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Thursday, April 30, 2009

04/30/2009 Market Recap: Back Test or Head and Shoulders Top?

  Trend Momentum Comments - Sample for using the trend table. Warning: This is NOT a trading recommendation!
Long-term Down   Idea for trading intermediate-term under primary down trend.
Intermediate Up Neutral According to $NYA50R, the market might be topped.
Short-term Up Neutral  
Report Focused On Buyable dip or the market topped?
Today’s Summary The 5th unfilled gap and negative divergences still are bulls’ major concern.
Don’t chase high if tomorrow is up again.

Today’s report is similar with yesterday's, so take the speculation with a grain of salt:

  1. Higher high again, but still failed to close above 875 and SPY formed a black candle which often means a reversal, so I still cannot rule out the possibility of a fake head.
  2. Should the market gaps down tomorrow, the gap may not be filled because the 3rd time is the charm.  On Monday and Tuesday the market gapped down and rallied immediately, so I won’t expect the 3rd time is the same.
  3. SPY still has 5 unfilled gaps, so the 5th gap has a good chance to be filled in a very near term.  Again, if the market gaps up tomorrow, don’t expect the 6th gap to be held.
  4. Intermediate-term, I still expect the market to seesaw. I don’t see much edge today for either bulls or bears. However, if the market goes up tomorrow, don’t chase high because several accurate signals will get overbought again, therefore the market may pullback on Monday.

0.0.2 SPY Short-term Trading Signals.  As aforementioned, it could be a fake head.  Furthermore, the negative divergence is my biggest concern.

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1.0.2 S&P 500 SPDRs (SPY 60 min), still 5 unfilled gap plus a couple of negative divergences, it looks very bearish to me.

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1.0.3 S&P 500 SPDRs (SPY 30 min).  The market has to resolve this puzzle, it could be a retest after the symmetrical triangle breakout, or a head and shoulders top.  I don’t know.

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Here are two interesting charts.

3.0.0 10Y T-Bill Yield, market could be topped.  Please notice that the top given by this chart may be a month earlier.  For the back test of this signal, please refer to 8.0.4 Market top/bottom by ROC30 of 10Y T-Bill Yield 2005-2008, 8.0.5 Market top/bottom by ROC30 of 10Y T-Bill Yield 2001-2004.  Since 2001 this chart only gives one false signal in predicting a top.  By the way, some readers may not understand the numbers preceding every of my charts.  Let me explain one more time, all charts in my report come from my chart book at StockCharts.com.  By the way, the click rate of my chart book has been a No 1 in StockCharts.com for the past several months, and about 6,000 readers read my market recap (including the Chinese version) on a daily basis.  I am not bragging here, what I mean is that my market recap should have some credit. Well, maybe view it from a contrarian’s perspective could get a better results, LOL, but anyway, credit is a credit. Again, the market recap is different from giving the actual buy/sell signals, as this report tries to detect the trend change as early as possible, while for the real world trading, it’s better to let market go first. Therefore, sometimes this report may seems against the trend, so you should really pay attention to the trend table.  For instance, now the intermediate term and short term are up, which means short selling must be taken with great caution unless bears have very convincing edges mentioned by the report.  For more information, please refer to Sample for using the trend table.

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5.0.2 S&P Sector Bullish Percent Index.  Technology sector (BPINFO) and Consumer Discretionary (BPDISC) are almost 8 years high at this moment.

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Wednesday, April 29, 2009

04/29/2009 Market Recap: The 5th Unfilled Gap

  Trend Momentum Comments - Sample for using the trend table. Warning: This is NOT a trading recommendation!
Long-term Down   Idea for trading intermediate-term under primary down trend.
Intermediate Up Neutral According to $NYA50R and $CPCE, the market might be topped.
Short-term Up Neutral  
Report Focused On Buyable dip or the market topped?
Today’s Summary Firework trading setup was triggered, but not sure this time as a pullback is expected as early as tomorrow.

Today’s report contains some speculation, please take these with a grain of salt:

  1. The market made a higher high today, but I suspect it’s a fake head;
  2. If the market gaps down tomorrow, the gap may not be filled since the 3rd time is the charm.  Monday and Tuesday were both gap down and immediately going higher, so don’t expect the 3rd time is the same.
  3. SPY has now 5 unfilled gaps, and the probability of filling the 5th gap is very high, which means SPY has a need to pullback in the near term.  Also if tomorrow the market gaps up again, don’t expect the 6th gap could hold.
  4. Still maintain the “seesaw” forecast. Unlike yesterday, today bears have more edges so at least expect a short term pullback as early as tomorrow.

