Wednesday, October 22, 200810/22/2008 Market Recap: Lowest Close 2008
Today a bad news is that SPX has reached the lowest close in 2008, another one is that the symmetrical triangle we talked about before has broken out at the down side.At the market close SPX went back to the triangle, which means it must go up tomorrow otherwise the Oct 10th low will be in danger.Will the market rise tomorrow?If the market is rational, the probability of bounce back is high.
&disp=P]2.4.2 NYSE - Issues Advancing chart is the only hope of bulls recently.NYADV has not shown a lower low so far, which is a characteristics of market bottom.Note the SPX close only chart at the bottom clearly shows that today is the lowest 2008 close.
http://lh3.ggpht.com/cobrasmarketview/SP_0UXJS_tI/AAAAAAAABRQ/eX6B0yoZ_Io/1_thumb.png?imgmax=800
&disp=P]1.0.3 S&P 500 SPDRs (SPY 60 min).It has gone back to the triangle, but not much room to turn around.
http://lh6.ggpht.com/cobrasmarketview/SP_0VgCkDJI/AAAAAAAABRY/BXTnFynQJJo/2_thumb.png?imgmax=800
&disp=P]0.0.0 Signal Watch and Daily Highlights.Take a look at today's signals, two mid-term buy signal have reversed to sell.Meanwhile several breadth oversold show up, again if the market is rational, these oversold signals are good news.However, given the current situation, I don't know when these signals will start to show their effects.
http://lh6.ggpht.com/cobrasmarketview/SP_0Wz-fn3I/AAAAAAAABRg/rHcWixBCbNw/3_thumb.png?imgmax=800
&disp=P]1.0.5 Major Accumulation/Distribution Days.Today is the second consecutive major distribution day up to now.After two to three major distribution days, we know the market may bounce back up significantly.So far this pattern works well, but the problem is that we don't know if the third major distribution day will show up before the bounce.
http://lh3.ggpht.com/cobrasmarketview/SP_0XgJ1d5I/AAAAAAAABRo/T6KFdVL0ZOQ/4_thumb.png?imgmax=800
&disp=P]1.3.7 Russell 3000 Dominant Price-Volume Relationships.The dominant price-volume relationships today are 1721 stocks price down volume up, which shows that the market is oversold and due for a rebound.
http://lh4.ggpht.com/cobrasmarketview/SP_0Ym3esNI/AAAAAAAABRw/e0L9_1TG3nk/5_thumb.png?imgmax=800
Posted by Cobra at 8:49 PM 3 comments http://www.blogger.com/img/icon18_email.gif
Tuesday, October 21, 200810/21/2008 Market Recap: Inside Day
Today is an inside day, which means today's candle is completely inside yesterday's.As mentioned previously, inside day candle is like a string which stores energy, after a few inside days once the market breaks out it could be quite violent.Unfortunately, the direction of potential breakout is unknown today, so we have to see how it goes tomorrow.
http://lh6.ggpht.com/cobrasmarketview/SP61gL3bajI/AAAAAAAABQo/SbeNZ9g7Ai0/1_thumb.png?imgmax=800
&disp=P]1.0.3 S&P 500 SPDRs (SPY 60 min).The symmetrical triangle on the chart has not broken yet.By the way, the chart also shows the trading tactic of consolidation area breakout (inside days usually form a consolidation area).Basically the narrower is the consolidation area, the better.Because the stop loss for a narrow consolidation area can be more close, the risk reward ratio is more favorite.In fact, recently the market is very volatile, and the consolidation area that we see today is quite big compared with the ones in the past.
http://lh4.ggpht.com/cobrasmarketview/SP61gnn_F6I/AAAAAAAABQw/cpm_aJD1HFg/2_thumb.png?imgmax=800
&disp=P]1.0.4 S&P 500 SPDRs (SPY 15 min).The gap on the chart has not been completely filled yet, and this is the first resistance SPX has to conquer should it breaks out at the up side.It has tried three times, and for the forth time it will likely succeed.
http://lh5.ggpht.com/cobrasmarketview/SP61hZQRegI/AAAAAAAABQ4/i9NAYftFHHM/3_thumb.png?imgmax=800
&disp=P]1.1.5 PowerShares QQQ Trust (QQQQ 15 min).QQQQ doesn't look so good because an important support was broken.However it has come back after the trading hours thanks to Apple's earning report.So the alarm is considered as off at the moment.Hopefully today's low will hold tomorrow.
http://lh3.ggpht.com/cobrasmarketview/SP61irpGOII/AAAAAAAABRA/KYicdC-gR8k/4_thumb.png?imgmax=800
&disp=P]3.1.0 US Dollar Index (Daily).US dollar has broken out the ascending triangle, but it's overbought now.A strong US dollar is a good news for the stock market, but a bad news to the commodities.
http://lh5.ggpht.com/cobrasmarketview/SP61jUJd-KI/AAAAAAAABRI/JxYhEW96SPI/5_thumb.png?imgmax=800
Posted by Cobra at 10:09 PM 0 comments http://www.blogger.com/img/icon18_email.gif
Monday, October 20, 200810/20/2008 Market Recap: One more buy signal
Today we have one more mid-term buy signal, which means the market gets improved at least over the intermediate term.In the short-term, the volume is a bit weak today, and the market may pull back tomorrow or on the next day according to 1.3.7 Russell 3000 Dominant Price-Volume Relationships.However I think the possibility of further rally in tomorrow morning is quite high, which is critical.
Take a look at those signals first.
&disp=P]0.0.2 SPY Short-term Trading Signals.With respect to MA10 Envelop VIX is oversold (yes, it is oversold after only one day drop), and the oversold RHNYA has been corrected.In the short term, for a long time we haven't seen two up days in a row.Let's see how it goes tomorrow.
http://lh4.ggpht.com/cobrasmarketview/SP1b3oEo8UI/AAAAAAAABPg/2fcd0hhY1Z0/1_thumb.png?imgmax=800
&disp=P]0.0.3 SPY Mid-term Trading Signals.NYMO at the bottom has given a buy signal, so now we have three mid-term buy signals on the chart.Take notice that the two most reliable mid-term signals, MACD and NYSI, are still sell signals although they are improved.If the NYMO buy signal doesn't go away, NYSI will give one soon.
http://lh3.ggpht.com/cobrasmarketview/SP1b4yzm9HI/AAAAAAAABPo/MJpRZuwcoU0/2_thumb.png?imgmax=800
&disp=P]0.0.0 Signal Watch and Daily Highlights.The overview of all signals is show as follows for your information.
