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Sunday, June 28, 2009

06/26/2009 Market Recap: VIX new low again


Expect QQQQ to have at least a short-term pullback.

  Trend Momentum Comments - Sample for using the trend table.
Long-term Down   Idea for trading intermediate-term under primary down trend.
Intermediate Down Neutral  
Short-term Up Neutral  

I discussed the negative divergence between VIX and SPX in Friday’s After Bell Quick Summary. This is the main reason that I don’t trust this rally.


2.0.0 Volatility Index (Daily), VIX ENV10 oversold, still is a pullback setup.


1.0.4 S&P 500 SPDRs (SPY 15 min), 1.1.6 PowerShares QQQ Trust (QQQQ 15 min), Bearish Rising Wedge plus lots of negative divergences, a possible pullback setup as well.


Besides, QQQQ has some additional extremes:

2.3.4 Nasdaq Total Volume/NYSE Total Volume, too high which usually means a top. Since it’s a RATIO, so I don’t think the spike was caused by Russell 3000 re-balance on Friday.


5.0.2 S&P Sector Bullish Percent Index, Tech sector is overbought. This is year level of overbought, so I don’t think it could be neglected.


Nasdaq 100 short-term model from, way overbought。


So to summarize, I tend to believe a pullback Monday, especially QQQQ. 

0.0.2 SPY Short-term Trading Signals, lots saying about a Complex Head and Shoulders Top is in the forming on SPX. The chart below illustrates the idea which shows SPY is probably making a right shoulder now. I have no idea if this is true, just put the chart here for your reference only.



  1. Hello Cobra,

    What do you think about the SPY - OPX time analysis from here

  2. thanks a lot cobra

  3. Everyone click on a banner ad to support Cobras work, please!

  4. As long as the institutions don't buy into this, we should see some substantial downside next month.

  5. The index vix is very dangerous,i have a chart of index vix 1987 august-october of thos year is emulated maybe from jenuary 2009,if this is good then july-august dow jones should have a big crash.

  6. Cobra,

    Even though I like being a Bear more the a Bull I try to read sites and watch videos of both Bull and Bear traders. Looking at both sides should help me make a better decision... right? Tonight I went over the and watch Oscar's weekend video. He is definitely Bullish for next week.

    It's funny how the charts he picked to follow were all Bullish, but most other peoples' chart's are Bearish. One chart that shows the "Open Interest" increasing on the Nasdaq is certainly very Bullish. Although he is a Day Trader his weekend updates are more focused on the next weeks' trend.

    It certainly makes me question any decisions I made recently. However, even with his Bullish charts, I don't think we are going to break out to new highs. One reason that now paints a Bearish picture is the recent Large Call Buying on the Vix.

    If you go over to, and click on the "1x3 spread" link, you will see a video explaining that the last week or two many large blocks of Vix Calls were bought. During the May-June consolidation period I was buying puts on the S$P500. Of course I lost money, or broke even on most of those puts, as the market chopped sideways and slightly upward.

    I watched those daily video updates and never understood why their were so many large buyers of puts during that time period. I thought that those buyers were retail buyers... wrong! By all accounts, the market should have corrected many times during that May-June period. Now I know why they bought those puts... they already knew which direction the market was going.

    Now, by their action's of buying "out of the money" calls, they are telling me that the market is going down in the next month or so. The lesson I've learn here is that TA, Fib's, Fork's, Turn Dates, etc... still need to match what the "Market Manipulators" want. Right now I think they want a correction. And I'm quite happy with that, as I want one too.

    Dan Black

  7. Dan, thanks. I've read a post about huge call on VIX too. I agree with you, someone seems to always know something ahead of us, like, say, before the March bottom, someone bought huge call on XLI...

