Live Update

Monday, July 20, 2009

07/20/2009 Market Recap: A few potential turning signs


Could be a turning day tomorrow.

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

Could be a turning day tomorrow as I saw a few potential turning signs today.

7.6.1 SPX Cycle Watch (60 min), today is the end of 7 trading day cycle while tomorrow is the end of 13 trading day cycle, both or either of those days could be a turning day.


2.0.0 Volatility Index (Daily), from the chart we can see that black bar has very high chances of being a reversal bar.


3.0.0 10Y T-Bill Yield, yield always leads the stock market. It formed a Bearish Dark Cloud Cover today, so it could pullback which means that the stock market could pullback as well.


From chart pattern, I see lots of negative divergences on SPY, QQQQ and USO intraday charts so they could pullback, while I see lots of positive divergences on UUP chart which means US$ could rebound. The combination of those charts should mean a pullback of the stock market.

1.1.5 PowerShares QQQ Trust (QQQQ 30 min).


3.4.2 United States Oil Fund, LP (USO 30 min).


3.1.1 PowerShares DB US Dollar Index Bullish Fund (UUP 30 min).


Listed all the other overbought signals below. It’s true that in a strong uptrend, market could be overbought then even more overbought, but personally, without seeing a pullback, I won’t chase high here.

0.0.3 SPX Intermediate-term Trading Signals, ChiOsc way too high.


2.4.2 NYSE - Issues Advancing, overbought.


T2103 - Zweig Breadth Thrust from Telechart, overbought.


Last but not the least, take a look at After Bell Quick Summary, from seasonality point of view, tomorrow is the most bearish day in July.


  1. Thank you! Keep up the good work. Looking to exit my shorts.


  2. You've been saying that the past week. I am going to laugh so hard if market rallies in your face tomorrow.

  3. Cobra,

    Over the last 2-3 weeks, Jamie Tyrrell over at Option Monster, reported large blocks of VIX Call buying. Most were in August and September, with strike prices of 42, 47, and 50. They came in blocks of 25k, 50k, and 100k... all Calls! Probably 400k-500k or more in total by now. Also, they were probably by the same person. This tells me that the VIX is going up fast before the August expiration. That means the S&P is going down fast.

    I want to also point out that most of the earnings coming out this week and next are "real companies" with "real products", not banks with monopoly money and fake earnings. Since most the TA and Elliotwave chartists can give both a Bullish and Bearish views when at a crossroads... like now, the decision to go in one direction or the other could be made by how the earnings are reported.

    Now, I do agree that fundamentals are already priced into the charts. But, when there is "indecision", the fundamentals... or I should say "How the fundamentals are interpreted" are the key to the direction of the market. With that said, I think that "ALL" positive earnings are goings too be required to push the market higher. And, on the other hand, just a "FEW" negative earnings could cause a breakdown.

    So you have to ask yourself "Did I fire 5 shots or 6?" If you're a bear, will all the earnings be positive this week and next, or will at least one major company disappoint? Do feel lucky... well do you punk?

    Dan Black

    P.S. I'm looking to go short Tuesday between 950-955 Spx. Those VIX call buyers know something that I don't, and I'm just going to follow along for the ride.

  4. Cobra, you forgot to mention that if we gap up tomorrow, it will be the 8th gap up... although today's gap is really small though... Just one question, how is $VIX get the black bar? I thought is only red down and white up, what does it make it black?

  5. Black bar = Open > Close but Close > Yesterday's close.

  6. Anon at 7:56pm, I don't mind you laughing, but you didn't really read my post.

  7. Thanks a lot, Cobra!

    A pullback is much needed and actually healthy for the market to go up further.

  8. Dan Black, the market might take a breather this week, but check the bullish percentage of the SPX: as long as the number of stocks on a bullish buy signal keeps rising, it does not make sense to go against the trend (unless you are a day trader). Beyond that, the P&F charts of the SPX are bullish. If you go short, most of the odds will be squarely against you.

  9. Thanks Cobra! Keep up the good work!

  10. Here's my latest astro/eclipse update. According to Francis Bussiere, Moons entering Leo and New Moons are "statistically highs and suggest a move up to late July 21st." He also felt that the market could get a typical Cardinal New Moon Panic heading into options expiration (He has a theory that the full moon after a cardinal date can usher in a panic window--a cardinal date being a change in season)

    This solar eclipse will be the most watched eclipse in history as it will be travelling over India and China and will cross over Shanghai. The Shanghai Index is currently exhibiting bubble like tendencies with the index currently 40+% above its 200day average (Nasdaq was 50%+ above its 200day at its 2000high) Will it end the emerging markets mania in both of these countries? (and cause a major dollar bottom?) Indian astrologers believe a solar eclipse will usher in a period of discord and religious authorities there are requesting Indians to pray to counter its malefic effects. As I have been doing this research, I definitely have read some red-pill stuff including one Indian astrologer's confirmation that August 14 could be a significant date (which Dan Black has mentioned a few times).

