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Tuesday, October 6, 2009

10/06/2009 Market Recap: CPCE too low


CPCE is too low. The previous 2 times when CPCE was this low the market wasn't up much thereafter.

Could be a Cup and Handle pattern formed on the SPY intraday chart.

  TREND MOMENTUM   COMMENT - Sample for using the trend table.
Long-term Up      
Intermediate Down Neutral    
Short-term *Up Neutral    
SETUP DATE INSTRUCTION STOP LOSS Mechanic trading signals for reference only. Back tested since 2002.
Index ST Model I     Stopped out long with gain on 10/01. No position held now.
Index ST Model II 10/06 *Move stop loss 10/06 High Short position initiated on 09/30.
VIX ENV 10/06 *Set stop loss 10/05 Low Long position initiated on 10/06.
Reversal Bar 10/06 *Set stop loss 10/05 Low Long position initiated on 10/05.


All I want to say today are mainly in the chart below:

  1. CPCE closed at 0.47 which is way too low. The last 2 times when this happened the market consolidated for awhile before pulling back. So if we see a few days consolidation from now on then bulls should be careful. I’m inclined to believe this is what’s going to happen next.
  2. Neither have I any evidences to prove that the pullback was over nor any evidences to prove that the market won’t go to a new high. From pure TA perspective, as long as the 09/23 high remains intact the trend is down. This sounds too later if eventually it proves that bears are WRONG AGAIN. Well, that’s why I have short-term setup incorporating with the Index ST Model I/II. See table above, if the 09/23 high is taken, then because of the short-term long setup recently, the dip was bought, right?
  3. I cannot exclude the possibility that the rebound was just to kiss trend line good bye. Chart 0.0.3 SPX Intermediate-term Trading Signals has even a bigger trend line which drew by most people except that trend line wasn’t 3 point validated. Anyway, even use this trend line, it’s not decisively broken, so still could be seen as a back test. All in all, bears still have hopes. (PS. I don’t really believe this “back test bear friendly” stuff though as I trust more on horizontal lines for support and resistance. I’ve discussed this issue Here.)


1.0.4 S&P 500 SPDRs (SPY 15 min), this chart is “bull friendly”, could be a Cup with Handle pattern in the forming, if so then the target is around $110.39.




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