  8. McClellan oscillator basically has rallied to the 0line which becomes resistance in downtrends. When $Vix and $SPX are down on the same day, the market is down around 2% during the next week during this bear market according to something I read a few weeks ago when the market did it at the 950ish top. (I think it was one of Hulbert's articles.)
    I believe this is week 90 of the bear market; the panic of 1907 lasted 96 weeks, 1974 decline 100 weeks both of which this bear market is related to cyclically which would call for a low in late August,Sept,Oct timeframe and I saw the Bradley model recently and it has a low around early September (but with a high in July)
    Mr. Panic 1907/2009

  9. I like to watch the $XII as it can give more clues than the $SPX.

    The $XII is a higher quality index than the $SPX because it represents stocks that most large institutions actually own. There are many stocks in the SP500 that institutions don't care to own for one reason or another.

    The $XII {Institutional holdings Index) is at a critical point. It is signaling using a lot of solid TA clues that the washout phase is coming. Using the trendchannels and the A-B-C corrective pattern from the 2000 high, we've got a whopper coming. Notice how nicely the B wave retraced 61.8% of the A wave.

    $XII Chart

    June may hold for the EOM/EOQ closeout, but come July, look for a heavy slide.

  10. On June 24, Guy Lerner posted 7 reasons why the equity markets may bounce over the short term:

    Besides Cobra, I include Guy in my daily reading of the market.

    Dan, nice post, Thanks for the link to optionmonster.

  11. You're welcome Anonymous...

    Thanks for the link to "The Technical Take" blog. I hadn't see that McClellan Oscillator chart before. It does look Bullish. But, I agree with Guy that about 930 is the max limit I could expect upward.

    The second chart gives mixed signals. Sometimes the market went up, and sometimes it went down the next day when the Leverage Bear Fund (Red Line) spiked upwards. Hard to predict any outcome with that chart only. That's why we look at multiple charts.

    On another note...

    I spoke with my Astrologer friend Adrian Fourie today. The planets say we go down in the next couple of weeks! His exact words were as follows...

    "In the next couple of weeks, I expect the markets to crash, with September still dropping heavily".


    He still believes a "One Day Crash" will occur on August 14th. Noted Astrologer Raymond Merriman lists August 14th-17th as a "Turn Date" too. I expect that other Astrologers will probably have similar turn dates as well. It's looking good for the Bears now.

    Dan Black

  12. Dan, I don't know if you follow CYCLE T's charts, but it looks as if the market follows a downward trend into Spring 2010...

  13. No,

    I hadn't heard of him, but thanks. I'll check it out.

    We're stopped right now at 927, just as I thought we would. It might go as high as 930, but after that I'm looking for a nice 3 wave (or C wave) down to occur. Where ever this current move ends, (927 or 930), that will complete a 5 wave up move from the 888 low. If the 956 high to the 888 low was wave 1, then this move back to 927 (or so) will complete wave 2.

    Next up... wave 3! It should be a nice move down! I think we will do a total of 5 waves down to about the 61.8% Fib line (about 777), or maybe only the 50% Fib line. I believe that will be larger Wave 1 down, that should be completed around OPX of July, or a little after, as the next turn date is July 24th.

    Then, a Wave 2 back up to about 880 or so, to end around the next turn date of August 14th. That would then setup the perfect storm... a Major Wave 3 inside a larger Primary Wave 3! A "One Day Crash" could occur, which would be a Minor Wave 1, inside this Major Wave 3 of Primary 3.

    A small bounce to occur as the President reassures everyone that everything is ok. The FED throws more money at it, and Minor Wave 2 back up occurs. That would take us to late August or early September. Once the market sees through the BS that FED feed them...

    Wave 3 of 3 of 3 occurs! (Minor wave 3, inside Major wave 3, of Primary wave 3). Hold on to your hat as this rollercoaster in headed straight down at full speed! I think this picture will explain it best...

    Dan Black

  14. Cobra,

    Notice ISEE is going off the chart today... Look at total "indicies/ETF" is way way up... I wonder if the rule I send you last time work on intra day basis also? I guess we will find out... But then again, with government manipulation and intervention, it seems all the bearish case don't work out to bear's favor of late...


  15. By the way, manipulation has become so obvious that even CNBC (bulltard's cheerleader) has picked that up...



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