a rebound tomorrow, mostly likely we’ll see a QQQQ new high.

 

1.1.5 PowerShares QQQ Trust (QQQQ 30 min), 1.0.4 S&P 500 SPDRs (SPY 15 min), Pennant or Bull Flag, especially the QQQQ 30 min chart looks very bullish. In addition, according to today’s After Bell Quick Summary, a green day tomorrow is high likely.

 

3.1.0 PowerShares DB US Dollar Index Bullish Fund (UUP Daily), black bar, so the dollar could pullback tomorrow therefore it’s also good for the stock market.

 

INTERESTING CHARTS: NONE

12/30/2009 After Bell Quick Summary

One trick today, when CPC < 0.8, 30 out of 37 times (81%) a green day the next day.

The CPC < 0.8 also triggers a Firework trading setup which had 70% successful rate in the past. Not working good recently, so again pay attention to the past failures (Blue cycles): If small bar again the next trading day or the firework shoots high then falls to the ground on the same day then most likely this is a failed setup.

12/29/2009 Market Recap: Bearish Reversal Day

Summary:

More evidences point to a short-term top coming.

	TREND	MOMENTUM	EMOTION	COMMENT - Sample for using the trend table.
Long-term	Up		Disbelieve
Intermediate	Up	Neutral		II Survey: Historical low number of bears. 3.0.0 TNX: Top in a month?
Short-term	Up	Neutral		0.0.9 CPC/CPCI: Topped? 1.0.2 SPY: 15 unfilled gaps. 12/23 Recap: Too many bearish extremes. 12/29 Recap: *Bearish reversal day.
SPY SETUP	ENTRY DATE	INSTRUCTION	STOP LOSS	Mechanic trading signals, details are HERE.  Take profit whenever you see appropriate.
ST Model	12/21 L		Breakeven
Reversal Bar	12/21 L	*Adjust Stop Loss	12/24 Low
NYMO Sell
VIX ENV
Other Signals	12/28 S		2xATR(10)	2% stop for SPY, 4% for 2xETF.

INTERMEDIATE-TERM: BREAKOUT BUT I'M NOT CONVINCED

Nothing new, breakout but I'm not convinced, see 12/24/2009 Market Recap for more details.

SHORT-TERM: COULD BE A PULLBACK SOON

Nothing new too, still looking forward to a short-term pullback. Two more evidences:

1. SPY Bearish Reversal Day, take a look at what happened thereafter.

 

2. 1.0.9 SPX Cycle Watch (60 min), looks like a cycle top.

 

The most recent Indicators At Extremes from www.sentimentrader.com, number of indicators at bearish extremes are still very high.

The bottom line, no doubt this is an uptrend and the Santa Rally is supposed to end on 1/5/2010, so, sure, bear can bet its luck here, just be cautious, try best not to lose another CLAW AGAIN. LOL

INTERESTING CHARTS: NONE

12/29/2009 After Bell Quick Summary

OK, we got the negative divergence I talked in the last night report, not lengthy enough though, so I’m not sure if there’s another push up tomorrow. The bottom line, I think it’s safe to short here but don’t forget it’s definitely a countertrend trading, so proceed with caution please!

12/28/2009 Market Recap: No Negative Divergence Yet

Summary:

Don't see any short-term negative divergence, so short right here maybe a little premature.

	TREND	MOMENTUM	EMOTION	COMMENT - Sample for using the trend table.
Long-term	Up		Disbelieve
Intermediate	Up	Neutral		II Survey: Historical low number of bears. 3.0.0 TNX: Top in a month?
Short-term	Up	Neutral		0.0.9 CPC/CPCI: Topped? 1.0.2 SPY: 15 unfilled gaps. 12/23 Recap: too many bearish extremes.
SPY SETUP	ENTRY DATE	INSTRUCTION	STOP LOSS	Mechanic trading signals, details are HERE.  Take profit whenever you see appropriate.
ST Model	12/21 L		Breakeven
Reversal Bar	12/21 L		Breakeven
NYMO Sell
VIX ENV
Other Signals	12/28 S	*Short at close.	2xATR(10)	2% stop for SPY, 4% for 2xETF. *Not a perfect short setup, better wait for the 2nd entry.

 

INTERMEDIATE-TERM: BREAKOUT BUT I'M NOT CONVINCED

Nothing new, breakout but I'm not convinced, see 12/24/2009 Market Recap for more details.

