01/29/2010 Market Recap: Gap Support Or Island Reversal?

TREND INDICATOR MOMENTUM INDICATOR COMMENT (Click link to see chart) Long-term 3 of 3 are BUY     Intermediate 3 of 3 are SELL 4 of 6 are NEUTRAL SPY ST Model is in SELL mode Short-term 1 of 1 are SELL 4 of 8 are OVERSOLD

BULLISH 2.4.4 NYSE McClellan Oscillator: Oversold. 0.0.6 Nasdaq 100 Index Intermediate-term Trading Signals: NADNV too high. 0.0.3 SPX Intermediate-term Trading Signals: *NYADV oversold, ChiOsc a little low. BEARISH 2.0.0 Volatility Index (Daily): *Could be a Bull Flag in the forming. CONCLUSION

SPY SETUP ENTRY DATE STOP LOSS INSTRUCTION: Mechanic signals, back test is HERE, signals are HERE. TRADING VEHICLE: SSO/SDS, UPRO/SPXU ST Model 01/27 S 1.9 x ATR(10) Reversal Bar     NYMO Sell 01/21 S *01/28 High *Adjust Stop Loss VIX MA ENV

OTHER ETFs TREND COMMENT – *New update. Click BLUE to see chart if link is not provided. QQQQ     IWM     CHINA Down Double Top or Bearish 1-2-3 Formation? EMERGING     CANADA Down Double Top, target $15.77. TOADV oversold. 1.5.2 TSE McClellan Oscillator: Oversold. Could be a short-term rebound, but the big trend is down. FINANCIALS   REITS   ENERGY   *Beware of Double Top. OIL     GOLD   01/29 Market Recap: *Rydex traders too pessimistic about gold. DOLLAR UP Confirmed Head and Shoulders Bottom breakout! 3.1.1 US Dollar Index Bullish Fund (UUP 30 min): *ChiOsc too high, expect short-term pullback. BOND   Could be a Bull Flag. So yield could rise while bond should fall.

INTERMEDIATE-TERM: MULTIPLE SUPPORT FOR SPX IS AROUND 1020-1040 AREA

2.0.0 Volatility Index (Daily), could be a Bull Flag in the forming so VIX could rise which means the SPX is doomed.

Seasonality wise, the beginning of the February wasn’t good and neither the whole month.

3.1.0 PowerShares DB US Dollar Index Bullish Fund (UUP Daily), confirmed the Head and Shoulders Bottom again and again, this should put a tremendous pressure on the stock market. Because of zero interest rate, the dollar has been the main force for the carry trade fueling almost the entire 2009 rally. Now dollar becomes stronger and stronger so the carry trade has to be unwound which means sell stocks for cash to cover dollar shorts and which in turn means more selling for stocks and more covering for dollar shorts…

So to summarize the above, most likely the pullback isn’t over yet. 4.1.0 S&P 500 Large Cap Index (Weekly), Fib confluences area plus MA89 plus Nov lows, so logically, the pullback target could be around 1020-1040 area. By the way, from the chart, we can see, the GDX and NYSI STO also have confirmed the intermediate-term down. 

The latest II Survey shows much less bulls but unfortunately those running bulls didn’t run into the bear’s camp, instead they’re in correction camp. So far from the red vertical lines, I don’t see high number of people in correction camp means anything significant for bulls.

SHORT-TERM: BEWARE OF ISLAND REVERSAL  

As mentioned in the After Bell Quick Summary, there’s a chance we could see a green Monday. 1.0.3 S&P 500 SPDRs (SPY 30 min), Declines to Advances ratio keeps decreasing meaning the sell pressure is constantly easing therefore it’s good for bulls too.

0.0.2 SPY Short-term Trading Signals, however beware of the possibility of an Island Reversal. If so, then pattern also confirms the intermediate-term downtrend, which is very bad, as so far till now, I have only indicators confirming intermediate-term down, no pattern confirmation yet which is far more reliable than indicators.

