Live Update

Thursday, March 26, 2009

03/26/2009 Market Recap: Beware of Rising CPC

Three points for your information.  The well expected meaningful pullback might be approaching, and it’s time for bulls to lock the profit and for bears to be patient.

  1. Note the normalized CPC at the bottom of 2.8.1 CBOE Options Total Put/Call Ratio is starting to rise.  Declining CPC has successfully predicted the recent rally, will the rising CPC forecast the pullback of the market?
  2. 5.0.1 Select Sector SPDRs Financials sector has led the rally but it starts to lag behind.  Moreover, energy sector is also lagging behind.  The lag of these two sectors with the heaviest weights in the index may be a warning to the market.
  3. 1.0.3 S&P 500 SPDRs (SPY 30 min).  The negative divergence becomes more serious which is sign of weakening momentum of this rally.  It is more clear to check the A/D for the negative divergence on ChiOsc, so I temporarily replaced ChiOsc with A/D.

2.8.0 CBOE Options Equity Put/Call Ratio starts to test the double confirming trend line today.  The trend line is not broken yet.  However, it won’t be intact should the market drops down tomorrow.


As we talk about for several days, the market is more or less overbought in both short and intermediate term.  Let’s check out more details.

0.0.2 SPY Short-term Trading Signals.  RHNYA at the very bottom of the chart is 100%, which means there is no new 52 week low today.  Such a value can only be found in 2003 when the market had rallied for a while, while now the rally has only lasted for 14 days.


1.1.4 Nasdaq 100 Index Intermediate-term Trading Signals.  NDXA50R at the bottom of the chart is way too high which is at the big bull market level.  Note that NAADV and NAUPV starts to separate, and usually index starts to fall after NAUPV.  The separation between NYADV and NYUPV can also be seen on 0.0.3 SPX Intermediate-term Trading Signals.


T2122 from Telechart, 4 week New High/Low Ratio, is way too high.



  1. Hi Cobra,

    This is a somewhat unusual question. If you are short 30% of your account right now and down about 20% on that trade, what will be your next strategy be ?

  2. Ha,ha, ha ! Da Boyz are enjoyng Geithner's Ponzi scheme, so forget about charts!


    Maximus aspires to be a philosopher forecasting and describing the history of these world changing times....

    But tonight, because people are looking for RESEARCH, Einstein makes his point and links to key techinical analysis and market analysis is provided....

    Best to all....


  4. Yon, thanks as always, could you please explain what you meant on the CPCE chart when you said the market must be up to keep this trendline in tact. do you mean if the market is up then the bulls are safe for another day. or if the market is up then the line is broken and the bears will get their pullback.

  5. Hi alphahorn,

    I'm sure that Yon would explain this better but the significance of that chart is that CPCE will break the solid blue line if the market were to go lower tomorrow(CPCE will rise). This would mean that today's high was a short term top and that the trend has reversed in the short term.

  6. Cobra,

    It would be interesting to see the characteristics of CPC during a major market change like July 2002 - March 2003. It was inverted H&S.

    Unfortunately I do not subscribe stockchart.

  7. Please add IWM Weekly and Monthly charts

  8. Yes, the CPCE explaination is correct. Thanks.

    For the 30% short deep in the water, I don't think it's now the time to cover, however in case that we do make a history (which means the market rise without any pullback forever), you can gradually bet a little by little on the long side to hedge your current position.

  9. Hi, about adding chart, just hope you could understand, for 80 of 102 charts in my public list, I have to watch them one by one, even without doing anything, simplely clicking these 80 charts one by one and above all every day, is a very tedious task. (You can try the same thing by turning 80 pages one page by one page, for any book, for every day then guess, you could understand, how hard for me to add even a single chart.) So actually I'm trying my best to reduce some charts if they're not absolutely necessary. Hope you could understand. Thanks.

  10. Cobra,
    I was able to find an older, longer term T2122 chart that you posted in Dec 2008.
    My take is that the major markets tops usually occur 1 month after the initial T2122 top. I saw it in sept-oct 2007, april-may 2008 and july-august 2008. Did not happen that way in Nov 08 or Jan 09, but there were other good indicators pointing to tops on those dates.
    Do you have any comments?
    I'm planning to reload my short positions (that I was stopped out from a few times now). But my target is somewhere between 700-800 with another leg up.

  11. Cobra
    You are doing an excellent job in updating and analyzing these charts everyday. Moreover, you are so generous to share them publicly! Please keep up your good work and forget about those "Hey, can I have this chart up?! Mama, I have some problem in analyzing this X chart, can you please include this in your blog,thanks" comments.

    Bravo, Cobra!

  12. It's OK, normally I'll try my best to meet everyone's requests, just sometimes it's really difficult and in this case I'll explain and hope to get some understandings.

  13. I'll check T2122, thanks. It's just a faster version of RHNYA which is 52 week new high/low ratio, while T2122 is 4 week new high/low ratio.

  14. Cobra,
    You mentioned that "Financials sector has led the rally but it starts to lag behind. Moreover, energy sector is also lagging behind. The lag of these two sectors with the heaviest weights in the index may be a warning to the market."

    Is there any link to illustrate the ratio of each Sector SPDRs with respect to particular index?


  15. Yes, I do have. Check here:

  16. Cobra,
    Thanks for the link provided. It's awesome.

  17. Excellent post as always. Your insight and explanation is really at the top of anything I have found on the web. Please lord let this fall get its thing on. I want 3.1 up! Just noticed I got included in the blog roll. Thank you very much. It is an honor.


  18. Cobra,

    I study your XLF 30 minute chart with great interest.

    Why don't you add FAS and FAZ to your lists of charts. This would provide a good look at bull/bear pull on financials and the market in general. They are 3X and exaggerate the technicals.

    Great charts/great presentation.

    Thanks EDM



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