The Treasury does not want to be seen as playing favorites. Hence, everybody gets to play.
I explain the inner-working of these programs in this article. The short version is I think this will stop the bleeding pretty effectively.
Posted by bonddad at 10/14/2008 09:12:00 AM
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Treasury Tuesdays
http://i17.photobucket.com/albums/b84/bonddad/ChartofIEF1-2.gif
On the year long chart, notice the following:
-- The market rallied until early March. This was in reaction to the credit crunch.
-- The market sold-off until late June to a bit below the 200 day SMA. This was in reaction to the stock market's rally at the time.
-- The market rallied again until mid-September. Again, this was a safe haven rally.
-- The market has sold off as of late.
The treasury market is caught between two different important cross-winds right now. On one had we have the safe haven play. As investors deal with their concern about the other markets they will flood in Treasury bonds. At the same time, over the last few months the US government has said they will spend a lot more money. That means more treasury bonds will be issued. Increased supply = lower price.
http://i17.photobucket.com/albums/b84/bonddad/ChartofIEF3-8.gif
On the daily chart, notice the following:
-- Prices are below the 200 day SMA.
-- All the shorter SMAs are now beading lower
BUT
-- All the SMAs are also very tightly bunched right now. This indicates there is a mixture of expectations in the market. There is an even balance between bulls and bears right now.
Posted by bonddad at 10/14/2008 06:54:00 AM
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Labels: Treasury Market
Monday, October 13, 2008Today's Markets
http://i17.photobucket.com/albums/b84/bonddad/ChartofSPY-150.gif
Let's try and filter out the daily noise and see that this daily chart tells us.
1.) The market was really oversold and due for a rebound. I said so, but I am hardly alone in that pronouncement.
2.) The blue horizontal lines are from previously established price levels on the chart. As such they will now provide upside resistance.
3.) There is also upside resistance at the 10 day SMA
So, we have several levels of resistance. While today's market action is encouraging, it can also be seen as a way for the markets to make-up for all the selling from last week.
In addition, consider the fundamental background.
France, Germany, Spain, the Netherlands and Austria committed 1.3 trillion euros ($1.8 trillion) to guarantee bank loans and take stakes in lenders, racing to prevent the collapse of the financial system.
The announcements came as Britain took majority stakes today in Royal Bank of Scotland Group Plc and HBOS Plc. The coordinated steps followed a pledge yesterday by European leaders to bolster market confidence as the global economy slides toward recession.
``What it should do is stabilize the banking system,'' said Peter Hahn, a fellow at London's Cass Business School and former managing director at Citigroup Inc. ``Will it stop us from having a recession? No, nothing is going to stop us from having a recession.''
The agreement among heads of the 15 countries using the euro helped trigger a rally in stocks and the euro after a market rout. The Dow Jones Stoxx 600 Index rebounded a record 10 percent today, after slumping 22 percent to the worst drop in its two-decade history last week. The currency had its biggest gain in three weeks, climbing 0.9 percent to $1.3526.
This is a huge move by the respective governments. It indicates they realize the severity of the situation. In addition, it tells us they are willing to "put their money where there mouth is" so to speak. Bottom line, this move has greatly eased the market's tension -- at least for now.
Posted by bonddad at 10/13/2008 03:52:00 PM
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A Closer Look At S&P 500 Sectors: The XLBs
Last week did a ton of technical damage to the markets. So it seems like a good time to look a bit deeper into the markets and turn our attention to specific market sectors.
Let's start with the XLBs, which represent the basic materials sector of the market.
http://i17.photobucket.com/albums/b84/bonddad/ChartofXLB-3.gif
On the multi-year chart, the main point to notice is the sector has clearly broken the long-term trend lines that started in 2003.
http://i17.photobucket.com/albums/b84/bonddad/ChartofXLB1.gif
On the yearly chart, notice the index was holding on even into August of this year. While it was declining at that time, it had only fallen by about 15%. While this isn't good, it certainly isn't horrible either. Also remember that global infrastructure development was a strong theme for most of the latest rally. It looks as though traders were hanging on to that idea for as long as possible. But when we started to hear news from Europe and Asia that they were slowing down, this sector became a portfolio liability.
http://i17.photobucket.com/albums/b84/bonddad/ChartofXLB3.gif
On the three months chart, notice the following:
-- Prices are below the 200 day SMA
-- All the SMAs are moving lower
-- The shorter SMAs are below the longer SMAs
-- Prices are below all the SMAs
Bottom line -- this is now a bearish chart.
Posted by bonddad at 10/13/2008 12:45:00 PM
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The Difference Between Equity Injection and Buying Bad Debt
Let's look at the two different ways the Treasury Department is looking at helping the banking sector.
Here is how they were recently described:
1) Mortgage-backed securities purchase program: This team is identifying which troubled assets to purchase, from whom to buy them and which purchase mechanism will best meet our policy objectives. Here, we are designing the detailed auction protocols and will work with vendors to implement the program.
2) Whole loan purchase program: Regional banks are particularly clogged with whole residential mortgage loans. This team is working with bank regulators to identify which types of loans to purchase first, how to value them, and which purchase mechanism will best meet our policy object
.....
4) Equity purchase program: We are designing a standardized program to purchase equity in a broad array of financial institutions. As with the other programs, the equity purchase program will be voluntary and designed with attractive terms to encourage participation from healthy institutions. It will also encourage firms to raise new private capital to complement public capital.
Buying Debt/Loans/Mortgages
Under this plan, the government will purchase problem assets from lenders. Let's look at the pros and cons of this program:
Pros
-- It gets the assets off the books. This prevents the assets from further hurting the financial institution.
Cons
-- Define "troubled mortgage/loan".
-- The only way for this program to work is for enough of the bad mortgages/loans to be purchased to convince lenders that problem mortgages can't hurt the system. Put another way, the government has to purchase enough of these asset to inspire intra-institution confidence. I have no idea what amount that would be.
-- The only assets the institutions will sell are the ones that are probably going to remain depressed in value for the duration of their existence. No one is going to sell an asset that is or has a higher probability of making them money. This means the government stands a higher probability of taking most of the losses.
Equity Injections
Pros
-- The institutions gets cash immediately. In theory, this should encourage the institutions to start lending again.
Cons
-- Why would they want to start lending? We're at the beginning of a recession, defaults are increasing and other lenders have assets on their books that are increasing the possibility of default.
-- With housing values still decreasing in value, anything related to mortgages will also be dropping in value. That means loans and bonds tied to loans will continue to drop forcing institutions to continue writing down the value of these assets. As a result, equity may go loan loss reserves. This means the government will have to buy a large enough amount of equity to encourage lending and possibly the increase in loan loss reserves coming down the pike.
-- The government says it isn't buying an ownership interest that will lead to directing bank policy. I'm finding that a bit hard to believe. Call me cynical.
Conclusion
It's really looking as though it's going to take a combination of both of these ideas to take care of this mess.
Posted by bonddad at 10/13/2008 10:00:00 AM
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Good Overview of Last Week's Markets
This is from Investor's Business Daily. Click for a larger image.
http://3.bp.blogspot.com/_4jIlyJ10uJU/SPM9vDrZUDI/AAAAAAAAARw/pPXvtN7ANZs/s400/feature101308.gif
Posted by bonddad at 10/13/2008 07:23:00 AM
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Market Monday's
Let's take several different looks at last week's action.
http://i17.photobucket.com/albums/b84/bonddad/ChartofSPY-149.gif
The daily chart shows a very bearish orientation. Prices are below all the SMAs, all the SMAs are headed lower, and the shorter SMAs are below the longer SMAs. But let's add a few points.'
1.) Notice there are two very long candles, which occurred on Tuesday and Thursday. There are bearish.
2.) Note the escalating volume that occurred throughout the week
3.) Note the market was down about 15% last week -- that's a huge drop.
http://i17.photobucket.com/albums/b84/bonddad/ChartofSPY10years.gif
On the 10 day chart, simply notice that the week before last (the last week of September) the market stabilized a bit. Most of the damage was down last week.
http://i17.photobucket.com/albums/b84/bonddad/ChartofSPY5-1.gif
On the 5-day chart, notice there were two big moves lower last week. The first occurred from the beginning of Tuesday to mid-Wednesday. The second occurred from the beginning of Thursday to almost the end of Friday. Also note the market moved lower for most of Monday. In other words, far the majority of time last week the market was moving lower.
Keep in mind that with last week's action numerous people are looking for a reversal. Considering how oversold the market is at this point, that would make sense. However, I made the observation on Wednesday that I was expecting a reversal and look how far that went.
Posted by bonddad at 10/13/2008 05:00:00 AM
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Friday, October 10, 2008Weekend Weimar and Beagle
No pictures or movies today. I'm just glad this week is over.
I'll be on KTLK tomorrow morning for econ 101 with Johnny Wendell.
I'll be back on Monday.
Until then, relax as much as you can and think about anything except the market.
Posted by bonddad at 10/10/2008 03:46:00 PM
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This Week Has Done a Ton Of Technical Damage
Let's take a look at multi-year charts to see how the markets are looking.
http://i17.photobucket.com/albums/b84/bonddad/ChartofSPY-148.gif
As of this writing, the SPYs are at 85.9
Prices have moved through price levels established in 2002, 2004, 2005, 2006, 2007 and 2008.
Now we are looking to test lows established in 2003. That's when this multi-year rally started.
http://i17.photobucket.com/albums/b84/bonddad/ChartofQQQQ-66.gif
As of this writing, the QQQQs are at 30.10.
The QQQQs have moved through lows established in 2004, 2005, 2006, 2007 and 2008. Now the QQQQs are looking to test the high established at the end of 2002. Mercifully we still have a ways to go before we've wiped out this rally.
http://i17.photobucket.com/albums/b84/bonddad/ChartofIWM-17.gif
As of this writing, the IWMs are at 47.90.
The IWMs have moved through levels established in 2004, 2005, 2006 2007 and 2008. Now they are looking to test levels established in 2003.
That's a lot of wealth wiped out.
Posted by bonddad at 10/10/2008 10:58:00 AM
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Paul Volcker Has The Answer
Paul Volcker was the last great Chairman of the Federal Reserve. He was presented with a terrible situation -- stagflation, or weak growth and high inflation. He could only tackle one problem. He chose inflation. To combat the problem he increased interest rates to levels that caused a recession. In fact -- there were two recessions. However, 25 years later, we still have low inflation largely thanks to Volckers efforts. He deserves far more accolades than he receives.
In today's WSJ he offers something that is dearly lacking right now: hope that this situation will end. What has been dearly lacking from anybody (and I mean anybody in any party in any position anywhere) is leadership. Bush is a lame duck watching is legacy (what little is left) circle the bowl. Congress has lacked any dynamic leaders who inspire calm. Paulson attempted one of the largest power grabs in political economic history several weeks ago lowering his public perception. In short, there haven't been many adults anywhere to be found.
However, Volcker is an adult. His editorial is clear and decisive.
First of all, there is now clear recognition that the problem is international, and international coordination and cooperation is both necessary and underway. The days of finger pointing and schadenfreude are over. The concerted reduction in central bank interest rates is one concrete manifestation of that fact.
While there is concern on my part that Bush will do everything he can to prevent international coordination from occurring, the bottom line is circumstances may overpower him. Simply put -- he really doesn't have much choice right now.
In the U.S., with higher limits of deposit insurance in place, the FDIC has demonstrated its ability to protect depositors, to arrange mergers, and to provide capital for troubled banks. Most other countries now have a comparable capacity.
Recent U.S. legislation has provided authority for large-scale direct intervention by the Treasury in the mortgage and other troubled markets. Along with increased purchases by Fannie Mae and Freddie Mac, now under government control, means of restoring needed liquidity are at hand.
Other key sectors of financial markets are now protected or supported by either the Treasury or Federal Reserve, specifically by temporary insurance of money-market funds and by direct purchase of commercial paper.
The FDIC has been working overtime over the last year. Behind the scenes they have helped to arrange important mergers that kept deposit access seamless while preventing more hits to their capital. They deserve far more credit then they are getting.
There is now authority for the Treasury to take unprecedented moves in the markets. While some may not like this -- those arguing "socialism" etc -- they should simply be ignored. The bottom line is we are far past the point of ideology. We need solutions. What has been proposed so far is clearly insufficient to solve the task. We need far more direct intervention and participation.
In addition, there are other regulatory pieces in place. SIPC will help to prevent losses at brokerage firms should there be any problems. There is talk of insuring all bank deposits and debts. In other words -- we're moving in the right direction.
But we need leadership:
None of that is easy. Some of it poses risks for the taxpayer. All of it is decidedly unattractive in the sense of large official intervention in what should be private markets able to stand on their own feet. Unattractive or not in normal circumstances, the point is the needed tools to restore and maintain functioning markets are there. Now is the time to use them. To that end, the immediate and critical need is determined, forceful and persistent leadership -- extending across administrations and Congresses. Both the public and private sectors must be involved
Posted by bonddad at 10/10/2008 07:14:00 AM
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Tuesday, March 24, 200903/24/2009 Market Recap: Consolidation Day
A small candle following a big candle, this is a typical consolidation pattern, so today’s market actions say nothing about the future direction.Short-term overbought signals have been corrected, so I have no idea about tomorrow.CPC is below 0.8, tomorrow the market has 62.5% of chance to close in green according to &disp=P]7.0.4 Extreme CPC Readings Watch.However this chart has given false signals for three times, so I am not sure if it still works.Over the intermediate term the market is still overbought, therefore a pullback is due in the short-term.The bottom line is that the normalized CPC is too low on &disp=P]2.8.0 CBOE Options Equity Put/Call Ratio, so I doubt how far this rally can go.Today’s “down” is far from getting back the Monday’s “up”, should the market goes further down tomorrow without fully offsetting Monday’s gain, then I guess there’ll be a new high later.
http://lh5.ggpht.com/_APmrYvpA45s/ScmjzRgu1pI/AAAAAAAACk0/dOUZibdIpug/CPCWatch_thumb.png?imgmax=800
&disp=P]1.0.4 S&P 500 SPDRs (SPY 15 min).The pattern can be seen as a kiss back after the breakout.STO is a little bit oversold but not at an extreme level, therefore the market could bounce back up during the day if it drops further tomorrow.
http://lh5.ggpht.com/_APmrYvpA45s/ScmdVZuupAI/AAAAAAAACkE/c-FkcXYYC1E/image_thumb%5B1%5D.png?imgmax=800
&disp=P]3.4.1 United States Oil Fund, LP (USO Daily), possible Bearish Rising Wedge, plus STO overbought, so the crude oil may pull back.&disp=P]3.4.2 United States Oil Fund, LP (USO 30 min), the bearish rising wedge can be clearly seen on the 30min chart.The pullback of crude oil is bearish to the stock market.
http://lh6.ggpht.com/_APmrYvpA45s/ScmdWKiQ1WI/AAAAAAAACkM/MOotVhqMr18/image_thumb%5B2%5D.png?imgmax=800http://lh4.ggpht.com/_APmrYvpA45s/ScmdWm0AM7I/AAAAAAAACkU/Jf6ZL_DwAN4/image_thumb%5B3%5D.png?imgmax=800
&disp=P]0.0.3 SPX Intermediate-term Trading Signals.Note that the market is overbought over the intermediate term.
http://lh4.ggpht.com/_APmrYvpA45s/ScmdXstARSI/AAAAAAAACkc/zs0uMzd785k/image_thumb%5B4%5D.png?imgmax=800
T2122 from Telechart, NYSE 4 week New High/Low ratio, overbought.This indicator has been quite accurate once it gets overbought.
http://lh3.ggpht.com/_APmrYvpA45s/ScmdYP7R73I/AAAAAAAACkk/iz9ZZ1608x4/image_thumb%5B5%5D.png?imgmax=800
Seasonality, courtesy of www.sentimentrader.com. Just for fun. Tomorrow the Nasdaq 100 seems very bullish as statistically it has 70% chances of closing in green. However Friday looks terrible, will it be a black Friday?
http://lh3.ggpht.com/_APmrYvpA45s/ScmdYhOHbiI/AAAAAAAACks/qsR82h55SQw/image_thumb%5B6%5D.png?imgmax=800
Posted by Cobra at 7:56 PM 9 comments http://www.blogger.com/img/icon18_email.gif
When both SPX and VIX drops
Just for your reference, today both SPX and VIX dropped. This is rare especially because SPX dropped more than 1%. The following table illustrates how the market performed in the past when SPX dropped more than 1% while VIX also dropped on the same day. The statistics were collected on March 27, 2008, so there’s no data shows after March 27, 2008, but we all know what happened after March 27, 2008. So, if history repeats itself, seems like the market performs well in the coming week as well as the coming month.
http://lh4.ggpht.com/_APmrYvpA45s/ScmaYlgw4dI/AAAAAAAACj0/6UWvbo15z6s/BothVIXandSPXDown_thumb.png?imgmax=800
Today’s report will come soon… This is just a snack. :-)
Posted by Cobra at 7:43 PM 2 comments http://www.blogger.com/img/icon18_email.gif
Thank you for the referring!
I added three more blogs into my blogroll today. They've been providing good traffics to my blog recently so as a sign of sincere appreciation and to be fair, I've added them to my blogroll. Thank you guys! May the force be with you!
http://erikmarketview.blogspot.com/
http://kennystechnicalanalysisblog.blogspot.com/
http://shankystechblog.blogspot.com/
Posted by Cobra at 3:18 PM 8 comments http://www.blogger.com/img/icon18_email.gif
Older Posts
Monday, March 23, 200903/23/2009 Market Recap: Very Short-term Overbought
Now the market is very overbought in the very short term, and it may pull back in tomorrow morning.Since CPC is lower than 0.8 again, 65% of the chance is to close in green according to &disp=P]7.0.4 Extreme CPC Readings Watch.Other short-term and intermediate-term signals are more or less overbought as well but not at extreme levels, so I am not sure if they will play out.Based on the normalized CPC on &disp=P]2.8.1 CBOE Options Total Put/Call Ratio, I still doubt the upside room of this rally.On the other hand, in term of operation I will buy dip with no argument in order to hedge my short positions because the intermediate-term rally may last for a couple of days longer.
Take a look at two charts as follows which show why the intermediate-term rally could go further.
&disp=P]2.8.0 CBOE Options Equity Put/Call Ratio.Finally we have a double confirming trend line.However it may take some time should CPCE decisively breaks out this trend line.
http://lh4.ggpht.com/_APmrYvpA45s/SchICEjraXI/AAAAAAAACic/HZJfx0u6ko0/image_thumb.png?imgmax=800
&disp=P]1.1.4 Nasdaq 100 Index Intermediate-term Trading Signals.NDXA50R at the bottom of the chart is very close to 80, and the level of 80 is a top even in a bull market.Of course, this also means we need to be patient for a few days.
http://lh3.ggpht.com/_APmrYvpA45s/SchIDAt2k0I/AAAAAAAACik/pzm3mS0cVno/image_thumb%5B1%5D.png?imgmax=800
OK, now let’s see how overbought the market is.
&disp=P]0.0.3 SPX Intermediate-term Trading Signals.Overbought in the intermediate-term as you can see, both NYADV and NYUPV have made a historical high.
http://lh3.ggpht.com/_APmrYvpA45s/SchIDy2TQiI/AAAAAAAACis/mt70e483ZAI/image_thumb%5B2%5D.png?imgmax=800
&disp=P]7.0.1 Extreme NYADV and NYMO Readings Watch.Short-term overbought on the following chart.The last time NYADV stayed for 4 days at the overbought level, but this time it may not stay that long in my opinion.
http://lh4.ggpht.com/_APmrYvpA45s/SchIESWKPzI/AAAAAAAACi0/QSJ-h5WMNNs/image_thumb%5B3%5D.png?imgmax=800
&disp=P]1.0.3 S&P 500 SPDRs (SPY 30 min) and &disp=P]1.0.4 S&P 500 SPDRs (SPY 15 min).Over the very short-term, overbought all over the charts for all applicable indicators, therefore I believe the market will pull back in tomorrow morning.
http://lh6.ggpht.com/_APmrYvpA45s/SchIFDBJ5LI/AAAAAAAACi8/KTnO13X2eh0/image_thumb%5B4%5D.png?imgmax=800
&disp=P]1.0.7 NYSE - TICK (30 min).TICK is too high which means the market may pull back in tomorrow morning.
http://lh3.ggpht.com/_APmrYvpA45s/SchIF2DH06I/AAAAAAAACjE/y7XfF-Yls1c/image_thumb%5B5%5D.png?imgmax=800
&disp=P]1.3.7 Russell 3000 Dominant Price-Volume Relationships.Here is the biggest problem with today’s rally, 1592 stocks price up volume down.Anyway, who cares? He he.
http://lh3.ggpht.com/_APmrYvpA45s/SchIGiM0dDI/AAAAAAAACjM/soTDb2Ke7bs/image_thumb%5B6%5D.png?imgmax=800
&disp=P]7.0.7 SPX and VIX Divergence Watch.For your information only, VIX is reluctant to go down while the stock market is flying high.Nothing beyond that.
http://lh4.ggpht.com/_APmrYvpA45s/SchIHXSGK5I/AAAAAAAACjU/O3NyT4OjxUE/image_thumb%5B7%5D.png?imgmax=800
Posted by Cobra at 7:40 PM 10 comments http://www.blogger.com/img/icon18_email.gif
Sunday, March 22, 200903/20/2009 Market Recap: Hey, don’t you see intermediate-term buy signal?