About gold, looks like Rydex traders are too pessimistic about it, so gold could rebound, I’m not sure, as I have no idea how the strong dollar is going to affect the gold if indeed it rebounds.

 

STOCK SCREENER:  For fun only, I may not actually trade the screeners. Since SPY ST Model is in SELL mode, only SHORT candidates are listed. For back test details as well as how to confirm the entry and set stop loss please read HERE. Please make sure you understand the basic risk management HERE.

01/29/2010 After Bell Quick Summary

I have nothing new to say except to repeat the last part of the last night’s report, for 3 reasons we could see a green Monday.

1. Monday is the 1st trading day of the February when INDU closed in green 8 out of 10 times since year 2000.

2. Monday is now known as very very bullish and so far the pattern worked perfectly.

3. From the chart 1.0.8 SPX Cycle Watch (Moon Phases), now it looks like the Full Moon means a bottom.

The bottom line, no panic no bottom, and right now I don’t see any panic yet, as people visiting my blog are still trending down (I’m confident that’s not because my posts are bad, simply because people still consider the stock market as easy money), as there’s no single Major Distribution Day (NYSE Down Volume to Up Volume ratio > 9) yet, as there’s no big sell off lasting at least three days in a row yet. If you’re bullish and think this simply is an usual shake of weaker hands, then think about this: If those big shakers’ main purposes are for your cheaper stocks, then what the best time is to get them? Yes, that’s when you’re panic. Now ask yourself: do you still think there’s a hope? Do you still bravely buying dips? Do you yet feel your stomach pain and find hard to sleep overnight? If the answers are all Yes, then perhaps the selling isn’t over yet.

01/28/2010 Market Recap: NATV/NYTV Spiked Again

TREND INDICATOR MOMENTUM INDICATOR COMMENT (Click link to see chart) Long-term 3 of 3 are BUY     Intermediate 3 of 3 are SELL 4 of 6 are NEUTRAL SPY ST Model is in SELL mode Short-term 1 of 1 are SELL 5 of 8 are NEUTRAL

BULLISH 2.4.4 NYSE McClellan Oscillator: *Oversold. 0.0.6 Nasdaq 100 Index Intermediate-term Trading Signals: *NADNV too high. BEARISH 2.3.4 Nasdaq Total Volume/NYSE Total Volume: *Topped again? CONCLUSION

SPY SETUP ENTRY DATE STOP LOSS INSTRUCTION: Mechanic signals, back test is HERE, signals are HERE. TRADING VEHICLE: SSO/SDS, UPRO/SPXU ST Model 01/27 S 1.9 x ATR(10) Reversal Bar       NYMO Sell 01/21 S *01/26 High *Adjust Stop Loss VIX MA ENV

OTHER ETFs COMMENT – *New update, they may not be mentioned in the report. Click links to see more details. IWM & QQQQ 8.2.9a QQQQ – 2009  - 8.2.9h QQQQ – 2002: Seasonality is bearish until the end of January. 0.0.5 QQQQ Short-term Trading Signals: *Breakdown from consolidation area, more downside ahead.  EMERGING 1.4.0 Shanghai Stock Exchange Composite Index (Daily): Double Top or Bearish 1-2-3 Formation? CANADA TSX 1.5.0 iShares CDN S&P/TSX 60 Index Fund (XIU.TO Daily): Double Top, target $15.77. *TOADV oversold. 1.5.2 TSE McClellan Oscillator: *Oversold. I believe TSX will rebound soon. For intermediate-term, however, the Double Top is still in play. FINANCIALS REITS MATERIALS 3.4.4 Materials Select Sector SPDR (XLB Daily): ChiOsc is very oversold now. OIL & ENERGY 3.4.0 United States Oil Fund, LP (USO Daily): *Black bar, could lead to a rebound. GOLD 3.3.0 streetTRACKS Gold Trust Shares (GLD Daily): On multiple support, could rebound soon. DOLLAR 3.1.0 US Dollar Index Bullish Fund (UUP Daily): *Confirmed Head and Shoulders Bottom breakout! BOND 3.0.0 10Y T-Bill Yield: Could be a Bull Flag. So yield could rise while bond should fall.