    Anyway, $Vix refuses to make a new low and is acting like the stock market at its March low. VXX has been under significant accumulation during the past week.

    Mr. Panic

  11. Also, according to Bussiere, previous eclipses near July 21st were exact highs (1990,1982) or in the case of 1963 an exact low.

  12. Dan Black - I can kind of confirm what you are saying about call buying. I'm seeing over 870,000 contracts on the VIX bought since 7/14/2009. I didn't see contracts > 15k though.

    One thing to be careful of, however, is that these could be spreads being set up. For example, they could be selling the higher calls and buying the lower calls, etc. I've seen transactions that seem like they are selling the lower calls, and buying the higher calls, but 2-3x more calls, so they will benefit greatly if the VIX skyrockets.

    As well, lots of put selling around 22.5-25. This may mean that we are seeing a bottom in the VIX at least for the summer.

    Cobra - ignore the asshats that love to hate. You will always encounter plenty of haters for whatever reason, maybe they were sexually abused as children so they have anger issues. Ignore them. You're doing great work here, keep it up.

  13. Thank you! Keep up the good work.
    Paulson versus Credibility
    This video.
    Paulson How do you have Credibility?
    Enjoy the party.

  14. Hello Cobra, Uempel, and Dan Black,

    Near term upside should be limited. Cobra's intermedaite term indicators reflect "over-bought" and we are at resistance.

    Cobra is correct in noting that Tues 07-21 has bias for seaaonal weakness,..Hirsch's Trader's Almanac has only a 23.8% probability (their lowest) for Tuesday 07-21 having an UP close on the SP500. Not very good odds.

    My bias is for lower on Tuesday, into Wed 07-22 Low, then turn up on next 13 mkt day (likely pivot) date of Thurs 07-23. My bias is for "trading range" activity, not a "trending move".

    Two items of interest.

    First, Brent Leonard notes that Insider Selling has significantly increased:

    Second, a short term indicator I like (once open, click on chart to enlarge, then see lowest plot on active chart below) is ratio plot of $SPX:$CPCE (Equity Put/Call ratio) and is at an overbought level:$CPCE&p=D&yr=1&mn=0&dy=0&i=p44037532917&a=115818118&r=3214

    Again, combined, these things suggest to me that upside is limited. I am positioned short for Tuesday, but will likely reverse to Long if we have a Lower Close.

    Cobra, one question for you, Intraday NYSE Cumulative Tick plot, do you read it at present? Do you see a negative divergence between the SP500 going higher and Cum Tick gong lower?...(implying the market is due to correct)? OR, you see the Cum Tick plot as somewhat oversold here, having pulled back and now being in a position to support a momve to the upside for the SP500? Any thoughts appreciated. Ditto for STEM.MR plot,..same sort of thing.

    Thank you for your hard work and for the sharing of ideas. Thankyou also Dan Black for reply to the rude visitor yesterday. Have a good day all.

    Regards, Jim P.

  15. PS regarding the Solar Eclipse on 07-22, Carolyn blog has an interesting report:

    Regards, Jim P.

  16. You fools are HILARIOUS. Using superstition to play the markets?? HA HA HA. Get ready for another rally!! woot woot.

  17. Look like $vix is going to cliff dive at open? And we have 8th gap (if you count yesterday's gap as a gap although very very tiny though)...

  18. Yes, it's the 8th gap, let's wait and see. Just sometimes the 8th gap could hold for a day or 2.

  19. I think we need to consider the possibility of a double top. Take a look at the double top in June/July of 2007. Also, take a look at what happened in the following weeks. I expect the same to happen here -- a crash shortly coming, if bears can be patient. I wonder what the target would be if we double-topped in the 960-970 range.

  20. Jim, I did see negative divergence on NYSE/Nasdaq cumulative TICK, and I think it's a sign of a pullback. The reason I didn't mention it last night was because I think it's not very clear so I decided to keep it for myself only.

  21. Thanks uempel...

    I'm looking for a quick drop to around 920 and then get out, as many shorts that were caught around the 870-890 area will probably try to buy back their short and take a smaller loss.

    I'll re-evaluate the market again then.

    To Anonymous 11:09 pm...

    As for the large block going through on the VIX, you are correct. I suspect that Jamie Tyrrell was quoting how many total went through for the day, so they could have been broken down in smaller amounts. Many were Calls sold with lower strike prices and bought with higher strike prices. That points to even more of a deeper correction in the market, as those Calls won't be profitable until a much higher VIX.

    Dan Black

  22. Thanks Cobra for clarification on Cumulative NYSE TICK thoughts. I appreciate your interpretation.

    Sincere thanks also to Uempel, Schweizer, Mr. Panic, Dan Black and others for sharing their work and thoughts here.