All intermediate-term signals on &disp=P]0.0.0 Signal Watch and Daily Highlights are buy now, and I am not going to argue with them.However my bottom line is that the normalized CPC on &disp=P]2.8.1 CBOE Options Total Put/Call Ratio is way too bullish, so I don’t think this intermediate-term rally – if it does exist – could go too far.In this report, I will show you what the profit/loss would be by following intermediate-term buy signal at the primary down trend, and this should be more meaningful than arguing whether the market would go up or down over the intermediate term.The market has topped out over the short term, I believe, however it may bounce back up in the Monday morning and more likely close in red according to the statistics.
http://lh4.ggpht.com/_APmrYvpA45s/ScZ5MJAx3VI/AAAAAAAAChY/knPdhDCmBls/image_thumb.png?imgmax=800
&disp=P]7.2.3 Intermediate-term Trading Rule.Note the blue dashed line on the chart.Simply saying, it would be a consistent loss if one followed the intermediate-term buy signal to buy and then sell on the intermediate-term sell signal.On the other hand, one could get a decent return by simply following the intermediate-term sell signal to short and then to cover on the intermediate-term buy signal.
http://lh5.ggpht.com/_APmrYvpA45s/ScZ5M-_r9OI/AAAAAAAAChg/Iq5uffDHzho/image_thumb%5B2%5D.png?imgmax=800
Why is that?Some people say TA signals don’t always work which is frustrated.Well, does the above &disp=P]7.2.3 which shows buy signal doesn’t work frustrate you?A very important thing prior to using the technical indicators is to check out the trend over the longer time frame.For instance, one must take the primary trend in count while trading the intermediate-term trend on &disp=P]7.2.3.The primary trend is down according to &disp=P]7.3.0 SPX Long-term Trading Signals, and this is why the buy signal isn’t so useful compare with the sell signal over the intermediate term, right?
http://lh4.ggpht.com/_APmrYvpA45s/ScZ5NvEvAPI/AAAAAAAACho/Qhm6ctD11xc/image_thumb%5B3%5D.png?imgmax=800
Now let’s go back to the analysis of the current market. On &disp=P]0.0.3 SPX Intermediate-term Trading Signals, although intermediate-term signals are all buy, the momentum indicators on the top of the chart show that the market is overbought, which means it’s risky to go long at the current level.Don’t forget &disp=P]7.2.3, even going long at the intermediate-term buy won’t be consistently profitable, buy at the extremely overbought level will have no luck.
http://lh3.ggpht.com/_APmrYvpA45s/ScZ5OtjSUiI/AAAAAAAAChw/ZtZTE3Rb3_M/image_thumb%5B4%5D.png?imgmax=800
&disp=P]2.8.0 CBOE Options Equity Put/Call Ratio.This is a re-organized chart.Basically, any breakout on the trend line pinpoints at least a short-term top of the market, breakout of trend lines across major peaks are more likely a top in the intermediate-term.Now you see at least a short-term top, don’t you?The good news is the trend line across major peaks isn’t there, therefore the intermediate term rally might not finish yet.However, I doubt how far this rally could go according to the normalized CPCE as I mentioned earlier.
http://lh4.ggpht.com/_APmrYvpA45s/ScZ5PtCDgfI/AAAAAAAACh4/ACilB88po0w/image_thumb%5B5%5D.png?imgmax=800
&disp=P]1.3.7 Russell 3000 Dominant Price-Volume Relationships.1587 stocks price down volume up, this is because the sell off is just a beginning so this reading is actually bearish which means the down trend may continue until the next price down volume up.You may read the comments in blue on the chart and understand what I am talking about.
http://lh6.ggpht.com/_APmrYvpA45s/ScZ5QE-Lw0I/AAAAAAAACiA/DUL_v01vZBA/image_thumb%5B6%5D.png?imgmax=800
&disp=P]1.0.3 S&P 500 SPDRs (SPY 30 min).STO is extremely oversold over the very near-term, so the market may bounce back up at least in the Monday morning.
http://lh3.ggpht.com/_APmrYvpA45s/ScZ5RA2oNII/AAAAAAAACiI/CdYPzsaYWkM/image_thumb%5B7%5D.png?imgmax=800
&disp=P]2.3.4 Nasdaq Total Volume/NYSE Total Volume.Here is a bottom sign.However the assumption of this chart is that, Nasdaq is usually considered more risky/volatile than the broad market, therefore should the volume of Nasdaq be significantly lower than that of NYSE it means the funds are staying away from the risk, from contrarian’s perspective this scenario would be very bullish.However according to &disp=P]1.1.7 QQQQ Outperforms SPY Good Sign? Now the problem is that the funds are not afraid of risk but QQQQ way outperforms SPY, so I decide to overlook the bottom signal on this chart.In fact, why NYSE volume becomes huge is because of the massive volume of financial stocks which are only one or two bucks, and the funds are not afraid of risks or staying away from Nasdaq market.
http://lh5.ggpht.com/_APmrYvpA45s/ScZ5R3cvagI/AAAAAAAACiQ/rbTKaWDJElU/image_thumb%5B8%5D.png?imgmax=800
Posted by Cobra at 10:45 AM 7 comments http://www.blogger.com/img/icon18_email.gif
Thursday, March 19, 200903/19/2009 Market Recap: The 2nd Bearish Reversal Day
Today is the second bearish reversal day in this week, and I guess there won’t be a follow-through tomorrow just like the first one on Monday because of the famous The 3rd time is the charm.Albeit the market declined, it is still overbought either the short term or the intermediate term, therefore a pullback is still needed.The financial sector is extremely oversold in the very short-term, so the market may at least bounce back up some time tomorrow and 67% of the chance may close in green according to &disp=P]7.0.4 Extreme CPC Readings Watch in the case of CPC < 0.8.However, a grand rally seems unlikely to me even the market does close in green.
http://lh5.ggpht.com/_APmrYvpA45s/ScL2prWYPqI/AAAAAAAACgo/mjgZdAcWyLw/image_thumb.png?imgmax=800
&disp=P]1.0.4 S&P 500 SPDRs (SPY 15 min).The pattern on the chart looks like a Pennant which is a continuation pattern, so the market may possibly go up further.
http://lh3.ggpht.com/_APmrYvpA45s/ScL2qw-h6hI/AAAAAAAACgw/mxDSN8c71gQ/image_thumb%5B1%5D.png?imgmax=800
&disp=P]5.3.1 Financials Select Sector SPDR (XLF 30 min).Since the ChiOsc is way too low, the price may at least bounce back up in the middle of the day which is bullish to the broad market.
http://lh3.ggpht.com/_APmrYvpA45s/ScL2rZmbtgI/AAAAAAAACg4/ZUFHU8CSQwY/image_thumb%5B2%5D.png?imgmax=800
Now let’s check out how overbought the market is.
&disp=P]0.0.2 SPY Short-term Trading Signals
http://lh6.ggpht.com/_APmrYvpA45s/ScL2sPczfNI/AAAAAAAAChA/sTzsRtEXhXU/image_thumb%5B3%5D.png?imgmax=800
&disp=P]0.0.3 SPX Intermediate-term Trading Signals
http://lh4.ggpht.com/_APmrYvpA45s/ScL2s5lm96I/AAAAAAAAChI/aIiChWKjCCE/image_thumb%5B4%5D.png?imgmax=800
Number of SPX stocks closed above MA10, courtesy of www.sentimentrader.com.
http://lh5.ggpht.com/_APmrYvpA45s/ScL2tSXtnBI/AAAAAAAAChQ/VuirHqpjSq8/image_thumb%5B5%5D.png?imgmax=800
Posted by Cobra at 6:51 PM 12 comments http://www.blogger.com/img/icon18_email.gif
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Wednesday, March 18, 200903/18/2009 Market Recap: CPC new low!
Nothing new today, except repeat: overbought, very overbought, very very overbought. This is a sad aspect of TA (or more precisely my poor TA skills), history does not simply repeat exactly itself. I still see a short-term pullback. And very short-term, there should be a pullback at least tomorrow morning. CPC is still less than 0.8 today, so according to &disp=P]7.0.4 Extreme CPC Readings Watch, 69% chances tomorrow may close in green, just this time I'm not very sure, will explain later. &disp=P]7.0.1 Extreme NYADV and NYMO Readings Watch, day 3 NYADV remains overbought, according to the past most extreme case, NYADV could remain overbought again tomorrow.
http://lh6.ggpht.com/_APmrYvpA45s/ScG-J8upAEI/AAAAAAAACfo/CO752Z387qU/NYADVandNYMO_thumb.png?imgmax=800
&disp=P]2.8.1 CBOE Options Total Put/Call Ratio, this is the today's main story, 0.65, new low. According to the red dashed lines, the past two times when CPC was bellow 0.7, weren't very pleasant the next day, so that's why I said, I'm not sure about tomorrow. I don't know if the recent rally is a start of an intermediate-term rally, just with such a low readings of the Normalized CPC, I really have difficulties in understanding how far the market can go up. Today's Fed Announcement, by the way, finally made me understand the reason for the March 9 speculation play in chart &disp=P]7.3.2 Firework Trading Setup, the big money knew today's announcement and therefore bought lots of CALLs, and this is why the CPC keeps going low. So, if my guess is right, if no pullback or just a small pullback tomorrow, the chances are, that this OE Friday, we may see yet another huge firework, so bears be prepared.
http://lh3.ggpht.com/_APmrYvpA45s/ScG-Kz2eu_I/AAAAAAAACfw/y_6XD35T7zA/CPC_thumb.png?imgmax=800
&disp=P]2.8.0 CBOE Options Equity Put/Call Ratio, just a quick look, another top signal triggered today.
http://lh6.ggpht.com/_APmrYvpA45s/ScG-LirqVII/AAAAAAAACf4/PIMSTb7rTyM/CPCE_thumb.png?imgmax=800
1&disp=P].0.2 S&P 500 SPDRs (SPY 60 min), ChiOsc is way too high, this is why I think that the market may pullback tomorrow morning.
http://lh5.ggpht.com/_APmrYvpA45s/ScG-MEnHABI/AAAAAAAACgA/nwMtpbtVG5s/SPY60min_thumb.png?imgmax=800
For other charts, noting particular, just look how overbought they are.
&disp=P]0.0.2 SPY Short-term Trading Signals, NYADV and NYMO are very overbought.
http://lh3.ggpht.com/_APmrYvpA45s/ScG-NLaNE8I/AAAAAAAACgI/MWBlVOIvtOM/SPYShortTerm_thumb.png?imgmax=800
&disp=P]0.0.3 SPX Intermediate-term Trading Signals, 804 is where Wave reader distinguish between an intermediate-term rally and a correction rally, pay attention there.
http://lh4.ggpht.com/_APmrYvpA45s/ScG-NylvTWI/AAAAAAAACgQ/E-eELd15DlQ/SPXMidTerm_thumb.png?imgmax=800
Number of SPX stocks closed above MA10，courtesy of www.sentimentrader.com.
http://lh5.ggpht.com/_APmrYvpA45s/ScG-OmXN7XI/AAAAAAAACgY/F4W4ndnwjvM/SPYBreadth_thumb.png?imgmax=800
The following chart is just for fun, courtesy of www.sentimentrader.com. The following four days starting from tomorrow are statistically a little bearish biased.
http://lh3.ggpht.com/_APmrYvpA45s/ScG-PFyFuqI/AAAAAAAACgg/uklPHk6dZek/Seasonality_thumb.png?imgmax=800
Posted by Cobra at 8:38 PM 15 comments http://www.blogger.com/img/icon18_email.gif
Tuesday, March 17, 200903/17/2009 Market Recap: Market Overbought
The market is overbought and due for a pullback in the near term.As I warned in the weekend report, statistically today is the most bullish trading day in March so bears should get ready for the final strike from bulls.Now we saw the strike, which was even more aggressive than what I thought.Therefore, I still think the market should at least pullback in the near term (note that my tone is softer…) however bears should also be aware of the worst scenario.According to &disp=P]7.0.1 Extreme NYADV and NYMO Readings Watch, in the past NYADV had been staying as overbought for 5 days, and now it’s the third day, so maybe bears need to wait for two more days although I doubt it (reasons will be given in the following).Tomorrow the market may pull back in the morning, but it may close in green with the probability of 68% according to &disp=P]7.0.4 Extreme CPC Readings Watch in the case CPC < 0.8.In addition, tomorrow is the Fed day, and the statistics show that if the market rallies sharply prior to the Fed day then it’s very like to sell off afterward.Therefore it’s prudent for bulls to lock the profit before 2:15pm Fed Announcement.
http://lh5.ggpht.com/_APmrYvpA45s/ScB3Zqni5NI/AAAAAAAACew/KsLOF6uoPbA/image_thumb.png?imgmax=800
There are two issues with today’s rally which makes me doubt if the market could keep overbought for too long.
[*]&disp=P]1.3.7 Russell 3000 Dominant Price-Volume Relationships, 1524 stocks price up volume down, which is a little bit too high and also a strong hint to the near-term pullback.You may compare the current setup with what happened after the red comments on the chart, especially while the number is more significant.
http://lh3.ggpht.com/_APmrYvpA45s/ScB3ak6QusI/AAAAAAAACe4/XxrXDYfrB8o/image_thumb%5B1%5D.png?imgmax=800[*]Today the TICK was retreating while the market was going up.You may see it more clearly on the cumulative TICK presented as follows (Courtesy of www.sentimentrader.com).In my opinion this is the early warning of pullback.
http://lh6.ggpht.com/_APmrYvpA45s/ScB3bB4tbnI/AAAAAAAACfA/_9WzhoEyaYA/image_thumb%5B2%5D.png?imgmax=800Now let’s check out how overbought the market is.
&disp=P]0.0.2 SPY Short-term Trading Signals.Quite a lot of overbought on the market, while NYADV and NYMO are rather accurate.
http://lh3.ggpht.com/_APmrYvpA45s/ScB3b9DHjzI/AAAAAAAACfI/nNWzqljXLdM/image_thumb%5B3%5D.png?imgmax=800
&disp=P]0.0.3 SPX Intermediate-term Trading Signals.In terms of intermediate term signals NYADV and NYUPV are overbought too.Of course, in the most extreme scenario the market could go further up for two days but that will be small candles.This observation agrees well with &disp=P]7.0.1 Extreme NYADV and NYMO Readings Watch that the overbought could last for 5 days.
http://lh3.ggpht.com/_APmrYvpA45s/ScB3cTTJvgI/AAAAAAAACfQ/fmYwo05kzng/image_thumb%5B4%5D.png?imgmax=800
Number of SPX stocks closed above MA10, courtesy of www.sentimentrader.com.Still way too high.
http://lh6.ggpht.com/_APmrYvpA45s/ScB3c-civiI/AAAAAAAACfY/D2uiHbqaMb8/image_thumb%5B5%5D.png?imgmax=800
&disp=P]1.0.4 S&P 500 SPDRs (SPY 15 min).ChiOsc is a bit too high, therefore the market may at least pullback in the morning.Furthermore, should the market gaps up it will be the 5th time during the past 7 days, period.
http://lh6.ggpht.com/_APmrYvpA45s/ScB3dn2fu5I/AAAAAAAACfg/gCfwP9jyh1M/image_thumb%5B6%5D.png?imgmax=800
Posted by Cobra at 9:24 PM 18 comments http://www.blogger.com/img/icon18_email.gif
Too busy, so tonight's report will be delayed till maybe 1am ET.
Posted by Cobra at 7:56 PM 10 comments http://www.blogger.com/img/icon18_email.gif
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Monday, March 16, 200903/16/2009 Market Recap: Bearish Reversal Day
Today is a bearish reversal day, the daily charts of major indices look at least being topped out over the short term, which is quite bearish.However, tomorrow the market might bounce back up and close in green.Here are three reasons to support the potential rally:
[*]CPC is still lower (or equal to) 0.8 today.Therefore the market has 67% chances to close in green tomorrow according to &disp=P]7.0.4 Extreme CPC Readings Watch.
http://lh6.ggpht.com/_APmrYvpA45s/Sb8Lg2YXvVI/AAAAAAAACdI/Ag3z912XRf4/image_thumb.png?imgmax=800[*]Statistically tomorrow is the most bullish day in March, and the probability of SPX closing in green is about 66%.
http://lh6.ggpht.com/_APmrYvpA45s/Sb8LhooQ4AI/AAAAAAAACdQ/_QP5QBqQnok/image_thumb%5B1%5D.png?imgmax=800[*]&disp=P]1.0.4 S&P 500 SPDRs (SPY 15 min).Oversold, very short-term, especially the ChiOsc is way too low, which also means that the market may bounce back up at least tomorrow morning.
http://lh5.ggpht.com/_APmrYvpA45s/Sb8LiZ0UKTI/AAAAAAAACdY/NZ_TTRvQ0N4/image_thumb%5B2%5D.png?imgmax=800On the other hand, bears should not be too worried if the market does go up tomorrow as the market is still very overbought in the short term.Therefore, if tomorrow high cannot go beyond today's high, maybe the short term reversal gets possibly confirmed, and bears should feel happy about this.
&disp=P]0.0.2 SPY Short-term Trading Signals.Especially NYADV is very overbought, which is my favorite.
http://lh5.ggpht.com/_APmrYvpA45s/Sb8LjB3BbkI/AAAAAAAACdg/wDzAU6DVeH8/image_thumb%5B3%5D.png?imgmax=800
Number of SPX stocks closed above MA10 (courtesy of www.sentimentrader.com), still is too high.
http://lh5.ggpht.com/_APmrYvpA45s/Sb8Lk1Qee3I/AAAAAAAACdo/IkryZLVkOgw/image_thumb%5B4%5D.png?imgmax=800
&disp=P]1.1.6 PowerShares QQQ Trust (QQQQ 15 min).QQQQ may have formed a Tripe Top. The target is $27.72 which is right at Fib 38.2.
http://lh4.ggpht.com/_APmrYvpA45s/Sb8Ll6JVX-I/AAAAAAAACdw/Ib3Wyb9-GSw/image_thumb%5B5%5D.png?imgmax=800
Posted by Cobra at 7:31 PM 21 comments http://www.blogger.com/img/icon18_email.gif
Sunday, March 15, 2009When both SPX and VIX up on the day
Here's a simple back test on what had happened when both SPX and VIX are up on the day. Basically, in the recent bear market, if this kind of thing happens on Friday, the next week tends to close in red.
http://lh4.ggpht.com/_APmrYvpA45s/Sb2LH5RHy6I/AAAAAAAACc8/v7pqC2xPqrU/3380_1237040971zr9a_thumb.png?imgmax=800
Posted by Cobra at 4:11 PM 15 comments http://www.blogger.com/img/icon18_email.gif
03/13/2009 Market Recap: Pullback or Down Leg?
I tend to use "Down Leg" to describe the next phase. But the most bullish scenario is that the down leg starts on Wednesday.
Four points to say: (I think this a typical Ch-English, would anybody mind telling me what I should say? Four things to say, perhaps?)
[*]From all the aspects such as, technical indicators, Elliott Wave, Astrology, Time cycle and the traditional Chinese "Zhou Yi" (yes, the report you read everyday are the summarize and compromise of all these analysis), the primary theme in the next week is pullback.The only thing I am not sure is whether this coming pullback is only a pullback or another down leg to finish so called "wave 5".In term of probability, down leg is more likely. This scenario is the emphasis of the report, and many evidences will be presented.[*]The recent story has been a firework, but you'd better recall the other half of the firework is to fall onto ground eventually. (Hey, have you ever seen any firework which doesn't fall?) &disp=P]7.3.2 Firework Trading Setup, you may see that all fireworks in the past have ended up with big sell off with no exceptions so far.Now NYADV is extremely overbought, which is an early warning.On the other hand, in the most bullish case NYADV on &disp=P]7.0.1 Extreme NYADV and NYMO Readings Watch can stay as overbought for four days.I don't think it could this time, but possibly it can stay until Tuesday which I'll explain in "point 3".
http://lh3.ggpht.com/_APmrYvpA45s/Sb1W-t2PyGI/AAAAAAAACbE/aJVLfcZYQ7Q/image_thumb.png?imgmax=800 http://lh6.ggpht.com/_APmrYvpA45s/Sb1W_kfGeMI/AAAAAAAACbM/NbFotjKwYJ8/image_thumb%5B1%5D.png?imgmax=800[*]Based on &disp=P]7.0.4 Extreme CPC Readings Watch, when CPC is lower than 0.8, the probability of close in green on Monday, is about 69%.However I tend to believe that when both SPX and VIX close green, the next day tends to be a big down day according to &disp=P]7.0.7 SPX and VIX Divergence Watch, so the market may close in red on Monday.Afterward, the probability of a turnaround Tuesday is about 66%, which is a statistically very bullish Tuesday (courtesy of www.sentimentrader.com).In term of operation, should the market go down slightly on Monday, bears better be careful about the bulls' final strike on Tuesday, don't be knocked down prematurely.
http://lh4.ggpht.com/_APmrYvpA45s/Sb1XAqDwbII/AAAAAAAACbU/yPIsMeXiGD4/image_thumb%5B2%5D.png?imgmax=800 http://lh5.ggpht.com/_APmrYvpA45s/Sb1XBB7zX-I/AAAAAAAACbc/vnYQAIc5Hu8/image_thumb%5B3%5D.png?imgmax=800[*]The rally on Thursday and Friday was a little bit suspicious since the defensive sectors way outperformed which means that the fund is flowing into these sectors for safety.Should this trend continue, a big down is coming.
http://lh4.ggpht.com/_APmrYvpA45s/Sb1XCJZ2LAI/AAAAAAAACbk/jPTNj8zpJOI/image_thumb%5B4%5D.png?imgmax=800Well, this seems quite a lot of information.Not over yet, let's go back to present all the evidences needed to support "point 1", which is the main focus of this report.
