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Wednesday, April 13, 2011

04/13/2011 Market Recap: To be or not to be?

Long-term 2 of 2 are BUY
Intermediate 3 of 5 are BUY 5 of 5 are NEUTRAL Cobra Impulse in BUY mode; Non-Stop in *SELL? mode.
Short-term 6 of 6 are NEUTRAL
04/11-04/15 04/03 : 04/05 04/04-04/13 Next pivot date: 04/11
BULLISH 09/27 Market Recap: 9 POMO within 20 trading days means 14%+ up in 3 months.
02/23 Market Recap: Pullback could last 4 weeks, then 02/18 highs will be revisited.
03/11 Market Recap: Bullish in 3 to 6 months.
04/01 Market Recap: Bullish April.
0.1.0 SPY Short-term Trading Signals: A few TradingMarkets long setups trigged on 04/12.
BEARISH 4.0.1 SPX Long-term Trading Signals: Weekly EMA(13) is way too high above weekly EMA(34).
03/18 Market Recap: 03/16 lows will be revisited.
0.0.2 Combined Intermediate-term Trading Signals: Top confirmed?
0.2.4 Nasdaq Total Volume/NYSE Total Volume: Top?
My Thoughts There’re some chances that an intermediate-term top was in.
SPY SYSTEM ENTRY DATE STOP LOSS INSTRUCTION: Mechanic signals, back test is HERE, signals are HERE.
Non-Stop 03/31 L N/A *Sell signal could be triggered, can wait for a few days to avoid whipsaw.
CI Buy & Hold 12/03 L N/A *Close long and sell short if today’s low is broken and red day tomorrow.
CI Swing *Long if breakout 04/13 high and a green day tomorrow. Stop loss is 1.7*ATR(10).
*Short if breakdown 04/13 low and a red day tomorrow. Stop loss is 2.0*ATR(10).
Short-term DOWN N/A I hold both long (trapped) and short overnight.


Three cents:

  1. Short-term direction is not clear, tomorrow could be the “to be or not to be” day. From the statistics mentioned in today’s After Bell Quick Summary and the Shooting Star formed on the SPY 60 min chart, I’m now more inclined to believe “not to be”.
  2. VIX still looks pretty much at a bottom so a rebound, if any, I still doubt how far it could go.
  3. Trading wise, my first priority is to sell bounce. For Cobra Impulse System, tomorrow also is the day of “to be or not to be”.

The chart below should be clear about why I’m clueless about tomorrow, either Double Bottom or Measured Move, we have to wait and see. However, the Shooting Star stalled under EMA(20) does not look good, so my guess is we might see some weakness at least in the morning.


0.2.0 Volatility Index (Daily), this is my biggest concern, not only the VIX:VXV is still too low (as I’ve been blah blah), there’re simply too many reversal like bars on the VIX chart, so chances are high that the VIX may reverse up from here which usually means bad for the stock market.


As for trading tomorrow, first of all, Non-Stop sell signal could have been triggered. I think we’d better wait for tomorrow to avoid the whipsaw. The winning rate of the model is only 50%, it relies heavily on a few winning trades that win really big to earn money in the long run, which is very typical of a trend following system. I’ve mentioned several times in the past about how to take partial profit in the middle to prevent gains to turn into losses. Please refer from chart 8.2.2a Combined Intermediate-term Trading Signals – 2004 to 8.2.2g Combined Intermediate-term Trading Signals – 2010 for how to use the trend line to help determining the exit point. If you know the trend line trick, then the recent 2 trades shouldn’t be the losing trades. Anyway, even both were lost, it doesn’t matter as I stated above, the model relies on only a few longer and more stable trend to earn money in the long run, and in those cases, the trend line trick for sure would make a premature exit, so basically it may not be a good strategy.


About Cobra Impulse System long setup I mentioned yesterday, if you followed my 15 min Open Range rule, then you might not take a long position today. The long setup is still valid for tomorrow, but there’s also a potential short setup for tomorrow. So:

  1. If green day tomorrow and break above today’s high then it’s a long. While if red day tomorrow and breakdown below today’s low, then it’s a short.
  2. If gap up open above today’s high tomorrow, please use 15 min Open Range breakout as the confirmation. While if gap down open below today’s low tomorrow, please use 15 min Open Range breakdown as the confirmation.
  3. If we have both higher high and lower low tomorrow, then how the day closes will determine which position to take. Green day, it’s a long while red day, it’s a short. Feel confused and complicated? Well, it’s a rare coincidence when both long and short are possible at the same time. So don’t be.
  4. If the short setup is confirmed tomorrow, then Cobra Impulse System will be officially in sell mode which also officially to me the intermediate-term trend is down.



See 04/01 Market Recap for more details.


See 04/01 Market Recap for more details. Also according to Stock Trader’s Almanac:

  1. Monday before expiration, Dow up 14 of last 21, down 4 of last 6.
  2. April expiration day, Dow up 11 of last 14.
  3. Income tax deadline, generally bullish, Dow down only 5 times since 1981.
QQQ & Weekly UP
IWM & Weekly UP
SSEC & Weekly UP
EEM & Weekly UP
XIU & Weekly UP
TLT & Weekly DOWN
FXE & Weekly UP
GLD & Weekly UP
GDX & Weekly 04/05 L
USO & Weekly UP
XLE & Weekly UP
XLF & Weekly DOWN
IYR & Weekly UP
XLB & Weekly UP
DBA & Weekly UP
  1. 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.
  2. * = New update; Blue Text = Link to a chart in my public chart list.
  3. UP = Intermediate-term uptrend. Set when weekly buy signal is triggered.
  4. DOWN = Intermediate-term downtrend. Set when weekly sell signal is triggered.
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