INTERMEDIATE-TERM: THE CORRECTION TARGET FOR INDU COULD BE AROUND 9727

No update. According to chart 4.0.4 Dow Theory: Averages Must Confirm, the correction target could be around 9727.

SHORT-TERM: COULD BE MORE CORRECTION AHEAD

The SPY and QQQQ daily chart pattern don’t look good today, plus Nasdaq Total Volume to NYSE Total Volume ratio spiked again which means we’re still pretty much near a top, therefore could more corrections ahead.

0.0.2 SPY Short-term Trading Signals.

0.0.5 QQQQ Short-term Trading Signals.

2.3.4 Nasdaq Total Volume/NYSE Total Volume.

Tomorrow, I’m not sure, could be an up day. Besides the 6.1.1a Extreme CPC Readings Watch mentioned in today’s After Bell Quick Summary, because CPC <= 0.81, there’re 78% chances a green close tomorrow, and the 1.0.9 SPX Cycle Watch (60 min) cycle bottom effect, if it hasn’t expired, the most important is 1.0.3 S&P 500 SPDRs (SPY 30 min), VIX didn’t confirm the SPY new low plus lots of positive divergences, so there’s a chance we could see an up day tomorrow.

If however the market is down again, perhaps bears should take some profits. Three reasons:

The next trading day after tomorrow is the 1st trading day of the February, INDU closed in green 8 out of 10 times since year 2000.

The next trading day after tomorrow is now known as very very bullish Monday. There’s no evidence so far proves that the pattern doesn’t work anymore.

Also don’t forget, according to 1.0.8 SPX Cycle Watch (Moon Phases), new low tomorrow could be a bottom as says the coming Full Moon.

INTERESTING CHARTS: NONE

01/28/2010 After Bell Quick Summary

OK, looks like the first prophecy in last night market recap came true: the market did turn on the SPX cycle due time. Now let’s see whether the second prophecy about the market rising to tomorrow or the next Monday will come true.

One trick today, when CPC <= 0.81, 28 out of 36 times (78%) recently a green close the next day.

The bottom line, the intermediate-term remains down. And the bad news is that I have yet another reliable signal even arguing today as a top. I’ll talk about this in tonight’s report.

01/27/2010 Market Recap: Key Day Tomorrow

TREND INDICATOR MOMENTUM INDICATOR COMMENT (Click link to see chart) Long-term 3 of 3 are BUY     Intermediate 2 of 3 are SELL 4 of 6 are NEUTRAL SPY ST Model is in SELL mode Short-term 1 of 1 are SELL 7 of 8 are NEUTRAL

BULLISH 2.0.0 Volatility Index (Daily): Looks like VIX trend was reversed to down from up. BEARISH   CONCLUSION

SPY SETUP ENTRY DATE STOP LOSS INSTRUCTION: Mechanic signals, back test is HERE, signals are HERE. TRADING VEHICLE: SSO/SDS, UPRO/SPXU ST Model 01/27 S *1.9xATR(10) *Click links above for ATR value. May not be a good timing to short here. Reversal Bar       NYMO Sell 01/21 S Breakeven   VIX MA ENV