From the perspective of Elliott Wave, the final wave 5 is incomplete assuming that this round is still conventional 5-wave downtrend.Here is an excerpt of the Friday's report from John Murphy:
MARKET MAY NEED ONE MORE DIP... The weight of technical evidence suggests that the market is close to a rally (which could test the January high). As I suggested on Tuesday, however, I remain concerned that the decline from the January top looks incomplete. I'd prefer to see a five-wave decline instead of the current three waves shown in Chart 5. The current bounce could be just a wave 4. At the risk of putting too fine a point on things, I'd prefer to see one more pullback that either touches a new low or retests the March low to complete a fifth downwave and set up an intermediate recovery. The key is the 800 level. Any move over that level (and its 50-day moving average) would signal that the bottom is in. Either way, it's not too soon to start turning a bit more positive.
http://lh3.ggpht.com/_APmrYvpA45s/Sb1XCkPrNRI/AAAAAAAACbs/QBNxw5mteRg/image_thumb%5B5%5D.png?imgmax=800
You may still remember Phi Mate Turn Date from Rober McHugh, March 13 is such a turn date which seems a top while the next turn date is March 26.If my analysis is correct, the most likely bottom is around 26th in the context of 5-wave downtrend, therefore bulls should be aware of this possibility.The good news is that after this round of sell off, a decent intermediate term rally will be and the initial target is January high based on analysis using different methods (Elliott Wave, Astrology, Time cycle, Statistics etc etc).
http://lh4.ggpht.com/_APmrYvpA45s/Sb1XDpbYekI/AAAAAAAACb0/ldp35BlBIHM/image_thumb%5B6%5D.png?imgmax=800
Now let's take a look at why technical indicators support 5-wave downtrend also instead of a technical pullback.
Note the relationship between the brown curve and the blue curve which denotes the market on T2101 from Telechart, every time the turnaround of the brown curve is also the turning point of the blue curve, which means a trend reversal of the market.Last time this chart has successfully predicted the trend reversal (03/09/2009 Market Recap: Speculation Play).Now it turns again, which could possibly mean a bearish reversal of the market.
http://lh6.ggpht.com/_APmrYvpA45s/Sb1XEEgA81I/AAAAAAAACb8/IEnAdZ-cnkA/image_thumb%5B7%5D.png?imgmax=800
&disp=P]2.8.1 CBOE Options Total Put/Call Ratio.The normalized CPC at the bottom of the chart is way too bullish, and this is a sign of market topping.
http://lh4.ggpht.com/_APmrYvpA45s/Sb1XE65LYxI/AAAAAAAACcE/BPbXZFELfjU/image_thumb%5B8%5D.png?imgmax=800
SPX breadth from www.sentimentrader.com shows that 467 out of 500 stocks in SPX close above 10-day moving average on Friday, which is a sign of extremely overbought.Look at the following chart, every time, such overbought condition has marked a market top, hasn't it?Since the number of stocks of SPX closed above MA10 is very important information so I will collect these statistics from now on and log the extreme result on chart &disp=P]1.3.7 Russell 3000 Dominant Price-Volume Relationships.Additionally, the last time when 460 stocks close above MA10 as illustrated on chart &disp=P]1.3.7, was exactly the top in January 2009.Note the negative divergence during the last three days of the rally.Finally, the dominant price-volume relationships on Friday is 1212 stocks price up volume down, bearish.
http://lh4.ggpht.com/_APmrYvpA45s/Sb1XFzNnVlI/AAAAAAAACcM/0zCjuRmBlWY/image_thumb%5B9%5D.png?imgmax=800 http://lh6.ggpht.com/_APmrYvpA45s/Sb1XGoFCc-I/AAAAAAAACcU/2Xdjo1TePhY/image_thumb%5B10%5D.png?imgmax=800
At the end of report, let's review the charts of indices and important sectors.
&disp=P]1.0.2 S&P 500 SPDRs (SPY 60 min).The four day rally looks like a bear flag to me.Note that RSI and STO are still overbought.
http://lh5.ggpht.com/_APmrYvpA45s/Sb1XHy_kYEI/AAAAAAAACcc/7ZZONQZNG_4/image_thumb%5B11%5D.png?imgmax=800
&disp=P]1.0.4 S&P 500 SPDRs (SPY 15 min), this bearish rising wedge is very obvious on the chart. STO is also overbought.
http://lh3.ggpht.com/_APmrYvpA45s/Sb1XJbEA0PI/AAAAAAAACck/_KOBUfzZNf0/image_thumb%5B12%5D.png?imgmax=800
&disp=P]5.3.0 Financials Select Sector SPDR (XLF daily).Financial sector had led the rally, however it hits the resistance now.On the chart, there was only one casethat XLF had more than 5 consecutive up days.
http://lh4.ggpht.com/_APmrYvpA45s/Sb1XKOumk1I/AAAAAAAACcs/O7EvGyQ2KZU/image_thumb%5B13%5D.png?imgmax=800
&disp=P]5.7.0 Technology Select Sector SPDR (XLK Daily).Technology sector which used to outperform, looks bearish now.Should the 5-wave down leg proven to be the case, the puzzle on &disp=P]1.1.7 QQQQ Outperforms SPY Good Sign? could be resolved. Well, hopefully.
http://lh3.ggpht.com/_APmrYvpA45s/Sb1XLMfV4oI/AAAAAAAACc0/eEGJ5lliccU/image_thumb%5B14%5D.png?imgmax=800
Posted by Cobra at 12:29 PM 39 comments http://www.blogger.com/img/icon18_email.gif
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Thursday, March 12, 200903/12/2009 Market Recap: Very short-term overbought
The market is overbought very short-term, so it may pull back at least tomorrow morning.Short-term, &disp=P]0.0.4 SPX:CPCE, still "firework-ing", just pay attention to the NYADV at bottom, very close to overbought now.Since CPC is lower than 0.8 today, so according to &disp=P]7.0.4 Extreme CPC Readings Watch, 68% chances tomorrow may close in green.
http://lh6.ggpht.com/_APmrYvpA45s/SbnTJiaq1YI/AAAAAAAACa4/NIuKAH94CUI/SPXvxCPCE_thumb.png?imgmax=800
&disp=P]0.0.0 Signal Watch and Daily Highlights.Here is the overview of all signals, extremely overbought in very short-term.Well, the most accurate NYADV and NYMO are not overbought yet, so I guess the market still could go up further in the short-term.
http://lh4.ggpht.com/_APmrYvpA45s/SbnGs9Nbr0I/AAAAAAAACaI/SLzw0xr8ohM/image_thumb.png?imgmax=800
Let's "feel" a little bit about how overbought the market is.
&disp=P]0.0.2 SPY Short-term Trading Signals
http://lh5.ggpht.com/_APmrYvpA45s/SbnGtmhZhXI/AAAAAAAACaQ/V50mXhnFHeE/image_thumb%5B1%5D.png?imgmax=800
&disp=P]1.1.3 QQQQ Short-term Trading Signals.STO is extremely high.
http://lh6.ggpht.com/_APmrYvpA45s/SbnGuYWHYyI/AAAAAAAACaY/CvY7vzIh7OM/image_thumb%5B2%5D.png?imgmax=800
&disp=P]1.0.3 S&P 500 SPDRs (SPY 30 min)
http://lh5.ggpht.com/_APmrYvpA45s/SbnGu9VIY9I/AAAAAAAACag/r5jRrC3nDPk/image_thumb%5B3%5D.png?imgmax=800
&disp=P]1.1.6 PowerShares QQQ Trust (QQQQ 15 min).This bearish rising wedge looks so obvious, and also be cautious on the negative divergence on ChiOsc.
http://lh6.ggpht.com/_APmrYvpA45s/SbnGvvt6fsI/AAAAAAAACao/uX3u2gDRtVs/image_thumb%5B4%5D.png?imgmax=800
&disp=P]2.0.0 Volatility Index (Daily).Previously VIX always makes a U-turn when the STO is at the current level, RSI oversold, MA10 ENV oversold and multiple support, therefore VIX may bounce back up.This is no good for the stock market.
http://lh4.ggpht.com/_APmrYvpA45s/SbnGwaGFFoI/AAAAAAAACaw/Y-w88ptVnP8/image_thumb%5B5%5D.png?imgmax=800
http://res1.blogblog.com/tracker/1523319707289548972-1593593180451830425.gif?l=cobrasmarketview.blogspot.com
Posted by Cobra at 7:36 PM 15 comments http://www.blogger.com/img/icon18_email.gif
Wednesday, March 11, 200903/11/2009 Market Recap: This bounce may have more legs
According to "Equal up and down" rule, down swing 3 days then up swing 3 days, the up swing advanced more than the down swing, so bulls won, this means probably the bounce may have more legs. But because of &disp=P]2.8.1 CBOE Options Total Put/Call Ratio, normalized CPC is still deep inside the bearish area, so I don't think that the market can go much far. Short-term, the story still is &disp=P]0.0.4 SPX:CPCE, firework, until when day the market opens with big down gap. Tomorrow, according to chart &disp=P]7.0.4 Extreme CPC Readings Watch, because CPC < 0.8, so 67% chances the market may close in green.
http://lh3.ggpht.com/_APmrYvpA45s/Sbh6Ka8pcYI/AAAAAAAACZg/8e7AoTMJau0/SPXvsCPCE_thumb.png?imgmax=800
&disp=P]7.1.0 NYSE Composite Index Breadth Watch, "Equal up and down" rule, I annotated a past instance, which should enough to explain why this bounce may have more legs.
http://lh3.ggpht.com/_APmrYvpA45s/Sbh6Kp04FQI/AAAAAAAACZo/SP1fZ4dzekw/NYADaily_thumb.png?imgmax=800
&disp=P]0.0.5 XLY:XLP, I've noticed that recently the consumer discretionary sector outperforms the consumer staples sector, this is a bullish sign because this means that the money dare to fly out of safety seeking more risks. Today the chart generates a buy signal, combining with &disp=P]0.0.4 SPX:CPCE and &disp=P]7.1.0 NYSE Composite Index Breadth Watch, so far we've had 3 evidences arguing for more up legs, this is good. By the way, if you observe trading signals from &disp=P]0.0.5 XLY:XLP carefully, you will find that you can hardly earn any money simply by following buy signal to buy and hold until sell signal to sell. While if you follow the sell signal to short hold until buy signal to cover, you're more likely to earn money. This well explains why in a bear market we better follow the sell swing. When in a buy swing, we should wait for a pullback before entering long and above all, always remember to take profits as you cannot rely on sell signal to exit. Anyway, I just want to emphasis that in a bear market taking long is far more difficult than taking short.
http://lh5.ggpht.com/_APmrYvpA45s/Sbh6Lbi7JmI/AAAAAAAACZw/Ss2HqnNQu4g/XLYvsXLP_thumb.png?imgmax=800
&disp=P]1.0.3 S&P 500 SPDRs (SPY 30 min), &disp=P]1.1.5 PowerShares QQQ Trust (QQQQ 30 min), possible bounce target and the major resistance. I don't remember for how long that bullish pattern such as Head and Shoulders Bottom has failed to work. So I'm not sure either this time.
http://lh6.ggpht.com/_APmrYvpA45s/Sbh6L58mpiI/AAAAAAAACZ4/5FdGPzUp-LA/SPY30min_thumb.png?imgmax=800
&disp=P]2.8.1 CBOE Options Total Put/Call Ratio, this is the main reason that I don't think that this bounce can go much far as the normalized CPC on the bottom is way deep inside bearish area, unless a bull market has started. Well, you don't really believe that we're in a bull market now, do you?
http://lh6.ggpht.com/_APmrYvpA45s/Sbh6MtHT3zI/AAAAAAAACaA/oMDiwukiQ8g/CPC_thumb%5B1%5D.png?imgmax=800
Posted by Cobra at 7:57 PM 7 comments http://www.blogger.com/img/icon18_email.gif
Tuesday, March 10, 200903/10/2009 Market Recap: Firework Trading Setup Triggered
Very short-term, the market is overbought, so should pullback at least tomorrow morning. Short-term, since the low CPC has triggered a "firework setup", so the market could rise for several consecutive days (may have small red consolidation days in between though), until one day the market opens with a big down gap. Intermediate-term, well, let's wait until the "big down gap day" before making any conclusions, OK?
&disp=P]0.0.4 SPX:CPCE, this is a story for the coming several days (hopefully), CPC < 0.8 plus MACD buy signal, a "firework" was triggered today. The profits were very good in the past. Let's pray it works again this time.
http://lh5.ggpht.com/_APmrYvpA45s/SbcZ6nrbAkI/AAAAAAAACZI/fAZmx-am6Pg/SPXvsCPCE_thumb.png?imgmax=800
&disp=P]1.0.3 S&P 500 SPDRs (SPY 30 min), &disp=P]1.0.4 S&P 500 SPDRs (SPY 15 min), TICK and STO are very overbought, so a pullback could be at least tomorrow morning. Usually after a big price bar, there'll be one or several small price bars (consolidation on decreased volume), so my guess is tomorrow we may have a small price bar which has 65% chances of closing in green. Why 65% chances? &disp=P]7.0.4 Extreme CPC Readings Watch, when CPC < 0.8, 15 out of 23 times recently the next day closed in green.
http://lh4.ggpht.com/_APmrYvpA45s/SbcZ7y09f-I/AAAAAAAACZQ/e0ApVajuTaA/SPY30min_thumb.png?imgmax=800
&disp=P]5.3.1 Financials Select Sector SPDR (XLF 30 min), Financials are very overbought, period.
http://lh4.ggpht.com/_APmrYvpA45s/SbcZ82KREhI/AAAAAAAACZY/3_ST9COjNqg/XLF30min_thumb.png?imgmax=800
Posted by Cobra at 6:54 PM 8 comments http://www.blogger.com/img/icon18_email.gif
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Monday, March 9, 200903/09/2009 Market Recap: Speculation Play?
CPC dropped bellow 0.8 again today, so a firework is coming? I suspect that this is a speculation play related to the Thursday's Mark-to-Market meeting. My firework prediction according to CPC < 0.8 in 02/24/2009 Market Recap: A CPC's Tale has turned out to be wrong, but on 2/25 and 2/26 the market did attempt a firework, just couldn't hold on, so the rule about "when CPC < 0.8, there'll be a firework" may still apply this time, therefore bears should be careful here especially now the market is very oversold. Tomorrow, also because of CPC < 0.8, 14 out 22 times the market may close in green. Intermediate-term, lots of bullish signs as well as some bearish signs, so no solid conclusion, I'll list all these signs in today's report for your references. My guess is, a short-term rebound is due, but intermediate-term still hasn't bottomed.
Short-term:
&disp=P]7.0.4 Extreme CPC Readings Watch, CPC < 0.8, 14 out 22 times, the next day, SPY closed green.
http://lh4.ggpht.com/_APmrYvpA45s/SbXcSDm6-kI/AAAAAAAACYA/Rvmjhmj_6tI/CPCWatch_thumb.png?imgmax=800
&disp=P]1.0.4 S&P 500 SPDRs (SPY 15 min), Bullish Falling Wedge plus an oversold STO, so a rebound could be tomorrow.
http://lh3.ggpht.com/_APmrYvpA45s/SbXcTMG5VdI/AAAAAAAACYI/CKTVpY8Km0k/SPY15min_thumb.png?imgmax=800
Intermediate-term:
Bullish signs:
&disp=P]0.0.3 SPX Intermediate-term Trading Signals, RSI, STO and ChiOsc are all very oversold, VIX:VXV is very close to the buy area, and the most important is that the NYUPV in red leads the NYADV in blue (volume leads price) on the upside while the SPX is down, this is a positive divergence.
http://lh5.ggpht.com/_APmrYvpA45s/SbXcUN7T3AI/AAAAAAAACYQ/toJAizXpWu0/SPXMidTerm_thumb.png?imgmax=800
The following chart explains why the positive divergence of NYUPV and NYADV is important. The same positive divergence was formed before the market bottom in last July.
http://lh4.ggpht.com/_APmrYvpA45s/SbXcU4NbgII/AAAAAAAACYY/YNP7W2m1ueM/NYAandNYADV_thumb.png?imgmax=800
&disp=P]1.1.0 Nasdaq Composite (Daily), Dow Theory, a sell signal is confirmed only when both $INDU and $TRAN has reached a new low. From Nasdaq point of view, $SOX vs $COMPA is equivalent to $TRAN vs $INCU. Now $COMPQ has formed a new low but $SOX is far away from confirming it, this is a bullish sign.
http://lh3.ggpht.com/_APmrYvpA45s/SbXcV8ci3zI/AAAAAAAACYg/gi2WbXIYLr4/COMPQandSOX_thumb.png?imgmax=800
&disp=P]2.3.4 Nasdaq Total Volume/NYSE Total Volume, the normalized value bellow says that the market is bottoming.
http://lh6.ggpht.com/_APmrYvpA45s/SbXcWuaaL-I/AAAAAAAACYo/w1EYhO8mrbM/NATVvsNYTV_thumb.png?imgmax=800
T2101 from Telechart, no need to know what T2101 represents, just pay attention to the relationships between the brown curve and the blue curve which represents SPX. It looks that whenever brown curve turns so does the blue curve. Now brown curve turns again, does this mean that SPX is about turning higher?
http://lh5.ggpht.com/_APmrYvpA45s/SbXcXTSOsEI/AAAAAAAACYw/TBqEj9jh3l0/T2101_thumb.png?imgmax=800
Bearish signs:
&disp=P]2.8.1 CBOE Options Total Put/Call Ratio, the normalized CPC at bottom is still bellow zero line. I've checked all the available record in www.StockCharts.com, there wasn't a single instance that the market was bottomed when the normalized CPC was bellow zero line. So if history repeats itself, according to the current normalized CPC position, it's impossible for the market to be bottomed.
http://lh6.ggpht.com/_APmrYvpA45s/SbXcYcanQfI/AAAAAAAACY4/RkdXaOfN2Fw/CPC_thumb.png?imgmax=800
&disp=P]1.1.7 QQQQ Outperforms SPY Good Sign?, the ratio is too high, I really don't know how Mr market is going to handle this, if right from here an intermediate-term rally begins.
http://lh5.ggpht.com/_APmrYvpA45s/SbXcYwg4rfI/AAAAAAAACZA/AEo_2TgPRK0/QQQQvsSPY_thumb.png?imgmax=800
The conclusion, this down leg may take much longer time to complete, therefore there'll be a or even several short-term rally among the entire process. The bottom line still is "no panic no bottom", but bears must be prepared for a sudden rally, so even if it turns out to be that "this time IS DIFFERENT", an intermediate-term rally can be formed without a panic selling, bears won't suffer too much.
Posted by Cobra at 8:20 PM 7 comments http://www.blogger.com/img/icon18_email.gif
Sunday, March 8, 200903/06/2009 Market Recap: 3/6/2009 = 11/21/2008?
The Friday's later surge made bulls on my Chinese forum very excited, but I guess it might mean nothing, at least a follow-through Monday is needed.
Three points to say:
1. I still insist "no panic no bottom". In my Chinese forum (which should be the most popular Chinese stock forum in North America. I don't mean to brag here, I just mean that it can represent what most people think), the same argument of "VIX may not spike this time" happened before Jan, March and July bottom last year. Now the same argument rose again, exactly the same reasons for "not spiking this time", the only differences are now the argument came from different IDs.
2. Seldom a bottom is formed by a later day surge, the only exception recently was 11/21/2008, so I'll compare the Friday's later surge with that of 11/21/2008 in today's report.
3. The market is extremely oversold, a rally could happen at any time, so if we do get a follow-through Monday, according to my "equal up and down" rule, the high should be higher than SPX Wednesday's high which was 724, in order to confirm that the Friday was indeed a bottom.