http://lh4.ggpht.com/cobrasmarketview/SP1b5w2Lr-I/AAAAAAAABPw/eYi14hAfNvg/3_thumb.png?imgmax=800
&disp=P]2.0.2 Volatility Index (60 min).The pattern on VIX is likely a double top, and the negative divergence on MACD and RSI shows that VIX may drop down further, which is bullish to the market.
http://lh3.ggpht.com/cobrasmarketview/SP1b61W6cMI/AAAAAAAABP4/HQx9pbwvID8/4_thumb.png?imgmax=800
On &disp=P]1.0.3 S&P 500 SPDRs (SPY 60 min) the symmetrical triangle composed by the dashed lines was broken today.However we can still draw an enlarged symmetrical triangle which is confirmed by three points of touch.Therefore, as real as it gets, it is critical whether SPX can break the upper edge of this triangle.I don't think the triangle has been broken out today because the part outside of the triangle is tiny and within the error range.Should the market sell off tomorrow, this symmetrical triangle will be valid and dominate, and 75% chance of the breakout will be at the downside.In addition, RSI at the top of the chart seems be testing the resistance, which supports the possibility that the triangle won't be broken.
http://lh3.ggpht.com/cobrasmarketview/SP1b8GVxsSI/AAAAAAAABQA/HyLFSbmnIlI/5_thumb.png?imgmax=800
Is it possible that the symmetrical triangle will be broken out?Maybe.Note the RSI on &disp=P]1.0.4 S&P 500 SPDRs (SPY 15 min).RSI rarely reverses after a single overbought/oversold.Usually it has to enter into oversold/overbought twice and form a divergence before reversal.From this perspective, RSI just went overbought and may pull back tomorrow morning.Afterward it might likely rise again and form a double overbought.
http://lh4.ggpht.com/cobrasmarketview/SP1b9EuqP_I/AAAAAAAABQI/nx1nU4DVlXo/6_thumb.png?imgmax=800
&disp=P]1.3.7 Russell 3000 Dominant Price-Volume Relationships.The dominant price-volume relationships are 2100 stocks price up volume down, which is very bearish.According to the past statistics, the market may drop down tomorrow or as late as the next day.Therefore if RSI does go up for forming a double top, pay attention to the volume and be cautious to the day after tomorrow.
http://lh3.ggpht.com/cobrasmarketview/SP1b-EvpNjI/AAAAAAAABQQ/-lc9cw7i3uM/7_thumb.png?imgmax=800
&disp=P]2.8.1 CBOE Options Total Put/Call Ratio.CPC is a bit over bullish today.If tomorrow it drops further, be cautious on the next day.
http://lh5.ggpht.com/cobrasmarketview/SP1b--FYGyI/AAAAAAAABQY/ITrRGdW2ghM/8_thumb.png?imgmax=800
&disp=P]1.4.4 TSE McClellan Oscillator.A buy signal on the Canadian chart.
http://lh3.ggpht.com/cobrasmarketview/SP1b_1Au8JI/AAAAAAAABQg/nHozSh896Tc/9_thumb.png?imgmax=800
Posted by Cobra at 9:35 PM 2 comments http://www.blogger.com/img/icon18_email.gif
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Monday, October 20, 2008$TICK closes above 1,000 means the market will close lower the 2nd day?
Just a note for myself, and share with you, my dear readers, as thanks for all kinds of info I've got from your feedbacks.
I read an article saying if TICK closes above 1,000 then very high chances that the 2nd day the market will close lower and the same is true for CPC if it closes around 0.8. Is it true? Check the following chart, see dashed lines, at least I don't see any edges here.
http://lh5.ggpht.com/cobrasmarketview/SP1P6XLyCaI/AAAAAAAABPY/DQUjWy73ouU/NYA_thumb%5B2%5D.png?imgmax=800
Today's Market Summary is ready, guess, my friend is busy translating it now, will be posted later.
Posted by Cobra at 8:43 PM 4 comments http://www.blogger.com/img/icon18_email.gif
Sunday, October 19, 200810/17/2008 Market Recap: No Follow-through
There is no concrete conclusion in this report, we have to see how the market goes next week.
We saw a bullish reversal on Thursday, but unfortunately no follow-through showed up on Friday.Many breadth signals (e.g., &disp=P]1.0.5 Major Accumulation/Distribution Days, &disp=P]2.4.3 Breadth Oversold/Overbought Watch) indicate that a bottom is highly likely in place, however no chart pattern has confirmed this so far, therefore one should not heavily long or short.
In the next week, the key market behaviors to watch are if the Thursday low SPX 865 will hold, and if Friday high SPX 984 will break out.
&disp=P]1.0.3 S&P 500 SPDRs (SPY 60 min).During the weekend many people are talking about the symmetrical triangle on the chart.The pattern does look like a symmetrical triangle which means 75% possibility is breakout at the downside.However symmetrical triangles (as well as all trend lines) need a confirmation by the third point, you can see that we can also draw an ascending channel which has no third-point either.Therefore, it is probably too early to talk about the symmetrical triangle.Let's see how the market plays out next week.
http://lh6.ggpht.com/cobrasmarketview/SPt7qhBQE8I/AAAAAAAABOo/y5De06rNq-Q/1_thumb.png?imgmax=800
&disp=P]1.0.4 S&P 500 SPDRs (SPY 15 min).The selling-off at the end of trading hours on Friday could be considered as a bull flag, which is not too bad.There is a consolidation region near Fib 61.8which may provide some supports.
http://lh5.ggpht.com/cobrasmarketview/SPt7r40qFrI/AAAAAAAABOw/rI6fALUjHzY/2_thumb.png?imgmax=800
&disp=P]1.1.4 PowerShares QQQ Trust (QQQQ 60 min).Just like SPY, the pattern could be either double bottom or descending triangle at this point of time, but the positive divergence on MACD and RSI looks good.
http://lh4.ggpht.com/cobrasmarketview/SPt7s13hlwI/AAAAAAAABO4/86GKmI-XzwE/3_thumb.png?imgmax=800
&disp=P]1.4.2 S&P/TSX Composite Index (60 min).MACD and RSI also show positive divergence on the Canadian market.
http://lh6.ggpht.com/cobrasmarketview/SPt7tu3I1xI/AAAAAAAABPA/SwXwNtVAgt0/4_thumb.png?imgmax=800
&disp=P]2.0.1 Volatility Index (Weekly).The rally of VIX has lasted for 8 weeks, and VIX is extremely overbought now.Period.
