08/25/2010 Market Recap: Head and Shoulders Bottom in the Forming?

TREND MOMENTUM COMMENT Long-term 2 of 2 are SELL   Intermediate 3 of 3 are SELL 5 of 5 are NEUTRAL SPY ST Model in SELL mode; Non-Stop in SELL mode. Short-term Model is SELL 5 of 5 are NEUTRAL Trend is down, I hold tiny short position overnight. GANN DAY MOON/SOLAR CYCLE CONCLUSION 8/26, 9/10 08/24 / 08/23 8/23 Next pivot date: 08/23 – 08/26

BULLISH BEARISH 0.2.3 NYSE McClellan Oscillator: the 3rd Hindenburg Omen triggered. *T2105 too high.

SPY SETUP ENTRY DATE STOP LOSS INSTRUCTION: Mechanic signals, back test is HERE, signals are HERE. TRADING PLATFORM: SSO/SDS, UPRO/SPXU Non-Stop 08/16 S N/A For general direction guide only. ST Model *Cover short entered on 08/23 at close today.

*Please make sure you understand how to use the table above. The purpose of this report is to provide info so contradictory signals are always presented.

SEASONALITY: NO UPDATE

INTERMEDIATE-TERM: STATISTICS ARE BEARISH

See 08/20 Market Recap and 08/24 Market Recap for more details.

SHORT-TERM: HEAD AND SHOULDERS BOTTOM IN THE FORMING?

In 08/24 Market Recap, I said that around 08/26(+-) could be a pivot date, if SPX pullback to 1040 around this pivot date, then there’s a chance that a Head and Shoulders Bottom could be in the forming. This was exactly what happened today. The SPX got support around 1040 and rebounded to form a bullish reversal bar, looks not bad. Well, does this mean that the market has bottomed? All I can say are maybe, could be, probably, possibly. Need see a follow through tomorrow for sure.

 

0.2.0 Volatility Index (Daily), VIX formed 2 reversal bars in a row, therefore may pullback further which is good for the stock market. Besides this, I have lots of other daily charts showing bullish reversal bars. So overall, daily charts look not bad.

 

If you’ve read SPY ST Model Cover Short Signal then you should know a blue bar cover short signal was given by the SPY ST Model today. The chart below shows all the blue bars in recent years. As you can see, although they may not be exactly THE BOTTOM but generally should be close enough, so I think today’s blue bar can be treated as another evidence that the market might have bottomed.

 

HIGHLIGHTS OF THE OTHER ETFS IN MY PUBLIC CHART LIST

	TREND	DTMFS	COMMENT – *New update. Click BLUE to see chart if link is not provided.
QQQQ	DOWN	SELL
IWM	DOWN
CHINA	UP		Head and Shoulders Bottom in the forming?
EMERGING	*DOWN	SELL	4.1.6 iShares MSCI Emerging Markets (EEM Weekly): EEM to SPX ratio too high.
EUROPEAN	DOWN
CANADA	UP	SELL
BOND	UP		4.2.0 20 Year Treasury Bond Fund iShares (TLT Weekly): Too far away from MA(200).
EURO	DOWN	SELL
GOLD	UP	*BUY
GDX	UP	*BUY	4.3.1 Market Vectors Gold Miners (GDX Weekly): GDX to SPX ratio too high.
OIL	DOWN
ENERGY	DOWN
FINANCIALS	DOWN		4.4.2 Financials Select Sector SPDR (XLF Weekly): Head and Shoulders Top in the forming?
REITS	DOWN		4.4.3 Real Estate iShares (IYR Weekly): Home builder is lagging, be careful.
MATERIALS	DOWN	SELL

*DTFMS = Dual Time Frame Momentum Strategy. The signal is given when both weekly and daily STO have the same buy/sell signals. Use it as a filter, don’t trade directly.