&disp=P]7.1.0 NYSE Composite Index Breadth Watch, 11/21/2008 was a very strong day, besides the breadth and the volume differences, most of all, Russell 3000 Dominant Price-Volume Relationships argues a lot: On 11/21, we had 1367 stocks price up on volume up which was the most bullish price-volume relationships, while on Friday, there wasn't any dominant price-volume relationships, the largest number was 796 stocks price up volume down which was the most bearish price-volume relationships.
http://lh5.ggpht.com/_APmrYvpA45s/SbP5V0yunyI/AAAAAAAACXQ/gYQLI8jfvzk/NYADaily_thumb.png?imgmax=800
I have an impression that every time before bottom is formed, there always are some failed intraday reversal attempts until, well, the last one. So let's take a look at how many failed reversal attempts before 11/21/2008. If you have time, read this: 11/21/2008 Market Recap: Is 3rd time the charm?. I didn't correctly call the bottom, the reason was the same "seldom a bottom is formed by a later day surge", but I did, according to "the 3rd time will be different", predict a follow-through and after the follow-through, via "equal up and down" rule, the bottom was confirmed. OK, we may apply the same method nowadays. To me, the Friday's later surge looked like a 2nd reversal attempt, so accordingly, I suspect that if there'll be any follow-through on Monday. And also about "equal up and down" rule, if we do have a follow-through Monday, remember, the high of SPX must be higher than 724. Bellow are 2 charts, the 1st one is around 11/21/2008 where I see at least 3 reversal attempt, while the 2nd one which is now, so far I only see 2 reversal attempts.
http://lh5.ggpht.com/_APmrYvpA45s/SbP5W69SZfI/AAAAAAAACXY/PytJskIF-4o/SPY15minNov212008_thumb.png?imgmax=800
http://lh5.ggpht.com/_APmrYvpA45s/SbP5X4PapZI/AAAAAAAACXg/wG2QYlYMkVg/SPY15min_thumb.png?imgmax=800
&disp=P]1.0.3 S&P 500 SPDRs (SPY 30 min), STO has remained under oversold for too long which was rare, plus positive divergence everywhere, so there's a hope that we might see an up Monday. I'm not sure though as statistically, Monday tends to close in red.
http://lh4.ggpht.com/_APmrYvpA45s/SbP5Y30lFeI/AAAAAAAACXo/IJCXj3ZjvJ0/SPY30min_thumb.png?imgmax=800
&disp=P]1.3.3 Russell 2000 iShares (IWM 15 min), ChiOsc is way too high, period.
http://lh3.ggpht.com/_APmrYvpA45s/SbP5ZhMhoFI/AAAAAAAACXw/HocplWh0DF8/IWM15min_thumb.png?imgmax=800
Before the end of this report, I'd like to share you a new chart. I've put this in &disp=P]2.4.3 Breadth Oversold/Overbought Watch.
http://lh3.ggpht.com/_APmrYvpA45s/SbP5ajt9ssI/AAAAAAAACX4/j8gnc8esOKQ/NYHLCum_thumb.png?imgmax=800
Posted by Cobra at 9:59 AM 23 comments http://www.blogger.com/img/icon18_email.gif
Thursday, March 5, 200903/05/2009 Market Recap: Flight-to-safety
Three points:
1. Seldom can a bottom be formed with only one day drop, so most likely today is not a bottom. Likewise if tomorrow the market closes green, then again not yet, the bulls hope is at least drop 2 days in a row. Please refer to chart &disp=P]0.0.1 Market Top/Bottom Watch for why the market needs to drop at least 2 consecutive days to form a bottom.
2. Short-term is very oversold, so a rebound could be tomorrow morning and if no rebound in the morning then there'll be an intraday reversal. Just I'm not sure if the market could close green. Well, better not.
3. Gold, which is a traditional flight-to-safety, can be treated as a fear indicator besides VIX. Today we'll take a look a gold chart to see what it usually does before the market bottoming.
&disp=P]7.0.8 GLD and the Market Bottom, I've observed this for long long time, every time when market begins to drop, it drops too, eventually the market enters into a panic mode and then flight-to-safety trade makes the gold rise sharply. Take a look at the chart bellow, seems like it usually takes 5 days of rising gold to mark a bottom. Today, it's the day one of a rising gold.
http://lh3.ggpht.com/_APmrYvpA45s/SbClRoQog3I/AAAAAAAACWg/PNZ7ChKNG_M/GLDBottomWatch_thumb.png?imgmax=800
&disp=P]7.0.1 Extreme NYADV and NYMO Readings Watch, both NYADV and NYMO are oversold today, the best case, rebound tomorrow, the worst case, the market will remain under oversold for another 3 days which approximately coincide with the &disp=P]7.0.8 GLD and the Market Bottom prediction.
http://lh3.ggpht.com/_APmrYvpA45s/SbClSwCnOKI/AAAAAAAACWo/PfDtGFM9Sds/NYADVandNYMO_thumb.png?imgmax=800
If the market keeps selling for another 3 days then probably there'll be a panic and so will rise the VIX. Let's have a quick look at VIX, by the way. &disp=P]7.0.7 SPX and VIX Divergence Watch, SPX new low while VIX is still in a consolidation area, I think this is a negative divergence. Well, you can too consider it as a positive divergence, I for sure won't argue with you.
http://lh4.ggpht.com/_APmrYvpA45s/SbClUMt_rAI/AAAAAAAACWw/AJgLcAv0Rew/SPXandVIX_thumb.png?imgmax=800
All above are mere speculation only, maybe the market is not worse than that, maybe the market is worse than that. The bottom line still is no panic no bottom.
&disp=P]7.0.3 Extreme TICK Readings Watch, this is the main reason for the possible tomorrow's intraday reversal. TICK closes bellow -1000, the 2nd day tends to have a lower low, but 10 out of 10 case, it had an intraday reversal, 7 out 10 cases it eventually closed in green.
http://lh5.ggpht.com/_APmrYvpA45s/SbCm42upr5I/AAAAAAAACXI/nbBGHV73NX4/TICKWatch_thumb%5B1%5D.png?imgmax=800
&disp=P]1.0.3 S&P 500 SPDRs (SPY 30 min), STO and TICK are very oversold so a rebound could be at least tomorrow morning.
http://lh4.ggpht.com/_APmrYvpA45s/SbClWpKxRdI/AAAAAAAACXA/QSbzXawBfYw/SPY30min_thumb.png?imgmax=800
&disp=P]1.3.7 Russell 3000 Dominant Price-Volume Relationships, 1391 stocks price down volume up which mean the market is oversold.
&disp=P]1.0.5 Major Accumulation/Distribution Days, as predicted, today is the 2nd Major Distribution Day. This means either we'll have a very good bounce or there'll be a 3rd Major Distribution Day.
Posted by Cobra at 8:23 PM 5 comments http://www.blogger.com/img/icon18_email.gif
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Wednesday, March 4, 200903/04/2009 Market Recap: Oversold Tension Relieved
The bulls achievement today was relieved the market of the oversold tension accumulated in the past five days and made the market short-term very overbought, so we may see further pullback at least tomorrow morning. It's been a long time that the market couldn't rally for more than one day, so whether the market could close green tomorrow to follow through the today's bounce is very important. Bottom line, still is chart &disp=P]0.0.1 Market Top/Bottom Watch, any bounce before any signs of panic might be a good sell opportunity. Well, is it possible the market can be bottomed without any sign of panic? Here's a post for your reference: The Possibility of a ‘Stealth Bottom. I have a similar chart, created long time ago (for dealing with the same question again and again and again before the market bottomed), &disp=P]8.0.2 Can market bottom without VIX spike?, which says that VIX has to spike before the market bottoms.
http://lh4.ggpht.com/_APmrYvpA45s/Sa9K94hhmUI/AAAAAAAACVs/pJK-EWUbBzI/BottomWatch_thumb.png?imgmax=800
0.0.0 Signal Watch and Daily Highlights, take a look at the overall trading signals, short-term oversold signals are all gone while instead we have several overbought signals. Not good.
http://lh6.ggpht.com/_APmrYvpA45s/Sa9K-52Tb_I/AAAAAAAACV0/XH2XuN_Ry7c/SingalWatch_thumb%5B1%5D.png?imgmax=800
The following chart is today's major concern, all sectors are up but financials. It even forged a new low today. Let's see for all the past bottom, how many times the rebound was without XLF? None, right? So for today's rebound, without XLF, how likely will it be a bottom?
http://lh3.ggpht.com/_APmrYvpA45s/Sa9K_6o8_OI/AAAAAAAACV8/Yk1frpaS-IA/XLFandSPX_thumb.png?imgmax=800
&disp=P]1.3.7 Russell 3000 Dominant Price-Volume Relationships, this is another problem today, 1561 stocks price up volume down, statistically the market should down either tomorrow or the day after tomorrow.
http://lh5.ggpht.com/_APmrYvpA45s/Sa9LAuTrOXI/AAAAAAAACWE/JYl43HDn0lA/RUA_thumb.png?imgmax=800
&disp=P]1.0.3 S&P 500 SPDRs (SPY 30 min), STO, TICK, ChiOsc are all too high, so the market should pullback at least tomorrow morning.
http://lh3.ggpht.com/_APmrYvpA45s/Sa9LB040XgI/AAAAAAAACWM/_7nahwZ5-bI/SPY30min_thumb.png?imgmax=800
&disp=P]1.0.4 S&P 500 SPDRs (SPY 15 min), same problem, STO and ChiOsc are still very high.
http://lh3.ggpht.com/_APmrYvpA45s/Sa9LJfUSk7I/AAAAAAAACWY/K82czzq5oNM/SPY15min_thumb.png?imgmax=800
Posted by Cobra at 7:46 PM 3 comments http://www.blogger.com/img/icon18_email.gif
Tuesday, March 3, 200903/03/2009 Market Recap: Still No Panic
According to the weekend report, today should be counted as day 3, although an intraday reversal did happen as expected, I have no confidence about the possible rebound tomorrow, the reason is so far I haven't seen any panic yet. So if we do get a rebound tomorrow, it's probably nothing but a rebound. Besides this, I have not much to say today, everyone knows that the market is very very oversold, a rally could kick in at any time, just I have no idea when. The bottom line is chart &disp=P]0.0.1 Market Top/Bottom Watch, if this chart shows no any bottom signals like it does now, any rebound is likely a good sell opportunity.
http://lh5.ggpht.com/_APmrYvpA45s/Sa34kmpla4I/AAAAAAAACVM/dOZOb5PVago/ReversalWatch_thumb.png?imgmax=800
&disp=P]0.0.1 Market Top/Bottom Watch, the most important characteristic of a bottom is "panic" when the only word in everybody's mind is "sell sell sell". The indicators reflecting this panic status are Volume spikes, VIX spikes, NYSE New Low spikes. Now let's look at chart 0.0.1, Volume and VIX are not there, aren't they? New Low seems OK, but, look at the past bottom, just two golden bars seem not enough to justify a bottom, right? So, most likely we're not there yet.
http://lh5.ggpht.com/_APmrYvpA45s/Sa34l7SIj_I/AAAAAAAACVU/L7l-YjFY83I/BottomWatch_thumb.png?imgmax=800
&disp=P]1.3.7 Russell 3000 Dominant Price-Volume Relationships, this is the main reason I'm not confident about a bounce tomorrow, only 1054 stocks price down with volume up, comparing with that of Nov 20, 2008, it's not very convincing that today is a capitulation day, isn't it?
http://lh3.ggpht.com/_APmrYvpA45s/Sa34m6V6MSI/AAAAAAAACVc/0_lDAMBTXzQ/RUA_thumb.png?imgmax=800
&disp=P]7.0.1 Extreme NYADV and NYMO Readings Watch, my "ultimate oversold" signals, probably the only oversold signal worth of looking at now. When both NYADV and NYMO are oversold, the next day tends to be an up day. The worst case was Oct last year when the market was sold off for another 3 days. The 2nd worst case was before the last Tuesday's rebound when the market, after NYADV and NYMO both went oversold, sold off for another 2 days. Anyway, let's see how many more days the market will remain under oversold this time. Hmm, just found that this chart happens to support my weekend's report - a rebound tomorrow, well, don't count on it, be prepared for the worst then perhaps luckily we may cheerfor the "less worst".
http://lh5.ggpht.com/_APmrYvpA45s/Sa34oDTPpVI/AAAAAAAACVk/UDRA1Xwgyzs/NYADVandNYMO_thumb.png?imgmax=800
Posted by Cobra at 7:42 PM 11 comments http://www.blogger.com/img/icon18_email.gif
Monday, March 2, 200903/02/2009 Market Recap: Turnaround Tuesday?
According to the weekend market recap, today is counted as day 2, so tomorrow we may see an intraday reversal but it's hard to guess if the market will close in green.NYADV formed a lower low today, so theoretically SPX should at least have a lower close then today's close ahead.Furthermore, today is the first Major Distribution Day after the last Tuesday's rebound, because Major Distribution Day seldom appears alone, so there should be one or more Major Distribution Days ahead.Therefore, if an intraday reversal happens and the market even closes in green tomorrow, it may just be a rebound.
http://lh3.ggpht.com/_APmrYvpA45s/Sayc0CWaOPI/AAAAAAAACUU/XVlZnAL31YA/image_thumb.png?imgmax=800
&disp=P]7.0.3 Extreme TICK Readings Watch.Today TICK closed bellow -1000, so the intraday reversal may appear on the next day based on the past observation.This in turn agrees with the wild guess in the weekend report.
http://lh3.ggpht.com/_APmrYvpA45s/Sayc0s3ks2I/AAAAAAAACUc/VWzp_tYv4qM/image_thumb%5B1%5D.png?imgmax=800
&disp=P]1.3.7 Russell 3000 Dominant Price-Volume Relationships. 1443 stocks price down volume up, so the market is even more oversold than last Friday when it had 1155 stocks price down volume up.This is a good news.
http://lh3.ggpht.com/_APmrYvpA45s/Sayc1JJeYoI/AAAAAAAACUk/bGPWMjnLwPc/image_thumb%5B2%5D.png?imgmax=800
&disp=P]0.0.2 SPY Short-term Trading Signals.Lots of oversold signals.
http://lh5.ggpht.com/_APmrYvpA45s/Sayc13HJ9UI/AAAAAAAACUs/Y_EWrWKLf-4/image_thumb%5B3%5D.png?imgmax=800
&disp=P]1.0.3 S&P 500 SPDRs (SPY 30 min).The accuracy of RSI oversold on the 30-min chart is pretty high.
http://lh3.ggpht.com/_APmrYvpA45s/Sayc2ZFN9qI/AAAAAAAACU0/63pDEW3tiWw/image_thumb%5B4%5D.png?imgmax=800
In summary, it looks like a rebound is due.However, it might actually be a bad news for bulls, should the market rebounds tomorrow or the day after tomorrow, as it's too easy for bulls, therefore most likely the selling is not over yet.On the other hand, if sell off continues in the next two days, it could be a climax sell and the bottom may be close.
&disp=P]2.4.2 NYSE - Issues Advancing.This chart explains why the NYADV lower low today means SPX will have a lower low ahead.
http://lh4.ggpht.com/_APmrYvpA45s/Sayc3CpnfRI/AAAAAAAACU8/n1US4Wy1lB4/image_thumb%5B5%5D.png?imgmax=800 &disp=P]1.0.5 Major Accumulation/Distribution Days.Major Distribution Day always come in cluster so it's really not a good news to see a Major Distribution Day today.
http://lh3.ggpht.com/_APmrYvpA45s/Sayc3mu0FlI/AAAAAAAACVE/eLZT0sm5aqc/image_thumb%5B6%5D.png?imgmax=800
Posted by Cobra at 6:58 PM 12 comments http://www.blogger.com/img/icon18_email.gif
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Sunday, March 1, 200902/27/2009 Market Recap: Repeat History or Make History?
TA is based on the assumption that the history repeats itself.However, at the time being there is not much history to look for the repeated pattern for the market, what we can refer to are only the market conditions in last October and November.Therefore, we will compare the current situation with that time and see if the market could bounce back up in the short term.If the last October/November pattern repeats, the next Tuesday might be a reversal day, however don't count on it.If we are witnessing a new chapter in the history, no analysis will work.The bottom line is, there is no bottoming sign on &disp=P]0.0.1 Market Top/Bottom Watch, and any rebound is a short opportunity.
http://lh3.ggpht.com/_APmrYvpA45s/SaraU1iNqlI/AAAAAAAACS8/7p_7NZxW1m8/image_thumb.png?imgmax=800
Firstly let's check out the potential target and time frame of this round of sell off.
&disp=P]0.0.3 SPX Intermediate-term Trading Signals.The breakdown on Friday means the confirmation of Flag or Pennant Pattern in the Thursday report, and this pattern often means the trend is on its half way.Based on this theory, the potential target of SPX is about 647.By the way, we will discuss NYADV (blue curve) and ChiOsc on &disp=P]0.0.3 later, and they are the main evidence for Tuesday reversal.Here you have an impression first, these two indicators are at extreme levels.
http://lh5.ggpht.com/_APmrYvpA45s/SaraVpqkCOI/AAAAAAAACTE/GP_vHEcfnN8/image_thumb%5B1%5D.png?imgmax=800
&disp=P]1.0.2 S&P 500 Large Cap Index (Monthly).On the monthly chart, 647 is at about Fib 61.8 and it looks close to a support.Of course, a real support is around 400.
http://lh6.ggpht.com/_APmrYvpA45s/SatR6iKUy-I/AAAAAAAACUM/CNvCFy8O2jE/image_thumb%5B1%5D.png?imgmax=800
When will this sell off come to an end?https://www.technicalindicatorindex.com provides a very interesting chart and claims that March 20th is likely a reversal.After that, based on my experience, the market will rally into May should "Sell in May" still works.
http://lh4.ggpht.com/_APmrYvpA45s/SaraXJTRrnI/AAAAAAAACTU/EDgs_V3NtpM/image_thumb%5B3%5D.png?imgmax=800
OK, now let's check out the short-term charts and see how possible the rebound will be.Again, don't count on it.
The following chart is today's focus.In last October and November, the worst situation is that three indicators stay under oversold level for three days, suppose last Friday is the day 1, then Tuesday could be a reversal (may not close in green though), and rally comes into play on Wednesday.Once again, the major accumulation day must be the first one after the new close low which is marked in dashed line, other major accumulation days don't count.
http://lh4.ggpht.com/_APmrYvpA45s/SaraYILx-PI/AAAAAAAACTc/MA7eW2rC0Kk/image_thumb%5B4%5D.png?imgmax=800
&disp=P]1.3.7 Russell 3000 Dominant Price-Volume Relationships.1155 stocks price down volume up, although it means the market is oversold, I don't think this is sufficient for a rebound.
http://lh3.ggpht.com/_APmrYvpA45s/SaraYxXJ2_I/AAAAAAAACTk/D4T8vMTPsrc/image_thumb%5B5%5D.png?imgmax=800
&disp=P]2.3.4 Nasdaq Total Volume/NYSE Total Volume.Here it looks like a short-term bottom.The nearest scenario is signal came out on Friday, further down on Monday, and rebound on Tuesday.Well, again it points to Tuesday.By the way, there is a statistics called "turnaround Tuesday", and Monday has higher probability of going down.
http://lh5.ggpht.com/_APmrYvpA45s/SaraZy3XC_I/AAAAAAAACTs/T1AljtAACB8/image_thumb%5B6%5D.png?imgmax=800
&disp=P]1.1.6 PowerShares QQQ Trust (QQQQ 15 min).The ChiOsc at the bottom of the chart is way too low, while STO is not at bottom yet.Therefore, QQQQ may go down further on Monday with a small rebound during the day.
http://lh3.ggpht.com/_APmrYvpA45s/SaraaqxeVEI/AAAAAAAACT0/rnjy8l-814g/image_thumb%5B7%5D.png?imgmax=800
&disp=P]3.4.1 United States Oil Fund, LP (USO Daily).The oil meets resistance, period.
http://lh5.ggpht.com/_APmrYvpA45s/SarabrlEf7I/AAAAAAAACT8/zbCJz4NCTCI/image_thumb%5B8%5D.png?imgmax=800
Almost forget this &disp=P]0.0.4 SPX:CPCE, the firework setup is still valid, however I don't think it will happen.Buy signal on MACD is likely a whipsaw, and we will know on Monday.
http://lh3.ggpht.com/_APmrYvpA45s/Sarack2K92I/AAAAAAAACUE/KfcFbCuiRuc/image_thumb%5B9%5D.png?imgmax=800
Posted by Cobra at 10:56 AM 9 comments http://www.blogger.com/img/icon18_email.gif
Thursday, February 26, 200902/26/2009 Market Recap: Firework still possible but be prepared for the worst
The chances of firework (A firework means the market skyrockets high for a few days, then falls hard to the ground.) is diminishing upon today's sell off. I still see a possible firework, just not very confident now. As mentioned in the yesterday's report, we may see the worst case: Statistically, if a Major Accumulation Day happens near a new close low, that low usually holds before a firework kicks in. However there were some cases that the new close low didn't hold. The worst case was Nov 20 to 23 last year where the SPX had closed bellow that low for another 3 days. So be prepared for the SPX to close bellow 743.33 for at least 3 days. Tomorrow, however, the market may bounce and probably could close green.
http://lh6.ggpht.com/_APmrYvpA45s/SadjTHQaocI/AAAAAAAACSE/UG75x6T1ESE/MADandCPC_thumb.png?imgmax=800
Bad news first: &disp=P]0.0.2 SPY Short-term Trading Signals, looks like a Bear Flag to me, so be prepared, the down leg hasn't done yet.
http://lh5.ggpht.com/_APmrYvpA45s/SadjTwV6YUI/AAAAAAAACSM/sYhemWl6f88/SPYShortTerm_thumb.png?imgmax=800
Now good news, before the down leg begins, still possible we may see a firework.
