11/30/2009 Market Recap: Cycle Bottom?

Summary:

The market could be at a cycle bottom so probably more upside ahead.

	TREND	MOMENTUM	EMOTION	COMMENT - Sample for using the trend table.
Long-term	Up		Disbelieve
Intermediate	Down	Neutral
Short-term	Down	Neutral
SPY SETUP	ENTRY DATE	INSTRUCTION	STOP LOSS	Mechanic trading signals for reference only. Back tested since 2002.
ST Model	11/30 L	*Long intraday.	1.5xATR(10)	Use 2% as the stop loss for SPY. No confidence in this trade.
Reversal Bar	11/30 L	*Long intraday.	0.9xATR(10)	Use 2% as the stop loss for SPY. No confidence in this trade.
NYMO Sell	11/24 S		Breakeven
VIX ENV
Patterns ect.

INTERMEDIATE-TERM: BUILDING A TOP

Maintain the “building a top” forecast. For details please see 11/27/2009 Market Recap.

2.8.0 SPX:CPCE, trend line broken, the market could be topped as long as the trend line holds tomorrow.  Just this chart didn’t work well for predicting an intermediate-term top recently, OK for short-term top though.

SHORT-TERM: COULD BE MORE REBOUND AHEAD

No solid evidences, just bulls have more charts backing them up, so could be more rebound ahead.

Two reversal bars in a row formed on lots of indices’ daily chart, so the chances are good that the market has reached a short-term bottom. 1.3.0 Russell 2000 iShares (IWM Daily), the reversal bars are more clear on  this chart, besides the volume looks promising too.

 

0.0.3 SPX Intermediate-term Trading Signals, today’s low could be seen as a 10 day cycle low, so there’s a good chance that the next 10 trading day could be an up cycle.

1.0.9 SPX Cycle Watch (60 min), looks like a cycle low too.

INTERESTING CHARTS:

I saw lots of people mentioning this, so thought you might want to know: Full moon was the bottom recently (chart below is from www.astrocycle.net). And 12/2 will be the next full moon. Personally, I think full moon or new moon simply means a potential trend change, so if the market rebounds to 12/2, then probably 12/2 is a top.

 

This chart is “bear” friendly, if it repeats what happened in the last 3 weeks: up huge on Monday then pullback the rest of the week. We'll see.

11/30/2009 After Bell Quick Summary

Still within the Rectangle and under important resistance, so theoretically the direction is unknown. But I think the market has a little bit better chance to rebound further. Will present evidences in tonight’s report.

11/27/2009 Market Recap: None Confirmation

Summary:

The market is building a top, not sure where exactly the top is though.

Expect short-term rebound, not sure though.

	TREND	MOMENTUM	EMOTION	COMMENT - Sample for using the trend table.
Long-term	Up		Disbelieve
Intermediate	Down	Neutral
Short-term	Down	Neutral
SPY SETUP	ENTRY DATE	INSTRUCTION	STOP LOSS	Mechanic trading signals for reference only. Back tested since 2002.
ST Model		*Long if green Monday. Again I have no confidence in this trade.		*Stopped out long position with loss. No confidence in this trade.
Reversal Bar		*Long if green Monday. Again I have no confidence in this trade.		*Stopped out long position with loss. No confidence in this trade.
NYMO Sell	11/24 S	*Adjust Stop Loss	Breakeven
VIX ENV
Patterns ect.

INTERMEDIATE-TERM: BUILDING A TOP

The Dubai drama may mean nothing. But it could be seen as one of topping signs. I think I mentioned this sign before: False alarm before the market really tops – sudden drop followed by complete recovery as if nothing happened, this actually reflects the market’s nervousness. Another sign is up and down swings like what’s happening now. We all know that the up and down of the market actually reflects the supply and demand, if demand is high then there won’t be any up and down swing, the market simply goes straight up. Only when supply and demand reach equilibrium, will the market begin to show up and down swings. And since supply and demand are equal now, there’s a chance that the market will drop. The bottom line, I believe that the market is building a top, just I don’t know if the top was in already or there’s another new high.

