Live Update

Monday, May 4, 2009

05/04/2009 Market Recap: Breakout!

  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, market might be topped.
Short-term Up Overbought*  
Report Focused On Buyable dip or the market topped?
Today’s Summary

Bears beware of possible reduced effects of overbought signals.

Expect a turnaround Tuesday.

I don’t know if you remember that for awhile the “Momentum” column in the above trend table were “neutral”, therefore from chart 0.0.2 SPY Short-term Trading Signals, we can see during that period the market seesawed. Today, however, the trading range was broken on the upside and we now have “overbought” listed in the “Momentum” column. I have an impression that once a range was broken, the overbought/oversold effects will be greatly reduced, so from now on, pay attention to the “Momentum” column, if it keeps having “overbought” while the market simply consolidates in a small price bar after each big up day on daily chart, bears must be careful that the market may have another round of push up. By the way, if we do get another round of push up, the negative divergences seen on lots of charts may get corrected.


1.0.2 S&P 500 SPDRs (SPY 60 min), I still don’t believe that the SPY can hold 6 gaps and even has the 7th gap, so I dare not add long now, I’ll wait for “at least a minor” pullback before deciding what to do next. Please pay attention to the word “at least a minor”, as described above I’m generally losing confidences on “overbought” signals after a trading range breakout. LOL



Tomorrow, I expect a turnaround Tuesday.

2.8.0 CBOE Options Equity Put/Call Ratio, although CPC < 0.8 which according to 7.0.4 Extreme CPC Readings Watch, there’re 65% chances that the market may close in green tomorrow, but since CPCE today reads only 0.54 and from the chart, we can see if the CPCE becomes too bullish, the next day wasn’t very pleasant.


T2103 from Telechart, Zweig Breadth Thrust, as mentioned in the weekend report, it gets overbought today and its overbought signal is very accurate.


T2121 from Telechart, 13 Week New High/Low Ratio, mentioned in the weekend report too, too high, should be corrected soon.


T2112 from Telechart, % stocks trading 2 standard deviation above their 40-day moving average, I suspect that maybe there’s a data error here, too many stocks too far away from MA40.



3.0.3 20 Year Treasury Bond Fund iShares (TLT Daily), Just to show you a possible Bullish Tri Star. It’s not another excuse I found (as listed above) to talk you into believing that we’ll have a pullback tomorrow. LOL



  1. all the asset classes have moved to act as 1 large asset class right now.

  2. Eric: could you repeat your previous post, but in a bit plainer English this time?

    (for us dumber readers)

  3. Cobra's as much as I enjoy your commentary you have had the same mentiality as everyone else..."The market should go down!'...we are in a bear market rally which since none of us here lived through the 30's would understand that violent moves like this should be expected. However, in time the pain will be felt for the bulls as well...keep your powder dry bears as this market can make you broke rather quickly.

  4. Well, I don't know. I honestly don't have the answers. And I'm sleeping like 3 hours these days.

    This is from ZeroHedge: "A high correlation means that there is very little dispersion among the stocks and a low correlation means that there is high dispersion in performance. Today there is very little dispersion when measured in stocks across the market as a whole. "

    The story is there is Little Dispersion.

    But careful how you read that, because there are 2 kinds of moves when Correlations go to 1, and there is "little dispersion". Up and Down.

    Yesterday they purchased Everything Oil, Gold, Bonds, Socks. All of it! How long will it last?

  5. Eric, you missed one most important factor that drives this mkt: $USD, this is the 1 of 2 factors that can possible make this mkt go into correction mode.

  6. see, more bears, you can't get away from them...

    I'm not presenting a Thesis; I'm saying they are buying everything. Not they are 'going to' buy everything, they 'are buying' everything.

    and it probably won't end, until we go back to normal correlations between asset classes.

    every hedge-fund on the planet is short.

  7. Eric: I agree with you if this "buying everything" was not in April because I found that many years before that most of the boards (Gold, FX, and Stocks) buy in this period (March to the mid. of May) just to avoid any unexpected opinion from the sharholders.
    You can check the monthly chart for S&P500 and see that April (the period that most of the companies have sharholder meeting and board elections)is hardly become a red month. Also you can see that almost always the high of April is penetrated.


  8. Cobra,...Remember your previous post regarding the potential mirror image pattern?

    Well, Another reason to be looking for a High in this time frame is that Mirror Image pattern centered on 03-06 Low (market likes symmetry):

    o From High on Tue Jan 6, to the Low on Fri Mar 6, was 41 mkt days.

    o From Low on Mar 6, going fwd 41 mkt days, targets Tue 05-05 as likely High.

    So we are in the window for a potentail reversal right now.

    Also,....Working off a daily SP500 bar chart,...I suspect Mon 05-04 will mark a High, or turn lower from a High.

    Here is the count, with each pivot separated by 13 mkt days: (KEY Low) Mon Mar 9 + 13 mkt days = (High) Thur Mar 26 +13 mkt days = (Low) Wed April 15 + 13 mkt days =(High?) Mon May 04.

    Thanks for sharing your work on your blog,..
    much appreciated.

    Regards, Jim P.

  9. Cobra,

    good work on your Tir-star in the south for TLT and this normally signals a bottom...other gurus point to 925 as top and possibily within a week....


  10. Let the bulls drink cool-aid and be happy and I'm sure they're very happy right now.

  11. Hi, guys thank you so much for those valuable info. This is the best comment area ever. Hope I could get such kind of comments more and more and if this keeps going on, I'll consider open a forum for all of you. Thanks again!

  12. Hey Cobra,

    Thanks for calling them like you see them.

    Personally, I think we're ripe for a pullback before we go higher, but that's only because we are very overbought short term in a powerful bear market rally.

    In fact, I wouldn't be surprised if we stairstep all the way to S&P 1050 before we, um... Crash to 350.

  13. Thank you for sharing your input, Eric!

  14. am I being Mocked ;)

    So... no followthrough today on Assets to 1.

    so... maybe that was the blow off as Cobra hinted...

    Or One more push... This as wave 4 then wave 5.

  15. this market is a fuchin joke. How many hours a day are you guys spending trying to figure out what direction the market is going the next day?

    everybody got the EW count right?

    The indicators are saying....but don't trust them.

    How high are we going?

    Why are we going up again?

    Will we stay there this time?

    Has anybody figured out whether the banks are solvent yet? Does it matter?

    I hear we need another war just to keep unemployment under 22%.

    Going up big tomorrow. Or maybe not. Not sure, will let you know.



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