&disp=P]0.0.4 SPX:CPCE, buy setup triggered today, it was very profitable recently, hope this time it still works. By the way, this is how the word "firework" comes from.
http://lh3.ggpht.com/_APmrYvpA45s/SadjUtVduhI/AAAAAAAACSU/jRu7AZnCcrY/SPXvsCPCE_thumb.png?imgmax=800
&disp=P]1.1.5 PowerShares QQQ Trust (QQQQ 30 min), &disp=P]1.1.6 PowerShares QQQ Trust (QQQQ 15 min), STO oversold, ChiOsc way too low, these mean a bounce at least tomorrow morning.
http://lh4.ggpht.com/_APmrYvpA45s/SadjVrGKHiI/AAAAAAAACSc/dKMBU7xpMJA/QQQQ30min_thumb.png?imgmax=800
http://lh4.ggpht.com/_APmrYvpA45s/SadjWvIiTtI/AAAAAAAACSk/GDNFZktusKw/QQQQ15min_thumb.png?imgmax=800
&disp=P]7.0.4 Extreme CPC Readings Watch, CPC < 0.8, 14 out of 21 times (67% chances) the next day closed green.
http://lh5.ggpht.com/_APmrYvpA45s/SadjXQGUmsI/AAAAAAAACSs/u3SN4UL3uR0/CPCWatch_thumb.png?imgmax=800
OK, if you don't see 67% chances are good chances, let's have a look at "Odd Lot Purchase Percentage" chart from www.sentimentrader.com, this chart represents retail traders who are considered as contrarian, today it fell out of the green curve at bottom which means that we retailers were scared to death. Pay attention to the vertical green lines, looks like every time that we retailers were scared to death, the next day the market always closed green. :-)
http://lh5.ggpht.com/_APmrYvpA45s/SadjYMetgVI/AAAAAAAACS0/3xJwNQJ2yZU/OddLotPurchasePercentage_thumb.png?imgmax=800
Posted by Cobra at 7:52 PM 9 comments http://www.blogger.com/img/icon18_email.gif
Wednesday, February 25, 200902/25/2009 Market Recap: New Low or Firework?
The sell off before close might mean nothing, very short-term the market was very overbought, so even without the sell off before the close, we'd see a pullback tomorrow morning. Tomorrow could be critical to determine the market's true direction.
&disp=P]1.0.5 Major Accumulation/Distribution Days, yesterday was a so called Major Accumulation Day or as other called "90% day" (see chart bellow, it's defined as a day with green bar higher than the horizontal blue line). Although we've got lots of Major Accumulation Days recently, but the one we had yesterday was very unique, it happened near new low. Statistically, after such kind of Major Accumulation Day, market usually fireworks first then might or might not test the previous low. The only exception was Oct last year. Bellow, we'll see, since Oct last year, how the firework went after a Major Accumulation Day formed near new low.
http://lh5.ggpht.com/_APmrYvpA45s/SaYVQX6N3gI/AAAAAAAACRk/G8PNAimcn90/MADandCPC_thumb.png?imgmax=800
As illustrated above, I can see 4 things:
1. Closed red today is quite normal after a Major Accumulation Day, so again, it (closed red) didn't mean anything.
2. Tomorrow shell be critical to determine the market's true direction. Looks to me, the reason for no firework in the last Oct was because CPC was not low enough.
3. Actually, the last Oct did have a firework, it just happened too fast - only lasted one and half day.
4. Even if no firework tomorrow, like what had happened last Oct, the worst (if past statistics still work) is to test the Monday low which seems not as scary as that of last Oct, right?
OK, what if Monday low was broken tomorrow? After all, the past statistics cannot guarantee the history 100% repeats itself. Look at the chart bellow, courtesy of www.sentimentrader.com, NYSE Cumulative TICK, pay attention to green cycles, short-term, intermediate-term or whatever-term, the market is rather closer to a bottom than a top, right?
http://lh3.ggpht.com/_APmrYvpA45s/SaYVQ2uNsrI/AAAAAAAACRs/F2sSh_VnaIA/NYSECumTICK_thumb.png?imgmax=800
So, the conclusion: Bulls should not be too worried as long as the current position is not heavy.
&disp=P]1.0.3 S&P 500 SPDRs (SPY 30 min), possible Head and Shoulders Bottom in the forming which means if we do see firework, the target is around $81.93.
http://lh3.ggpht.com/_APmrYvpA45s/SaYVRjrG-CI/AAAAAAAACR0/ioOAY7kxyiQ/SPY30min_thumb.png?imgmax=800
&disp=P]3.4.2 United States Oil Fund, LP (USO 30 min), very short-term, oil is overbought, period.
http://lh6.ggpht.com/_APmrYvpA45s/SaYVSLb7ctI/AAAAAAAACR8/AuNjH4f6Wqk/USO30min_thumb.png?imgmax=800
Posted by Cobra at 8:06 PM 1 comments http://www.blogger.com/img/icon18_email.gif
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Tuesday, February 24, 200902/24/2009 Market Recap: A CPC's Tale
CPC dropped bellow 0.8 today, so we may see a firework again. What is firework? Skyrocketing high then (maybe after a few days) drop to the ground. Very short-term, the market is overbought, so should pullback at least tomorrow morning.
&disp=P]7.0.4 Extreme CPC Readings Watch, this is the today's tale: CPC closed bellow 0.8, 14 out of 20 times recently, the second day closed green. Also in my previous report, I mentioned that CPC closes bellow 0.8 may mean several consecutive up days until one day the market opens with big gap down, so if tomorrow the market closes green again, bears should be careful about the possible coming firework.
http://lh5.ggpht.com/_APmrYvpA45s/SaS6Wlz-V-I/AAAAAAAACRE/mIMqOBja4QY/CPCWatch_thumb.png?imgmax=800
&disp=P]0.0.3 SPX Intermediate-term Trading Signals, NYADV and NYUPV (blue and red curves) look promising, so this is another reason, if tomorrow the market closes green, bears should be careful.
http://lh6.ggpht.com/_APmrYvpA45s/SaS6Xo_b06I/AAAAAAAACRM/Me3X3WM5-aY/SPXMidTerm_thumb.png?imgmax=800
&disp=P]1.0.3 S&P 500 SPDRs (SPY 30 min), this is why I said the market may pullback at least tomorrow morning: STO overbought while ChiOsc is a little bit too high.
http://lh3.ggpht.com/_APmrYvpA45s/SaS6YYqpBPI/AAAAAAAACRU/N__SRMEm8Rk/SPY30min_thumb.png?imgmax=800
&disp=P]7.0.1 Extreme NYADV and NYMO Readings Watch, even the market drops tomorrow, bulls should not worry too much as very likely the "ultimate oversold" signals will be oversold again.
http://lh3.ggpht.com/_APmrYvpA45s/SaS6Y9UPlOI/AAAAAAAACRc/TwT8TKYsJrA/NYADVandNYMO_thumb.png?imgmax=800
Posted by Cobra at 7:26 PM 7 comments http://www.blogger.com/img/icon18_email.gif
Monday, February 23, 2009SPX Relative to Normal P/E Range
I was just kidding about SPX 400 target but I've got a reply saying SPX 600 target is based on P/E. I don't know if it's true or not, just want to share with you an interesting chart from www.decisionpoint.com:
http://lh4.ggpht.com/_APmrYvpA45s/SaOLPwOB3cI/AAAAAAAACQ8/inIhWq1qang/SPXPE_thumb.png?imgmax=800
Posted by Cobra at 9:53 PM 7 comments http://www.blogger.com/img/icon18_email.gif
Why 1997 lows?
OK, someone asks for why I said SPX may test 1997 lows in today's report? It's just a guess, since 741 is not far away and I believe Mr market needs something more scary. :-) Also from the chart, some serious supports are around 400. Why lots people say 600? I don't see much support around 600. :-)
http://lh5.ggpht.com/_APmrYvpA45s/SaN6R2mKfYI/AAAAAAAACQ0/6Jc59f3YxC8/SPXMonthly_thumb.png?imgmax=800
Posted by Cobra at 8:40 PM 3 comments http://www.blogger.com/img/icon18_email.gif
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Monday, February 23, 200902/23/2009 Market Recap: A TICK's Tale
Before today's report, I want to say two things first:
1. I still think there'll be a rebound. After all, oversold like &disp=P]7.0.1 Extreme NYADV and NYMO Readings Watch is rare, worth of betting. So I took long last Friday. Well, the point is how much? 2% of my total capital. Yes, I didn't write it wrong, it is 2%.
2. I've noticed accidentally that since last November, all my losing trades were LONG positions, there was not a single losing SHORT position.
So, what the above tells me? Long is dangerous when the primary trend is down, no matter how good chances the TA signal says.
Today's Russell 3000 Dominant Price-Volume Relationships was 1666 stocks price down volume down. This is a bad news which means no panic, therefore we may see another sell off tomorrow. The good news is we might have an intraday reversal tomorrow.
The reason for an intraday reversal: &disp=P]7.0.3 Extreme TICK Readings Watch, when TICK closes bellow -1000, the next day tends to have an intraday reversal. So ideally, SPX may drop bellow the 1997 low at 729.55 to fulfil the prophecy made by&disp=P]1.2.0 INDU Leads Market first, then reverse higher tomorrow. From the chart, we can see an exception in last Nov, so the worst case, the market could rebound the day after tomorrow.
http://lh6.ggpht.com/_APmrYvpA45s/SaN4OeyN8iI/AAAAAAAACQU/X7FoegPfYhE/TICKWatch_thumb.png?imgmax=800
I won't mention all the oversold/positive divergence signals today, they were all in 02/20/2009 Market Recap: Finally Oversold, still there and more oversold.
&disp=P]7.0.1 Extreme NYADV and NYMO Readings Watch, the "ultimate" oversold signals, day 2 bellow oversold. The worst case is the last Oct, rebounded on day 4. Hmm, if rebounds on day 4 then it fits for chart 7.0.3's worst case prophecy, interesting.
http://lh3.ggpht.com/_APmrYvpA45s/SaN4Pp5NBjI/AAAAAAAACQc/cpCg6QES9Qo/NYADVandNYMO_thumb.png?imgmax=800
&disp=P]0.0.3 SPX Intermediate-term Trading Signals, intermediate-term NYADV and NYUPV are oversold. Market usually rebounds when NYUPV (red curve) crossover above NYADV (blue curve), we're not there yet, be patient.
http://lh3.ggpht.com/_APmrYvpA45s/SaN4Q3xERbI/AAAAAAAACQk/8cyb1hgQHxY/SPXMidTerm_thumb.png?imgmax=800
I heard lots of saying that oversold can be more oversold, so if you believe that this market can drop another 6 days or more and therefore want to short now, here's a chart for you: &disp=P]1.1.7 QQQQ Outperforms SPY Good Sign?, QQQQ may just start dropping. For me, it is true there're no 100% correct TA signals and extremely oversold may or may not work this time, but as I kept saying before, I try my best not to think that this time is different and therefore because of the extremely oversold conditions, I shell still see a rebound. :-)
http://lh4.ggpht.com/_APmrYvpA45s/SaN4RpO27hI/AAAAAAAACQs/oMqqXRnJSZU/QQQQvsSPY_thumb.png?imgmax=800
Posted by Cobra at 8:32 PM 4 comments http://www.blogger.com/img/icon18_email.gif
Sunday, February 22, 200902/20/2009 Market Recap: Finally Oversold
Friday's Russell 3000 Dominant Price-Volume Relationships has finally confirmed that the market is oversold, so we shell have a bounce sometime next week. And since I haven't seen any signs of bottom yet, I believe it's a tradable bounce only, not a bottom.
Bad news first: &disp=P]1.2.0 INDU Leads Market, 10 year new low! Although some newsletters consider INDU new low without SPX's confirmation to be a positive divergence, but according to chart 1.2.0, if the past rule still applies, I believe that SPX will follow INDU, eventually will have a new low. Besides, again, &disp=P]0.0.1 Market Top/Bottom Watch has not a single bottom signal yet.
http://lh3.ggpht.com/_APmrYvpA45s/SaGO9bfcKNI/AAAAAAAACOw/i4tGi8p86jw/INDULeads_thumb.png?imgmax=800
&disp=P]1.3.7 Russell 3000 Dominant Price-Volume Relationships, 1479 stocks price down volume up, finally oversold. Look at the chart, starting from Feb 9, these are series of typical downside price-volume relationships, where at the very beginning, the "price down volume up" was bearish, and during the down trend, the "price down volume down" (not annotated on the chart: either "price up volume up" or "price down volume down") was a sign of continuation, and finally "price down volume up" again which is bullish because it means a possible capitulation.
http://lh3.ggpht.com/_APmrYvpA45s/SaGO-ZTQAuI/AAAAAAAACO4/uY3IFaj1Aqc/RUA_thumb.png?imgmax=800
&disp=P]2.3.4 Nasdaq Total Volume/NYSE Total Volume, looks like a short-term bottom to me.
http://lh4.ggpht.com/_APmrYvpA45s/SaGO-5DHbWI/AAAAAAAACPA/ubATHdAM5BE/NATVvsNYTV_thumb.png?imgmax=800
&disp=P]0.0.2 SPY Short-term Trading Signals, perfect bounce setup, well, as long as you don't consider the "perfect" as a contrarian sign.
http://lh5.ggpht.com/_APmrYvpA45s/SaGO_06AOaI/AAAAAAAACPI/56nWuX8llAY/SPYShortTerm_thumb.png?imgmax=800
&disp=P]1.0.3 S&P 500 SPDRs (SPY 30 min), &disp=P]1.0.4 S&P 500 SPDRs (SPY 15 min), lots of positive divergence arguing for a rebound as well.
http://lh6.ggpht.com/_APmrYvpA45s/SaGPAn66kfI/AAAAAAAACPQ/Efpk3lJo99U/SPY30min_thumb.png?imgmax=800
&disp=P]3.1.0 PowerShares DB US Dollar Index Bullish Fund (UUP Daily), Bearish Engulf, Bearish Rising Wedge, dollar should drop further which is good for commodities.
http://lh5.ggpht.com/_APmrYvpA45s/SaGPB1bgLLI/AAAAAAAACPY/OWuYo_yQAz4/UUPDaily_thumb.png?imgmax=800
&disp=P]5.0.2 S&P Sector Bullish Percent Index, looks like there's not much room for Financials to drop.
http://lh5.ggpht.com/_APmrYvpA45s/SaGPCc22-0I/AAAAAAAACPg/XwdBxU-1meU/BPFINA_thumb.png?imgmax=800
&disp=P]5.2.0 Energy Select Sector SPDR (XLE Daily), right on the support, XLE should rebound.
http://lh3.ggpht.com/_APmrYvpA45s/SaGPDC-hNRI/AAAAAAAACPo/siJuFZ7D5HQ/XLEDaily_thumb.png?imgmax=800
And lots of oversold signals from various angles bellow. So again, looks like a "rare" "perfect" sign of a tradable bounce. I'm not a fan of "contrarian", but in case the market is sold off again next week, if I have long, I might turn off the computer and pretend that nothing has happened. LOL
Liquidity Flow and Institutional "shift in direction" from www.stocktiming.com.
http://lh3.ggpht.com/_APmrYvpA45s/SaGPD_MihdI/AAAAAAAACPw/NB1ewXgVQA0/rain_thumb.png?imgmax=800
SPX Climactic Volume Indicator and SPX Price Momentum Oscillator from www.decisionpoint.com.
http://lh6.ggpht.com/_APmrYvpA45s/SaGPE0vJ5mI/AAAAAAAACP4/l8660-0owzM/SPXCVI_thumb.png?imgmax=800 http://lh5.ggpht.com/_APmrYvpA45s/SaGPFobRwFI/AAAAAAAACQE/IGZXT0rhTJ0/SPXPMO_thumb.png?imgmax=800
NYSE 4 Weeks New High/Low Ratio from Telechart.
http://lh3.ggpht.com/_APmrYvpA45s/SaGPG91G8pI/AAAAAAAACQM/8TROLof5zkk/T2122_thumb.png?imgmax=800
Posted by Cobra at 9:44 AM 7 comments http://www.blogger.com/img/icon18_email.gif
Thursday, February 19, 200902/19/2009 Market Recap: No Panic Yet
First of all, correct an error in yesterday's report: According to http://quantifiableedges.blogspot.com/2009/02/2-gaps-down-revisited.html, the latest day for SPY to close above $80.16 is next Monday not this Friday.
From indicator point of view, the market is very oversold. So it could bounce at any time, and I really wish I could know exactly when. However, today's Russell 3000 Dominant Price-Volume Relationships has 1153 stocks price down on decreased volume arguing that the volume has not confirmed the oversold condition yet, so it's still possible we may see another sell off tomorrow. Bears better take some profits if we do have a sell off again tomorrow because it's rare for SPX to be down more than 5 days in a row. Bulls, be patient, not too hurry bottom fishing, as today's report will review my "ultimate oversold" indicators, which in the worst case like Oct 2008, may stay at oversold level for another 3 days.
0.0.0 Signal Watch and Daily Highlights, lots of short-term green, market is very oversold.
http://lh5.ggpht.com/_APmrYvpA45s/SZ41NVLFg2I/AAAAAAAACOA/1D-XaVi4UL8/SignalWatch_thumb.png?imgmax=800
&disp=P]1.0.3 S&P 500 SPDRs (SPY 30 min), &disp=P]1.0.4 S&P 500 SPDRs (SPY 15 min), lots of positive divergence, which means, under NORMAL CONDITIONS, we should see a bounce tomorrow.
http://lh4.ggpht.com/_APmrYvpA45s/SZ41N-aeSUI/AAAAAAAACOI/iCbKE1cwalw/SPY15min_thumb.png?imgmax=800
OK, now let's see my "ultimate oversold" indicators, &disp=P]7.0.1 Extreme NYADV and NYMO Readings Watch. Whenever both NYADV and NYMO are oversold, the market usually bounces the next day. The only exception was Oct 2008 when the indicator stayed at the oversold level for another 3 days. So, if you really really want to do bottom fishing, better plan the worst case according to this indicator.
http://lh5.ggpht.com/_APmrYvpA45s/SZ41OhKgxfI/AAAAAAAACOQ/e3MlEv4a8qA/NYADVandNYMO_thumb.png?imgmax=800
My GUESS is that the market is likely to bounce next Monday. The reasons, except the above mentioned statistics which says SPY will close above $80.16 no later than next Monday and &disp=P]7.0.1 Extreme NYADV and NYMO Readings Watch at that time will be very oversold, according to https://www.technicalindicatorindex.com/, its "Fib Cluster Event" and "Phi Mate Turn Date" have both pointed out the next Monday as a bottom.
http://lh6.ggpht.com/_APmrYvpA45s/SZ41P5uERyI/AAAAAAAACOY/h_4K-X2AcGg/FibClusterEvent_thumb.png?imgmax=800
http://lh4.ggpht.com/_APmrYvpA45s/SZ41QRr0WAI/AAAAAAAACOg/01tL_kUWE9o/PhiMateTurnDates_thumb.png?imgmax=800
If we do have a bounce tomorrow, it's actually a bad news for bulls as that means an orderly retreat and therefore the selling is far from over. Please refer to chart &disp=P]0.0.1 Market Top/Bottom Watch for conditions about the bottom. Also even the market rebounds on Monday or after several more consecutive down days, we still need to refer to chart &disp=P]0.0.1 Market Top/Bottom Watch to see if the market has bottomed or not. So far, none of bottom conditions are met.
http://lh3.ggpht.com/_APmrYvpA45s/SZ41RBRA-wI/AAAAAAAACOo/20EGih0XpBY/TopBottomWatch_thumb.png?imgmax=800
Posted by Cobra at 8:44 PM 1 comments http://www.blogger.com/img/icon18_email.gif
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Wednesday, February 18, 200902/18/2009 Market Recap: SPX down 3 days in a row
I think there're good chances that SPY will close above the Tuesday's open which is $80.16 either tomorrow or Friday.
This is where the $80.16 idea is from: http://quantifiableedges.blogspot.com/2009/02/2-gaps-down-revisited.html. Because on Tuesday SPY had a larger than 2% gap down, so statistically within 4 days, SPY should close above the Tuesday's open which is $80.16.
SPX has been down 3 days in a row now, which is kind of a good news as from chart &disp=P]7.0.5 SPX Climax Sell Watch, at least in the past year, there were only 2 cases that SPX was down more than 3 days in a row.
http://lh3.ggpht.com/_APmrYvpA45s/SZzWiEamEVI/AAAAAAAACNY/ZsIIKL0HD0g/SPXClimaxSellWatch_thumb.png?imgmax=800
OK, enough statistics, let's talk about signals:
&disp=P]7.1.2 NYSE - TICK (30 min), blue curve, which is 3 day moving average of the TICK, has reached a two months low today, very oversold. A rebound should be close.
http://lh4.ggpht.com/_APmrYvpA45s/SZzWixRAFFI/AAAAAAAACNg/JrzlGorvN1Q/TICK_thumb.png?imgmax=800
&disp=P]1.1.5 PowerShares QQQ Trust (QQQQ 30 min), ChiOsc is till very low, a rebound is sill possible.
http://lh5.ggpht.com/_APmrYvpA45s/SZzWjuhyUcI/AAAAAAAACNo/63AGMRT6u60/QQQQ30min_thumb.png?imgmax=800
&disp=P]3.4.1 United States Oil Fund, LP (USO Daily), green dashed vertical lines, USO rallied when both RSI2 and STO had reached certain oversold level. Now we have this setup again with an additional help of extremely low ChiOsc readings. I believe this is also good for the overall market.
http://lh4.ggpht.com/_APmrYvpA45s/SZzWkQPCJQI/AAAAAAAACNw/i-1GNwlyv38/USODaily_thumb.png?imgmax=800
&disp=P]1.4.0 S&P/TSX Composite Index (Daily), USO rally should help the Canadian market. RSI2, STO and ChiOsc on TSX daily chart also argue for a rebound.
http://lh3.ggpht.com/_APmrYvpA45s/SZzWlNHuN5I/AAAAAAAACN4/n1pCCW5aeP4/TSXDaily_thumb.png?imgmax=800
If, however, the market crashes tomorrow and Friday, I'll review some very reliable oversold signals, which will be very helpful for guiding bulls to fight back.
