Live Update

Monday, August 10, 2009

08/10/2009 Market Recap: My emotional long-term view


More explain about my long-term view.

Expect US$ to pullback.

A new high still is possible.

  Trend Momentum Comments - Sample for using the trend table.
Long-term Up    
Intermediate Up Overbought  
Short-term Up Neutral  
My Emotion No idea   Neither believe this bull nor want to be a hero to short against it.

I think there’re lots of misunderstandings about my view for a long-term uptrend so I’d like to clarify it here. The chart below is my EMOTIONAL long-term view, I believe we’re now within the green zone, which means I still consider this rally as a bear market rally. Pay attention to “EMOTIONAL” here, as mentioned in my weekend report, in order to avoid “BIAS”, I simply use a few signals to identify the trend for different time frame. By this way, it keeps me from heavily betting against the trend whenever my emotion conflicts with my trend table. Anyway, from now on, I’ll add a new row called “My Emotion” to the trend table. Hope this could help avoiding any future confusions and perhaps provide some “entertainment”.


3.1.0 PowerShares DB US Dollar Index Bullish Fund (UUP Daily), as mentioned in the weekend report, the trend of US$ could determine the trend of the stock market, also I mentioned that good chances today that we could see if the Friday’s rally actually meant something. Well, today, at least US$ didn’t pullback hard like before, this is a little encouraging for bears, but a Doji on the daily chart doesn’t tell us much about the further trend, it could be a reversal or a continuation, so still we need to see tomorrow.  3.1.2 PowerShares DB US Dollar Index Bullish Fund (UUP 30 min), on the 30 min chart, however, there’re a few negative divergences, so I tend to believe that US$ will have a pullback tomorrow. The question is how much?

UUPDaily UUP30min

Nothing else new to say.  1.0.2 S&P 500 SPDRs (SPY 60 min), SPY is till in an up price channel, and 1.1.5 PowerShares QQQ Trust (QQQQ 30 min), an Ascending Triangle could be in the forming, so it’s possible that SPY and QQQQ could push up to a new high. I’ve read lots of paid services, all aren’t sure if the market would have a pullback first or a new high first, but all agree that a little bigger pullback is very close. My bottom line: still don’t believe that SPY could have so many unfilled gaps. Well, I know, I’ve been complaining this for a long long time and already lost my credit – I mean I’m just murmuring…

SPY60min QQQQ30min


  1. That 1929 chart looks scary...

    I doubt we'll have chart like that...Great depression in once in a century in enough

  2. Maybe we won't have as bad a chart as 1929 but the long-term trend is definitely down. This whole "the recession is over" drumroll is just hilarious and will prove wrong in a couple of weeks.

    BTW: Doug Kass of RealMoney Silver has turned bearish. He is a "player" and an "insider" on Wall Street and his prediction is very accurate. You can read his piece titled: "A Summary of My Bearishness" at "".

  3. Hi Cobra,

    Thanks for your daily posts!

    I have read a lot of your commentary, but never posted any comments.

    Just a question for you.

    Are you a believer that gold is forming an inverse head and shoulder in the weekly chart and the price will eventually push up to 1300?

    Thanks in advance,

  4. Dennis, yes, it looks like a H&S bottom but without breakout above the neckline, it still is not a H&S bottom. Also I belive that US$ has bottomed, so we may see gold pulls back a lot.

  5. Thanks for the quick reply Cobra.

    I do see US$ hit a major retracement level, but it could go up and come back down lower. Just wondering what makes you think US$ has bottomed?

    On the other hand, if we see a pull back and a second stimulas package is introdcued in one form or the other, then it could be a catalyst to push gold above 1000? Just a thought.

  6. Cobra - first and most importantly thank you for sharing your hard work so openly and honest. Why trust your emotions when all indicators point up ?

  7. I think we could get a big day down tomorrow. The markets are doing the exact opposite of the March low. Friday we got a spike high followed by an inside day doji today(for $BKX at least) or an inside day minor down in most other indices (March 6 had spike down doji close, March 9 with a minor down inside day and then the market took off to the upside).

    Although, he is bullish, my cycle-timer writes to be wary of August 11; it has ties to the highs of May8-11, and June 11.

    The ascending triangle pattern looks like the pattern of many Nasdaq stocks (after the rebound following the internet stock crash in the spring) in the summer of 2000 before they collapse in the fall of that year. I dubbed that the diving board pattern or the ledge over the cliff pattern

    ------Mr. Panic

  8. Semis could possibly step up and lead once more, for the ST anyway.

  9. Hi Cobra,..and Mr. Panic,..

    Re. the 08-11 time frame,...I have it as a 3 wk cycle likely pivot (being 13 mkt days from previlous pivot on 07-23.