    Regards, Jim P.


    Tuesday morning ISEE first reading (at 9:50 am)is 171,..very high, reflecting over-belief?

    This fellow's (Spectacular Bid)work is well founded:

  23. the Head & Shoulder’s breakdown failed to break down, a rally was imminent but technical couldn't sense that, how pathetic indeed.
    overall I like Cobra's better than the others..most people who went short got killed by this rally.

  24. I think I sensed the rebound:

    Just I failed to realize it was a huge rally. This is a sad nature of the TA which is based on "normal odds". It cannot tell me anything if things are way out of normal.

  25. Dan Black, first support is at 932.

  26. It looks like a nice reversal at a critical area at a critical date. Anecdotal evidence suggests that people are panic buying into the market. Tim Wood has written that he has been inundated with e-mails from subscribers asking whether we are starting a new bull market and Carl Swenlin ridiculously switched course and declared that the SP is headed for 1200 although his climatic volume and short term volume indicators are supremely overbought and in areas located at tops; he justifies it by saying that this is an initiation climax not a blowoff top but with McClellan Summation index nearly +3000 it can't be an initiation phase.

    And of course we got the infamous Goldman call for 1040 yesterday.

    Mr. Panic

  27. Check out this technician's take on the current expanding triange/ possible megaphone pattern:
    He's been posting over on Kenny's board.

    --Mr. Panic

  28. Panic, don't underestimate the power of "bull" side. The strength of the pullback is very important, so far I don't see any.

  29. Cobra, I think any pull back will probably be a higher low... the only way to kill this bull momentum is to gap down below 87... but what are the chances?

  30. Cobra,
    I am a riverboat gambler. If the market gaps up tomorrow on Apple's news at rsi 70, then I'll have to take it. But it could easily gap down and take out five daily bars. This rally just seems unsustainable and reminds me of Nasdaq 2000. I sold my largest long position just now and entered VXX and some bearish ETFs.

    --Mr. Panic

  31. Mr. Panic, sincerely wish you good luck!

  32. Anon, you still didn't read my post, I said 4-6 days rebound. Today is just day 6. I bet you won't see your comment anymore. You probably are smart enough (which I seriously doubt) to know which one is easier: a click of a delete button or your long meaningless sentence? You can keep trying, let me see how persistence you could be.

  33. +1 Cobra for deleting Mr. Ass Clown... LOL!

    Mr. Panic, I'm on the boat with you as I went short today too. Merriman just posted a 159.4 reading for tomorrow. Anything over 120 has a higher then usual correspondence to a reversal. The last 2 days have been 89.2. I'm not sure how far down we will go, but 932 (as uempel stated) is the first support. (I'd like to see 914-920 area, but I'll take what the market gives me).

    I'm thinking that it will go down until Friday (and I'll close my shorts), and then the Bull's will rally back up one more time until about the first or second week of August. That should allow them to reach that 1014 level that they are salivating over so bad. That would also be the 50% Fib retracement level from the March 666 low. That should complete the "B" or "2" rally. Then "C" or "3" will start off with a "One Day Crash" to start the "Blood in Streets" Bull nightmare!

    I wonder if Mr. Ass Clown will be buying all the way down? LOL!

    Dan Black

  34. Dan, origianlly, I saw a turn day today and tomorrow but with AAPL ER, frankly, I'm not sure now...

  35. Cobra,

    After Hours (AH) are pretty flat right now. I think AAPL's earnings were already factored in. The old "Buy the Rumor, Sell the Facts". Tomorrow is a likely day to turn, but if it doesn't, it should remain flat until it does. More "doji's from hell"... hey maybe they should make a movie called that?

    Merriman has the 24th listed as a "turn date" in his "Forecast's for 2009" book. Next turn date after that is 31st. (Probably UP to finish at 1014 or whatever?). Of course he has August 14th-17th as a turn date, just like Adrian Fourie does at LuckyDays.TV. I listen to Larry Pesavento too, and he has August 14th as a turn date as well. Many others do too.

    With so many Astrologers and Market Timers predicting the same date I think it will be quite accurate. Raymond Merriman's previous turn date on March 6th-9th was pretty accurate... wouldn't you agree?

    I just can't possibly think of any real (not made up) reasons that the economy is going to be better this fall, as compared to last fall. That August turn date is a big one, and I just don't see it rallying up to 1200-1400 (S&P) starting on that date. It is most likely a turn date that will drive the market below the March 6th bottom, not up. Just my opinion. Maybe I'm wrong, and the local stores in California will start taking IOU's instead of cash, and all those people will start paying their bills with IOU's, and the 15-20 percent of the population that is un-employed will start spending IOU's at local retailer's, etc...

    Do we live in the Matrix or what? I'm glad I took the red pill.

    Dan Black

  36. Dan, I agree with you but just hope you are not too aggressive in shorting this market.



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