Posted by Cobra at 7:48 PM 7 comments http://www.blogger.com/img/icon18_email.gif
Tuesday, February 17, 200902/17/2009 Market Recap: Breakdown!
Three points to say:
1. Trading range was broken on the downside today plus lots of newly generated intermediate-term sell signals (0.0.0 Signal Watch and Daily Highlights). This means an intermediate-term down leg has began. Is it possible that today's breakdown was a faked one? Well, even so, as I have mentioned in 02/11/2009 Market Recap: Consolidation Day, the upside is limited. So looks to me that bears are safe while any rally is a gift to bulls.
2. When will be a bottom (if not the bottom)? It's time to pay attention to chart &disp=P]0.0.1 Market Top/Bottom Watch. Not yet so far. If the market keeps selling off tomorrow, we'll probably review some reliable oversold signals in tomorrow's report. Right now, yes, the market is a little oversold, but not enough for buying a dip in this dangerous bear market.
3. A bounce might be at least tomorrow morning.
&disp=P]0.0.2 SPY Short-term Trading Signals, range breakdown which means a confirmed Double Top targeting $74.88. NYADV is a little oversold, good, but since NYADV formed a lower low today, this means that SPY will have a close which is lower than today's close. Why? Please read annotations in chart &disp=P]2.4.2 NYSE - Issues Advancing.
http://lh3.ggpht.com/_APmrYvpA45s/SZuP-1d4ntI/AAAAAAAACM4/SqCT4x1iigM/SPYShortTerm_thumb.png?imgmax=800
&disp=P]1.0.3 S&P 500 SPDRs (SPY 30 min), ChiOsc is way too low, this is the main reason that I think the market will have at least 2 hours (4 candlestick bars) bounce tomorrow. For other 30 min chart, such as QQQQ, IWM, XIU.TO, they all have the same ChiOsc extreme readings. By the way, for everyday's report, if all the indices charts look the same (QQQQ, IWM, XIU.TO, XLE, XLF etc), I'll only annotate the SPX chart. I really don't have time for updating all of them.
http://lh5.ggpht.com/_APmrYvpA45s/SZuP_5o6E1I/AAAAAAAACNA/GzrBOR6XbBk/SPY30min_thumb.png?imgmax=800
&disp=P]1.3.7 Russell 3000 Dominant Price-Volume Relationships, 1974 stocks price down volume up which means the market is oversold. From the chart, pay attention to all the green annotation boxes, looks like recently, whenever, price down volume up relationships appear, the second day tends to close green.
http://lh3.ggpht.com/_APmrYvpA45s/SZuQAplxXSI/AAAAAAAACNI/Du4C2WCIixU/RUA_thumb.png?imgmax=800
&disp=P]1.4.0 S&P/TSX Composite Index (Daily), from TOAD and BB Width, even TSX was down a lot recently, it seems that TSX is still closer to a top then a bottom.
http://lh4.ggpht.com/_APmrYvpA45s/SZuQBlyacWI/AAAAAAAACNQ/-bZHDfAMeaI/TSXDaily_thumb.png?imgmax=800
&disp=P]1.0.5 Major Accumulation/Distribution Days, two Major Distribution Days so far now, which means either a good bounce is due or there'll be a third Major Distribution Day.
Posted by Cobra at 8:35 PM 1 comments http://www.blogger.com/img/icon18_email.gif
Sunday, February 15, 200902/13/2009 Market Recap: No Follow-through
Two points to be noticed that:
[*]The market did not follow through the reversal on Thursday, and this is no good;[*]Most signals are neutral, so the future direction is unknown.However I got a few interesting charts for your information.http://lh6.ggpht.com/_APmrYvpA45s/SZhcSagIbSI/AAAAAAAACLg/je6zeaWXKN8/image_thumb.png?imgmax=800
&disp=P]1.1.7 QQQQ Outperforms SPY Good Sign?This is a reminder (not even a warning) that QQQQ:SPY is too high.Please note that I am not saying QQQQ is going to sell off immediately, eventually it will pay back, but when?I have no idea.
http://lh4.ggpht.com/_APmrYvpA45s/SZhcTdsu32I/AAAAAAAACLo/tpiLapKHbhQ/image_thumb%5B1%5D.png?imgmax=800
Institutional Buying and Selling Trending from www.stocktiming.com, here is the explanation from the author:
The Institutional Selling shows its trend line making higher/highs and higher/lows ... the definition of an up trend.The Institutional Buying shows its trend line making higher/highs and higher/lows ... the definition of an up trend.Institutions are showing an up-trend in BOTH ... buying and selling. This behavior does not indicate what their predominant intention is.This could mean they are rotating sectors, and/or setting up hedges.
I notice that the setup on the chart looks similar in last September when we saw a firework.
http://lh4.ggpht.com/_APmrYvpA45s/SZhhTBpfpEI/AAAAAAAACMA/L9xrAxYH4z8/image_thumb%5B1%5D.png?imgmax=800
News Driven Market from www.tdtrader.com.
http://lh4.ggpht.com/_APmrYvpA45s/SZhcUHDD9WI/AAAAAAAACLw/BqlHNJ8q_H4/image_thumb%5B2%5D.png?imgmax=800
Compare the above chart with the following one, every time prior to the news pop market, CPC is waiting at the extremely low reading, isn't it?Now, the CPC reading doesn't show much enthusiasm to the Wednesday Mortgage Relief Plan, does it?The third time it will be different -- I guess the market will either sell off from Tuesday, or rally without sell on news and continue to go higher afterward.In another words, the market direction on Tuesday could possibly be the real direction.Lastly just to remind you that this is a wild guess, not TA, and should not be take as a guide to trading.
http://lh6.ggpht.com/_APmrYvpA45s/SZhcU3qmwLI/AAAAAAAACL4/6OESnZCKJD4/image_thumb%5B3%5D.png?imgmax=800
Posted by Cobra at 10:17 AM 10 comments http://www.blogger.com/img/icon18_email.gif
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Thursday, February 12, 200902/12/2009 Market Recap: Range Bound
Four points:
1. The violent bounce before the close today didn't mean anything. I don't know if you still remember the last year? So many times the market bounced violently right before the close when bulls were so desperate. What had happened afterwards? How many times the marked followed through with continuous rally? &disp=P]1.2.0 INDU Leads Market, technically, damage was done today and I believe that SPX will follow, sooner or later. Also don't forget &disp=P]1.1.7 QQQQ Outperforms SPY Good Sign?, QQQQ eventually has to payback, the price will be a big sell off.
2. Market still is range bounded. Just now bears are on the defense while bulls, pay attention to chart &disp=P]7.1.0 NYSE Composite Index Breadth Watch for "equal up down strength" rule, have three days to prove themselves.
3. Range bound means the intermediate-term direction is unknown, so the market might have chances to breakout on the upside of the range, but, because of too many "topping signals", I doubt how much the market can rise. I'll review those "topping signals" again in today's report.
4. Market might pullback at least tomorrow morning.
http://lh5.ggpht.com/_APmrYvpA45s/SZTxpGZQ7uI/AAAAAAAACKw/UwI1vzPuSF0/SPYShortTerm_thumb.png?imgmax=800
First, why the market might pullback tomorrow morning:
&disp=P]1.0.3 S&P 500 SPDRs (SPY 30 min), lots of positive divergence which means good chances of further rally. Just the ChiOsc is way too high, so I believe the market could pullback at least in the morning. Please notice here, when I say pullback, I don't mean pullback right way, the market could open high then pullback, generally I cannot predict the next day's open. And likewise, when I say bounce, I don't mean bounce right way, the market could open low then bounce. &disp=P]1.0.4 S&P 500 SPDRs (SPY 15 min), also ChiOsc and STO are way too high.
http://lh3.ggpht.com/_APmrYvpA45s/SZTxqDQGOTI/AAAAAAAACK4/e3nOD_mXYCc/SPY30min_thumb.png?imgmax=800
OK, now let's review why I believe there's not much room left on the upside:
&disp=P]2.8.0 CBOE Options Equity Put/Call Ratio, we've been watching this recently, now it has confirmed a top. This chart has never disappointed me ever since I "invented" it.
http://lh4.ggpht.com/_APmrYvpA45s/SZTxqyEQU2I/AAAAAAAACLA/2HpkIPyVHrk/CPCE_thumb.png?imgmax=800
&disp=P]2.8.1 CBOE Options Total Put/Call Ratio, the normalized CPC bellow is too low, which at least mean that there's not much room left on the upside, unless we're in a bull market. Please refer to chart &disp=P]8.1.2 Does extremely low CPC lead a market top? for the past accuracy. Why "normalized CPC"? Because the extreme values of the CPC are different during different time. For example, nowadays, readings bellow 0.8 are considered extremely low, but maybe ten years ago, readings bellow 0.8 meant nothing. So to solve these differences, we better look at the distance between MA10 and MA200. And so here comes the final MACD(10, 200,1) which is better than drawing MA10 and MA200 directly on the CPC chart. If you don't understand why MACD(10,200,1) can be used to replace the MA10 and MA200 on CPC chart, please read here: http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators:moving_average_conve.
http://lh5.ggpht.com/_APmrYvpA45s/SZTxrQEjFtI/AAAAAAAACLI/HXX7gMfFWPE/CPC_thumb.png?imgmax=800
&disp=P]3.0.0 10Y T-Bill Yield, ROC30 is far beyond 9, this usually means a market top (sometimes a month earlier though). Please refer to the chart &disp=P]8.0.4 Market top/bottom by ROC30 of 10Y T-Bill Yield 2005-2008 and &disp=P]8.0.5 Market top/bottom by ROC30 of 10Y T-Bill Yield 2001-2004 for the past accuracy of this signal.
http://lh3.ggpht.com/_APmrYvpA45s/SZTxsMUaW6I/AAAAAAAACLQ/fR1WbLi96Ns/TNX_thumb.png?imgmax=800
&disp=P]1.1.4 Nasdaq 100 Index Intermediate-term Trading Signals, via indicators at top and bottom, draw conclusion yourself if the market is closer to a top or a bottom?
http://lh6.ggpht.com/_APmrYvpA45s/SZTxszRiw_I/AAAAAAAACLY/bnM6COcV13M/NDXDaily_thumb.png?imgmax=800
Posted by Cobra at 8:06 PM 7 comments http://www.blogger.com/img/icon18_email.gif
Wednesday, February 11, 200902/11/2009 Market Recap: Consolidation Day
The market consolidated on decreased volume today, the future direction is unknown.Probably the rebound could continue tomorrow.
&disp=P]1.0.4 S&P 500 SPDRs (SPY 15 min).The main reasons for the rebound tomorrow: Double Bottom plus some positive divergences.
http://lh6.ggpht.com/_APmrYvpA45s/SZOIkb9BegI/AAAAAAAACKg/SDlGtfgGmsM/image_thumb.png?imgmax=800
&disp=P]2.8.0 CBOE Options Equity Put/Call Ratio.CPCE tested trend line, and tomorrow will be critical -- if the market goes down, most likely the trend line will be broken, and therefore a top will be confirmed.
http://lh5.ggpht.com/_APmrYvpA45s/SZOIk5oOOoI/AAAAAAAACKo/KsRQFydWY0s/image_thumb%5B1%5D.png?imgmax=800
&disp=P]1.3.7 Russell 3000 Dominant Price-Volume Relationships, 1368 stocks price up volume down, bearish.However because of the typical consolidation pattern on the decreased volume today, I'd not read too much into this.
Posted by Cobra at 6:25 PM 2 comments http://www.blogger.com/img/icon18_email.gif
Tuesday, February 10, 200902/10/2009 Market Recap: Overdone
Today's sell off seemed a little overdone to me, so very likely market will rebound at least tomorrow morning. From technical point of view, market still is range bounded, no higher high, no lower low yet, so the top hasn't confirmed and therefor I'm not absolutely sure about intermediate-term direction. One thing is certain though, it is that even the market starts to rally tomorrow, there's not much up room left.
http://lh6.ggpht.com/_APmrYvpA45s/SZJXyJCrIsI/AAAAAAAACJ4/yBCbLq4bofc/SPYShortTerm_thumb.png?imgmax=800
&disp=P]1.0.3 S&P 500 SPDRs (SPY 30 min), TICK way too oversold, ChiOsc way too low, not only this chart but lots of 30 min charts in my chart book have the same problem, that's why I think that today's sell off was overdone, a bounce is very likely at least tomorrow morning.
http://lh4.ggpht.com/_APmrYvpA45s/SZJXy-bagNI/AAAAAAAACKA/vhFyj350aC4/SPY30min_thumb.png?imgmax=800
&disp=P]1.2.0 INDU Leads Market, if the rule still applies, soon or later SPX will have lower low.
http://lh6.ggpht.com/_APmrYvpA45s/SZJXzoJhKqI/AAAAAAAACKI/dI_TdoVvruI/INDULeads_thumb.png?imgmax=800
&disp=P]2.8.0 CBOE Options Equity Put/Call Ratio, as I said in the commentary area, now we need turn attention to this chart. So far the top is not confirmed, but soon or later the trend line will be broken, this seems inevitable.
http://lh6.ggpht.com/_APmrYvpA45s/SZJX0cx6efI/AAAAAAAACKQ/WDwEpS5sAOg/CPCE_thumb.png?imgmax=800
&disp=P]2.8.1 CBOE Options Total Put/Call Ratio, normalized CPC at bottom means a top as long as we're still in a bear market. (Refer to chart &disp=P]8.1.2 Does extremely low CPC lead a market top? for the exceptions in the bull market.)
http://lh6.ggpht.com/_APmrYvpA45s/SZJX1DsPpbI/AAAAAAAACKY/30iSrDwpHbQ/CPC_thumb.png?imgmax=800
Posted by Cobra at 8:45 PM 7 comments http://www.blogger.com/img/icon18_email.gif
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Monday, February 9, 200902/09/2009 Market Recap: Sell on News?
Tomorrow is the judgement day, bears are ready to sell on news, aren't they?However I don't see signs of big sell off except a few overbought signals.
&disp=P]0.0.0 Signal Watch and Daily Highlights.Here is the overview of all indicators, all mid-term signals are buy, and not so many overbought short term signals.This means the market might still have some room on the upside.
http://lh3.ggpht.com/_APmrYvpA45s/SZD2G9GHNWI/AAAAAAAACI4/TNLuVVwK4-w/image_thumb.png?imgmax=800
&disp=P]7.0.4 Extreme CPC Readings Watch.CPC is down to 0.67, speechless, on the other hand it means the probability of close in green tomorrow is about 80%.
http://lh5.ggpht.com/_APmrYvpA45s/SZD3uTyn9aI/AAAAAAAACJw/SK311XA76XA/image_thumb%5B1%5D.png?imgmax=800
&disp=P]1.0.3 S&P 500 SPDRs (SPY 30 min).The pattern looks like a symmetrical triangle, which has 75% of probability of resolving at the up side.If SPX breaks the red resistance line afterward, a cup with handle pattern will be formed, bullish.
http://lh5.ggpht.com/_APmrYvpA45s/SZD2HoyuqLI/AAAAAAAACJI/PHasZM4xifw/image_thumb%5B2%5D.png?imgmax=800
&disp=P]2.0.0 Volatility Index (Daily).Here is a black bar which could cause further pullback, and this is bullish to the stock market.
http://lh3.ggpht.com/_APmrYvpA45s/SZD2IFMSFJI/AAAAAAAACJQ/R5JPKn_Y_ms/image_thumb%5B3%5D.png?imgmax=800
&disp=P]3.4.1 United States Oil Fund, LP (USO Daily).Note that ChiOsc is very low, and I still think that a rebound is possible which is bullish to the stock market.
http://lh5.ggpht.com/_APmrYvpA45s/SZD2IsbyVoI/AAAAAAAACJY/XyMhzjdGIQg/image_thumb%5B4%5D.png?imgmax=800
&disp=P]7.1.0 NYSE Composite Index Breadth Watch.This is good for bears.Five days of rally cannot even beat with three days of down, according to &disp=P]7.2.1 Buyable Pullback Rule, this should be a good entry point for short.However, as I've been saying that low CPC may cause continuous rally, so according to chart &disp=P]0.0.4 SPX:CPCE, if NYADV hasn't reached the overbought area, better wait until the market opens with big gap down.
http://lh3.ggpht.com/_APmrYvpA45s/SZD2JB4WvbI/AAAAAAAACJg/e3_bodsKK-4/image_thumb%5B5%5D.png?imgmax=800
&disp=P]3.0.3 20 Year Treasury Bond Fund iShares (TLT Daily).The symmetrical triangle on TIP broke out on the upside, welcome to inflation age!Inflation means the rally of commodities, let's wait and see.
http://lh5.ggpht.com/_APmrYvpA45s/SZD2JuU2p2I/AAAAAAAACJo/RkamkQBiEsw/image_thumb%5B6%5D.png?imgmax=800
Posted by Cobra at 7:36 PM 9 comments http://www.blogger.com/img/icon18_email.gif
Sunday, February 8, 200902/06/2009 Market Recap: Innocent (Up) Until Proven Guilty (Big Gap Down)
Lots of intermediate-term buy signals in chart 0.0.0 Signal Watch and Daily Highlights, well, I don't argue with those signals. Just I'm not sure how high the market can go on the intermediate-term basis. Short-term, one thing is certain, a big pullback is a must in order to correct the extremely low CPC readings. As I've been saying that CPC lower than 0.8 means consecutive up in a few days until one day the market opens with big gap down. When is this (big gap down open) going to happen? I don't know, so innocent until proven guilty, bulls and bears, please wait until the market proven guilty. Until then, bears be prepared for the market to continuously go up, while bulls, don't be too greedy.
First, let's check the overall signals:
0.0.0 Signal Watch and Daily Highlights, lots of intermediate-term buy, not many short-term overbought yet, seems to favor bulls. Especially &disp=P]7.0.6 Weekly STO and the Market Top/Bottom, once a buy signal signaled seldom a whipsaw it has, so as I said, I don't (or pretend not to) argue with signals.
http://lh3.ggpht.com/_APmrYvpA45s/SY9x6vQhMFI/AAAAAAAACHs/V0qQ2GHq7lA/SignalWatch_thumb.png?imgmax=800
Now, let me explain why I doubt how high the market can go:
&disp=P]1.1.4 Nasdaq 100 Index Intermediate-term Trading Signals, NDXA50R at bottom is way too high which is normally a sign of a top.
http://lh4.ggpht.com/_APmrYvpA45s/SY9x7TdbH0I/AAAAAAAACH0/i7RO2gwUAeA/NDXDaily_thumb.png?imgmax=800
&disp=P]1.1.7 QQQQ Outperforms SPY Good Sign?, we all know that recently the QQQQ outperforms the SPY a lot. Is it a good sign?
http://lh6.ggpht.com/_APmrYvpA45s/SY9x7zIngzI/AAAAAAAACH8/ErDBwkhIBto/QQQQOutperforms_thumb.png?imgmax=800
&disp=P]2.8.1 CBOE Options Total Put/Call Ratio, normalized CPC is another sign of a top. Well, after check chart &disp=P]8.1.2 Does extremely low CPC lead a market top?, you might have a second thought, but you still cannot rule out the possibility of being a top, can you?
http://lh5.ggpht.com/_APmrYvpA45s/SY9x8Uuky2I/AAAAAAAACIE/RN3CQO0cl1Y/CPC_thumb.png?imgmax=800
OK, now the short-term speculation:
&disp=P]7.0.7 Extreme CPC Readings Watch, 80% chances Monday close green (except of course, a big gap down open).
http://lh6.ggpht.com/_APmrYvpA45s/SY9x9MJWoJI/AAAAAAAACIM/Ycsn0hmD5FY/ExtremeCPCWatch_thumb.png?imgmax=800
&disp=P]0.0.4 SPX:CPCE, I've mentioned this setup before, hopefully this time bulls are lucky enough to get NYADV overbought before the sell off begins.
http://lh4.ggpht.com/_APmrYvpA45s/SY9x92SRd7I/AAAAAAAACIU/D_2_FNUZO1A/SPXvxCPCE_thumb.png?imgmax=800
&disp=P]1.1.5 PowerShares QQQ Trust (QQQQ 30 min), STO and RSI testing resistance. &disp=P]1.1.6 PowerShares QQQ Trust (QQQQ 15 min), lots of negative divergence. So QQQQ has good chance to pullback Monday morning. If it can again close green, bulls better take some profits.
http://lh4.ggpht.com/_APmrYvpA45s/SY9x-qD2kWI/AAAAAAAACIc/6jIPdBF57YQ/QQQQ30min_thumb.png?imgmax=800
http://lh4.ggpht.com/_APmrYvpA45s/SY9x_f8DUpI/AAAAAAAACIo/TcEAD7yVFTM/QQQQ15min_thumb.png?imgmax=800
&disp=P]3.4.1 United States Oil Fund, LP (USO Daily), nothing to do with my short-term speculation, just the down volume on Friday looks like a capitulation. If oil can go up, it's very good news for bulls.
http://lh3.ggpht.com/_APmrYvpA45s/SY9yAPgPWiI/AAAAAAAACIw/QxsguhTDEhc/USODaily_thumb.png?imgmax=800
Posted by Cobra at 4:00 PM 11 comments http://www.blogger.com/img/icon18_email.gif
Thursday, February 5, 200902/05/2009 Market Recap: Firework continues
OK, no follow-through of the yesterday's bearish reversal, then firework shell continue. Three points to say:
1. CPC again dropped bellow 0.8, if no big gap down open tomorrow, then probably the firework will continue which means consecutive up for a few days until one day the market opens with big gap down.