http://lh4.ggpht.com/cobrasmarketview/SPt7u1d1uNI/AAAAAAAABPI/QpIUDpeF5T8/5_thumb.png?imgmax=800
&disp=P]3.0.2 TED Spread.Here is a poor man's TED spread.LIBOR is falling and UST3m is rising.Hopefully this good trend can continue in the next week.
http://lh3.ggpht.com/cobrasmarketview/SPt7v88MHlI/AAAAAAAABPQ/_Gm0dj21vOA/6_thumb.png?imgmax=800
Posted by Cobra at 11:26 AM 4 comments http://www.blogger.com/img/icon18_email.gif
Thursday, October 16, 200810/16/2008 Market Recap: Bullish Reversal Day
&disp=P]0.0.2 SPY Short-term Trading Signals.Technically today is a Bullish Reversal Day, and the last Friday low was successfully tested.But a follow-through tomorrow is still needed.
http://lh5.ggpht.com/cobrasmarketview/SPgGVBjoH6I/AAAAAAAABOA/2lKrLIRjY3k/1_thumb.png?imgmax=800
On the following chart, SPX has a higher low while VIX has a new high, and this is a positive divergence.This is great and many professional traders are waiting for this signal to resume trading.
http://lh6.ggpht.com/cobrasmarketview/SPgGV_UeIkI/AAAAAAAABOI/esZtu2JlH9s/2_thumb.png?imgmax=800
&disp=P]1.0.4 S&P 500 SPDRs (SPY 15 min).This chart shows the potential target and resistance should the rally continues.
http://lh6.ggpht.com/cobrasmarketview/SPgGWvV7W7I/AAAAAAAABOQ/K9VpaHVSmno/3_thumb.png?imgmax=800
&disp=P]2.4.3 Breadth Oversold/Overbought Watch.Note that if the market becomes rational again, all extremely oversold breadth signals on the following chart have to be corrected.This means the rally will very likely continue.Among those signals, the current levels of NYA50R and NYHILO indicate a mid-term bottom under the normal market condition.
http://lh3.ggpht.com/cobrasmarketview/SPgGXuu4GpI/AAAAAAAABOY/DgkMIuoWgW4/4_thumb.png?imgmax=800
&disp=P]1.0.5 Major Accumulation/Distribution Days.Previously I mentioned that Major Distribution Day means the market will rally for 22% within 60 days.A reader asked if past two Major Accumulation Day still count after getting a Major Distribution Day yesterday.The answer is yes.On the following chart, the Major Distribution Day between April and May did not affect the rally in May.On the other hand, I have a little bit concern to the first Major Accumulation Day in September, because it was manually made by market makers after an unexpected selling off ($700B bailout plan was rejected).Therefore it is better to have another Major Accumulation Day just to be safe.Concerning the forming of the market bottom, a research paper says that, the market is likely bottomed out if a Major Accumulation Day follows a Major Distribution Day.This is exactly what happened in the last week and this Monday, and so the market is very likely bottomed out.For your information, here is the excerpt of the article:
The historical record shows that 90% Downside Days do not usually occur as a single incident on the bottom day of an important market decline, but typically occur on a number of occasions throughout a major decline, often spread apart by as much as thirty trading days. For example, there were seven such days during the 1962 decline, six during 1970, fourteen during the 1973-74 bear market, two before the bottom in 1987, seven throughout the 1990 decline, and three before the lows of 1998. These 90% Downside Days are a key part of an eventual market bottom, since they show that prices are being deeply discounted, perhaps far beyond rational valuations, and that the desire to sell is being exhausted.
But, there is a second key ingredient to every major market bottom. It is essential to recognize that days of panic selling cannot, by themselves, produce a market reversal, any more than simply lowering the sale price on a house will suddenly produce an enthusiastic buyer. As the Law of Supply and Demand would emphasize, it takes strong Demand, not just a reduction in Supply, to cause prices to rise substantially. It does not matter how much prices are discounted; if investors are not attracted to buy, even at deeply depressed levels, sellers will eventually be forced to discount prices further still, until Demand is eventually rejuvenated. Thus, our 69-year record shows that declines containing two or more 90% Downside Days usually persist, on a trend basis, until investors eventually come rushing back in to snap up what they perceive to be the bargain of the decade and, in the process, produce a 90% Upside Day (in which Points Gained equal 90.0% or more of the sum of Points Gained plus Points Lost, and on which Upside Volume equals 90.0% or more of the sum of Upside plus Downside Volume). These two events – panic selling (one or more 90% Downside Days) and panic buying (a 90% Upside Day, or on rare occasions, two back-to-back 80% Upside Days) – produce very powerful probabilities that a major trend reversal has begun, and that the market’s Sweet Spot is ready to be savored.
http://lh3.ggpht.com/cobrasmarketview/SPgGYYsFRnI/AAAAAAAABOg/dduew4ax4ho/5_thumb.png?imgmax=800
Posted by Cobra at 8:28 PM 2 comments http://www.blogger.com/img/icon18_email.gif
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Wednesday, October 15, 200810/15/2008 Market Recap: Testing Low
Tomorrow is very critical because the market may test the last Friday low.Whether the mid-term bullish trend will be killed, in some extent, depends on whether the Friday low still holds tomorrow.For people who are desperate to cut losses, you may want to wait to know if that low is broken.
Usually the pattern of a market bottom is formed by double bottom: firstly the price goes down with increasing volume to form a new low, then bounce back up, after some time dives down again with decreasing volume (because people who are willing to sell may have sold off, those who are not may keep their holdings opened at previous high price level) to test the previous low, once the kiss back succeeds then a double bottom is formed.Today's selling off looks a bit like that as the volume decreased, so tomorrow we might have a piece of hope.On the other hand, the second kiss back usually happens one or two months later, and it rarely happens this quickly.If the market breaks the Friday low easily and does not reverse before the market close, the bottom may be formed at a low level.So be cautious.