SHORT-TERM: COULD BE A PULLBACK SOON

As mentioned in the After Bell Quick Summary, a short setup was triggered because of the SPY black bar. Just that reason may not be good enough. Better wait for a negative divergence formed on chart 1.0.3 S&P 500 SPDRs (SPY 30 min). In another word, to trade against a trend, better take the 2nd entry, in our case is to wait the market pullback then rebound to test the previous high then short the pullback.

 

3.4.1 United States Oil Fund, LP (USO Daily), black bar so oil could pullback which is not good for the stock market.

 

6.4.5 GLD and UUP Watch, black bar too, so UUP could be up tomorrow at least gaps up, this also is not good for the stock market.

 

INTERESTING CHARTS: NONE

12/28/2009 After Bell Quick Summary

OK, Bears got a potential reversal bar from SPY. Take a look at the chart below, it may mean a down day tomorrow, but it also quite possible there’ll be a new high after the down day before a real pullback so be careful shorting here.

When both SPX and VIX closed in green, 10 out of 18 times (56%) a red day the next day. It’s not much edge but I know some of you will remind me of this, so I list it here simply in order to let you know, yes, I’m aware of this. LOL

12/24/2009 Market Recap: Unfilled Gaps, Cycle Turn Date and Block Sell

Summary:

Breakout but I'm not convinced.

Still expect a short-term pullback soon.

	TREND	MOMENTUM	EMOTION	COMMENT - Sample for using the trend table.
Long-term	Up		Disbelieve
Intermediate	Up	Neutral		II Survey: Historical low number of bears. 3.0.0 TNX: *Top in a month?
Short-term	Up	Neutral		0.0.9 CPC/CPCI: *Topped. 1.0.2 SPY: *15 unfilled gaps. 12/23 Recap: too many bearish extremes.
SPY SETUP	ENTRY DATE	INSTRUCTION	STOP LOSS	Mechanic trading signals, details are HERE.  Take profit whenever you see appropriate.
ST Model	12/21 L		Breakeven
Reversal Bar	12/21 L		Breakeven
NYMO Sell
VIX ENV
Other Signals		*Sell short if Open > Close		*Signals presented in the short-term comment area are enough to justify a short selling. This is a countertrend trading so for aggressive traders only.

INTERMEDIATE-TERM: BREAKOUT BUT I'M NOT CONVINCED

5.0.1 S&P Sector SPDRs I (Daily), breakout, yes, but since the SPY and QQQQ are not in syn plus the very thin holiday volume, so I'm not convinced.

 

I know you’re now so used to ignore the volume. Well, OK, let me present some other reasons why I'm not convinced.

The chart below shows clearly that COMPQ had the breakout on 5 consecutive unfilled gaps! I don’t remember I’ve ever seen this kind of breakout before. 1.0.2 S&P 500 SPDRs (SPY 60 min), 15 unfilled gaps, the highest record so far this year. 1.1.0 Nasdaq Composite (Daily), even according to the more strict rules, COMPQ has 9 unfilled gaps now, also is the highest record this year.

 

Let’s take a look at block sell. The chart below highlighted all the SPY block sells for 12/21, 12/22 and 12/24. Apparently the 12/24 SPY block sell was unusual. OK, now let’s look back at the chart 5.0.1 S&P Sector SPDRs I (Daily). It’s the 12/24 bar made the SPY breakout look real, isn’t it? Then, why bigger than usual block sell on the same day?

 

3.0.0 10Y T-Bill Yield, this chart argues for a top now. Please refer to 8.2.7 Market top/bottom by ROC30 of 10Y T-Bill Yield 2005-2008 and 8.2.8 Market top/bottom by ROC30 of 10Y T-Bill Yield 2001-2004 for the past performances. Surprisingly, this signal worked very well in the past. Of course for calling a top, the signal sometimes could be a month earlier, so for now, we don’t need to worry about much. The actual stuff I want your attentions are:

1. Yield rose too fast and it has more upside ahead. This is not good for the economical recovery. (What? The economy has already recovered, so it’s OK the mortgage keeps rising. Well, #$%^&#$%!)
2. Pay attention to the IRX above, the 3 month yield, strangely, it dropped a lot while the market was rising. This is a sign of flight to safety which usually means an imminent pullback.

SHORT-TERM: COULD BE A PULLBACK SOON

I still expect a short-term pullback soon. The main reason still is that there’re too many indicators at bearish extremes in www.sentimentrader.com. The chart below shows a longer history when there’re so many indicators at bearish extremes. Trading wise, if you really want to short this rally, take a look at the trend table above, this is a countertrend trading so better wait for a Bearish Reversal day before taking serious any actions.

