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Wednesday, July 15, 2009

07/15/2009 Market Recap: Heading to a new high?


Market could be bottomed, a weak pullback would convince me so.

Could be a pullback tomorrow.

  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 Overbought*  

Is the market heading to a new high? Frankly, I don’t know. The weekend report drew “not bottomed” conclusion from 8.0.1 Use NATV/NYTV to catch the market top/bottom, 8.0.6 Use NYTV to catch the market top/bottom and 7.0.9 NYADV and NYUPV Divergence Watch. But on the second thought, they cannot exclude the possibilities that the market is still in a topping process, i.e. the market hasn’t started to drop yet, the previous one month pullback could just be a bigger pullback in an uptrend. The following chart put together all factors arguing that market could be bottomed. It looks like that the bears only hope now is “SPX and VIX negative divergence”, the market is repeating exactly what happened last Aug (chart posted below for your convenience). Personally I’ll wait for the pullback to see if I could ideally apply “N vs N” rule on the pullback, such as “down 2 days couldn’t even recover the bull’s 1 day advance”, to confirm that indeed the market was bottomed.

MarketBottomed SPXVIXDivergence2008

Is it possible that there won’t be any pullback at all? Well, take a look at 7.6.0 SPX Cycle Watch (Daily), every time a 4 to 6 days huge rebound after the market bottomed, with no exceptions that they were followed by a pullback. The worst was that I kept yelling overbought for several days but the market simply slapped me on the face every day, but eventually, I was always able to say “told you so”. LOL. Today, I see a few reliable overbought signals, so I’m willing to take the risk of being slapped right on the face again tomorrow, by bravely claiming here that I expect a pullback tomorrow. (drum please…)

Short-term Model from, highest ever.


T2103 - Zweig Breadth Thrust from Telechart, the overbought signal is fairly reliable.


0.0.2 SPY Short-term Trading Signals, STO and RSI are all at an extremely overbought level plus the NYADV overbought below is quite reliable too.


The After Bell Quick Summary has discussed reasons for closing red or green tomorrow, considering the above mentioned overbought signals, so the possibility of a pullback should be a little higher tomorrow.

Two bullish charts for your info. Bottom line, short-term is way too overbought, so if there’s no pullback, I won’t chase high here.

7.3.2 Firework Trading Setup, CPC < 0.8, a “firework” was triggered today.


1.0.2 S&P 500 SPDRs (SPY 60 min), could be an Island Reversal formed, target $95.12.



  1. who are these BEARS you speak of?


  2. Bears? what's that mean? :)

    Island reversal looks very likely. I think at this juncture, we are going higher... Mega-phone pattern in play... This is the only way to get rid of all bears and convince bulltards that we are going up and up forever now... Also as a phrase heard often "from failed move come fast move the other way" and that is exactly what we've seen. So I'm not surprise to see we at least test 956 again. But at that point I don't see what will hold the bulls back and not scare bears into more short squeeze and break above it...

  3. Thanks for the info. Cobra - I look at your charts daily.

    This may sound silly, but can you compare any of this exuberance and irrational market behaviour to market movements in the early 1930's? There seems to be a lot of economic timing similarites (including CIT possibly declaring bankrupcty tomorrow) to a range of economic indicators. I know it is a little bit of a stretch, but there does not seem to be any other reasonable current reference market reference points to the information I am looking at. Thanks for humouring me

  4. Sorry, I don't have 1930 chart so cannot compare with it.

  5. Watch the $NDX and $COMP, as they are very close to highs of the year.

    If the break out and make NEW highs....OR just form a double top (lower low)....should tell alot.

    Everyone keeps watching the SPX, but some people are not looking to notice that the nasdaq is 1% away from high of year. It's all up to GOOG basically...

  6. Many thanks, Cobra. Follow your lead.

  7. If we get a pullback on Thursday, it is likely a Short Term Low. Thurs 07-16 is 13 mkt days from Fri 06-26, and a likely pivot date. My bias is that we see upward pressure on prices into Mon 07-20.

    Regards, Jim P.

  8. 2nd lowest volume of the year and busted all these bearish TA signals.

    A bull trap.

    I think large institutionl positions are being unloaded to the call writers at fat prices before the mega plunge.

    SPX GAAP PE is 59. Bear market bottoms are made at a PE less than 10.

  9. Now everyone is talking about push to SPX 1050. I'm still long-term bearish, but be aware that short-term could be much higher.

  10. Cobra,
    You are an extremally tallented TA person, but I wonder if you don't get discoureged by the fact TA analysis plainly doesn't work anymore?

    Traders at places like GS also have access to the same info you have, plus they have data mining computers with neuronal network that will exploit any possible leading indicators, and thus these indicators will stop working any longer.

    The only way you can beat the system is by using some obscure indicators not correlated with the rest. I don't know what those could be. Maybe sentiment indicators or institutions buying or railroads stats?

    BTW, how are institutions doing, is the last couple of days buying due to institutions?


  11. Jack, TA still works, I think I've predicted this week's rebound just I didn't expect to see such a huge rally (instead of a rebound). The only thing I can tell you is that I'll keep doing this report, yeah, maybe I'm not the smartest guy but still I belive hard work will pay eventually. So please do come and see me and maybe after a year or two, I could be better?

    As for institution accumulation, now accumulation > distribution a little bit. I'll watch for a few days then post an update here.

  12. Disappointing open for shorts. If we dont have a huge down day tomorrow, I will go flat into wknd.

  13. sure look like we going to 1000 by tomorrow!

  14. Any reason to not chase here? Equities will not go down. Apparently when everyone looking at a H&S pattern, it will fail but conversely everyone looking at S&P 1050 is foregone conclusion. This is a one way street and I don't want to miss out on the next run.

    S&P 866 --> 940 in four trading days. It's March all over again. Extreme divergences are meaningless. Good luck everybody.

  15. A prominent cycle timer has a turn date for July17th. Tim Ord says this is a false breakout because it is occurring on light volume but he thinks the market might shoot for the gap at SPY 94 (???-article is over at decisionpoint). hasn't updated their data so I can't see how overbought their oscillator is getting. (There is a parallel to the 1st week of January 09 occurring right now but in that parrallell SP went to new rally high).

    Mr. Panic

  16. Cobra, something wrong with the accumulation chart? We got a BIG STICK GREEN up but no accumulation?!

  17. There was an accumulation yesterday, nothing wrong.

  18. Everybody seems to be skeptical and hardly anybody trusts the rally - and that's why the markets are so strong. As soon as the economy picks up steam and moves forward again, the Fed will raise the rates and the market will tank. But at the moment a bet against the trend is - in my view - foolish.

  19. The economy/real estate market here in California is a mess. The media is deliberately ignoring the massive defaults occurring in real estate right now. The St. Regis Hotel and Resort, where AIG executives infamously partied it up, defaulted on one of its loans in June and was to go into foreclosure auction on July 17th but the auction has been postponed presumeably so the big boys can squeeze the remaining shorts and get the final bagholders into the market before that auction can get national airplay. $SPX opex is over and the all the July puts that were bought playing the HandS false breakout last week have been destroyed so it will be interesting to see how the market plays out tommorrow.

    ----Mr. Panic

  20. The auction was supposed to be July 7th not 17th.



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