&disp=P]1.0.4 S&P 500 SPDRs (SPY 15 min).The level that the market will test tomorrow is a consolidation region on last Friday, which has a strength and could hold.Additionally RSI at the top of the chart has oversold, if the market gaps down at open it will be deeply oversold.On the chart, the oversold of RSI on the 15-min chart, specially if RSI forms a double bottom, is quite accurate.Today RSI has formed a double bottom, therefore the market might hold there.Good luck, bulls!
http://lh6.ggpht.com/cobrasmarketview/SPbBCQEGkfI/AAAAAAAABNo/SF71qk4o1Yo/1_thumb.png?imgmax=800
Some people are probably waiting for the reversal of the brown curves (10-day moving average of the green curve) on T2101 chart of Telechart.Today it seems so.T2101 is the absolute value between NYSE advancing and declining, and the ascending green curves means the difference between advancing and declining is increasing, which is a bad news during a down trend because of more and more declining.Now the green curve starts to go down, which means the difference between advancing and declining is decreasing, so it is a good news and means the selling strength is weakening.
http://lh6.ggpht.com/cobrasmarketview/SPbBENyroII/AAAAAAAABNw/AoZliK1c59M/2_thumb.png?imgmax=800
Take a look at the following chart &disp=P]1.0.5 Major Accumulation/Distribution Days.Today is another Major Distribution Day, and it is the second highest on the record.
http://lh6.ggpht.com/cobrasmarketview/SPbBE1ccYWI/AAAAAAAABN4/6a7t4heT71Y/3_thumb.png?imgmax=800
Posted by Cobra at 9:20 PM 1 comments http://www.blogger.com/img/icon18_email.gif
Tuesday, October 14, 200810/14/2008 Market Recap: Bearish Reversal Day
Today the situation doesn't look so good.Technically we got a Bearish Reversal Day.One day may not mean anything, and the key is the follow-through on the next day.So let's see how the market goes tomorrow.
&disp=P]1.0.6 S&P 500 Bullish Percent Index.The good news today is we finally have a mid-term buy signal.
http://lh4.ggpht.com/cobrasmarketview/SPVrqu6oMqI/AAAAAAAABNA/uS6V3l9az7Q/1_thumb.png?imgmax=800
Here is the overview of all signals: &disp=P]0.0.0 Signal Watch and Daily Highlights
http://lh4.ggpht.com/cobrasmarketview/SPVrrQKJBFI/AAAAAAAABNI/m_3KIQUrMcY/2_thumb.png?imgmax=800
&disp=P]0.0.2 SPY Short-term Trading Signals.A Bearish Dark Cloud Cover appeared on the chart, and the reversal is close to both the resistance and Fib 50 level at where usually a bounce back stops.Therefore the situation is a bit bearish and we can only wish there is no follow-through tomorrow.
http://lh6.ggpht.com/cobrasmarketview/SPVrsWwHLLI/AAAAAAAABNQ/TWZToYl5Afo/3_thumb%5B1%5D.png?imgmax=800
&disp=P]1.0.3 S&P 500 SPDRs (SPY 60 min).This chart gives us a hope in some extent.SPY pulled back to the support level, and RSI still held above 50.It may be testing the lower edge of the price channel, but I don't know if it will bounce back up to the upper edge of the price channel or break out the price channel at the downside.We will know tomorrow.
http://lh5.ggpht.com/cobrasmarketview/SPVrtDLbEbI/AAAAAAAABNY/Nhb1qluK6WI/4_thumb.png?imgmax=800
&disp=P]1.4.2 S&P/TSX Composite Index (60 min).The pattern on Canadian market looks like a breakout of the Bullish Falling Wedge and testing of the breakout point.We still have to see how it goes tomorrow.
http://lh6.ggpht.com/cobrasmarketview/SPVrt4Qtw7I/AAAAAAAABNg/j9VUSBJNTVA/5_thumb.png?imgmax=800
Posted by Cobra at 9:04 PM 0 comments http://www.blogger.com/img/icon18_email.gif
Monday, October 13, 200810/13/2008 Market Recap: A Follow-through Major Accumulation Day
Today is a great day, and a very high probability is that the market has formed an intermediate term bottom.Here are the reasons:
[*]&disp=P]0.0.1 Market Top/Bottomed Watch.We have all bottoming patterns on the chart, and confirmation by Bullish Morning Star as well.Many candlestick patterns require a confirmation on the next day, Morning Star doesn't because of its high accuracy.So this is very encouraging.
http://lh5.ggpht.com/cobrasmarketview/SPQYRU87PlI/AAAAAAAABLY/IPRxXlMpmVM/1_thumb.png?imgmax=800[*]&disp=P]1.0.5 Major Accumulation/Distribution Days.In fact, the best news today is the Follow-through Major Accumulation Day.Concerning the Major Accumulation Day, once two major accumulation days show up, there will be a decent rally afterward.According to the record on the StockCharts.com, it has never been wrong (refer to charts from &disp=P]8.2.0 Major Accumulation Day 2007-2008 to &disp=P]8.2.5 Major Accumulation Day 1997-1998 should you need a verification).More details are given in 09/30/2008 Market Recap: Major Accumulation Day.More complete statistics shows that the market goes up for 22% on average within 60 days after the second major accumulation day.Moreover, take a look at the blue circles on the following chart, you will get a deep impression why it is risky to buy after the first major accumulation day and better to wait for the second one.
http://lh4.ggpht.com/cobrasmarketview/SPQYSIr_egI/AAAAAAAABLg/pS5cRmVuue0/2_thumb.png?imgmax=800[*]&disp=P]2.4.3 Breadth Oversold/Overbought Watch.In a rational market, the current level of NYA50R and HYHILO should be a mid-term bottom. Should the market goes back to rational from today, this chart will be a good news, because the breadth is still extremely oversold despite of big rally today, and the oversold has to be corrected by further rally.
http://lh6.ggpht.com/cobrasmarketview/SPQYS-kStkI/AAAAAAAABLo/nc18nby0YuY/3_thumb.png?imgmax=800In summary, the outlook in the mid-term looks bullish.&disp=P]0.0.0 Signal Watch and Daily Highlights, let's take an overview to today's signals which are corrected in some extent, however the breadth signals are still oversold as aforementioned, on the other hand there is no single buy signal.Does "no buy signal" mean one should not buy?There is no sure answer to this question.Allow me re-emphasis that there is no 100% accurate signal, you have to do your own due diligence.If three points given above are sufficient to take the risk, or if it is better to wait for the mid-term buy signal, different traders can endure different levels of risk and thus have different opinions.Even the mid-term buy signal could be a whipsaw, and is not 100% safe either.In addition, mid-term signals are often lagging indicators, and the relative safety is achieved as the cost of profit.
http://lh4.ggpht.com/cobrasmarketview/SPQYTewSjoI/AAAAAAAABLw/nFdNYBXl3S8/4_thumb.png?imgmax=800
Over the short term, or specifically tomorrow, where will the market go?It is hard to say, but in the early morning the market might pull back.QQQQ is also not far from the resistance, if it can break the resistance? I have no idea.