7.1.2 NYSE Advance-Decline Issues, lots of none confirmation.

 

7.1.1 Primay and Secondary Indices Divergence Watch, lots of none confirmation too.

 

ISEE Index, unlike the previous 2 times, this time it has 4 red cycles so this could mean that the pullback could be larger than the previous 2 times.

 

Investor's Intelligence Sentiment Survey, too few bears among newsletter writers.

 

SHORT-TERM: COULD BE A REBOUND

There’re lots of reversal bars (hollow red or solid black) on many of daily charts, so the market could rebound on Monday. I’m not sure if those reversal bars formed simply because of the special holiday schedule though.

0.0.2 SPY Short-term Trading Signals.

2.0.0 Volatility Index (Daily).

3.1.0 PowerShares DB US Dollar Index Bullish Fund (UUP Daily). I think the black bar means a very short-term pullback, but because the ChiOsc is way too low now, on a little bit longer term, the dollar should rebound.

3.4.1 United States Oil Fund, LP (USO Daily).

 

INTERESTING CHARTS: NONE

11/27/2009 After Bell Quick Summary

If you happened to read the 11/25 Quick Summary comment area you probably knew that today simply repeated the rule that has been playing for so many many times: Whenever US is in holiday/weekend the world tanks on some bad news but the next day when US opens, it won’t tank at all, sometimes it even rises. Plus it’s only a half trading day so I don’t know if the reversal bars I saw everywhere on the daily chart do mean a green Monday or not. The bottom line, a Rectangle formation seems in the forming which has 68% chances of breakout on the upside, but before the price breakout on either side, it’s still a range bounded market so don’t get too bullish or too bearish.

Also there’s one trick pointing to a green Monday: 23 out of 34 times (68%) a green day after a Major Distribution Day (NYDNV:NYUPV > 9).

 

Enjoy your weekend!

11/26/2009 Quick Update

Well, since some people are asking. Let’s take a quick look at SPX e-minis: Looks like a Triple Top is in the forming, the text book target is around 1054. Now the neckline at 1083 holds well. If it’s broken tomorrow then the next important support to watch is 1068.

Since tomorrow is very special – only half day trading so I’m not sure if indeed the above neckline broken means anything important. Just from the extremely bullish ISEE Index readings and Investor's Intelligence Sentiment Survey readings below, I’ll think twice buying this dips.

11/25/2009 After Bell Quick Summary (no market recap tonight)

One trick today: when ISEE Indices & ETFs only index > 100, 19 out of 25 times (76%) a red day the next day (most likely, see red arrows) or the next next day (blue arrows).

I know some of you would remind me of the trick about when both SPX and VIX closed in green, well, only 59% times a red day the next day as I don’t usually mention any trick with winning rate below 60%. Considering it’s just a half day trading on Friday, I doubt if this trick works or not this time.

The bottom line, watch the dollar. It broke below its recent trading range today while EURO broke above an Ascending Triangle with the text book target much much higher. But strangely, the market wasn’t up huge on this dollar pullback like it did on Monday. Not sure if this is simply because of a pre-holiday effect or the dollar goes too far to be a good news anymore.

Will dollar crash from here and how it affects the stock market are remained to be seen. But right now the most important thing is to enjoy your Thanksgiving! No market recap tonight. My next update will be on weekend. Cheers!

11/24/2009 Market Recap: Buy and hold since August

Summary:

No update, no need waste time to read further if don't like to hear lecture which provides small samples about why I always say be careful.

	TREND	MOMENTUM	EMOTION	COMMENT - Sample for using the trend table.
Long-term	Up		Disbelieve
Intermediate	Down	Neutral
Short-term	Down	Neutral
SPY SETUP	ENTRY DATE	INSTRUCTION	STOP LOSS	Mechanic trading signals for reference only. Back tested since 2002.
ST Model	11/23 L		1.5xATR(10)	For SPY the stop loss is around 2%. Use 4% for 2xETF and 6% for 3xETF. No confidence in this trade.
Reversal Bar	11/23 L		0.9xATR(10)	For SPY the stop loss is around 2%. Use 4% for 2xETF and 6% for 3xETF. No confidence in this trade.
NYMO Sell	11/24 S	*Short intraday	*0.8xATR(10)	For SPY the stop loss is around 2%. Use 4% for 2xETF and 6% for 3xETF.
VIX ENV
Patterns ect.

