Live Update

Saturday, December 12, 2009

12/11/2009 Market Recap: Commercial sell and retailer buy both accelerating


Intermediate-term direction not clear with some serious warnings.

Expect a short-term pullback as early as the next Monday.

  TREND MOMENTUM EMOTION COMMENT - Sample for using the trend table.
Long-term Up   Disbelieve  
Intermediate Down Neutral  
Short-term Up Neutral    
SPY SETUP ENTRY DATE INSTRUCTION STOP LOSS Mechanic trading signals for reference only.
Back tested since 2002.
ST Model 12/10 L


12/09 Low
Reversal Bar 12/10 L


12/09 Low


NYMO Sell  

*Stopped out short position flat.

VIX ENV        


0.0.3 SPX Intermediate-term Trading Signals, clearly shows that SPX is stuck in a range, going nowhere for a month, therefore officially the market’s direction is unknown.


Personally, I see more “bear friendly” warning signs. 7.1.2 NYSE Advance-Decline Issues shows all the major warnings while 7.1.1 Primary and Secondary Indices Divergence Watch has improved but still Russell 2000 underperform is a serious warning sigh. These 2 charts are in my public chart list, take a look if interested. The charts listed below are more important, I think:

COT Report - NDX Commercial Hedger Combo, Nasdaq 100 commercial hedger has been accurate. Looks like whenever the curve spiked high then pulled back, most likely it’s a top. This chart is a big warning. I’ll mention again in the short term section below, the candlestick pattern for Nasdaq 100 (QQQQ) looks not good too, so at least this could mean a short term top.


COT Report - SPX Large Contract, both commercial sell and retailer buy are accelerating.


Investor's Intelligence Sentiment Survey, I think all the world knows now that newsletter bears are very rare. The chart below shows some interesting statistics from It looks like a small number of newsletter bears didn’t necessarily mean a big drop but certainly the market went nowhere thereafter as well.

IIBearish IIBearishStatistics


I expect a short-term pullback, could start as early as the next Monday.

1.1.0 Nasdaq Composite (Daily), the black bar mentioned in 12/10/2009 Market Recap was confirmed on Friday. The chart below shows all the recent cases when black bar was confirmed by a red bar the next day.


QQQQ had a bearish reversal day this Friday. The chart below lists all the recent bearish reversal day, take a look at what happened thereafter.


1.0.7 SPX Cycle Watch (Daily), because of the stockcharts drawing problem, I’m not sure if Friday or the next Monday is the cycle turn date, but anyway it looks like a cycle top. Also don’t forget the possible cycle top showing in green just a few days ago. I think it’s rare for both cycle turn date failed to work at the same time so the chart should be trusted.


2.0.0 Volatility Index (Daily), Shooting Star plus hollow red bar, chances are good that VIX may turn up from here which is not good for the stock market.



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