http://lh3.ggpht.com/cobrasmarketview/SPQYUE_eAmI/AAAAAAAABL4/VKBD-A7XxCU/5_thumb.png?imgmax=800
&disp=P]1.0.3 S&P 500 SPDRs (SPY 60 min).SPY is still far from the gap resistance.
http://lh5.ggpht.com/cobrasmarketview/SPQYU_0N8ZI/AAAAAAAABMA/bhXzGIeZ8qU/6_thumb.png?imgmax=800
On 15-min charts, however, RSI on &disp=P]1.0.4 S&P 500 SPDRs (SPY 15 min) and &disp=P]1.1.5 PowerShares QQQ Trust (QQQQ 15 min) are extremely overbought, so at least the market will possibly pullback in the morning.
http://lh6.ggpht.com/cobrasmarketview/SPQYVwwC-5I/AAAAAAAABMI/HV3UaSRSj1Q/7_thumb.png?imgmax=800
A few interesting charts:
&disp=P]3.0.3 20 Year Treasury Bond Fund iShares (TLT Daily), oversold.
http://lh4.ggpht.com/cobrasmarketview/SPQYW2agcNI/AAAAAAAABMQ/HIVz35CvmGg/8_thumb.png?imgmax=800
&disp=P]3.3.0 streetTRACKS Gold Trust Shares (GLD Daily), the pattern of GLD looks like a double top, and the target is 70.
http://lh5.ggpht.com/cobrasmarketview/SPQYXqIyeOI/AAAAAAAABMY/8r2xDE2Nf1k/9_thumb.png?imgmax=800
&disp=P]5.0.2 S&P Sector Bullish Percent Index.Look at the sector Bullish Percent Indices, majority of them are still at 10-year low.In theory we have a good entry point now.
http://lh4.ggpht.com/cobrasmarketview/SPQYYibl3AI/AAAAAAAABMg/2kGYGOVtAuQ/10_thumb.png?imgmax=800
Posted by Cobra at 8:56 PM 0 comments http://www.blogger.com/img/icon18_email.gif
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Saturday, October 11, 200810/10/2008 Market Recap: Close near high of the day is needed
The market action on Friday looks pretty good, but it may not mean anything because the quick rally at the end of day seems like a short covering.Because of the G7 meeting in the weekend, many bears would rather not to carry short positions to Monday.Therefore, we need a follow-through on Monday.Recently the market is very panic and many TA signals on my daily watch list have been extremely oversold, while the market has not shown any sign of recovery.Again, if you insist to catch the bottom, don't open heavy positions and don't judge the bottom simply by a few indicators.At least the first step should be a close near height of the day, unlike the last week every time the bell was to ring then the market started to sold off, which indicated that people were unconfident to hold long positions overnight.If you catch the "bottom" a few days ago, this is not the time to stop loss, but don't average down either, just be patient and wait for the confirmation of the reversal.
&disp=P]0.0.1 Market Top/Bottomed Watch.Look at the chart again, it is still like a bottom.However it is prudent to wait for the follow-through on Monday.The best confirmation is gap up and close near high of the day, so a Bullish Morning Star pattern is formed, then the likelihood of reversal will be high.
http://lh5.ggpht.com/cobrasmarketview/SPGFsyCEYrI/AAAAAAAABKs/fn96aQdoG3I/1_thumb.png?imgmax=800
&disp=P]2.3.3 NYSE Total Volume.It looks like a bottom.Again, follow-through is the key.
http://lh4.ggpht.com/cobrasmarketview/SPGFuRLt9xI/AAAAAAAABK0/nkVU7aBP9Jw/2_thumb.png?imgmax=800
&disp=P]2.4.2 NYSE - Issues Advancing.NYADV is still high lows.Although the market kept dropping everyday, advancing issues didn't decrease so much, which is a good sign.
http://lh5.ggpht.com/cobrasmarketview/SPGFvDZjEQI/AAAAAAAABK8/k2KHXMDi2_A/3_thumb.png?imgmax=800
&disp=P]2.0.0 Volatility Index (Daily).The pattern looks like a Bearish Rising Wedge, which rallied too quickly to be sustainable.&disp=P]2.0.1 Volatility Index (Weekly), on the weekly chart, this is the seventhly up week, which is the historical record.
http://lh6.ggpht.com/cobrasmarketview/SPGFwNbYBlI/AAAAAAAABLI/VTym0rwqYYQ/4_thumb.png?imgmax=800
&disp=P]1.1.4 PowerShares QQQ Trust (QQQQ 60 min).QQQQ seems encouraging.Bullish falling wedge, and MACD and RSI show positive divergence as well.Note the RSI indicator at the top of the chart, the trend reversal won't be possible before RSI breaks above 50.
http://lh6.ggpht.com/cobrasmarketview/SPGFw7iVq8I/AAAAAAAABLQ/NygNpbCGcW4/5_thumb.png?imgmax=800
Posted by Cobra at 10:06 PM 2 comments http://www.blogger.com/img/icon18_email.gif
Thursday, October 9, 200810/09/2008 Market Recap: Is this time different?
The market dropped almost like a free fall, which is totally out of my expectation.Today I nearly believed that this time might be indeed different until I checked the monthly chart of major indices and calculated the declining in the worst months in 2001 and 2002.I hope the following chart could let you feel better.What I want to say is that the history will repeat and it is ultimately important to be patient no matter you hold any position or not.
http://lh3.ggpht.com/cobrasmarketview/SO7J9XiPGdI/AAAAAAAABJ8/CW9RVsbaKWw/1_thumb.png
Here is an excerpt from a blog(http://www.thekirkreport.com/2008/10/the-stock-marke.html), which is helpful in my opinion:
They say you have to listen to the message of the market and that message today is to run for your life. Every business in America is going bankrupt and taking you, your financial future, job, savings, and everything you know with it. If you believe that, you should have been selling everything today. I don't, which is why I'm going to the mattresses and fighting the good fight every single day. Sure, the battle scars are starting to get numerous and even I am having a difficult time staying opportunistic, but everything I've worked for and learned over the past twenty years has prepared me for what we're seeing now. My only hope is that I stay up to the challenge and hold true to my strategy even though like everyone else, I'd very much like to run for my life and sell & short everything in sight.