    And tomorrow Wedn 08-12 (FOMC decision)is
    on many market timer's radar as Tue 08-12 (Wed) is a Gann Angle Daily Date. Her is a link that shows why:

    I am biased for a Higher close Tue and Wed.
    Suspect 08-11 (my likely pivot date) is a turn UP. And that the 08-12 Gann Angle date will be a HIGH, or within a day of a High,..etc.

    Regards, Jim P.

  10. PS.. In Stan's 4csns end of day Rydex SP500 mutual fund trading program,..we once again are above the 50% YTD return level:

    And Stan has set up a new blog page for anyone interested, is the link:

    Have a good day,...Regards, Jim P.

  11. What do you mean... it's not like you have said "Take Profits" since march.....

    Not sure you could lose more credibility.

    but long term is up right?

    but as a Technician... your "technical emotional" view is this long term trend line.... following 1929... based on the Macro... which you obviously understand better than technicals right?

    because the point of technicals is to put your emotions out of the picture right?

    Not that the Technicals have said up since march, and you can't get your emotional confirmation bias out of it enough to make real money...

    Just so the Punters in the comment section love you still.... Right... so you can agree with eachother... and lose money together....

    The most important thing is to be Agreed with right? not to be correct? Here is a whole paper about how people would rather be Validated than correct.

    Spend more time reading and less trying to get your dick sucked.

  12. Cobra

    I have the same 'emotional' view as you. However, I do believe that this emotional derives from the rational.

    I have my own models (mainly using volatility, volume and yields) and they have been saying 'intermediate high'. However, given the power of this bear market this bear market rally is proportionately powerful and comparable only with 1930's rallys.

    My results for today are bearish under normal conditions but not bearish enough under recent conditions. I wait to see if the market becomes more responsive to the sell signals.


  13. Dennis, about US$, I have some other reports pointing to a major bottom which are copyrights protected so I cannot say here. But I believe they're reasonable.

  14. Douglas, thanks for the link!

    Anon of 7:43am, thanks, advice is well taken. I'll sure remember that.

  15. Hi, Cobra,

    I have read your post since June. they are very good post. Thanks for your hard working.

    I believe in your 13 trading and 7 trading cycle watch. it is reliable at least from my past watch. however I could not find any description on it. Do you mind to add some description on your chart 7.6.1 SPX cycle watch(60min)?


  16. Yanming, sure, but what kind of description you want?

  17. From your chart, the cycle is not 13 days ( or hours in 60 min chart), why you call it 13 days cycle? How to count it? Where is the starting point ? If the rule does not work, do we need to reset trading cycle?

    What is difference between 13 days and 7 days cycle? Last Monday when two cycles overlap, does this means chances of turning point doubled?

    Thank you for your quick reply.

  18. One day has 7 60min bars, so 13*7 = 91 bars.

    The starting point is not important, I simply try cycle tool on every significant high or low to see if I could find any rule. The 7TD and 13TD were all I could find.

    If rule doesn't work, then wait for the next cycle. Also I'll keep checking if I could find a new cycle.

    This is the first time 7TD and 13TD converges, I don't know how significance the event will be.

  19. Cool!!! you find this rule.

    So on 60min chart:
    7TD = 7*7 =49 bar
    13TD = 13*7=91 bar
    I love this simple rule.

    Does same multiple ( *7 ) apply to 7.6.0 SPX Daily charts?

    Many thanks.

  20. I said that I kept trying the cycle tool until I found something meaningful. So whatever you see on 7.6.0 is what I've found so far. "*7" doesn't work on daily chart.

    Like all the other indicators, cycle doesn't work all the time.

  21. Cobra I read your post everyday and can't thank you enough for all the hard work you put in. I find it really invaluable. I own some AUG SPY 96 lottery puts, only because I believe the top is in already (at least for a little bit).

    and if I can put in a shameless plug for my blog...



The information contained on this website and from any communication related to the author’s blog and chartbook is for information purposes only. The chart analysis and the market recap do not hold out as providing any financial, legal, investment, or other advice. In addition, no suggestion or advice is offered regarding the nature, profitability, suitability, sustainability of any particular trading practice or investment strategy. The materials on this website do not constitute offer or advice and you should not rely on the information here to make or refrain from making any decision or take or refrain from taking any action. It is up to the visitors to make their own decisions, or to consult with a registered professional financial advisor.

This websites provides third-party websites for your convenience but the author does not endorse, approve, or certify the information on other websites, nor does the author take responsibility for a part or all materials on the third-party websites which are not maintained by the author.