Live Update

Thursday, May 14, 2009

05/14/2009 Market Recap: Intermediate-term Sell Signal?

  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 In danger of giving sell signal.
Short-term Down Neutral  
Report Focused On Buyable dip or the market topped?
Today’s Summary

Intermediate-term sell signals were generated but need further confirmation.

Today's action could be a retest of the H&S Top neckline, so probably more pullback ahead.

Sell signals were given by 0.0.3 SPX Intermediate-term Trading Signals, 1.1.4 Nasdaq 100 Index Intermediate-term Trading Signals and 7.4.0 S&P/TSX Composite Index (Daily). They’re not crystal clear though, so to prevent a whipsaw and to avoid OE “mess” tomorrow, better wait till the next week. In chart 7.2.3 Intermediate-term Trading Rule, by the way, I’ve demonstrated that under the primary downtrend, to follow the intermediate-term sell signal is better than to follow the intermediate-term buy signal. Also today’s Institutional Buying and Selling Trending chart (if you haven’t looked at the chart I posted in the morning) as well argues that the market may become not so “bull friendly”.

SPXMidTerm NDXMidTerm MidTermTradingRule


No idea tomorrow as OE Friday anything could happen. Only 2 charts to show today, both are “bear friendly”.

1.0.3 S&P 500 SPDRs (SPY 30 min), all the market actions this week so far were bearish: Island Reversal then price channel breakdown then kiss channel goodbye then Head and Shoulders Top breakdown and then today, it seemed like another kiss goodbye.


1.3.7 Russell 3000 Dominant Price-Volume Relationships, 1585 stocks price up volume down, pretty bearish to me.



  1. Hi Cobra,

    I wanted to point you to an excellent post on, by Schweizer. The link is...

    In it, he compares where we are today to the chart from 2001. It is eerie in similarities, to say the least. It matches up perfectly with my previous post stating that August 14th is a critical turn in the market, according to astrology.

    Here is a direct link to his chart...

    Not only does astrologist Adrian Fourie ( predict that the market will turn down in mid August and all of September, but Raymond Merriman also has August 14th-17th as a turning date.

    Now Merriman doesn't predict which way the market will turn. But, in his "Forecast 2009 Book", he lists all the turning dates for the entire year, this one really stands out. I'm not going to list them all because that wouldn't be right. (His book can be purchased if you want them all).

    However, I will say that he perfectly predicted a turn date of March 6th-9th. We can all look back and say that prediction was "dead accurate".

    Of all the turn dates he lists in his book, most are within 30 days or less. Some occur within 2 weeks of each other, (which are some of the ones coming soon), but only one time this year does he skip an entire month.

    From the turn date of August 14th-17th there is NO other turn date until October 7th-8th. That's just short of 2 months! Now you have to ask yourself... Do I think the market will rally up from August to October, or crash down?

    That is the $64 Trillion Dollar Question? (It used too be the $64 Thousand Dollar Question in the TV game show from the 70's... but I factored in some inflation).

    To answer that, let's look at both sides.

    The Bull Theory...

    Hum? Let's see... by then the bank's should be in great shape from all the TARP money, as they are great investors and know how exactly how to put that money to work so it stimulates the economy. Also, Obama will have put those 8 million un-employed people back to work. The auto industry will have recovered and is now selling cars people want, as they finally design an engine that gets 200mpg like Charles Pogue did in the 1930”s. Retail stores are having record sells as debt weary consumers are spending again. And, the commercial real estate time bomb was a dud, and didn't explode!

    Wow, I think we will rally up from mid August to October... don't you? I wonder what Cramer will be saying then? Dow 15,000...Yeah!

    The Bear Theory...

    The commercial real estate time bomb does explode and the bank's collapse again. That 8 million people un-employed turns into 10 million, as Obama's plan fails. Retail stores are closing faster then you can say "Jack Rabbit". The auto industry is still in trouble, as people still aren't buying new cars. The banks are as crooked as we all suspected, and they burnt through all that TARP money trying to pump up their own stock, and are now back asking Uncle Sam for some more money. Hummm? Tough call here!

