Live Update

Thursday, April 2, 2009

04/02/2009 Market Recap: Higher High

Firstly I would like to correct a mistake: yesterday I said bears won 2 vs 2 so the uptrend was weakening, and this would not be changed even if SPX broke out 833.  This is incorrect.  The method of N vs N is based on the Dow theory, therefore a higher high has cancelled the previous 2 vs 2, which means the market action today confirms that the uptrend is still intact.  Compare the current scenario with 8.0.3 Use n vs n Rule to Identify a Trend Change 2008, there is no higher high every time the uptrend is changed to the downtrend (marked with red circles).

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7.1.0 Use n vs n Rule to Identify a Trend Change.  Since N vs N will be recounted, should the market pull back tomorrow which is the earliest possible time, bears will have three days to make lower low based on this rule.  Then with the assumption that bulls fail to make a higher high within three days, we will need 6 days to confirm the trend change.  Sorry to bears, this is the least amount of time you have to fight back.

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Besides the judgment of trend change, N vs N rule can also assist to decide whether to buy dip or sell bounce.  For this use, please refer to 7.2.1 Buyable Pullback Rule.

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Today’s higher high also cancelled two predictions which favored bears.

1.0.5 Major Accumulation/Distribution Days.  Today is a major accumulation day, so we won’t expect the second major distribution day in the short term.

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2.4.2 NYSE - Issues Advancing.  The assertion of SPX lower close ahead is invalid now because SPX has made a higher high.  By the way, the negative divergence on NYADV is an essential step prior to a market top.

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Over the short-term, there are a couple of overbought signals so a pullback is due.  On the other hand, none of them are at the extreme level so I am not sure if the market will pullback from tomorrow.

7.0.4 Extreme CPC Readings Watch, CPC is below 0.8 again, 64% of the chance is to close in green tomorrow.  However, recently when CPC was below 0.7 the next day was unpleasant so I am unclear if this time CPC means normal bullish instead of over bullish.  In addition, 7.3.2 Firework Trading Setup is put aside intentionally because the only time when the firework failed the CPC was below 0.7.

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5.0.1 S&P Sector SPDRs.  Today’s rally should thank to the good news from the financial sector.  However XLF is lagging behind.  The continuation of this trend, if it does, is bearish to the broad market.

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0.0.2 SPY Short-term Trading Signals.  Quite a lot of overbought signals, especially NYMO is quite accurate.

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1.1.4 Nasdaq 100 Index Intermediate-term Trading Signals.  NYDXA50R is so high that it even seems like a bull market.

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T2103 from Telechart, Zweig Breadth Thrust, which is equivalent to NYADV/(NYADV+NYDEC) then take a 10-day moving average.  I notice that the overbought of this indicator is very accurate, every time it happens the market pulls back on the next day.

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T2122 from Telechart, NYSE 4 week New High/Low Ratio, is now overbought.

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18 comments:

  1. Cobra, please take into consideration: the enlargement of your charts is now slightly to big for a 15" screen. The size your charts had end of March was just fine for the laptop most people use when they are on the move. Thanks.

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  2. Guess the most charts are fine, just those from Telechart are not ok, right?

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  3. Cobra,

    Regarding T2121 and T2123 charts, where I can find them?

    Also, do you have any hint where I can find extra information about those additional charts you analyze (like CPC, NYADV .....). My question is if there any rank in those ones. For example I usually filter my pick for TA by using leading indicators like STO and RSI. Only after this, I check confirmation on lagging ones like averages, MACD, CMF and so on. Is there any order that I should use this data.

    Thanks

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  4. T2122 and T2103 are from Telechart which is a TA software.

    There's no rank for CPC, NYADV etc etc. Personally, I favors CPC, NYADV and NYMO which means I give them the highest priority.

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  5. Thanks for your response. So you would say when there is a match in those 03, it means that the trend is really strong?

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  6. CPC tends move before the actual index. So if CPC goes low while the market is selling off, I'd be cautious on selling short.

    NYADV and NYMO are good momentum indicator, like STO/RSI, but I think they're far more accurate than that of STO/RSI, just they don't happen a lot.

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  7. Other question for you....what do you think about today's VIX behavior...at least for me...and other blogs...quite weird...or because it is a real "suckers rally"...lol...nobody trust on it?

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  8. Yeah, forgot to mention VIX, but anyway, I still need n vs n to confirm a trend change.

    I believe the VIX today is bearish. No panic no bottom so Mar. 8 is not a bottom. If a government can save a market from dropping, there won't be any bear market any more, right?

    April is the 3rd most bullish month in a year, let's see after April, if something goes wrong again, what the government would do? Print another 4T $? So I believe this is the last chance for bulls to raise cash.

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  9. Thanks Cobra....it is time to rest....I am short for tomorrow...APPL and BIG...

    By the way, I found T2122 and T2103. There is a very useful website http://www.bestfreecharts.com/. By the way, live data without any delay. I use it a lot at my work....yep....I have to work to survive...hopefully one day I will have the knowledge of the master COBRA...have a good night..

    Do you the code for CPC at Telechart? I could not find it that website...

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  10. Thanks for the website.

    Telechart doesn't have CPC.

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  11. Thanks for the wider charts. It's interesting that the last sell signal on your SPY chart, when CPC<.7 failed.

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  12. FYI, ajvsousa: Cobra still has to work a job, too. I, and some others now, am trying to convince him to shift to a paid-website model so he can quit his job and focus on enlightening us full-time. :)

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  13. Cobra, everything is fine now. Something was wrong with the settings of my laptop.

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  14. Cobra,
    Thanks for doing a great job and not being afraid of saying that you were wrong.
    However, I noticed one thing: you said "The assertion of SPX lower close ahead is invalid now because SPX has made a higher high."
    I looked at your 2.4.2 chart and SPX made a higher high at the beginning of Nov 08 and January 09 followed by a sharp selloff.
    Any comments?

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  15. I don't mean there won't be any lower close as long as we're in a bear market. Just this is not how NYADV predicts. If something predicts something ahead it should have a stop loss (assume you trade based on this prediction). A higher high would have triggered a stop loss in this case.

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  16. Nice insights COBRA, be advised I'm getting GIF Virus warnings when I click on your pictures however. Time to do a system scan?

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  17. Besides, if you feel unconfortable viewing those chart, you could always click the link to see the original chart.

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