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Saturday, April 11, 2009

04/09/2009 Market Recap: Up 5 weeks in a row!

  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 Beware of $NYA50R which usually means a top
Short-term Up* Neutral to overbought Take profit especially if further up next Monday.
Report Focused On Buyable dip or the market topped?
Today’s Summary Expect a short-term pullback or even a down week next week.
Top might be a few weeks away but please let the market go first.

7.1.0 Use n vs n Rule to Identify a Trend Change, higher high, and bulls won again, therefore the uptrend is strong.  However, the market is a bit overbought in the short-term.  Be ready to take profit especially if the market goes up further on next Monday.


Let’s see how overbought the market is in the short term.

T2122 from Telechart, 4 Weeks New High/Low Ratio, you may have seen it several times and should have no doubt about its accuracy while it’s overbought.


5.3.1 Financials Select Sector SPDR (XLF 30 min).  This is too much and I believe a pullback is due on Monday.  5.3.0 Financials Select Sector SPDR (XLF Daily), also expect further rally after the pullback, and the target is about $11.58.

image   image

3.4.2 United States Oil Fund, LP (USO 30 min).  Bearish rising wedge, and the crude oil may possibly pullback and thus affect the energy sector.  Since energy and financials have the greatest weights in the market, the entire market may drop down should these two sectors pullback.


2.0.0 Volatility Index (Daily).  STO is too low and VIX may bounce back up, this is no good to the stock market.


1.1.4 Nasdaq 100 Index Intermediate-term Trading Signals, I almost show this chart everyday.  If you believe iPod preserves value better than gold, go ahead.


1.0.2 S&P 500 SPDRs (SPY 60 min).  Many negative divergence gives a hint of possible pullback.  Note that there are 4 unfilled 1% or greater gaps, so I really doubt if any further open gap can hold.  In other words, probably any gap up is an opportunity for short-term short sell.


OK, let’s see how the market goes over the intermediate term.

Here is the chart in 2000 bear market.  What did it happen after 5 weeks of rally with price-volume negative divergence?  I am not saying this time the market will repeat the history exactly, I just point out that 5 up weeks does not means a bull market.  Furthermore, after several weeks of rally while the volume decreases continuously, very likely we will see a negative week.


1.0.0 S&P 500 Large Cap Index (Weekly).  Note the negative divergence on the volume supports a down week with high probability.  Also notice the STO on the top of the chart is at such an overbought level which is rare even in a bull market.  The last overbought comparable to current one is in last April, the market turned south 3 weeks later.  I guess the history may repeat because of sell in May, and May is precisely 3 weeks away.


2.0.1 Volatility Index (Weekly).  Again, STO on VIX may also take 3 weeks to reach the red line, and this level is often the top of the market even in a bull market.


0.0.1 Market Top/Bottom Watch.  The current level of NYA50R is used to be the intermediate term top in the past.


Indicators at extremes from  This a sum of all bullish and bearish signals at extreme level from sentimentrader.  So many signals are over bullish and I cannot list all of them here.  The chart is actually simple, notice  Net % at Extreme at the bottom, when the difference between too bullish and too bearish signals is huge, in other words when the blue curve is very high, the market is usually topped out.  Now the blue curve is very high and risky at this time, probably there could be one more push.


The bottom line, note NET Institutional Buying and Selling is very important, and I truly believe that something is seriously wrong.  However, like the analysis above, maybe the market could go up further, so we don’t need to guess where the top is, just let the market go first.  My secret weapon, during the following period of time, will be 2.8.0 CBOE Options Equity Put/Call Ratio and n vs n rule.  Until then!



  1. Is there any mistake in the 2000 bear market graph? The graph shows 2001, 2002 and 2003 figures on the X scale.

    I love to read your analysis. Congratulation

  2. Cobra,

    Congratulations, this has been the BEST WEEK EVER for this blog!

    Your blog literally gets better every week. I am amazed by the improvement just in the last two weeks!

    Thank you very much for all the great work!

  3. Thank you for noticing that. Hope I could get better and better.

    No mistake in chart year 2000 bear market. The chart only shows the downtrend.

  4. Cobra,
    This analysis is very good. Looks like it should be a top but who knows when selling starts. The futures are down slightly tonight, but it means nothing of course.
    One additional thing I noticed that the last couple of weeks had rising $SPX and $CPC (10 day MA), but dropping $VIX.
    The only times I saw it before was Feb 08 and Aug 08, just before a crash. Have you seen that?

  5. Yes, that's I've been saying, CPC is a leading indicator. I'll pay close attention on the rising CPC and CPCE.

  6. Cobra,
    Re: CPC
    Farthermore, CPCI raises faster than CPC, and CPC raises faster than CPCE (i'm talking 10 day SMA). To me, this is a sign of smart money jumping ship. I hope that I'm on the right side of the trade and will be able to stand and not be shaken down (like many times in the past). As you know, it's one thing to be right and another to actually make money. I shorted all major banks and morgage comps in summer 2007 and was stopped out at as loss to later see that I was right after all.
    Tonight, I feel an anormous anxiety to hold shorts, the right trades are the most difficult.
    Good luck,

  7. Thank you, Jack. I've provided a chart for you, you can make a further comment there, if you like, I'm sure others will appreciate your findings. Thanks again!

  8. Cobra,

    How close are you to being able to set up a pay website where we can obtain additional insight from you?

    My hope is that -- by supplying you with some cash flow through memberships -- you will be able to purchase access to additional advanced technical analysis tool and include them in analyses you publish on your pay website.

  9. Cobra,

    To clarify: my thought is that you can provide a two-tier analysis service.

    Tier 1: Basic analysis for free via this blog

    Tier 2: Advanced analysis on pay website

  10. By taking the two-tier analysis service approach, you could maintain the massive traffic to this blog, while using this as a feeder into your pay website where you ultimately make enough money to quit your day job.

    Once you are able to quit your day job, then you could even ultimately roll out a Tier 3 service, where -- for a premium membership fee -- members have access to intraday analysis you perform throughout the trading day.

  11. Cobra,

    I just saw another chart for USO (Crude Oil) that paints a very different technical picture. According to that chart, USO formed a resistance level in December 2008 and January 2009, and then finally pierced that resistance in March 2009. Since then, it has pulled back to that line (which is now Support) and bounced off of it twice with a higher low the second time.

    In short, it appears that USO (Crude Oil) may actually be poised to run up.

    Please take a look at this and give us your analysis.

    Thank you for your help with this!

  12. I agree that USO seems consolidating and about to be higher.

    As for paid services, I don't know what to say except thanks. If one day there is a such kind of service, I hope it'd be among the best, but right now, I'm far from even the better.

  13. Thanks for your comment on USO!



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