Firstly let’s review bulls’ edge:

7.0.4 Extreme CPC Readings Watch, 2.8.3 SPX:CPCE, CPC < 0.8, so 64% chances the market may close in green tomorrow,  CPC < 0.8 also has triggered the firework trading setup which so far worked very well.  However I am not sure about this time, as for reasons, please refer to the “Bears’ Edge” bellow.

SPXvsCPCE

Now bears’ edge:

0.0.2 SPY Short-term Trading Signals, higher high and Symmetrical Triangle breakout, but three evidences make me think it might be a fake head:

  1. Unable to close above 875, a long shadow was left and it seems like being rejected by the overhead resistance.
  2. The first move out of a volatility contraction (in this case a Symmetrical Triangle) is usually a "false" move, leading to a larger and more sustained trend in the direction opposite the initial break.
  3. Too many and too long period of negative divergences.  Like a volcano, the market will burst out eventually.

SPYShortTerm

1.0.2 S&P 500 SPDRs (SPY 60 min), 5 unfilled gaps plus a couple of negative divergences.  The speculation about gaps is mentioned in the beginning of this report, anyway, this chart looks very bearish.

SPY60min

T2103 of Telechart, Zweig Breadth Thrust.  You should know how accurate this indicator is now.

T2103

Intraday Cumulative Tick - NYSE from www.sentimentrader.com.  Recently this chart is also quite accurate.  TICK is at such a level that the market won’t go much higher even if it does go up tomorrow.

CumTICK

Lastly check out what happened the next day after the Fed Days.  Especially when the market soared up on the Fed Day, what happened the next day?

FOMC

Tuesday, April 28, 2009

04/28/2009 Market Recap: A Resilient Market

  Trend Momentum Comments - Sample for using the trend table. Warning: This is NOT a trading recommendation!
Long-term Down   Idea for trading intermediate-term under primary down trend.
Intermediate Up Neutral According to $NYA50R and $CPCE, the market might be topped.
Short-term Up Neutral  
Report Focused On Buyable dip or the market topped?
Today’s Summary Bears have spent 2 days in vain to push the market down, so a buyable dip could now be formed.

Tomorrow is the Fed day, the market may roller coaster after 2:15pm, so the final result is unknown.  Overall the market looks very resilient, although not dropped much but almost all the overbought signals have been corrected, therefore bears don’t have much edge now.  Bulls on the other hand may have some edges, not very strong though:

7.1.0 Use n vs n Rule to Identify a Trend Change.  Bears have tried hard for the past 2 days but failed to recover all the ground previously bulls made in the same two days period.  Although, bears still have 2 days to push SPX down below 826 to prove themselves, but at the current stage, bulls do look stronger.  So, according to 7.2.1 Buyable Pullback Rule, probably this is a buyable dip.

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NYSE Intraday Cumulative Tick from www.sentimentrader.com, TICK is not oversold yet, but it does not have much room on the down side either.

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1.0.3 S&P 500 SPDRs (SPY 30 min).  A possible Symmetrical Triangle is in the forming and therefore there’re 75% chances that the SPY will breakout on the upside.

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1.0.4 S&P 500 SPDRs (SPY 15 min), 1.1.6 PowerShares QQQ Trust (QQQQ 15 min), STO oversold plus ChiOsc way too low, at least the market should rebound tomorrow morning.

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3.0.3 20 Year Treasury Bond Fund iShares (TLT Daily), break down! Expect TLT to go further down, which means the money may flow into the stock market.

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7.0.7 SPX and VIX Divergence Watch, both SPX and VIX are down on the same day, according to the patterns marked by blue dashed lines, the market seems more likely to go up in the short term.

SPXvsVIX

Monday, April 27, 2009

04/27/2009 Market Recap: No Title

  Trend Momentum Comments - Sample for using the trend table. Warning: This is NOT a trading recommendation!
Long-term Down   Idea for trading intermediate-term under primary down trend.
Intermediate Up Neutral* According to $NYA50R and $CPCE, the market might be topped.
Short-term Up Neutral  
Report Focused On Buyable dip or the market topped?
Today’s Summary Still doubt the market’s ability to hold any further gap up open.
Still expect QQQQ to pullback.

No idea about tomorrow.  For the intermediate term, my forecast is still seesaw unless SPX could close above 875.

1.0.2 S&P 500 SPDRs (SPY 60 min), 5 unfilled gaps are still there, so bears don’t need to worry about gap up open the next day, which should be very tough to hold.

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2.8.3 SPX:CPCE gives a sell signal now, which is the second intermediate-term sell signal after 7.0.6 Weekly STO and the Market Top/Bottom.  However I am not sure if it’s a whipsaw. I’ll seriously consider these sell signals only after SPX has formed its first lower low (low < 826).

