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Wednesday, May 6, 2009

05/06/2009 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 Overbought According to $NYA50R, market might be topped.
Short-term Up Overbought  
Report Focused On Buyable dip or the market topped?
Today’s Summary

64% chances the market may close in green tomorrow.

Well, if the market keeps going up like now, I’d soon be out of this “blog business”, because the only thing I could write every day is: “overbought, but please discount all these overbought signals.” LOL.  In 05/04/2009 Market Recap: Breakout!, I mentioned that the overbought signals should be discounted once a breakout occurs. So from now on, if I have to mention “overbought” everyday, please take it with a grain of salt. Again, the most important thing in trading is to try best not to trade against the trend.


7.0.4 Extreme CPC Readings Watch, CPC < 0.8 today, which means 64% chances the market may close in green tomorrow. Also because of CPC < 0.8, according to chart 2.8.3 SPX:CPCE, the firework trading setup was triggered.


2.8.0 CBOE Options Equity Put/Call Ratio, if indeed the market closes in green tomorrow, then most likely it will pullback on Friday. The reason: if CPCE keeps dropping tomorrow then it will drop bellow the horizontal red line which has consistently caused an unpleasant day the next day; while if CPCE rises tomorrow then it will likely break the blue trend line which could also trigger a pullback.


There’re too many overbought signals which I almost mention them every day, so today I’ll just list the best of them.

T2112 from Telechart, % stocks trading 2 standard deviation above their 40-day moving average, this is a record high in Telechart. From my experiences, the best overbought/oversold signals are those extreme deviations from the moving average, so at least short-term I still expect a pullback.


T2103 from Telechart, Zweig Breadth Thrust, I trust this one very much.


For other signals, Indicators at extremes at says a lot today: For all the signals provided by, there’s no single bullish signal today (see green curves, reads 0 now), while the spread between the bearish and the bullish signals has again reached an extreme level (see dashed red curves on the bottom of the chart) which for the past 4 times has all successfully pointed out a market top.



  1. Another day another overbought. I think they're waiting for all bears get killed and then play the dump.

  2. Don't beat yourself up. Every other TA Chartist, Forkoholic, Fib's, and even Astrologist says that the market should correct now, or yesterday... hell weeks ago! It's those damn crooks in the whitehouse like Al Capone, (I mean Tim Geithner) and his buddies at Goldman (and all the other bank gangsters) that are manipulating this market up.

    It won't last forever! We are in the last round. Ding! Ding! Time to play a little "Eye of Tiger" to get Rocky (the Bears) pumped back up!

    Keep posting... I'll still be reading it.

    Dan Black

    P.S. Let us all try to remain focused, while we wait for this August 14th-17th when the big wave 5 down starts. This bs won't last forever!

  3. Thank you Dan, hope soon I don't have to say "overbought" anymore. :-)

  4. might want to add some trending indicators on t the analysis..helps me..oscillators are good for range bound markets...we broke out...

  5. Remarkable 10 days its been. God speed bears.

  6. Trend following indicators are always there in my chart book. Also you can see the current trend from the trend table, I actually update the table according to the trend following indicators.

  7. Cobra

    The chart from sentimenttrader looks very compelling, although from what I can see it appears that it was there yesterday too? Either way, I am not buying the 'this time its different' mantra. In fact the longer these overbought signals keep flashing and we bump into January's resistance AND May's seasonalilty, we might be in for a nasty 2 week drop.

  8. Ha ha! Cobra, you crack me up.

    Good post.

  9. If you can solve the OB,OS issue, you've made it. This is called stochastic pop. The best profits to be made.


  10. Could today be the day for bears to stend up?
    Like they say, sell on news and sell in May. We have both.
    Yesterday, $VIX closed bellow BB 20,2. Last time we had that was mid April 2009 (false alarm) and then mid May 2008 (true alarm).
    Even if this is to be a new bull market, there should be at least some consolidation.
    Good luck to you all and especially the bears!

  11. Arkady,
    I subscribe to sentimentrader too and the signals are real but obvious only in retrospect and not best timed. The sentiment totally failed in 2003 (and later part of 2008, too) and if 2009 is to be a new bull market, beware!

  12. Any indicator no matter how extreme if its signal is against the trend it still represents a low possibility. So I think the indicators in are worth of reference, period.

    Has trend changed today? I just know one day doesn't make a trend. Close in red is good for bears as from the daily chart it'll look like a reversal day, but still bear need a follow-through and most important of all, a lower low on daily chart which now still is far far away.

  13. Cobra,

    The up days had low volume. Today's down day had big volume. Maybe not the top, but I think we are getting closer.



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