2. Trend still favors downside. Also as I said before, extremely low CPC readings are bullish short-term but eventually there'll be a big sell off.
3. Pullback might be tomorrow morning, may close green however, again as long as the market doesn't open with big gap down.
&disp=P]1.0.8 Extreme CPC Readings Watch, green dashed lines represent up day the next day when CPC was bellow 0.8, while red dashed lines represent down day the next day when CPC was bellow 0.8. Counting all these lines, 14 out of 18 (78%) times, the next day closes green.
http://lh3.ggpht.com/_APmrYvpA45s/SYuzhrglWXI/AAAAAAAACHI/HPmKWqXT0eE/CPC_thumb.png?imgmax=800
&disp=P]7.0.3 NYSE Composite Index Breadth Watch, this is why I said trend still favors downside. The bounce has lasted 3 days but failed to recover the previous 3 down days. Plus, don't forget, the CPC payback time...
http://lh6.ggpht.com/_APmrYvpA45s/SYuzig78gRI/AAAAAAAACHU/UYUTQua9NwY/NYA_thumb.png?imgmax=800
&disp=P]1.0.3 S&P 500 SPDRs (SPY 30 min), STO and TICK are overbought, so probably there'll be a pullback tomorrow morning.
http://lh5.ggpht.com/_APmrYvpA45s/SYuzjCEFvVI/AAAAAAAACHc/73x96MoCtWs/SPY30min_thumb.png?imgmax=800
&disp=P]1.1.6 PowerShares QQQ Trust (QQQQ 15 min), lots of negative divergence, while &disp=P]1.0.4 S&P 500 SPDRs (SPY 15 min), no apparent negative divergence, so QQQQ has higher chances of pullback than SPY. Even it's possible that SPY closes up while QQQQ closes down tomorrow.
http://lh3.ggpht.com/_APmrYvpA45s/SYuzj5tU0II/AAAAAAAACHk/xwcax5tSSHk/QQQQ15min_thumb.png?imgmax=800
Posted by Cobra at 7:50 PM 9 comments http://www.blogger.com/img/icon18_email.gif
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Wednesday, February 4, 200902/04/2009 Market Recap: Follow-through Wanted
Bearish Reversal Day today, not good, but in order to confirm the so called "Bearish Dark Cloud Cover" pattern, a follow-through tomorrow is needed. From the daily chart, no lower low yet and CPCE (the brother of CPC which I've been talking recently) has not yet confirmed the top, so bulls still have hopes - at least a rebound tomorrow morning.
&disp=P]0.0.2 SPY Short-term Trading Signals, bearish Dark Cloud Cover, not good, but no lower low yet and the STO above is on the buy side so unless there's a follow-through tomorrow, the drop today may not mean anything.
http://lh6.ggpht.com/_APmrYvpA45s/SYprPV2ee-I/AAAAAAAACGo/h3GBgzhXG84/SPYShortTerm_thumb.png?imgmax=800
&disp=P]1.0.4 S&P 500 SPDRs (SPY 15 min), extremely low ChiOsc readings may mean a rebound. My GUESS is because of the Pennant Pattern (plus AH CSCO bad ER), tomorrow may open low but go high. Reason for go high: As I've been saying, the 3rd time is different.Feb 2, the market opened low went high, so if tomorrow we get a lower open, because it's only the 2nd time, so very likely the market repeats the Feb 2 intra-day pattern - opened low went high.
http://lh6.ggpht.com/_APmrYvpA45s/SYprPyUEeaI/AAAAAAAACGw/qoc8409LrfU/SPY15min_thumb.png?imgmax=800
&disp=P]2.8.0 CBOE Options Equity Put/Call Ratio, trend line still not broken, so top not confirmed today.
http://lh3.ggpht.com/_APmrYvpA45s/SYprQ4VlIXI/AAAAAAAACG4/dhgOQPrUXbo/CPCE_thumb.png?imgmax=800
&disp=P]3.4.1 United States Oil Fund, LP (USO Daily), I still think the oil is building a base which could bounce at any time. This is good for the overall market.
http://lh6.ggpht.com/_APmrYvpA45s/SYprRmzxmnI/AAAAAAAACHA/lkhLBYRQvEU/USODaily_thumb.png?imgmax=800
Posted by Cobra at 8:29 PM 6 comments http://www.blogger.com/img/icon18_email.gif
Tuesday, February 3, 200902/03/2009 Market Recap: Firework begins
3 points to say:
[*]CPC is still very low, and this might be a beginning of the firework according to the past.For the best scenario, the rally could last for several days until the market gaps (big) down.However it's unknown to me which day is the reversal day, maybe tomorrow, may the day after tomorrow, maybe...[*]If the market does not gap down a lot tomorrow, it may dip a bit and close in green.If it does (big gap down), well, according to above (point 1), better not to expect even an intra-day rebound.[*]Financials were lagging in today's rally.Bulls better to lock the profit when appropriate since CPC lower than 0.8 is not sustainable.Bears should be cautious since the market can go up crazy when CPC is lower than 0.8.
&disp=P]1.0.8 Extreme CPC Readings Watch.This is the proof to the above notes.When CPC reading is lower than 0.8, at least the market goes up the next day, and the probability of further rally is quite high until a big gap down, afterward the sell off could be massive too.
http://lh4.ggpht.com/_APmrYvpA45s/SYkMiAcKW-I/AAAAAAAACGQ/oQCjqwLbMIA/image_thumb.png?imgmax=800
&disp=P]1.0.4 S&P 500 SPDRs (SPY 15 min).Here is why the market will probably pull back tomorrow morning -- possible bearish rising wedge (volume isn't right though), ChiOsc negative divergence, as well as high STO and RSI readings.
http://lh5.ggpht.com/_APmrYvpA45s/SYkMjPULBXI/AAAAAAAACGY/uYFjZWOcd8w/image_thumb%5B1%5D.png?imgmax=800
&disp=P]5.0.1 Select Sector SPDRs.The pattern on XLF is a bearish dark cloud cover today.It's bearish that XLF didn't rally with the broad market.
http://lh3.ggpht.com/_APmrYvpA45s/SYkMjrWnecI/AAAAAAAACGg/3bP5xV1eG1c/image_thumb%5B2%5D.png?imgmax=800
Posted by Cobra at 7:33 PM 12 comments http://www.blogger.com/img/icon18_email.gif
Monday, February 2, 200902/02/2009 Market Recap: Anticipating Firework
Market kept dropping but CPC readings were quite bullish, almost around 0.8 the whole day today. I guess this implies that many are anticipating a FIREWORD from the government. Three points to say:
1. Not sure if we could get a firework, but eventually there sure will be a payback time for extremely low CPC readings. So firework, if any, is a gift to bulls.
2. INDU lower low today, so according to &disp=P]1.2.0 INDU Leads Market, SPX will have a new low which is lower than 804.30. This also complements the above, which says, firework, if any, is a gift to bulls.
3. Market could bounce tomorrow.
Let's see the reasons for the tomorrow's bounce first. It's a tough call though, because in chart &disp=P]1.0.4 S&P 500 SPDRs (SPY 15 min), ChiOsc shows negative divergence, so market could drop first tomorrow morning.
&disp=P]0.0.2 SPY Short-term Trading Signals, hollow red bar (which means open low close high but still close bellow the last close), usually means a reversal.
http://lh6.ggpht.com/_APmrYvpA45s/SYex-PBycRI/AAAAAAAACFo/Tvx-NMr3kHo/SPYShortTerm_thumb.png?imgmax=800
&disp=P]2.0.0 Volatility Index (Daily), black bar (which means open high close low but still close above the last close), also means a possible reversal.
http://lh4.ggpht.com/_APmrYvpA45s/SYex_L9swHI/AAAAAAAACFw/K_hmgN9uA2o/VIXDaily_thumb.png?imgmax=800
&disp=P]3.4.1 United States Oil Fund, LP (USO Daily), I think oil is building a base, so could bounce at any time (well, sure it can drop at any time, but still 50% chances, it can bounce, right?), this is good for the overall market.
http://lh4.ggpht.com/_APmrYvpA45s/SYeyAAPUdxI/AAAAAAAACF4/Ho6fO9J5I4k/USODaily_thumb.png?imgmax=800
Now, the firework. &disp=P]2.8.2 SPX:CPCE, look familiar? Sure, I know, similarity usually does not work, and that's why I said I'm not sure if we can get a firework this time. But here the point is extremely low CPC readings...
http://lh3.ggpht.com/_APmrYvpA45s/SYeyAnel8WI/AAAAAAAACGA/5angyTKvF4U/SPXvsCPCE_thumb.png?imgmax=800
&disp=P]1.2.0 INDU Leads Market. Also &disp=P]1.2.1 Dow Theory: Averages Must Confirm, TRAN has confirmed the lower low. Not good.
http://lh4.ggpht.com/_APmrYvpA45s/SYeyBB_YC5I/AAAAAAAACGI/LX72l1vwWF0/INDULeads_thumb.png?imgmax=800
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Sunday, February 1, 2009Don't know what I say everyday? Here's a simple version.
Chart 0.0.0 Signal Watch and Daily Highlights lists all the trading signals I follow. Because there're always some changes everyday so I don't generally mention them in my daily report. But it dose not mean they are not important.
Take today's signals as an example:
http://lh3.ggpht.com/_APmrYvpA45s/SYZl4uI-_oI/AAAAAAAACFY/NtBs17aSfZ0/SignalWatch_thumb.png?imgmax=800
1. We have almost all the intermediate-term sell signals, so generally, we want to take short positions.
2. Short-term, there're 2 sell signals and only 1 oversold signal, so should be OK to start short position or safe to keep the existing short positions.
Let's say, after a few days, we got signals like bellow:
http://lh5.ggpht.com/_APmrYvpA45s/SYZl5ThFbEI/AAAAAAAACFg/EZLL30VCZVQ/SignalWatch2_thumb.png?imgmax=800
1. Still intermediate-term are down, so we don't want to take any long positions here, unless you're an aggressive trader.
2. Since there're lots of short-term oversold signals, so we'd better take some profits here. And because the intermediate-term is still down and sometimes oversold can be more oversold, so it's OK we keep part of our short positions so that we won't regret if the market keeps going down disregarding all the oversold signals.
Anyway, my point here is to keep watching this chart and gradually adapt the signals in this chart to fit your own trading style.
Posted by Cobra at 7:17 PM 4 comments http://www.blogger.com/img/icon18_email.gif
01/30/2009 Market Recap: No Title
Although market fell on Friday, but &disp=P]2.8.0 CBOE Options Equity Put/Call Ratio and &disp=P]2.8.2 SPX:CPCE failed to confirmed that Wednesday was a top, so bears and bulls still can argue with each other. My view is still as illustrated in chart &disp=P]0.0.2 SPY Short-term Trading Signals, most indicators are near a top instead of a bottom. Monday, market could rise at least in the morning.
&disp=P]1.0.4 S&P 500 SPDRs (SPY 15 min), main reasons for the possible Monday rise (although Monday traditionally the weakest week day, usually Tuesday is a turnaround day), lots of positive divergence.
http://lh3.ggpht.com/_APmrYvpA45s/SYXN3l93xeI/AAAAAAAACFA/XgqimFU7tfY/SPY15min_thumb.png?imgmax=800
&disp=P]1.3.7 Russell 3000 Dominant Price-Volume Relationships, 1424 stocks price down volume up which means an oversold tension.
&disp=P]2.8.0 CBOE Options Equity Put/Call Ratio, trend line remains intact, this means that the Wednesday top has not been confirmed yet.
http://lh5.ggpht.com/_APmrYvpA45s/SYXN4_589lI/AAAAAAAACFI/aFXG4tKFr2k/CPCE_thumb.png?imgmax=800
Some interesting charts:
&disp=P]1.0.2 S&P 500 Large Cap Index (Monthly), I guess everybody is talking Jan Barometer, in order to make sure you know that I know this as well, so here comes this chart.
&disp=P]3.0.0 10Y T-Bill Yield, possible top signal. However I'm not sure now as bond market and stock market seem not closely related recently. (Yes, they're related, just I haven't found any rule to apply them yet.)
&disp=P]3.0.3 20 Year Treasury Bond Fund iShares (TLT Daily), TIP outperforms which means inflation, so my GUESS is that bond will keep dropping while the spring of commodities is coming.
http://lh4.ggpht.com/_APmrYvpA45s/SYXN50pLn5I/AAAAAAAACFQ/Hgup0Pql9NQ/TLTDaily_thumb.png?imgmax=800
Posted by Cobra at 8:29 AM 15 comments http://www.blogger.com/img/icon18_email.gif
Thursday, January 29, 200901/29/2009 Market Recap: Bearish Engulf
Today's pullback was far more than I've expected, so the worst case, long expected sell off in chart &disp=P]2.8.2 SPX:CPCE might have started. Tomorrow, the market might bounce back at least in the morning. However, since there're so many "top (at least short-term)" signals, although I'm not sure if the market can still go up a lot, it looks like bears have nothing to worry about at the current stage (at least a chance to escape without being punished). On the other hand, any bounce is a gift for bulls.
&disp=P]7.0.3 NYSE Composite Index Breadth Watch, this is how I measure the market.
http://lh5.ggpht.com/_APmrYvpA45s/SYKDXFdOAyI/AAAAAAAACEI/azdPYWVIRPM/NYA_thumb.png?imgmax=800
Evidences for a possible bounce tomorrow (Not very strong evidences though):
&disp=P]1.0.3 S&P 500 SPDRs (SPY 30 min), STO oversold, so might be a bounce at least tomorrow morning.
http://lh5.ggpht.com/_APmrYvpA45s/SYKDXv_0kMI/AAAAAAAACEQ/-0RKcBNG5xM/SPY30min_thumb.png?imgmax=800
&disp=P]1.0.4 S&P 500 SPDRs (SPY 15 min), might be a Bullish Falling Wedge, but since there are no positive divergence to support it, so don't hope too much.
http://lh5.ggpht.com/_APmrYvpA45s/SYKDYUVxLqI/AAAAAAAACEY/3O3dhUX96Zk/SPY15min_thumb.png?imgmax=800
Now the bad news:
&disp=P]2.8.2 SPX:CPCE, sell off might be ahead of schedule. It cannot wait until NYADV gets overbought which is a perfect "loading" chances for bears.
http://lh5.ggpht.com/_APmrYvpA45s/SYKDZNOC_-I/AAAAAAAACEg/3zvT7w1LaCM/SPXvsCPCE_thumb.png?imgmax=800
&disp=P]2.8.0 CBOE Options Equity Put/Call Ratio, remember how I called top here 01/07/2009 Market Recap: Intermediate-term Top?? Now this indicator comes back, so if market drops again tomorrow...
http://lh4.ggpht.com/_APmrYvpA45s/SYKDar3Xd6I/AAAAAAAACEo/nrupPoIW71A/CPCE_thumb.png?imgmax=800
&disp=P]2.8.1 CBOE Options Total Put/Call Ratio, pay attention to the "Normalized CPC" at bottom, a little bit too low, right? Yes, I said CPC low readings are bullish, but I also said, there'll be a payback time as CPC cannot remain at 0.8 level for ever.
http://lh6.ggpht.com/_APmrYvpA45s/SYKDbB73HYI/AAAAAAAACEw/y-YOqyUOn_U/CPC_thumb%5B1%5D.png?imgmax=800
&disp=P]0.0.2 SPY Short-term Trading Signals, all the red circles, at least not much up room left right? And this is why I mentioned at the very beginning that any bounce is a gift for bulls.
http://lh4.ggpht.com/_APmrYvpA45s/SYKDcP-pytI/AAAAAAAACE4/5KWzRzxXBRY/SPYShortTerm_thumb.png?imgmax=800
Posted by Cobra at 8:34 PM 0 comments http://www.blogger.com/img/icon18_email.gif
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Thursday, January 29, 2009Temporarily Disable Comments
I have to temporarily disable the comments area. If you have questions or any comments you can send me an email: peter_y_pan@hotmail.com.
All I want to say are, guys, please don't point fingers to each other as we're all friends here.
Meanwhile, I just want you to know that it's really not easy for me to take minimum 3 hours a day to report my view of the market (and some of you may know that never was I missed a single report ever since I started it). I have my own job, and I back home around 7pm and the report usually finishes around 11pm, so virtually every report you see here are "all my leisure time". My wife and kid were away from me last year, so I got plenty of time. However, they'll be back soon and I'm not sure how HARDER it will be since I've determined to keep up doing the report no matter what happens. So please, if you really appreciate my work, try your best to make things easier for me. Let's talk about stock market ONLY, OK?
And by the way, if my wife and kid are home, I need buy time from them (by bribing them with a little allowance while I'm busy on the report. :-)). I'm not here asking for donation however, I'm asking a little favor, so if you really want help and don't know how (some of you may have figured out from the changes I've made from my blog, and thanks, I really appreciate!), please send me an email.
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Wednesday, January 28, 200901/28/2009 Market Recap: Higher High
Trading range breakout on increased volume, bullish, today. Under NORMAL conditions, market should pullback tomorrow. If however no pullback or just a minor pullback tomorrow, pay attention to the trading setup described in chart &disp=P]2.8.2 SPX:CPCE, as eventually there'll be a big sell off.
&disp=P]7.0.3 NYSE Composite Index Breadth Watch, again this is how I interpret today's "Equal up and down strength" rule. Why is today bullish? 4 vs 4, bulls won. Now we need to see how the market pullbacks. If no lower low, then very good chances that the trend has changed from intermediate-term down to intermediate-term up.
http://lh5.ggpht.com/_APmrYvpA45s/SYEhyZM6pgI/AAAAAAAACDg/T902BwmW5p4/NYA_thumb.png?imgmax=800
&disp=P]0.0.2 SPY Short-term Trading Signals, trading range breakout and stand above MA50 again, very good. Although the RSI and STO are overbought, but since this is a pattern breakout, in which short-term overbought signals usually do not work, so I'm still watching the chart &disp=P]2.8.2 SPX:CPCE which trading setup I mentioned in yesterday's report, as I suspect (or more precisely I wish) that the market will keep going crazily up.
http://lh4.ggpht.com/_APmrYvpA45s/SYEhzdUNE6I/AAAAAAAACDo/4s7XQwadZ5M/SPYShortTerm_thumb.png?imgmax=800
&disp=P]1.0.3 S&P 500 SPDRs (SPY 30 min), possible Complex Head and Shoulders Bottom pattern, target around $90. Overbought though, might pullback at least tomorrow morning.
http://lh6.ggpht.com/_APmrYvpA45s/SYEh0SNXSYI/AAAAAAAACDw/5MaMAo645jA/SPY30min_thumb.png?imgmax=800
&disp=P]2.0.0 Volatility Index (Daily), VIX oversold, should bounce back which means a pullback in the overall market.
http://lh3.ggpht.com/_APmrYvpA45s/SYEh1xpyr_I/AAAAAAAACD4/gZynPxCCNSc/VIXDaily_thumb.png?imgmax=800
So, to summarize again, bulls need to take profits while bears best hopes are that the market keeps going crazily up until NYADV in chart &disp=P]2.8.2 SPX:CPCE gets overbought!
http://lh5.ggpht.com/_APmrYvpA45s/SYEh3I-_p7I/AAAAAAAACEA/pr_yPcL136s/SPXvsCPCE_thumb.png?imgmax=800
Posted by Cobra at 7:26 PM 30 comments http://www.blogger.com/img/icon18_email.gif
Tuesday, January 27, 200901/27/2009 Market Recap: SPX:CPCE Trading Setup
OK, are everyone bullish when AH news came out? Well, I'm preparing to be bearish now (pay attention to "preparing"). Reasons:
1. Up 3 days, still couldn't recover the Jan 20's one day loss.
2. &disp=P]1.3.7 Russell 3000 Dominant Price-Volume Relationships, again today has 1197 stocks price up volume down. Up 3 days in a row with volume down 3 days in a row, this is a typical pullback setup.
3. I mentioned here 01/23/2009 Market Recap: Extremely Low CPC Reading... about extremely low CPC readings are bullish, but this is only the half part. The other half is, a sell off generally follows. When will the sell off come? I don't know. But since we know a sell off usually follows, we should be careful here. Anyway, in today's report, I will talk about a trading setup which combines SPX:CPCE, CPC and NYADV together where at the same time we can see from the past, typically a sell off does follow.
