02/26/2010 Market Recap: Multiple Cycles Due

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

BULLISH BEARISH 6.4.A SPY Bottom Shape: Could be another leg down to test the low.  0.0.8 SPX:CPCE: A top was confirmed. 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 *02/26 L *1.5 x ATR(10)   Reversal Bar *02/26 L *0.9 x ATR(10) NYMO Sell       VIX MA ENV

OTHER ETFs TREND COMMENT – *New update. Click BLUE to see chart if link is not provided. QQQQ   1.1.5 PowerShares QQQ Trust (QQQQ 30 min), *Double Bottom? Target $45.57. IWM   *Not sure what the bearish reversal bar mean up or down. CHINA   Double Top. EMERGING Down CANADA FINANCIALS   REITS   MATERIALS   *Not sure what the black bar mean up or down. ENERGY Down Broadening Top in the forming, the breakout direction is unknown. OIL   ChiOsc too high. GOLD Down DOLLAR UP Head and Shoulders Bottom. BOND Down *Shooting Star under resistance, could pullback.

INTERMEDIATE-TERM: COULD BE A BIGGER CORRECTION BUT NOT SURE IF THERE’S A NEW HIGH FIRST

My speculation about the intermediate-term is still from the II Survey – too many people are looking forward to a correction, so the market would rebound huge before a real correction kicks in. See red vertical lines below, so far repeats exactly the past pattern, right? So I believe there could be a bigger correction ahead. The only question is that the rebound since the Feb 5 is over or there is more?

Because there’re lots of cycles due for the next week and so far they look like a top. Besides, there’re some evidences in the short-term session below arguing for a revisit of the Thursday’s low, so the conclusion is maybe, probably, possibly, there’s not enough time for a new high. All the cycles are listed below:

1. 1.0.7 SPX Cycle Watch (Daily)
2. 1.0.8 SPX Cycle Watch (Moon Phases)
3. 1.0.9 SPX Cycle Watch (60 min)

Take a look at the Important highs and lows Calendar. For the past 10 years, March had the most turning date (I think the March is famous as a turning month). The most famous one perhaps is 03/06/2009 when the mad cow began. There’re also several other turn dates around 03/06: 03/05/2004, 03/07/2005, 03/08/2006. And according to chart 1.0.7 SPX Cycle Watch (Daily), the purple line cycle due date happens to be on 03/08 (03/06 is weekend) as well. So, again, I believe the cycles due the next week could be trusted.

 

SHORT-TERM: VERY LIKELY THE THURSDAY LOW WILL BE REVISITED

There’re 2 evidences arguing that the Thursday low could be revisited the next week. Of course, like all the other evidences I’ve been presenting, they just represent higher odds, they definitely are not sure thing to happen.

QQQQ weekly opened high closed in red, counting the red arrows and the blues arrows, ( 6 + 19 ) / 31 =  81% chances there’ll be a low which is lower than the Thursday’s low the next week.

 

Rydex Enthusiasm Index from sentimentrader, pay attention to the red vertical lines, if the retailers are too active in buying the dips, the next day may rise a little bit, see red arrows, but the 3rd day is usually not very pleasant which could mean that we may not see a very bullish Monday mentioned in the After Bell Quick Summary again.

 

STOCK SCREENER:  For fun only, I may not actually trade the screeners. Since SPY ST Model is in BUY mode, only LONG 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.

Since the intermediate-term direction is not clear, so no stock screeners from now on until the dust settles.