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QQQQ has gone up for 5 consecutive days now, but I think a pullback is imminent.  The reasons are:

  1. 1.1.3 QQQQ Short-term Trading Signals, three up days with declined volume, this pattern has a high probability of pullback.
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  2. 1.1.4 Nasdaq 100 Index Intermediate-term Trading Signals, overbought.
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  3. 1.1.5 PowerShares QQQ Trust (QQQQ 30 min),  the negative divergence has lasted very long.  Usually the longer the negative divergence lasts, the more reliable is the pattern.  So this chart looks quite bearish to me.
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  4. QQQQ breadth, overbought plus negative divergence, these should be corrected soon or later.
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  5. Semi breadth, overbought plus negative divergence too.
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Speaking about QQQQ breadth, let’s take a quick look at the XLF breadth, by the way, also overbought plus negative divergence.

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Sunday, April 26, 2009

04/26/2009 Canadian Market Report

I believe short-term the TSX will follow the US market to pullback.

7.4.2 iShares CDN S&P/TSX 60 Index Fund (XIU.TO 30 min), looks like a Bearish Rising Wedge to me, so expect a pullback soon.

XIU30min

3.4.2 United States Oil Fund, LP (USO 30 min), oil is way too overbought on the 30 min chart, this is not a good news for TSX which is heavily weighted with the energy related stocks.

USO30min

 

For intermediate-term, I’m not sure because I’ve noticed a possible Ascending Triangle formed on the S&P energy sector, it’d be very good news if it could break above the triangle. But on the other hand, I see negative divergence on TOAD which definitely is not a good sign. Guess we’ll have to wait to see how the market unfolds itself. The key is the oil, if the oil is keep going up, then all the negative divergences will have to wait.

5.2.0 Energy Select Sector SPDR (XLE Daily), a possible Ascending Triangle is in the forming.

XLEDaily

7.4.0 S&P/TSX Composite Index (Daily), pay attention to the negative divergence formed on the TOAD above.

TSXDaily

7.4.4 TSE McClellan Oscillator, the same negative divergence can be seen on TSE McClellan Oscillator, also TSXA50R is way too high which in the past was likely a market top even in a bull market.

TOAD

04/24/2009 Market Recap: Still no Higher High

  Trend Momentum Comments - Sample for using the trend table. Warning: This is NOT a trading recommendation!
Long-term Down   Idea for trading intermediate-term under primary down trend.
Intermediate Up Overbought According to $NYA50R and $CPCE, the market might be topped.
Short-term Up Neutral  
Report Focused On Buyable dip or the market topped?
Today’s Summary Expect market seesaw for a few weeks.
Expect a pullback as early as the next Monday.

7.1.0 Use n vs n Rule to Identify a Trend Change.  Bulls have pushed up the market for 4 days but still cannot recover the loss that bears made in a single day.  Nevertheless the upward momentum is weakening, according to 8.0.3 Use n vs n Rule to Identify a Trend Change 2008 the market will seesaw and the game is buy dip and sell bounce.  However, bears will win more N vs N, which means it’s probably safer to sell bounce.  Keep an eye on INDU, according to 1.2.0 INDU Leads Market, if SPX breaks out 875 in the next week while INDU fails to make a higher high, that will be the third market topped signal after $NYA50R and $CPCE.

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7.0.6 Weekly STO and the Market Top/Bottom.  Here is another evidence for seesaw – market will at least up and down for several weeks once weekly STO gives a sell signal at overbought level.

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In the short term, I think the market will pullback on Monday, or as late as Tuesday.

T2103 from Telechart, Zweig Breadth Thrust is the primary reason why the market should pullback on Monday.  The overbought on T2103 seems very accurate so far.

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Intraday Cumulative TICK from www.sentimentrader.com, the overbought of this indicator is also quite accurate, while we cannot rule out the possibility of further rally on Monday.  However, even the market does go up the upside movement will be limited according to the past patterns.

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1.0.2 S&P 500 SPDRs (SPY 60 min).  Too many unfilled gaps, should the market gap up again on Monday, it could be an opportunity for short sell.

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1.0.4 S&P 500 SPDRs (SPY 15 min), Bearish Rising Wedge plus lots of negative divergence.

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In the intermediate term, the market is still overbought, and the negative divergence on the breadth signals are very obvious, this means a pullback is needed.

0.0.3 SPX Intermediate-term Trading Signals, 1.1.4 Nasdaq 100 Index Intermediate-term Trading Signals, overbought plus negative divergence.

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SPY breadth from www.sentimentrader.com, again overbought plus negative divergence, it looks very bearish.

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Lastly let’s take a look at 2.0.1 Volatility Index (Weekly), STO is turning up.

