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Monday, April 13, 2009

04/13/2009 Market Recap: CPCE New Low Since Year 2008

  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 to overbought* Beware of $NYA50R which usually means a top
Short-term Up Neutral to overbought Take profit especially if further up next tomorrow.
Report Focused On Buyable dip or the market topped?
Today’s Summary Expect a pullback tomorrow.
Besides $NYA50R, pay attention to the negative divergence formed on NYADV and NYMO.
Rydex fund bull/bear flow readings are extremely bullish.

Briefly speaking, a short-term pullback is due.  Over the intermediate term, it’s a little bit overbought.  Besides NYA50R on 0.0.1 Market Top/Bottom Watch has reached an intermediate-term top level, one should also notice that the negative divergence on 2.4.2 NYSE- Issues Advancing and 2.4.4 NYSE McClellan Oscillator are early signs prior to the market top.  Of course, divergence by itself is not a signal to act, it’s just a warning.


1.0.2 S&P 500 SPDRs (SPY 60 min).  Bearish rising wedge plus several negative divergences, so the market should pull back over the short term.


2.8.0 CBOE Options Equity Put/Call Ratio.  CPCE closed at merely 0.5, which is a new low since year 2008.  On the chart one can see that whenever CPC drops down below 0.55 the next day is not pleasant.  7.0.4 Extreme CPC Readings Watch, CPC is only 0.67 today.  Although the probability of closing in green on the next day is 65% if CPC is below 0.8, if it is below 0.7, however, only one out of five times the market closed in green on the next day.  Therefore CPC favors a down day tomorrow as well.


7.0.7 SPX and VIX Divergence Watch.  SPX and VIX went up at the same day, and it seems the next day is always down on the chart.


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


Let’s see how people are rushing for Rydex Bull Fund, a multi-year new high.  Almost buyers of Rydex Bear Fund are diminished (reversed on the chart), a multi-year new low.  The bull market rally is accompanied with doubts – who says that? Don’t you see that the majority of the investors are riding the trend up? LOL

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  1. Thanks for adding the Rydex fund flow data. I was interested to know what they data indicated. However, looking at the historical data, I didn't notice anything significant. Am I missing something?

  2. Rydex fund flow works similar to "divergence". This means it has not immediate effects. Just a warning, I'll say.

  3. Hi Cobra,
    Thanks for the update. Do you have any opinion on XLF or those financial bazoonkas short-term wise?

  4. XLF is a little bit overbought, but I'm not sure if the big guys still want to push that up as someone bought huge put on XLF and at the same time bought huge XLF shares. This apparently is expecting a huge up on XLF.

  5. How to tell that it's the same one who bought the XLF puts and XLF shares?


    And love your posts. Great work.

  6. OMG!
    CPC is below 0.6 (it was as low as 0.52 at open). If it holds till close, this will be the second lowest in 3 years. The only lower would be Dec 2008. We had similar readings in May 2006 and Dec 2006. CPCE is the same way. CPCI is the opposite. Smart money vs dumb money show?
    FD: Holding may shorts and expecting a severe seloff.

  7. I saw a report about XLF option/stock behavior. No idea how they get this kind of info.

  8. Look out below...



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