OTHER ETFs COMMENT – *New update, they may not be mentioned in the report. Click links to see more details. IWM & QQQQ 8.2.9a QQQQ – 2009  - 8.2.9h QQQQ – 2002: Seasonality is bearish until the end of January. 1.3.0 Russell 2000 iShares (IWM Daily): *Bullish Engulfing, bounce from trend line, looks bullish. EMERGING 1.4.0 Shanghai Stock Exchange Composite Index (Daily): Double Top or Bearish 1-2-3 Formation? CANADA TSX 1.5.0 iShares CDN S&P/TSX 60 Index Fund (XIU.TO Daily): Double Top, target $15.77. FINANCIALS 3.4.2 Financials Select Sector SPDR (XLF Daily): Pay attention to ChiOsc, maybe too low. REITS   MATERIALS 3.4.4 Materials Select Sector SPDR (XLB Daily): ChiOsc is very oversold now. OIL & ENERGY 3.4.0 United States Oil Fund, LP (USO Daily): Very oversold plus hollow red bar, could rebound soon. GOLD 3.3.0 streetTRACKS Gold Trust Shares (GLD Daily): On multiple support, could rebound soon. DOLLAR 3.1.0 PowerShares DB US Dollar Index Bullish Fund (UUP Daily): *Could be a H&S Bottom breakout! BOND 3.0.0 10Y T-Bill Yield: Could be a Bull Flag. So yield could rise while bond should fall.

INTERMEDIATE-TERM: THE CORRECTION TARGET FOR INDU COULD BE AROUND 9727

No update. According to chart 4.0.4 Dow Theory: Averages Must Confirm, the correction target could be around 9727.

SHORT-TERM: TWO CYCLES DUE, NEED SEE TOMORROW TO KNOW IF THEY MEAN TOP OR BOTTOM

Tomorrow is a key day because there’re cycle turn date due tomorrow and 01/30.

1.0.9 SPX Cycle Watch (60 min), I know most people don’t believe cycle, but this chart called the recent top successfully (see 01/20/2010 Market Recap), so it should have some credit now, shouldn’t it? According to the chart, if the market is up huge tomorrow morning then it could be a top while down huge means a bottom. This speculation is at least partially supported by today’s After Bell Quick Summary, as ChiOsc is way too high so it’s very likely a huge rise tomorrow morning, if any, could be faded.

1.0.8 SPX Cycle Watch (Moon Phases), so far moon phases worked OK, let’s just forget about being called superstitious, as long as it works, I’m OK with that. So combining with the 60 min cycle above, if the market is up huge tomorrow morning then it should reverse down intraday and fall until 01/29 or 02/01, while if the market is down huge tomorrow morning then it should reverse up and rise to 01/29 or 02/01.

Also there’re 3 additional reasons for calling a key day tomorrow:

The candlestick pattern in chart 0.0.2 SPY Short-term Trading Signals and 1.3.0 Russell 2000 iShares (IWM Daily) look bullish but need a follow-through tomorrow to confirm the trend reversal.

I’ve been talking about VIX pattern for several days, so far correct for VIX only while the bounce of the SPX is a lot weaker than the previous 3 times, so SPX really need to prove itself tomorrow. We’ll see.

3.1.0 PowerShares DB US Dollar Index Bullish Fund (UUP Daily), looks like a Head and Shoulders Bottom breakout, if it could confirm the breakout tomorrow then it’ll be bad for the stock market especially for commodity and related stocks.

 

INTERESTING CHARTS: NONE

01/27/2010 After Bell Quick Summary

The rebound was weak as the Issue Advancing to Declining ratio is 1 meaning for 1 stock up there’s another stock down. Moreover, ChiOsc below is a little bit too high, so I expect to see some weakness at least tomorrow morning.

Let’s see what kind of post Fed day pattern plays out this time. Right now, I have no idea.

The bottom line, that endless free money fueling the 2009 rally seems drying up. Have you noticed how liquidity flows made a higher high long before the stock market made its first higher high? And now it made a lower low while the stock is still much far away of making its first lower low. Will it lead again? We’ll see.