&disp=P]2.4.2 NYSE - Issues Advancing.NYADV is still a higher low today.Therefore the hope isn't gone.
http://lh6.ggpht.com/cobrasmarketview/SO7J-AnL3ZI/AAAAAAAABKE/dgQd5njae7I/2_thumb.png
&disp=P]1.0.5 Major Accumulation/Distribution Days.Today is the third Major Distribution Day.According to the history there will be a decent rally after three major distribution days.However note that last time the rally came after four major distribution days.So it is not the time to be optimistic yet.
http://lh5.ggpht.com/cobrasmarketview/SO7J_GByALI/AAAAAAAABKM/8nvhjBzFbkw/3_thumb.png
&disp=P]1.1.4 PowerShares QQQ Trust (QQQQ 60 min).Among all major indices only QQQQ shows a piece of hope.It is still in a bullish falling wedge, and MACD and RSI show positive divergence as well.
http://lh6.ggpht.com/cobrasmarketview/SO7J_8pMbnI/AAAAAAAABKU/PZ6q-qX1lck/4_thumb.png
&disp=P]2.0.0 Volatility Index (Daily).The chart says today is not the bottom, but STO has reached a level where a reversal happened several times in the past.
http://lh6.ggpht.com/cobrasmarketview/SO7KApGhWKI/AAAAAAAABKc/xX6R7kMlfbA/5_thumb.png
&disp=P]5.0.2 S&P Sector Bullish Percent Index.Maybe "overbought" doesn't mean anything at the time being.But let's take a look at major sectors anyway.Bullish Percent Index has reached a 10-year low now.
http://lh5.ggpht.com/cobrasmarketview/SO7KBYPpmeI/AAAAAAAABKk/mZelsjkWi3c/6_thumb.png
Posted by Cobra at 8:20 PM 2 comments http://www.blogger.com/img/icon18_email.gif
Wednesday, October 8, 200810/08/2008 Market Recap: Almost a reversal day
Today is a bit discouraging because a reversal day was almost there but eventually faded in the selling off.Under this situation, one should keep calm and be patient.However I would like to remind you again that the capital preservation is important.Today is unlikely a bottom according to &disp=P]2.0.0 Volatility Index (Daily) because the market rarely reaches bottom while VIX is still a big white candle.
http://lh5.ggpht.com/cobrasmarketview/SO2ACBRTuwI/AAAAAAAABJM/Mp17SpMKEG0/1_thumb.png?imgmax=800
What about tomorrow?Now I feel hesitate to say the market is due for a rebound because of being oversold.But there is no straight down market, and I believe a reversal could happen at any time.In most cases the bottom is formed as an intraday reversal, but not always.It is also possible that the reversal day is formed on today and tomorrow.On July 14th there was also a selling off after an intraday reversal, and the market soared up on the next day.Therefore, the history might repeat.
&disp=P]1.0.4 S&P 500 SPDRs (SPY 15 min), &disp=P]1.1.5 PowerShares QQQ Trust (QQQQ 15 min).Today's selling off can also be considered as the kiss back after the breakout of bullish falling wedge, which supports the possibility of tomorrow's rally.
http://lh3.ggpht.com/cobrasmarketview/SO2ACzsORFI/AAAAAAAABJU/AbSy-07ceyc/2_thumb.png?imgmax=800
&disp=P]3.2.0 CurrencyShares Japanese Yen Trust (FXY Daily).Japanese Yen is overbought, and the candle looks like a reversal.The retreat of Japanese Yen helps carry trade and is in turn bullish to the stock market.Although it is said that the influence of carry trade is almost gone, my observation shows that the trend of Yen is nearly an inverse of the stock market.You may refer to the relationship between the intraday trend of Yen and SPY on &disp=P]2.1.0 S&P 500 SPDRs (SPY 5 min).
http://lh3.ggpht.com/cobrasmarketview/SO2AESoYZ1I/AAAAAAAABJc/IlBZrp24hiQ/3_thumb.png?imgmax=800
&disp=P]3.2.4 Yen RSI and the Market Top/Bottom.When Yen enters into the overbought region, the green curve denotes the stock market is very likely bottomed, isn't it?Today Yen is finally there, which is a good sign.
http://lh3.ggpht.com/cobrasmarketview/SO2AE79-dvI/AAAAAAAABJk/77b_imKzYVE/4_thumb.png?imgmax=800
&disp=P]1.3.7 Russell 3000 Dominant Price-Volume Relationships, 1540 stocks price down volume up.Among recent six days, four days the dominant price-volume relationship is price down volume up, which indicates the market is extremely oversold.
http://lh3.ggpht.com/cobrasmarketview/SO2AFqO7CRI/AAAAAAAABJs/j6_yojqiotk/5_thumb.png?imgmax=800
&disp=P]2.4.2 NYSE - Issues Advancing.This is the most encouraging signal today.NYADV is still higher low.As long as no lower low shows up, we have a piece of hope.
http://lh3.ggpht.com/cobrasmarketview/SO2AGYmQlgI/AAAAAAAABJ0/yAqVf9shgyE/6_thumb.png?imgmax=800
Posted by Cobra at 8:52 PM 0 comments http://www.blogger.com/img/icon18_email.gif
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Tuesday, October 7, 200810/07/2008 Market Recap: Very Close
Today is the fourth day I gave the wrong prediction. Many people have been talking about that TA seems useless at the moment because the economy is in such a bad shape. However, I still believe that a bottom is pretty close. Of course, I have kept saying that bottom fishing is against the trend, and one should be cautious and always keep some cash no matter how sure you are. Hopefully you still have some bullets left now. I believe that, the current situation is like a pressed spring, once the market bounces back up, the probability of seeing a major accumulation day is very high. Keep in mind that a major accumulation day has shown up before, opening long positions after two major accumulation days is proven to be safe and profitable according to the past data.
The market might go up tomorrow, in my opinion. The reason is still oversold.
