07/14/2011 Market Outlook (Diamond as Half Staff)

SHORT-TERM: COULD SEE MORE SELLING AHEAD

Chart pattern looks like a Diamond Bottom acts as continuation pattern, so theoretically we’re only half way on the downside. Besides, see chart below, while SPY is still miles from 06/22 highs but RSP is already there. Since RSP is equal weighted S&P 500 ETF, therefore RSP leads down implies that the SPX internal is much worse than it appears because as you all know, for SPX, holding just a few heavy weighted stocks could easily make the chart looks prettier. So all in all, RSP leads down is not a good sign.

Those who follow Non-Stop Model, the sell signal might have been triggered, so should close long position tomorrow and aggressive trader can even start to short. You can, however, as always, wait for a few days before closing long then start short to prevent whipsaw. As for how well this sell signal worked in the past, you can check my public chart list, from 8.2.2a Combined Intermediate-term Trading Signals – 2004 to 8.2.2g Combined Intermediate-term Trading Signals – 2010, seems to me not a bad signal mostly.

INTERMEDIATE-TERM: BULLISH JULY

See 07/01 Market Outlook and 07/05 Market Outlook for more details.

SEASONALITY: BULLISH MONDAY BEARISH FRIDAY, BEARISH JULY EXPIRATION WEEK

According to Stock Trader’s Almanac:

1. Monday before July expiration, Dow up 6 of last 7.
2. July expiration day, Dow down 6 of last 10, off 390 points (4.6%) in 2002.

Also see 07/01 Market Outlook for July seasonality chart

ACTIVE BULLISH OUTLOOKS:

• 09/27 Market Recap: 9 POMO within 20 trading days means 14%+ up in 3 months.
• 07/01 Market Outlook: Bullish July.  Also one more evidence in 07/05 Market Outlook.
• 07/07 Market Outlook: New NYHGH high means SPX higher high ahead.

ACTIVE BEARISH OUTLOOKS:

• 07/01 Market Outlook: Market is a little overbought, could see pullback soon.
• 07/08 Market Outlook: Could see some weakness the next week.
• 07/12 Market Outlook: Lower SPX close ahead.

SUMMARY OF SIGNALS FOR MY  PUBLIC CHART LIST: 

TREND MOMENTUM COMMENT Long-term 2 of 2 BUY Intermediate 4 of 5 BUY 5 of 5 NEUTRAL Cobra Impulse in BUY mode; Non-Stop in *SELL mode. Short-term DOWN 6 of 6 NEUTRAL

TREND COMMENT QQQ & Weekly UP   IWM & Weekly UP   SSEC & Weekly UP   EEM & Weekly UP XIU & Weekly DOWN DAX & Weekly UP   TLT & Weekly DOWN   UUP & Weekly DOWN GLD & Weekly UP   USO & Weekly UP   XLE & Weekly UP   XLF & Weekly UP IYR & Weekly UP   XLB & Weekly UP

* = New update; Blue Text = Link to a chart in my public chart list. UP = Intermediate-term uptrend. Set when weekly buy signal is triggered. DOWN = Intermediate-term downtrend. Set when weekly sell signal is triggered.