INTERMEDIATE-TERM: MAINTAIN THE VIEW FOR BIGGER AND BIGGER UP AND DOWN SWINGS AHEAD

Nothing new to say today. The rest one and half trading day should more likely to rise than fall. We may have to wait until the next week to see the real market direction. So without further info, I temporarily maintain the view that we’re now repeating the 2007 July top that we'll see bigger and bigger up and down swing ahead and therefore be careful chasing high here.

1.0.3 S&P 500 SPDRs (SPY 30 min), the most bullish case: could be an Ascending Triangle in the forming, target is around 114ish.

I’ll give a little lecture below so if not interested, no bother to read.

I see some bulls in my forum (not in this blog) like to mock bears without any reasons whenever the market rose huge. So I’d like to show you the SPY chart since the August. Apparently it’s not as bullish as it feels. The market had bigger and bigger swings since the August, the best gain is 10% while the worst could only be 4%. Now the problem is no one could guarantee that there won’t be another 5% pullback. And if we do get a 5% pullback, will you hold your position? Isn’t completely impossible for another 5% thereafter? Well, I know you’ll say you simply sell high then buy dip to avoid this. If you really think this way then I don’t see reasons why people seeing glass “half empty” should be laughed by  people seeing glass “half full”.

The individual stocks listed below were deliberately picked in Sep (believe or not, they were chosen for today’s post). Someone in my forum could prove that indeed they were picked in Sep. The links for those chart in my public list is Here – the last 2 pages. I just want to show you how important to take profit and set proper stop loss (suppose the position was entered on the day pointed by the annotation box). Otherwise simply buy and hold until now, lots of these picks would be underwater. The question is: what should I do for those underwater stocks? Continue to hold them? Well, we’ll see. Again, I just want to say, no matter you see glass half full or half empty, trade properly, there’s no point to laugh people who sees a half glass of water in another way, after all you could not 100% guarantee that the best part of the market have not already gone.

  

SHORT-TERM: NO UPDATE

INTERESTING CHARTS: NONE

11/24/2009 After Bell Quick Summary

One trick today: when both SPX and VIX closed in red, 18 out of 28 times (64%) a green day the next day.

11/23/2009 Market Recap: Morning Doji Star

Summary:

Could be a new high ahead but after that there'll be a bigger pullback.

	TREND	MOMENTUM	EMOTION	COMMENT - Sample for using the trend table.
Long-term	Up		Disbelieve
Intermediate	Down	Neutral
Short-term	Down	Neutral
SPY SETUP	ENTRY DATE	INSTRUCTION	STOP LOSS	Mechanic trading signals for reference only. Back tested since 2002.
ST Model	11/23 L	*Long intraday	1.5xATR(10)	For SPY the stop loss is around 2%. Use 4% for 2xETF and 6% for 3xETF. *No confidence in this trade.
Reversal Bar	11/23 L	*Long intraday	1*ATR(10)	For SPY the stop loss is around 2%. Use 4% for 2xETF and 6% for 3xETF. *No confidence in this trade.
NYMO Sell		*Short if Open > Close tomorrow		*Setup not confirmed, waiting for Tuesday.
VIX ENV
Patterns ect.

INTERMEDIATE-TERM: NEED SEE MORE MARKET ACTIONS

The rebound today was more than I expected. However after the morning spike, the market spent the rest of the day on pulling back, only INDU made a new high while all the other indexes failed to confirm it, so the intraday action was not that bullish. No conclusion, need see more market actions.

As mentioned in the After Bell Quick Summary, when CPC < 0.7, high likely a red day tomorrow. Also if watch the chart below carefully, you could find that CPC < 0.67 usually is not a market top but it also means a short-term top is not far away, so maybe it’s not a very good idea to chase high here.

6.4.5 GLD and UUP Watch, GLD black bar means high likely UUP will rebound tomorrow which is another evidence saying that the market may pullback tomorrow.

1.1.3 QQQQ Short-term Trading Signals, the bull’s good news is a Morning Doji Star was formed, which leads to a bullish reversal 76% of the time. This also fits well with the above sayings that the market may have a new high ahead when CPC < 0.67.