 

4.1.1 PowerShares QQQ Trust (QQQQ Weekly), 4.1.9 SPX Cycle Watch (Weekly), it should be more clear on the QQQQ Weekly chart that multiple cycle turn dates are due therefore quite likely the market could turn down the next week.

 

Take a look at the chart below, sent by my friend Uempel, he gives almost the same cycle turn date.

 

INTERESTING CHARTS:

The most recent II and AAII Survey.

 

I think I’ve mentioned this several times, when there’re not many II bears, the market may not be up much.

12/24/2009 After Bell Quick Summary

One trick today, a firework (means shoot up high than fall hard to the ground eventually) trading setup was triggered, which had 70% successful rate in the past. I’m not sure about this time but again my purpose here is to provide you with some info, so decide for yourself. Pay attention to the past failures (Blue cycles): If small bar again the next trading day or the firework shoots high then falls to the ground on the same day then most likely this is a failed setup.

The bottom line, it’s Christmas, so Merry Christmas! And enjoy your holiday!

12/23/2009 Market Recap: 41% Indicators at Bullish Extremes

Summary:

Expect a short-term pullback soon.

	TREND	MOMENTUM	EMOTION	COMMENT - Sample for using the trend table.
Long-term	Up		Disbelieve
Intermediate	*Up	Neutral
Short-term	Up	Neutral
SPY SETUP	ENTRY DATE	INSTRUCTION	STOP LOSS	Mechanic trading signals for reference only. Back tested since 2002.
ST Model	12/21 L		Breakeven
Reversal Bar	12/21 L		Breakeven
NYMO Sell
VIX ENV

INTERMEDIATE-TERM: BULLISH SEASONALITY BUT MARKET MAY NOT UP HUGE

Nothing new, very bullish seasonality, see12/18/2009 Market Recap, but since the Options Speculation Index is way too bullish so I doubt how high the market could go.

Forgot to mention the chart below yesterday, anyway, a clear Broadening Top breakout on the upside, very good, the text book target is at galaxy far far away, the only problem is that the SPX is not confirming plus the holiday thin volume, therefore need further confirmation after the holiday.

 

SHORT-TERM: COULD BE A PULLBACK SOON

In short-term, lots of pullback signs are piling up, so be careful.

Among all the indicators in www.sentimentrader.com, today 41% of them are at bullish extremes. The last time I mentioned this was in 12/14/2009 Market Recap when it had 29% indicators at bullish extremes, the market pulled back immediately.

 

1.0.4 S&P 500 SPDRs (SPY 15 min), Bearish Rising Wedge plus lots of negative divergences. If the market makes a new high tomorrow but again is unable to up huge then this chart will look even more bearish.

 

As mentioned in today’s After Bell Quick Summary, 6.1.9 Extreme ISEE Index Readings Watch and 6.2.4b SPX and VIX Divergence Watch are sounding alarm, plus 0.0.9 Extreme Put Call Ratio Watch mentioned yesterday and the day before, all put together, I think the chances are very good we'll see a pullback soon, maybe not even need wait after the new year.

INTERESTING CHARTS:

The following 2 chars are for fun only, I don’t believe they’re significant.

2.0.0 Volatility Index (Daily), it looks a lot like what happened before the Dubai drama.

6.4.5 GLD and UUP Watch, GLD black bar means UUP up or at least gap up open tomorrow. The chart was surprisingly accurate. Let’s see if it works again tomorrow.

12/23/2009 After Bell Quick Summary

Two tricks today, both point to a red day tomorrow or the next next trading day.

When ISEE Indices & ETFs Only Index > 100, 21 (red and blue arrows) out of 29 times (72%) there’ll be a close that closed below today’s close in 2 trading days.

When both SPX and VIX closed in green 10 (dashed red lines) out of 17 times (59%, a little short of my usual report threshold but since still some people are interested, so I list it here again.) a red day the next day.

The bottom line, I believe a half trading day tomorrow should generally be bullish but be careful after the Christmas, too many not so good signs have been accumulating, so at least not to chase high here.

12/22/2009 Market Recap: 30% Indicators at Bullish Extremes

Summary:

Expect a short-term pullback soon.