01/26/2010 Market Recap: SPY ST Model Says Sell

TREND INDICATOR MOMENTUM INDICATOR COMMENT (Click link to see chart) Long-term 3 of 3 are BUY     Intermediate 2 of 3 are SELL 4 of 6 are NEUTRAL SPY ST Model is in SELL mode Short-term 1 of 1 are SELL 5 of 8 are NEUTRAL

BULLISH 2.0.0 Volatility Index (Daily): *Still looks like VIX trend was reversed to down from up. BEARISH 1.2.0 INDU Leads Market: INDU breakdown below strong support area, suspect SPX might follow. 01/22 Market Recap: Climax Buying spiked again. CONCLUSION

SPY SETUP ENTRY DATE STOP LOSS INSTRUCTION: Mechanic signals, back test is HERE, signals are HERE. TRADING VEHICLE: SSO/SDS, UPRO/SPXU ST Model *Short if 01/26 low is broken. Might not be a good timing, so be careful. Reversal Bar     NYMO Sell 01/21 S Breakeven Sorry, forgot to mention this setup on 01/20. VIX MA ENV

OTHER ETFs COMMENT – *New update, they may not be mentioned in the report. Click links to see more details. IWM & QQQQ 8.2.9a QQQQ – 2009  - 8.2.9h QQQQ – 2002: Seasonality is bearish until the end of January. EMERGING 1.4.0 Shanghai Stock Exchange Composite Index (Daily): *Double Top or Bearish 1-2-3 Formation? CANADA TSX 1.5.0 iShares CDN S&P/TSX 60 Index Fund (XIU.TO Daily): Double Top, target $15.77. FINANCIALS 3.4.2 Financials Select Sector SPDR (XLF Daily): *Pay attention to ChiOsc, maybe too low. REITS MATERIALS 3.4.4 Materials Select Sector SPDR (XLB Daily): *ChiOsc is very oversold now. OIL & ENERGY 3.4.0 United States Oil Fund, LP (USO Daily): *Very oversold plus hollow red bar, could rebound soon. GOLD 3.3.0 streetTRACKS Gold Trust Shares (GLD Daily): On multiple support, could rebound soon. DOLLAR 3.1.0 PowerShares DB US Dollar Index Bullish Fund (UUP Daily): Could be H&S Bottom in the forming. *Black bar formed, could mean a short-term pullback. BOND 3.0.0 10Y T-Bill Yield: Could be a Bull Flag. So yield could rise while bond should fall.

INTERMEDIATE-TERM: THE CORRECTION TARGET FOR INDU COULD BE AROUND 9727

No update. According to chart 4.0.4 Dow Theory: Averages Must Confirm, the correction target could be around 9727.

SHORT-TERM: FED DAY USUALLY WAS AN UP DAY

Since SPY ST Model is switched to sell mode today, so all the buy dip setups in the table above are cancelled. From now on only short setup will be triggered.

0.0.3 SPX Intermediate-term Trading Signals, looks like a 2 day consolidation pattern, so the direction is unknown. Trading wise, this could be a narrow range bar base band breakout setup – long if breakout above today’s high, short if breakdown below today’s low. For me, because SPY ST Model is in sell mode now, so I’ll short only on breakdown.

Fed day tomorrow, anything could happen, one thing is for sure though: After 2:15pm there’ll be a roller coaster show. From chart 6.4.3 SPX and FOMC, we can see more likely tomorrow will be an up day. As mentioned in today’s After Bell Quick Summary, according to 6.2.4a SPX and VIX Divergence Watch, also more likely an up day tomorrow.

The chart below is from Bespoke Premium, it says Fed day is more likely to rise especially in the morning, but normally there’ll be a sell off before the close.

Nothing else to say, there’re 2 charts, I’d like your attention, no conclusion though, let’s wait and see.

VIX could be topped. This is good for bulls. Besides, lots of indicators are very close to extremely oversold, so there could be a short-term bounce soon and even the market could be bottomed now.

Mentioned in today’s After Bell Quick Summary, QQQQ block sell was large, I’m not sure if we should be altered, just remind you again here, as from my forum, I see most people don’t read my After Bell Quick Summary (although most do read my market recap), so I assume maybe the blog is the same that most people come here for market recap only.

INTERESTING CHARTS: NONE