    What about past history? Who does it favor?

    Well, history is in favor of the Bear, as the fall months are usually when crashes and downturns occur. Summer months are usually up or flat as people generally feel good and either buy or simply don't sell. This could be related to the nice warm and sunny days the summer gives us. As the fall comes, so does the cold weather.

    Let's face it... people love the sun. It makes them feel good. And when people feel good they don't panic and sell. They buy! Why do so many people move to warm climates? Common sense should tell you that the market is controlled by people's moods, and that is controlled by the weather. Reality will start to sink in this coming fall...

    So again, what reality do you think it will be? UP or DOWN?

    Dan Black

    P.S. As you can see in Schweizer’s chart, it shows that in 2001 we simply went sideways for the summer months. I think that will happen again. I don’t think we will get the 61.8% retracement back down. I think the Market Maker’s will whipsaw us to death. It’s no long just Bear Season… It’s Open Season, and the hunters are going to shoot both Bulls and Bears. It’s probably best to stay out for a few months, or you might get shot.

  2. Dan, thanks for the info, very nice chart. I think the market will continue to pullback, I don't know how low it will go, just the SPX 875 is the key to watch.

  3. Dan,

    Thanks for the contribution. It's great keeping an eye open for all possibilities. If the market played out similar to 2001, it would be great (for me)--we just have to remain cautious and vigilant at all times.

    Thank you,

  4. It would be great for me too ADD. I'm a trend/swing trader, not a day trader, and I've been burnt here lately. So, I'm sitting on the sidelines for awhile as this plays out. I'm looking forward to this fall. Should be exciting!

    Dan Black

  5. Dan Black,
    I don't buy your 2001 analogy. The charts look similar but that is about it. 2001 was very early in the bear market and people were buying on dips like crazy. Now were are post major crash, people with heaps of money are sitting on sidelines and Feds are reflating like crazy. Looks like 2002-2003 to me. Yes, the markets will go down from this levels but I would not be surprised to see a higher low. However, this time I'm going to follow the markets rather than predict the next move.

  6. Well Anonymous...

    It's not exactly my analogy, it's Schweizer over at StockTock. I'm just throwing it out there to consider. I agree with you that there is still a lot of money on the sidelines, and money that the banks haven't spent yet. So, the question will be... will the money on the sideline be enough to rally the market up, or will the negative sentiment overwhelm the market and cause too much selling pressure to keep the holes in the damn plugged? Only time will tell?

    Dan Black

  7. First of all, I want to compliment Cobra for the Great charts provided, you are spot on and I'll be watching SPX875, it will be key for this move. One thing that i want to mention is the impact of the Inverse and Bear ETFs, these ETFs allow so many investors the opportunity to short the different sectors of the Market thus providing enormous momentum to the strength of a downside push. In EW intrpretation, P3 will be like no other Bear Leg ever seen in history, they haven't offically called P3 but P2 is either done or we are approaching the end of it's run. I enjoy TA and I think Cobra's charts are some of the best on the Web. I know one thing for sure and that is I will not under estimate the might of the Bear, I will just go along for the ride. Great charts Cobra thanks for sharing.

  8. Be aware the the "2" wave in 2001 might be the P2 wave people have been labelling this March-May move.

    The 2001 Bear was a Tech bubble, not a financial issue directly. This on now is damn serious, and as my article points out, the continued earnings collapse almost points to a market worth near zero. In the depression, the market fell over 90%. Not saying this is the case now, but 80% could happen easily.

  9. What article are you referring to?

  10. I have another post for Schweizer, you can find a link there.

  11. Cobra, I am a moderator on under the userid Analyze. I have been maintaining a string under the TA section called "Leading Market Indices". If you had a spare moment I was wondering if you could comment on my analysis there. We are all fans on the site of your charts and analysis. Link is:



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