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Tuesday, July 20, 2010

07/20/2010 Market Recap: Record High TICK Readings

  TREND MOMENTUM COMMENT
Long-term 2 of 2 are SELL    
Intermediate 2 of 3 are SELL 5 of 5 are NEUTRAL SPY ST Model in BUY mode; Non-Stop in BUY mode
Short-term Model is BUY 5 of 5 are NEUTRAL Trend is up, but I hold no long position overnight.
GANN DAY MOON/SOLAR CYCLE CONCLUSION
07/24, 07/27 07/26 / 07/23 07/29, 07/31 Next pivot date: 07/27 – 07/31
BULLISH
BEARISH 6.2.3 VIX:VXV Trading Signals: A little bit low.
SPY SETUP ENTRY DATE STOP LOSS INSTRUCTION: Mechanic signals, back test is HERE, signals are HERE.
TRADING PLATFORM:
SSO/SDS, UPRO/SPXU
Non-Stop 07/15 L N/A Be sure to check 8.2.2a to 8.2.2g to understand the risks.
ST Model *07/20 L 1.9xATR(10) *Long position initiated on 07/20.
*Please make sure you understand how to use the table above. The main purpose of this report is to provide information so contradictory signals are always presented.

SEASONALITY: WEEK AFTER JULY EXPIRATION, DOW DOWN 7 OF LAST 11

See 07/16 Market Recap for more details.

INTERMEDIATE-TERM: THE REBOUND STILL ALIVE BUT THE LONGER TERM CORRECTION ISN’T OVER YET

A Marubozo bar like today, opened sharply lower then closed deeply in green, usually means bullish even for the intermediate-term, so the puzzle which has been puzzling me for several days now was solved: The rebound isn’t over yet.

As why this kind of Marubozo bar is bullish? Well, I’m too tired to create some examples to prove it. The latest SPY ST Model back test summary (since 2002; still working on improving it now) below shows on average a 79% winning rate, should enough support the idea why Marubozo bar like today is bullish. However, the bigger picture, still think the correction isn’t over for too many reasons, see 07/02 Market Recap and 07/16 Market Recap, so just an one day Marubozo isn’t enough to change my view.

STModelBackTestSummary 

SHORT-TERM: COULD SEE SOME WEAKNESS TOMORROW

I’ve mentioned a little about the record high TICK readings in today’s After Bell Quick Summary. Because TICK is exchanger based, different data vendor will have different readings so please don’t argue with me that you don’t see any extreme readings on your chart. The chart below shows all 1,500 or above TICK readings available in StockCharts. As you can see, most likely a red day the next day. The samples are too small, so I also borrowed a table from the sentimentrader. Again, as I said different data vendor will have different readings so the purpose of using that table is just to convince you that chances are good that we may see a red tomorrow, as an extreme high TICK reading usually mean a buy exhaustion.

Date

TICK

1 Day

Later

1 Week

Later

2 Weeks

Later

1 Month

Later

07/15/10 1645        
09/18/02 1641 -3.0% -3.4% -4.8% 1.1%
06/11/10 1638 -0.2% 2.4% -1.4% 0.3%
03/21/07 1637 0.0% -1.2% 0.3% 3.4%
12/21/01 1599 0.0% 0.3% 1.4% -1.1%
06/12/07 1591 1.5% 2.7% 0.0% 3.7%
03/01/07 1579 -1.1% -0.1% -0.8% 1.3%
01/03/06 1563 0.4% 1.6% 0.7% 0.2%
07/02/03 1553 -0.8% -0.5% -1.2% -1.4%
03/28/07 1543 0.4% 1.6% 2.2% 5.4%
05/25/10 1541 -0.6% 2.3% -1.7% 0.0%
01/03/01 1538 -1.1% -2.5% 0.0% 0.1%
03/12/07 1529 -2.0% -0.3% 2.2% 2.3%
06/29/06 1524 -0.2% -0.6% -2.9% 0.3%
05/21/10 1519 -1.3% 0.2% -3.4% 0.7%
05/17/10 1517 -1.4% -5.6% -5.8% -2.0%
03/23/10 1510 -0.5% -0.1% 0.7% 2.9%
06/13/07 1509 0.5% -0.2% -0.6% 2.4%
03/14/07 1502 0.4% 3.5% 2.2% 4.7%
05/14/04 1493 -1.1% -0.2% 2.3% 3.5%
02/24/09 1492 -1.1% -9.9% -6.9% 5.3%
         
Average -0.6% -0.5% -0.9% 1.7%
% Positive 25% 40% 45% 80%

RecordHighTick1RecordHighTick2

The last but not the least, I’d like to remind you 2 things:

Don’t forget bearish seasonality for tomorrow and the day after tomorrow. Is seasonality useless? Well, today, for example, is well known as a turnaround Tuesday, and indeed it was, so you never know whether the seasonality work or not for tomorrow. Guess it’s no harm to know, isn’t it?

JulySeasonality 

6.2.3 VIX:VXV Trading Signals, too low, so again, I don’t think the market can go too far. By the way, why too low means no good? Because VIX is for 1 month volatility while VXV is for 3 month volatility. 1 month to 3 month ratio is low means the 3 month volatility will be higher than that of now which translates into the SPX point is to say that SPX will close lower than now in 3 month. Well, just a rough idea.

VIXToVXVRatio 


HIGHLIGHTS OF THE OTHER ETFS IN MY PUBLIC CHART LIST

  TREND COMMENT – *New update. Click BLUE to see chart if link is not provided.
QQQQ DOWN 4.1.1 Nasdaq 100 Index (Weekly): Bearish 1-2-3 formation, target 1565.
IWM DOWN 4.1.2 Russell 2000 iShares (IWM Weekly): Ascending Broadening Wedge, target $54.79.
CHINA DOWN
EMERGING UP 4.1.6 iShares MSCI Emerging Markets (EEM Weekly): Bear Flag?
EUROPEAN UP 4.1.7 Vanguard European VIPERs (VGK Weekly): Bearish 1-2-3 formation, target $35.45; Bear Flag?
CANADA DOWN 4.1.5 iShares CDN S&P/TSX 60 Index Fund (XIU.TO Weekly): Bearish 1-2-3 formation, target $15.30.
BOND UP
EURO UP
GOLD DOWN 4.3.0 Gold Trust Shares (GLD Weekly): Head and Shoulders Bottom, target $129.99.
GDX DOWN
OIL DOWN 4.4.0 United States Oil Fund, LP (USO Weekly): Bear Flag?
ENERGY DOWN 4.4.1 Energy Select Sector SPDR (XLE Weekly): Bearish 1-2-3 formation, target $43.14.
FINANCIALS DOWN
REITS DOWN 4.4.3 Real Estate iShares (IYR Weekly): Pay attention to XHB weakness!
MATERIALS DOWN 4.4.4 Materials Select Sector SPDR (XLB Weekly): Bearish 1-2-3 formation, target $27.35.

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