	TREND	MOMENTUM	EMOTION	COMMENT - Sample for using the trend table.
Long-term	Up		Disbelieve
Intermediate	Down	Neutral
Short-term	Up	Neutral
SPY SETUP	ENTRY DATE	INSTRUCTION	STOP LOSS	Mechanic trading signals for reference only. Back tested since 2002.
ST Model	12/21 L	*Adjust Stop Loss	*breakeven
Reversal Bar	12/21 L	*Adjust Stop Loss	*breakeven
NYMO Sell
VIX ENV

INTERMEDIATE-TERM: BULLISH SEASONALITY BUT MARKET MAY NOT UP HUGE

Nothing new, very bullish seasonality, see12/18/2009 Market Recap, but since the Options Speculation Index is way too bullish so I doubt how high the market could go.

As mentioned in today’s After Bell Quick Summary, something big is going to happen. Unfortunately I don’t know if it’s bullish or bearish. However, 0.0.9 Extreme Put Call Ratio Watch argues for a top again today and this time it adds one more red cycle. So as usual, the cliche: It’s OK to be bullish but proceed with caution.

 

SHORT-TERM: COULD BE A PULLBACK SOON

No idea about tomorrow. However for all the indicators listed in www.sentimentrader.com, there’re 30% of them at bullish extremes today. The last time I mentioned this was in 12/14/2009 Market Recap, SPY had almost 4 days down swing thereafter. So again, be careful here.

 

INTERESTING CHARTS:

1.4.0 Shanghai Stock Exchange Composite Index (Daily), the Bearish 1-2-3 Formation is confirmed.

12/22/2009 After Bell Quick Summary

The same as yesterday, CPC closed below 0.7 was not a good sign. And this time it’s even more suspicious because right before the close, CPC dropped sharply below 0.6. It was due to a huge index call transactions. Whether this guy bought this huge call to hedge his position (bearish) or he knows that the market’s going to rally really really big (bullish), depends on whether you have bull or bear eyes. Personally, I don’t know. I just know something big is going to happen. Tighten your belt!

 

When CPC < 0.7, 9 out of 15 times (60%) a red day the next day. Well, I know it didn’t work well recently, but the point is 0.0.9 Extreme Put Call Ratio Watch. Pay attention to it tonight after 7:40 ET, I’m pretty sure a top condition was met AGAIN as both CPCI and CPC are way too low.

12/21/2009 Market Recap: Put call ratio a little too bullish

Summary:

May still have some up room but could be very close to a short-term top.

	TREND	MOMENTUM	EMOTION	COMMENT - Sample for using the trend table.
Long-term	Up		Disbelieve
Intermediate	Down	Neutral
Short-term	*Up	Neutral
SPY SETUP	ENTRY DATE	INSTRUCTION	STOP LOSS	Mechanic trading signals for reference only. Back tested since 2002.
ST Model	12/21	*Long intraday	*12/18 Low	*No confidence in this trade.
Reversal Bar	12/21	*Long intraday	*12/18 Low	*No confidence in this trade.
NYMO Sell
VIX ENV

NTERMEDIATE-TERM: BULLISH SEASONALITY BUT MARKET MAY NOT UP HUGE

Nothing new, very bullish seasonality, see 12/18/2009 Market Recap, but since the Options Speculation Index is way too bullish so I doubt how high the market could go.

0.0.9 Extreme Put Call Ratio Watch, this chart confirmed the extreme bullishness of the Options Speculation Index. Although it may only argue for a short-term top (see red dashed lines), but put it here could make my point more clear: OK to be bullish but proceed with caution. We believed a strong Thanksgiving yet it failed; We believed the last option expire week is bullish but it failed again; Now how about Santa Rally?

 

SHORT-TERM: COULD UP

1.0.4 S&P 500 SPDRs (SPY 15 min), could be a Bullish Falling Wedge in the forming therefore the market could be up at least tomorrow morning.

 

1.0.2 S&P 500 SPDRs (SPY 60 min), looks bullish too on a little bit longer time frame, could be an Ascending Triangle in the forming. The only catch is that there’re too many unfilled gaps. Looks to me the SPY simply couldn’t hold its 14th gap recently. So if SPY gaps up again tomorrow morning but the gap is not large enough to break above the Ascending Triangle resistance line then chances are good that the gap will be filled and in this case be sure to check whether a Bearish Reversal day is formed.

 

INTERESTING CHARTS: NONE

12/21/2009 After Bell Quick Summary

OK, CPC closed at 0.6, I think the bull wagon is crowded.

Pay attention to chart 0.0.9 Extreme Put Call Ratio Watch tonight after 7:40 ET, I’m pretty sure a top condition was met as both CPCI and CPC are way too low and actually CPCE should be closed around 0.5 which also is quite low. Holiday effect, so extreme put call ratio doesn’t count? Well, I don’t know. Better be careful than sorry, I think.