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Saturday, January 9, 2010

01/08/2010 Market Recap: Headwind

TREND MOMENTUM COMMENTClick links to see chart or visit my public chart list.
Long-term Up    
Intermediate Up Neutral

3.0.0 TNX: Top in a month?
8.1.0 Normalized NYTV: Topped?
12/31 Recap:
II and AAII survey both show extremely low number of bears.
4.0.4 Dow Theory: *Multiple resistances and breadth are very overbought.

Short-term Up Neutral

1.0.2 SPY: 15 unfilled gaps.
01/04 Recap: Too many bearish extremes.
0.0.3 SPX: *CPC and CPCE MA10 are too low.

0.0.1 Top/Bottom Watch: NYDNV is too low. 
0.0.5 QQQQ: *Black bar, the 1st prophecy fulfilled, so perhaps top is close?
0.0.9 Put Call Ratio: *too extreme, top could be very close. 

CONCLUSION & TRADE Signals presented in the short-term comment area are enough to justify a short selling.
Waiting for a Bearish Reversal Bar to short.
SPY SETUP ENTRY DATE INSTRUCTION STOP LOSS Mechanic trading signals, details are HERE
Take profit whenever you see appropriate.
ST Model 12/21 L

12/31 Low *Added 0.0.4 SPY Mechanical Trading Model into my public chart list so that you can get some visual feelings about this trading model.
Reversal Bar  


NYMO Sell  


VIX ENV        
WATCH LIST COMMENT – *New update, they may not be mentioned in the report. Click links to see more details.
IWM & QQQQ 4.1.2 Russell 2000 iShares (IWM Weekly) : *Breakout but STO is too high may have pullback in a week or two.
EMERGING 1.4.0 Shanghai Stock Exchange Composite Index (Daily): Big red bar means more downside ahead.
FINANCIALS 4.4.2 Financials Select Sector SPDR (XLF Weekly): The breakout looks good, next target 15.70.
REITS 3.6.0 Real Estate iShares (IYR Daily): On multiple support, could rebound. 
3.6.1 Real Estate iShares (IYR 30 min): Bullish 1-2-3 formation breakout, target 47.09.
OIL & ENERGY 3.4.0 United States Oil Fund, LP (USO Daily): *Breakout then consolidation so could be more push up ahead.
DOLLAR 3.1.0 PowerShares DB US Dollar Index Bullish Fund (UUP Daily): Could be a Bull Flag in the forming.
BOND 4.2.0 20 Year Treasury Bond Fund iShares (TLT Weekly): *STO too low.
3.0.1 20 Year Treasury Bond Fund iShares (TLT Daily): *Hammer plus channel support.
*Bond could rebound, but overall it’s in a downtrend.


The negative divergences I mentioned in the earlier report in chart 4.0.2 NYSE Advance-Decline Issues and 4.0.3 Primary and Secondary Indices Divergence Watch are mostly fixed, plus the previously weak sectors 3.5.0 Financials Select Sector SPDR (XLF Daily), 3.4.2 Energy Select Sector SPDR (XLE Daily) and 3.6.0 Real Estate iShares (IYR Daily) (see home builder below), were leading this week, so I could hardly find any major problems from this rally. The only thing I’m worried now is still there’re too many short-term bearish extremes, so soon or later there’ll be a pullback, the question is how big the pullback will be?

4.1.0 S&P 500 Large Cap Index (Weekly), maintain 1150ish as target. SPX touched right at the Fib 61.8%, 1145 on Friday, the next target is so called A = C at 1159 according to some Elliott Wave analysts. And if it’s broken again, then I don’t see anything in between until 1200ish.


Because there’re too many short-term bearish extremes (see table above) plus long term resistances as well as way too overbought breadth signals on chart 4.0.4 Dow Theory: Averages Must Confirm, I think there’s a good chance that 1150ish would hold for awhile.


Not much else changed, all the warnings in the trend table above are still there with not much change so I won’t bother to list them one by one here. Just pay close attention to 3.0.0 10Y T-Bill Yield, looks like a Bull Flag to me, so yield could keep rising, and if so, then indeed most likely within a month we’ll see a top of some kind.



0.0.9 Extreme Put Call Ratio Watch, I’ve mentioned this in the After Bell Quick Summary, now it looks very extended, so I believe a short-term top should be just a few days away。


Monday, as mentioned in the After Bell Quick Summary, most likely bullish. The statistics below is the courtesy of From which we can see, if skip the Monday, plus many bearish extremes (see table above), plus as mentioned above 1150ish as resistance area, therefore, if there’s a Bearish Reversal Day (Open high then close in red or at least close < Open), then bear could bet its luck this time, well, of course, for aggressive traders only.



6.4.5 GLD and UUP Watch, GLD black bar so UUP rebound on Monday?


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