&disp=P]7.0.3 NYSE Composite Index Breadth Watch, according to the "Equal up down strength rule", up 3 days in a row still no higher high, bears won. Also, volume down 3 days in a row which in normal market conditions, a pullback is due. For more examples about "Equal up down strength rule" please refer to chart &disp=P]8.1.1 Buyable Pullback Rule.
http://lh4.ggpht.com/_APmrYvpA45s/SX_nEGgQEwI/AAAAAAAACDA/-cFbOhZjqIU/NYA_thumb.png?imgmax=800
&disp=P]2.8.2 SPX:CPCE, MACD buy signal, good, which is pretty accurate in the past. But if we simply follow the MACD here, we will lose lots of profits, especially when the MACD buy signal is generated by extremely low CPC readings as in this case a big sell off usually follows. Why big sell off? Simple, extremely (pay attention to "extremely") low CPC readings can hardly be lower so it eventually has to rise which means a pullback in the overall market. So is there anyway to take profits just right ahead of sell off? The answer is NYADV. Extremely low CPC readings tend tol make the market rise in an extreme way therefore usually cause NYADV to reach an overbought level. Today it seems that all these conditions are met, except the NYADV overbought, hopefully market can rise to the overbought level, which I doubt, by the way. Anyway, Fed day tomorrow, market typically roller coaster after 2:15pm, so before 2:15pm better take some profits. And also from the chart, we can see in the past the best case is up 5 days in a row and the market has been up 3 days now, so be careful.
http://lh4.ggpht.com/_APmrYvpA45s/SX_nFN3IT4I/AAAAAAAACDI/bIi0ZsVnGPk/SPXvsCPCE_thumb.png?imgmax=800
&disp=P]2.0.0 Volatility Index (Daily), pay attention to STO indicator, if market up big tomorrow, this chart can be another reason to take profits.
http://lh4.ggpht.com/_APmrYvpA45s/SX_nFwfJY1I/AAAAAAAACDQ/pxa03Y6FtuA/VIXDaily_thumb.png?imgmax=800
&disp=P]1.0.3 S&P 500 SPDRs (SPY 30 min), could be a small Symmetrical Triangle, so might be up tomorrow. Just the STO is a little bit high, so price could rise then fall tomorrow. &disp=P]1.1.5 PowerShares QQQ Trust (QQQQ 30 min), possible Ascending Triangle, could rise. The same, STO indicator is a little bit high.
http://lh6.ggpht.com/_APmrYvpA45s/SX_nGvbwBcI/AAAAAAAACDY/Wmvm7LuLU2c/SPY30min_thumb.png?imgmax=800
Posted by Cobra at 9:03 PM 9 comments http://www.blogger.com/img/icon18_email.gif
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Monday, January 26, 2009Another no good sign
Forgot to mention, according to SP Energy Climactic Volume Indicator from www.decisionpoint.com, Energy sector seems pretty overbought, so could be a pullback tomorrow and therefore not good for the overall market.
http://lh4.ggpht.com/_APmrYvpA45s/SX5-ezWaTkI/AAAAAAAACC4/aMmAT7fJQcU/XLECVI_thumb.png?imgmax=800
Posted by Cobra at 7:24 PM 9 comments http://www.blogger.com/img/icon18_email.gif
01/26/2009 Market Recap: No Title
There is no clue today, let's see how the market goes tomorrow.However tomorrow might not be a good day for bulls considering the bearish reversal of financial sector and 1196 stocks up on decreased volume in Russell 3000.
Firstly let's review the bad news.
&disp=P]7.0.3 NYSE Composite Index Breadth Watch.Compare with the beginning of December, the rebound after the sell off on Jan 20th is weaker.
http://lh5.ggpht.com/_APmrYvpA45s/SX50FxIT7WI/AAAAAAAACCQ/Q4BVoDuoMwI/image_thumb.png?imgmax=800
&disp=P]5.0.1 Select Sector SPDRs.XLF is a bearish reversal pattern, and the situation will be no good should the dropping continues tomorrow.
http://lh6.ggpht.com/_APmrYvpA45s/SX50GWaOw7I/AAAAAAAACCY/H72g3svMCWE/image_thumb%5B1%5D.png?imgmax=800
&disp=P]1.0.3 S&P 500 SPDRs (SPY 30 min).Although it could be a back test post to symmetrical triangle breakout, the MACD at the bottom of the chart could possibly give a sell signal if the market goes down tomorrow, and the MACD is quite accurate on this chart.By the way, it has been two times that the market gapped down and rallied back up and even closed in green.Will it still do so at the third time of gapping down?
http://lh3.ggpht.com/_APmrYvpA45s/SX50HE6cztI/AAAAAAAACCg/03fmLGruiqs/image_thumb%5B2%5D.png?imgmax=800
Then we have two promising bullish signs:
&disp=P]2.8.2 SPX:CPCE.If the market goes up tomorrow, MACD on the following chart will possibly give a buy signal which is also quite accurate.
http://lh6.ggpht.com/_APmrYvpA45s/SX50HqBVkrI/AAAAAAAACCo/4KjN1hYPH44/image_thumb%5B3%5D.png?imgmax=800
The Institutional Buying and Selling from stocktiming.com shows that the institutions are in accumulation recently.
http://lh6.ggpht.com/_APmrYvpA45s/SX50INbzM_I/AAAAAAAACCw/O73mpsYdnQY/image_thumb%5B4%5D.png?imgmax=800
Posted by Cobra at 6:40 PM 0 comments http://www.blogger.com/img/icon18_email.gif
Sunday, January 25, 200901/23/2009 Market Recap: Extremely Low CPC Readings
An inside bar again, three days in a row, indecision and emotion accumulation, the breakout will be violent either up or down. Well, I wish I could know the direction, although based on a few straws I've collected from my chart book, the guess is UP.
http://lh5.ggpht.com/_APmrYvpA45s/SXyMG3rpatI/AAAAAAAACBg/V5s2e38ni4M/SPYShortTerm_thumb.png?imgmax=800
&disp=P]1.0.8 Extreme CPC Readings Watch, unlike the common believes, extremely low CPC readings are generally bullish. Only the ACCUMULATION of extremely low CPC readings are bearish and by the way, that's why I use "normalized CPC" in chart &disp=P]2.8.1 CBOE Options Total Put/Call Ratio to help me identifying the possible top and bottom.
http://lh6.ggpht.com/_APmrYvpA45s/SXyMHrXvVCI/AAAAAAAACBo/HWJjebFO_y8/CPC_thumb.png?imgmax=800
&disp=P]1.1.4 Nasdaq 100 Index Intermediate-term Trading Signals, green dashed lines, it seems that every time NAUPV crossover above NAADV, the market is in for a good bounce. Well, let's don't discuss how illogic it is to use NAUPV and NAADV crossover, please. I said in article here Does INDU lead market?, I don't care how illogic something may sound, I read only charts.
http://lh6.ggpht.com/_APmrYvpA45s/SXyMIp1j9pI/AAAAAAAACBw/GvhZ865y2mE/NDXDaily_thumb.png?imgmax=800
&disp=P]2.0.1 Volatility Index (Weekly), looks topped to me, may pullback and therefore is good for the overall market.
http://lh4.ggpht.com/_APmrYvpA45s/SXyMJkEJolI/AAAAAAAACB4/B-GY3zAte9E/VIXWeekly_thumb.png?imgmax=800
&disp=P]3.1.1 US Dollar Index (Weekly), looks topped too, a Doji. The pullback of $ is good for commodities which may help lift the overall market.
http://lh6.ggpht.com/_APmrYvpA45s/SXyMKScs0VI/AAAAAAAACCA/CdjlMU810f0/USDWeekly_thumb.png?imgmax=800
Oh, one more chart about Dow Theory: &disp=P]1.2.1 Dow Theory: Averages Must Confirm, it's very interesting that the recent TRAN new low wasn't confirmed by INDU. let's see how things going.
http://lh3.ggpht.com/_APmrYvpA45s/SXyMLMa-K5I/AAAAAAAACCI/L3qw7J0MUkk/DowTheory_thumb.png?imgmax=800
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Thursday, January 22, 200901/22/2009 Market Recap: Inside Day
There is no so much to talk about today.Inside bar for two consecutive days on &disp=P]0.0.2 SPY Short-term Trading Signals, which means indecision or the momentum accumulation.Once it breaks out, it will be massive no matter which direction it finally goes to.
&disp=P]7.0.3 NYSE Composite Index Breadth Watch.Let's see the targets for bulls and bears on the chart respectively.Rising up -- if it doesn't go beyond the top blue line then the situation will be bearish.This is because three days' effort cannot even compete with the down on a single day of Tuesday.Dropping down -- if it doesn't dive below the bottom blue line, bullish.Why?two down days fail to take out the rally on Wednesday.It seems more difficult for bulls to go beyond the top blue line, especially on Friday not so many people are willing to hold their positions over the weekend.Therefore the best hope of bulls is actually modest down tomorrow.
http://lh5.ggpht.com/_APmrYvpA45s/SXk1EuPZ93I/AAAAAAAACBI/qwzesZ7B7h4/image_thumb.png?imgmax=800
&disp=P]1.0.3 S&P 500 SPDRs (SPY 30 min).It seems like a symmetrical triangle.If we just read this chart, the probability of downside move is bigger.
http://lh3.ggpht.com/_APmrYvpA45s/SXk1FbAU6dI/AAAAAAAACBQ/CxA3d0TvhO4/image_thumb%5B1%5D.png?imgmax=800
&disp=P]0.0.1 Market Top/Bottom Watch.A very simple criteria to judge the market bottom is fear.How can it fear?At least three down days in a row, right?What the bottom isn't in place without fear?Because without fear no one will cut with loss, and the big money couldn't get the cheap chips and they will keep trying.Therefore, even the market goes up tomorrow and beyond the high on 7.0.3, bulls shouldn't be too happy because it is most likely a rebound.If the market goes down tomorrow, there will be more hope since we get two down days already.
http://lh6.ggpht.com/_APmrYvpA45s/SXk1GKGkrwI/AAAAAAAACBY/brfpGy-MsJw/image_thumb%5B2%5D.png?imgmax=800
Posted by Cobra at 7:10 PM 6 comments http://www.blogger.com/img/icon18_email.gif
Wednesday, January 21, 200901/21/2009 Market Recap: Down 1 Day vs Up 1 Day
Two points to be noted today:
[*]down 1 day vs up 1 day, so bulls lost the battle and tomorrow is the last chance and they have to push the market up big;[*]Intraday charts show that the market is overbought, and may pullback at least in the morning, which makes the mission of big up more difficult.&disp=P]7.0.3 NYSE Composite Index Breadth Watch.Tomorrow's high must be at least higher than that of yesterday's high in order to prove the bulls are in control.One may refer to &disp=P]8.1.1 Buyable Pullback Rule.
http://lh3.ggpht.com/_APmrYvpA45s/SXfd-K8_LLI/AAAAAAAACAw/sBPY8FWacC4/image_thumb.png?imgmax=800
&disp=P]1.0.3 S&P 500 SPDRs (SPY 30 min).TICK overbought, ChiOsc is a little bit too high, so the market may pull back tomorrow morning.
http://lh4.ggpht.com/_APmrYvpA45s/SXfd-llSCcI/AAAAAAAACA4/rGaldBNjKAc/image_thumb%5B1%5D.png?imgmax=800
&disp=P]1.0.4 S&P 500 SPDRs (SPY 15 min).All momentum indicators are overbought, which also means the market may pullback tomorrow morning.
http://lh6.ggpht.com/_APmrYvpA45s/SXfd_WZpecI/AAAAAAAACBA/XT6OZLZSQUc/image_thumb%5B2%5D.png?imgmax=800
Posted by Cobra at 6:46 PM 0 comments http://www.blogger.com/img/icon18_email.gif
Tuesday, January 20, 200901/20/2009 Market Recap: What bottom fish signals say again?
The setup of technical indicators is very similar with Jan 14th, where TICK closed below -1000, so tomorrow the market may reverse during the day just like Jan 15th.In this report we will review several important bottom fish signals and see how far the market is from the possible bottom.Again, bottom fishing is very risky even all bottom fish signals are pointing the bottom.
&disp=P]0.0.2 SPY Short-term Trading Signals.Note what the green dashed lines are pointing to, if TICK closes below -1000, the market should sell off further in the next day but the probability of intraday reversal is very high.The worst situation happened on Nov 19th, and the market sold off on the next day and didn't reverse until the very end of trading hours in 21st.
http://lh3.ggpht.com/_APmrYvpA45s/SXaWjlcOi8I/AAAAAAAAB_k/5NDCv5R9xo4/image_thumb.png?imgmax=800
&disp=P]1.0.3 S&P 500 SPDRs (SPY 30 min).Oversold, and the market may bounce back up at least in the tomorrow morning.
http://lh5.ggpht.com/_APmrYvpA45s/SXaWkMcy5FI/AAAAAAAAB_s/EhfqJMJDh6Q/image_thumb%5B1%5D.png?imgmax=800
&disp=P]1.0.4 S&P 500 SPDRs (SPY 15 min).Again oversold, and the market may recover in the morning.
http://lh5.ggpht.com/_APmrYvpA45s/SXaWk-xb1NI/AAAAAAAAB_0/t-0om7AUtUQ/image_thumb%5B2%5D.png?imgmax=800
&disp=P]1.0.5 Major Accumulation/Distribution Days.Today is the second major distribution day.According to the past record, there will be some decent rebound after two major distribution days, or the third major distribution day.The possible rebound is of course not confirmed yet, but it's still better than having just one major distribution day.
http://lh5.ggpht.com/_APmrYvpA45s/SXaWlbrJrpI/AAAAAAAAB_8/ZPeXRWArDFg/image_thumb%5B3%5D.png?imgmax=800
&disp=P]1.3.7 Russell 3000 Dominant Price-Volume Relationships.1631 stocks price down volume up, which means the market is oversold.You may check the green comments and see what happens in the next day after the similar price down volume up setup.
http://lh4.ggpht.com/_APmrYvpA45s/SXaWmgRrF5I/AAAAAAAACAE/GeFtDNZMDZo/image_thumb%5B4%5D.png?imgmax=800
&disp=P]2.0.0 Volatility Index (Daily).Today VIX broke ENV 20 which is quite extreme.
http://lh3.ggpht.com/_APmrYvpA45s/SXaWnJVwVVI/AAAAAAAACAM/FEg-kv1nt4E/image_thumb%5B5%5D.png?imgmax=800
As a summary, should the technical analysis still works the market may bounce back up tomorrow (in recent several months the market often goes extremely.Before it gets very extreme, it's hard to say if these conventional TA signals still work or not although they used to work very well in the past)
OK, now let's review three bottom fish signals and see where they are, and how many days the market could still drop down in the most possible worst scenario.
&disp=P]2.4.2 NYSE - Issues Advancing.Famous NYADV is not yet oversold.It may take two more days to reach the oversold region.At the worst scenario it may stay at oversold for three days.So we might see five down days afterward if the market gets very very extreme.
http://lh3.ggpht.com/_APmrYvpA45s/SXaWnqWquQI/AAAAAAAACAU/pJu0xzR7UDQ/image_thumb%5B6%5D.png?imgmax=800
T2122 from the Telechart, 4 weeks New High/Low ratio, not oversold yet.If it is oversold, it may stay there for a while.
http://lh5.ggpht.com/_APmrYvpA45s/SXaWoYCpY4I/AAAAAAAACAg/1F03tDYVicw/image_thumb%5B7%5D.png?imgmax=800
&disp=P]7.0.7 NYSE - TICK (30 min).See those capitulation of TICK readings under -1000 in last November, compare with the current reading -- again, not yet.
http://lh5.ggpht.com/_APmrYvpA45s/SXaWo5in0iI/AAAAAAAACAo/JSLe73D9jxM/image_thumb%5B8%5D.png?imgmax=800
Posted by Cobra at 7:29 PM 5 comments http://www.blogger.com/img/icon18_email.gif
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Sunday, January 18, 200901/16/2009 Market Recap: Follow-through, Yes, but...
OK, we got a follow-through on Friday, but I'm not happy, because the bounce was weak and on decreased volume. Maybe it's because ofthe long weekend and OE day effect, but anyway, next Tuesday, the market must up big otherwise, bulls will be in trouble.
&disp=P]7.0.3 NYSE Composite Index Breadth Watch, this is the main reason why I'm not happy. According to "Equal up down strength" rule, bulls have 4 days left to prove themselves.
http://lh5.ggpht.com/_APmrYvpA45s/SXN9qNWJuyI/AAAAAAAAB-8/8PEWNnwC9V4/NYADaily_thumb.png?imgmax=800
Let's see if by any chances this short-term bounce can last for awhile:
&disp=P]0.0.2 SPY Short-term Trading Signals, 2 hammers plus STO buy signal triggered very close to its oversold area, so under normal conditions the bounce is likely to continue.
http://lh5.ggpht.com/_APmrYvpA45s/SXN9rDw1geI/AAAAAAAAB_E/m23i35qX-zI/SPYShortTerm_thumb.png?imgmax=800
Charts from www.stocktiming.com, from Liquidity Flow and Institutional "shift in direction" point of view, they're still at very low level.
http://lh6.ggpht.com/_APmrYvpA45s/SXN9sKUenhI/AAAAAAAAB_M/y4aJPmyolUs/rain_thumb.png?imgmax=800
Again, Institutional Buying and Selling Trending chart from www.stocktiming.com which I first introduced on Christmas day. Now blue curve is well bellow the red curve which means a distribution and therefore a downtrend in intermediate-term. The good news is that the blue curve is too low and therefore justifying a possible short-term rebound.
http://lh4.ggpht.com/_APmrYvpA45s/SXN9tCIw75I/AAAAAAAAB_U/B2FkcuyMulk/instsell_thumb.png?imgmax=800
OK, now the possible rebound target:
&disp=P]1.0.3 S&P 500 SPDRs (SPY 30 min), potential Head and Shoulders Bottom, the theoretical target happens to be Fib 61.8 level.
http://lh5.ggpht.com/_APmrYvpA45s/SXN9uDJN1XI/AAAAAAAAB_c/R71N8WHFY-M/SPY30min_thumb.png?imgmax=800
Posted by Cobra at 11:06 AM 16 comments http://www.blogger.com/img/icon18_email.gif
Saturday, January 17, 2009Does INDU lead market?
Hey, my "brother" keeps lecturing me about how impossible would be that general (INDU) leads the market. And here is his lecture:
DJI usually does not lead real moves; DJI usually leads FALSE moves.
There's an old saying Generals (General Foods; GM; GE; etc) do not lead; they follow.That also goes for the other large cap industrials in the DJI not named "General _ _ _"
Well, I'm a pure chart-ist (is this a real word? I know word "chartist" but it seems irrelevant form my English Chinese Dictionary with chart-ist). So here are my principles:
1. I see everything through the chart, I don't care if it sounds logical or not. So don't tell me, well, the world is going to end so this kind of breakout is a trap.
2. I try my best no to think that this time is different. Everyone knows that there aren't any 100% correct indicators, so many times we tend to think this time is different and therefore use this as an excuse to justify the trade that is against what the indicator says.
3. If an indicator works in the past, until proven wrong, I'll keep using it.
Hmm, I just realize that it sounds like all my principles are actually about: Try not to be smart.
OK, enough lecture. Let's see what makes me think that INDU leads the market. As usual, a chart. And again, it might not work this time, but hey, I'm not a smart guy. Happy long weekend!
http://lh5.ggpht.com/_APmrYvpA45s/SXI7qtRErwI/AAAAAAAAB-0/EKgP5Q9O3I8/INDULeadsMarket_thumb%5B1%5D.png?imgmax=800
Posted by Cobra at 11:20 AM 10 comments http://www.blogger.com/img/icon18_email.gif
Thursday, January 15, 200901/15/2009 Market Recap: Reversal Day
Today is a reversal day, but we have to see if tomorrow is a follow-through.Because of a few puzzles, the market may only bounce in the short term should it takes off from tomorrow, and the trend is still down over the intermediate term.
Four criteria for the reversal day are the following:
[*]New low;[*]Close > Open;[*]Close > Yesterday's Close;[*]Heavy volume.The reason we may get a follow-through tomorrow:
&disp=P]0.0.2 SPY Short-term Trading Signals, STO buy signal, and RSI is still oversold which looks promising.
http://lh3.ggpht.com/_APmrYvpA45s/SW_9-Jm_x8I/AAAAAAAAB98/HtSpFSa7w7Q/image_thumb.png?imgmax=800
&disp=P]1.0.3 S&P 500 SPDRs (SPY 30 min).It stands above EMA21 for the first time in the past seven days, and MACD gives buy signal too.So it looks good.
http://lh5.ggpht.com/_APmrYvpA45s/SW_9_N_BKRI/AAAAAAAAB-E/grUCMg10vQk/image_thumb%5B1%5D.png?imgmax=800
&disp=P]2.0.0 Volatility Index (Daily).VIX seems turning down which is bullish to the market.
http://lh5.ggpht.com/_APmrYvpA45s/SW_9_wt-fvI/AAAAAAAAB-M/iqj8ont95cA/image_thumb%5B2%5D.png?imgmax=800
Why I think the intermediate-term trend is still down:
&disp=P]1.0.5 Major Accumulation/Distribution Days.We saw a Major Distribution Day yesterday, and it seldom appears in single, which means the market might dive down one more time.
http://lh6.ggpht.com/_APmrYvpA45s/SW_-A9sbUbI/AAAAAAAAB-U/fdIWraYqdfE/image_thumb%5B3%5D.png?imgmax=800
&disp=P]1.2.6 INDU leads the Market.INDU has a lower low today ahead of SPX and COMPQ, and the latter two may follow afterward.
http://lh4.ggpht.com/_APmrYvpA45s/SW_-Bsce0mI/AAAAAAAAB-c/FQFq_MPGW_M/image_thumb%5B4%5D.png?imgmax=800
&disp=P]2.4.2 NYSE - Issues Advancing.NYADV lower low means SPX may make a lower close compare with yesterday's close level.
http://lh3.ggpht.com/_APmrYvpA45s/SW_-CdceRfI/AAAAAAAAB-k/_8zmVbDcVdw/image_thumb%5B5%5D.png?imgmax=800
Posted by Cobra at 7:24 PM 11 comments http://www.blogger.com/img/icon18_email.gif
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