 

SHORT-TERM: NO UPDATE

INTERESTING CHARTS: NONE

11/23/2009 After Bell Quick Summary

One trick today, when CPC < 0.7, 9 out of 12 times (75%) a red close tomorrow.

11/20/2009 Market Recap: The Retailer's Trilogy

Summary:

Expect more pullbacks ahead. Could see a very short-term rebound though.

	TREND	MOMENTUM	EMOTION	COMMENT - Sample for using the trend table.
Long-term	Up		Disbelieve
Intermediate	Down	Neutral
Short-term	Down	Neutral
SPY SETUP	ENTRY DATE	INSTRUCTION	STOP LOSS	Mechanic trading signals for reference only. Back tested since 2002.
ST Model	11/17 L		11/19 Low	*Stopped out of long position with loss. I mentioned in 11/16 report, I had no confidence in this trade.
Reversal Bar		*Long if green Monday		*No confidence in this trade too. If Monday eventually Open > Close then better follow the NYMO Sell Setup below.
NYMO Sell		*Short if Open > Close Monday		*Setup not confirmed on Friday, waiting for Monday.
VIX ENV
Patterns ect.

INTERMEDIATE-TERM: EXPECT MORE PULLBACKS

I was not sure about the market’s direction in the Friday’s After Bell Quick Summary, until I saw the Rydex Bull/Bear RSI Spread (Retailers buying Rydex bullish fund to bearish fund ratio) last night, now I believe more pullbacks ahead. See chart below. The green, blue and red lines represent the retailer’s trilogy: chasing high, buying dip and selling low. Unfortunately, the timing was pretty bad except the very first chasing high which had a little bit profit room. Now, retailers are in happy buying dips stage (blue line), missing the final selling low red line, so accordingly, I believe the pullback is not over yet. And I’m even not sure if we’ll see a green Monday anymore.

2.8.0 SPX:CPCE, trend line held confirming this at least is a short-term top.

Now, let’s review the bigger picture:

1.0.8 SPX Cycle Watch (Weekly), Fib 50 price target and Fib 50 time target plus weekly cycle due plus NYSI none confirmation, all pointing to a possible big top. Well, I know this could be another the wolf coming AGAIN. Well, we all know that the wolf coming story is meant to teach our kids no to lie but the story also implies that eventually the wolf does come, doesn’t it?

Still remember the Climax Buying indicator? We had yet another buying climax spike this week. It' doesn’t mean an absolute top but at least more choppy market actions should be expected.

 

COT report, still retailers are buying while institutions are selling.

So considering all above, I still believe, AT LEAST (if you don’t believe the wolf is coming this time), the 2007 July kind of top is replaying.

 

SHORT-TERM: COULD REBOUND ON MONDAY

For all the reasons listed below, I believe we’ll see a Monday rebound. After seeing the Rydex Bull/Bear RSI Spread chart mentioned above, I’m not sure if the market could eventually close in green though.

0.0.2 SPY Short-term Trading Signals, see green arrows, Monday was very bullish recently. Besides, the hollow red bar seemed to mean a rebound at least the next day.

1.0.4 S&P 500 SPDRs (SPY 15 min), ever since the March there were no cases that SPY gapped lower for 4 days in a row and it’d be the 5th consecutive gap down open if the SPY opens lower again on Monday. Also since the March, the bear’s attacks were all ended with the 3rd gap down, therefore what the chances are that, if Monday does gap down, the 3rd consecutive down gap remains unfilled for quite a long time? By the way, about the gap down and the 3rd consecutive unfilled down gap, from another angle, we can say, if indeed these happened, then perhaps chances are good that indeed the wolf is coming this time.

3.1.0 PowerShares DB US Dollar Index Bullish Fund (UUP Daily), black bar could mean a reversal. The dollar pullback is good for the stock market.

 

3.4.1 United States Oil Fund, LP (USO Daily), hollow red bar also means a reversal therefore oil could rebound which is good for the stock market too.

INTERESTING CHARTS:

The chart below is from Elliott Wave International, not a good sign, I think.