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Saturday, April 25, 2009

A Chart about Insider Selling

Just something to draw you to my blog (Kind like please “don’t forget me” post.) while I’m scrambling my weekend market report.

I happened to read several articles commenting about “Insider Selling Jumps to Highest Level Since 2007” and have an interesting chart about the current insiders activities.

InsiderScore

Also another interesting chart about Institutional Buying and Selling courtesy of www.stocktiming.com. As you can see, the institution is still in accumulation, with a decreased enthusiasm though. And that’s another reason why I believe the market will seesaw but bears will win more and more “n vs n”.

instbsell

Enjoy your weekend!

Thursday, April 23, 2009

04/23/2009 1 vs 3 Bear Won

  Trend Momentum Comments - Sample for using the trend table. Warning: This is NOT a trading recommendation!
Long-term Down   Idea for trading intermediate-term under primary down trend.
Intermediate Up Overbought According to $NYA50R and $CPCE, market might be topped.
Short-term Up Neutral  
Report Focused On Buyable dip or the market topped?
Today’s Summary

1 vs 3 bear won, however break above SPX 875 any time then uptrend is still intact.

Expect QQQQ to pullback soon.

7.1.0 Use n vs n Rule to Identify a Trend Change, 1 vs 3 bears won, so still the same predication about the market: seesaw while keep having lower low. However, the predication will be invalid any time if SPX breaks above 875.

NvsN

 

Not much other to say today. Bearish signals have a little edge, not very much though, so market has slightly better chance to close in red tomorrow.

1.0.4 S&P 500 SPDRs (SPY 15 min), any gap up open tomorrow will likely be filled because ChiOsc is already high so an up gap will make it go extreme.

SPY15min

1.1.4 Nasdaq 100 Index Intermediate-term Trading Signals, still overbought. (StockCharts.com has a data error about NDXA50R at bottom, but anyway, I can guarantee you it’s still very high today.)

NDXMidTerm

1.1.5 PowerShares QQQ Trust (QQQQ 30 min), too big the negative divergences, expect a big pullback soon.

QQQQ30min

3.1.1 PowerShares DB US Dollar Index Bullish Fund (UUP 30 min), RSI oversold seems pretty accurate recently, therefore US$ might rebound tomorrow, this is not good for commodities and so is bad for the overall market.

UUP30min

7.0.2 SPX and CPC Divergence Watch, when both price and CPC rise together, most likely an unpleasant day next day. If however the market manages to close in green tomorrow then pay attention to CPC. If it rises as well then very unpleasant next Monday may be.

SPXCPCWatch

 

7.3.2 Firework Trading Setup, forgot to mention this yesterday, a firework trading setup was triggered because CPC was less than 0.8 yesterday.

FireworkSetup

Wednesday, April 22, 2009

04/22/2009 Market Recap: A Change Of Character

  Trend Momentum Comments - Sample for using the trend table. Warning: This is NOT a trading recommendation!
Long-term Down   Idea for trading intermediate-term under primary down trend.
Intermediate Up Overbought According to $NYA50R and $CPCE, the market might be topped.
Short-term Up* Neutral*  
Report Focused On Buyable dip or the market topped?
Today’s Summary Bulls need to break above SPX 875 with great margin tomorrow to prove themselves.
Nasdaq 100 way outperforms the other indices but breadth disagrees.

7.1.0 Use n vs n Rule to Identify a Trend Change.  One down day versus two up days (please see comment area for why I count today as an up day), bears won.  Bulls have to break above SPX 875 with great margin tomorrow to prove themselves, however the uptrend would still be considered weakening even they could make it because that would be three days’ effort for recovering one day’s damage.  For people who are not familiar with N vs N rule, please refer to 8.0.3 Use n vs n Rule to Identify a Trend Change 2008.  A change of character, yes.  But this does not mean the market would plunge right away, one day does not make a trend, so I believe the market will seesaw while bears would win more and more during the next several rounds of N vs N.

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7.0.4 Extreme CPC Readings Watch.  63% of the chance we will see the market close in green tomorrow because CPC is below 0.8 today.

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There are not so many interesting topics today, let’s bash Nasdaq. :-D AAPL seems very excited during the after-hours trading, but I doubt how high Nasdaq can still go.  Here are the reasons:

1.1.4 Nasdaq 100 Index Intermediate-term Trading Signals, overbought in the intermediate term.

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Take a look at the QQQQ breadth, very obvious negative divergence.

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Let’s see how Semi is doing, which takes a very big share in Nasdaq.  Although Semi way outperforms Nasdaq recently, breadth looks terrible and seems completely contrary with its performance.

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In Rydex mutual fund, the investment on Internet is crazy, and this seems no good according to the historical record.

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