0.0.0 Signal Watch and Daily Highlights. The last signal on my watch list is oversold too, so there is no signal which is not in an oversold status -- except for no mid-term buy signal.
http://lh3.ggpht.com/cobrasmarketview/SOw4WIqmiWI/AAAAAAAABIs/xVilEL-0A4o/SignalWatch_thumb.png?imgmax=800
&disp=P]2.4.2 NYSE - Issues Advancing. This is the only good news today. As I mentioned yesterday, no matter what, NYADV should not form a lower low, otherwise SPX may have a lower close which is lower than today's close. So far no lower low happens. I don't know if or not it will form a lower low tomorrow. But the market may bounce back while NYADV gets oversold. Look at the following chart, every time the blue curve reaches the green horizontal green lines (denoted by green dashed line), the market always bounces back. In this year this pattern is always right. Hopefully this time is no exception, and TA still works.
http://lh6.ggpht.com/cobrasmarketview/SOw4W0sWnGI/AAAAAAAABI0/Ceote5MoaRU/NYADV_thumb%5B1%5D.png?imgmax=800
&disp=P]1.0.5 Major Accumulation/Distribution Days. Today is another major distribution day. According to the patterns on the chart (note the places marked by green circles and blue dashed lines), the market will have a nice rally after 2-3 major distribution days. However, we should be cautious because there are only two major accumulation days so far, and the third one could come. Take notice that prior to the big rally on Sep 18th/19th there were 4 major distribution days.
http://lh4.ggpht.com/cobrasmarketview/SOw4XtPlMWI/AAAAAAAABI8/g0u0_NQGqn8/MajorDistDay_thumb%5B1%5D.png?imgmax=800
&disp=P]1.0.4 S&P 500 SPDRs (SPY 15 min), &disp=P]1.1.5 PowerShares QQQ Trust (QQQQ 15 min), &disp=P]1.2.4 Diamonds (DIA 15 min), MACD and RSI show positive divergence, which is an early sign of rally.
http://lh3.ggpht.com/cobrasmarketview/SOw4YQD5NDI/AAAAAAAABJE/vQB83MKrbwU/SPY15min_thumb%5B1%5D.png?imgmax=800
Posted by Cobra at 8:36 PM 3 comments http://www.blogger.com/img/icon18_email.gif
About $LIBOR in StockCharts.com
I got a feedback about the using of $LIBOR:$UST1M to check the current credit risk, which appears that I was totally wrong. Since the feedback is in the comment area of this blog, I assume that most of you might not notice it so as granted by the original author, I put the commentary here, further feedbacks are welcome.
Your idea of LIBOR and UST3M Spread (also known as TED Spread) is conceptually correct. However, you may not be aware that the $LIBOR in StockCharts is NOT the LIBOR yield itself! It has the opposite correlation with the rate, just like the relationship between IEF and $TNX. So your $LIBOR:$UST1M ratio is misleading. Stockcharts has almost no chart to represent 3 months Treasury Bill. So I use BIL (an ETF) as a replacement. The ratio should be BIL:$LIBOR. Note that the ratio has been inversed in order to offset the bond price/yield relationship!
Posted by Cobra at 11:37 AM 3 comments http://www.blogger.com/img/icon18_email.gif
Monday, October 6, 200810/06/2008 Market Recap: Market Bottomed?
Has the market bottomed?&disp=P]0.0.1 Market Top/Bottomed Watch, it seems so, at least very close.I say close because the rally near the end of trading hours was a bit over rush, and the typical reversal usually closes in green.So today may not mean anything, and we have to see if tomorrow the market will follow through.
http://lh5.ggpht.com/yaozhenhua/SOrfdHFK5qI/AAAAAAAABH4/5KnEfyTJZbo/1_thumb.png
Will there be a follow through tomorrow?Maybe, the main reason is that the market isvery very oversold.Note that my prediction about the next day market direction has been wrong for three days, which is rare in the past.Therefore I am not sure if the oversold market could be even more oversold tomorrow.0.0.0 Signal Watch and Daily Highlights has all the signals, and all short-term signals as well as breadth are oversold except that there is no mid-term buy signal.You may refer to my chart book to see how over sold the market is at the time being.
http://lh4.ggpht.com/yaozhenhua/SOrfd1LKlII/AAAAAAAABIA/LvLDOlg61aU/2_thumb.png
&disp=P]1.3.7 Russell 3000 Dominant Price-Volume Relationships.This is the main reason why I think the market will go up tomorrow.During the past three days, the dominant price-volume relationships are price down volume up, and it seems highly capitulation.Therefore the probability of short-term rally is high.
http://lh6.ggpht.com/yaozhenhua/SOrfe8ssxyI/AAAAAAAABII/SDvNxOIGnZs/3_thumb.png
&disp=P]2.4.4 NYSE McClellan Oscillator,it is oversold.As far as I know, the market will have a good chance to bounce back up once NYMO is oversold.Also note that it is still positive divergence, which is very encouraging.
http://lh5.ggpht.com/yaozhenhua/SOrff2RnDxI/AAAAAAAABIQ/wpf9U9uzlg8/4_thumb.png
&disp=P]2.4.2 NYSE - Issues Advancing.This is very encouraging, too because it is higher low so far.However, it's better to not see it going down tomorrow, because a lower low means SPX will have a lower close than tomorrow's close.From the perspective of this indicator, the follow through tomorrow is very important, at least a heavy selling off is no good.
http://lh5.ggpht.com/yaozhenhua/SOrfhDt-KRI/AAAAAAAABIY/9JV6aeeqm8Y/5_thumb.png
&disp=P]3.0.2 Credit Risk Watch.This chart is what I am worrying about.LIBOR spread is still very high, and the market cannot rally without solving this problem.So the government would better stand out.If you don't understand LIBOR, just look at the relationship between the black curve and the green curve which denotes the market, the higher is the black curve, more bearish is the market.
A simple explanation of LIBOR spread: in plain English LIBOR is the interest rate that banks borrow money from each other.UST3M is the yield of the treasury, which can be considered as an interest rate.Because of the credit of US government, the treasury is considered risk-free.The spread of LIBOR and UST3M is the difference between risky and risk-free loans.A big spread means the risk of inter-bank loan is high, and banks are reluctant to borrow money to each other, then there is no liquidity on the market.The data of LIBOR in StockCharts is 1-month, so I use UST1M instead of UST3M.
http://lh3.ggpht.com/yaozhenhua/SOrfiTp_wkI/AAAAAAAABIg/simZrTrynSs/6_thumb.png
&disp=P]3.0.1 Yield Curve, UST3M. On the chart there is a big discrepancy between the projected Fed rate and current target rate, which means it is highly necessary to have an emergency rate cut.
http://lh4.ggpht.com/yaozhenhua/SOrfjEBBpiI/AAAAAAAABIo/9kPfYSl4Ihk/7_thumb.png
&disp=P]1.4.4 TSE McClellan Oscillator.Canadian market is extremely oversold as well.Today the market sold off for 1180 plus (equivalent to 1000 points for INDU).
http://lh3.ggpht.com/yaozhenhua/SOrfkZsL9zI/AAAAAAAABIw/ajQ6S6IGEyY/8_thumb.png
Posted by Cobra at 9:45 PM 1 comments http://www.blogger.com/img/icon18_email.gif
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Monday, October 6, 2008Line of Gravity
Tonight, I want to share with you a chart called "Line of Gravity" invented by a WS genius (I cannot spell his name, sorry). It's basically 10% envelope of ( EMA30 + EMA72 ) / 2 for INDU only.
A very basic theory about this "Line of Gravity" chart is if the price drops out of the envelope, it will rally back and such kind of chances (of being dropped out of the envelope) are very rare and therefore it's "once in a life time chance" (sorry, I cannot think of a right English word for this. By the way, the market summary you see everyday is actually translated from my Chinese summary by my friend. I myself is too busy to do the translation.)
OK, chart says everything. Let's look at all the history charts for the "once in a life time chance". And of course YMYD. Cheers!
Oh, my daily summary was ready and my friend is now busy translating it, so stay toned.
http://lh4.ggpht.com/cobrasmarketview/SOrZxg7jBlI/AAAAAAAABHk/g8-R9Mr-Km4/Gravity06-08_thumb.png?imgmax=800
http://lh6.ggpht.com/cobrasmarketview/SOrZybRmXTI/AAAAAAAABHs/XM-aIRda0A4/Gravity00-03_thumb.png?imgmax=800
http://lh5.ggpht.com/cobrasmarketview/SOrZy1njOdI/AAAAAAAABH0/KszIn6asLS4/Gravity97-00_thumb.png?imgmax=800
http://lh6.ggpht.com/cobrasmarketview/SOrZznMR6KI/AAAAAAAABH8/wWcNmruhirs/Gravity90-92_thumb.png?imgmax=800
http://lh5.ggpht.com/cobrasmarketview/SOrZ0CMyZ6I/AAAAAAAABIE/FbMDDwhW-iw/Gravity87-89_thumb.png?imgmax=800
Posted by Cobra at 8:38 PM 0 comments http://www.blogger.com/img/icon18_email.gif
Sunday, October 5, 2008Feedback concerning mid-term trend
Today a reader wrote to me and asked why my mid-term outlook was bullish in the past two weeks albeit the market kept selling off. He mentioned that there were many mid-term sell signals, especially MACD had been sell since Sep 4th.
Firstly I would like to clarify that, mid-term and short-term are different, a bullish mid-term outlook has nothing to do with the short-term trend whether the market goes up or down.
Indeed, The government intervention on Sep 19th did bring some trouble to my trading. On the other hand, the chart 0.0.1 did indicate a bottom (refer to the following chart which still contains false judgement), and 1.0.6 had been confirmed buy signal. Therefore, from the perspective of the technical analysis, it was right to net long from Sep 19th to Sep 26th by following TA trading signals.
http://lh4.ggpht.com/cobrasmarketview/SOkQouLoJwI/AAAAAAAABGQ/CPVPLFEt6NM/1_thumb.png?imgmax=800
On Monday the market broke out downward, and this indicates that the previous bottom is a false signal. Consequently, I did not recommend to catch the bottom from that time. In my reports, I kept saying that I was not sure if there would be a lower low, bottom-fishing is ahead of signal, be cautious to long, etc. Note that what I mentioned was referring to short-term.
Why was the mid-term outlook bullish? As I explained, the most important is 0.0.3 VIX:VXV, which indicated that 90-day projected volatility should be lower than the current value, which in turn meant that the market after 90 days might be higher than current close. In addition, 2.4.3 was extremely oversold, 2.4.2 and 2.4.4 showed typical bottoming pattern, positive divergence. Under such situation, the risk of net short was relatively high, and the best strategy should be holding cash if not day trading. In fact, this was what many professional traders were doing.
http://lh3.ggpht.com/cobrasmarketview/SOkQpSo4SAI/AAAAAAAABGY/7gPsuKAhfsI/2_thumb.png?imgmax=800
http://lh4.ggpht.com/cobrasmarketview/SOkQqTZVlMI/AAAAAAAABGg/r6c6bauaLx8/3_thumb.png?imgmax=800
http://lh6.ggpht.com/cobrasmarketview/SOkQrSpzn3I/AAAAAAAABGo/i2k0BGXrqvQ/4_thumb.png?imgmax=800
http://lh4.ggpht.com/cobrasmarketview/SOkQsqMgilI/AAAAAAAABGw/FxyMlsTdRUQ/5_thumb.png?imgmax=800
Concerning why my mid-term outlook was bullish without clear mid-term buy signals, as I mentioned in my report, the safe strategy is to wait for the mid-term buy signal, which is the mid-term trading signal instead of forecast. Forecast is conceptually different from trading. On the other hand, sometimes the mid-term signals can be whipsaw. For instance, 1.0.6 occasionally flipped to buy after Sep 16th. Previously I also explained that it is not guaranteed to be profitable by blindly following mid-term signal. By the way, many back tests show that simply following MACD is not profitable either.
My analysis is based on the market breadth, not technical indicators. The reason is as aforementioned, the back test shows that indicators are not accurate, but accuracy of breadth signals are much higher. Nevertheless, the timing of breadth could be more or less off, and this is exactly why the market has not rallied after two weeks. Anyway, there are many evidences on my daily report and these evidence should not be overlooked just because MACD is still a sell signal. Let me emphasis again, my back test shows that MACD itself doesn't work reliably, neither RSI, neither STO, nor any other simple technical indicators.
The point is that I must show the evidences that I see on the charts from time to time, and make a conclusion from these evidences. I cannot say that -- well, the mid-term signal is still sell, so these oversold signals as well as divergence are pointless, let's forget them. However I have no control to if or not these signals are valid or when they will be approved by the market. There is no 100% accurate signal, and my emphasis is on the probability over the long term. To achieve a steady long term probability, it is important to eliminate the thinking of maybe probably perhaps... this time is different.
Posted by Cobra at 12:08 PM 6 comments http://www.blogger.com/img/icon18_email.gif
Saturday, October 4, 200810/03/2008 Market Recap: Market Very Oversold
Firstly I would like to give my two cents on whether the big money were dumping their positions in recent two weeks.
If the big money wanted to distribute, the bailout news should be a perfect chance to pump the market up. This is because the majority of the retail traders considered the bailout plan as positive till yesterday, and they would believe the rally in the past two weeks was real. My question is, why the market was hammered down in the past two weeks? Doesn't big money want to distribute at a high price level? The market plummeted so retail traders were trapped, and then big moneys could hammer down the market even further? Tell me, which way is more profitable for distribution of existing long positions? So far what had happened this year were the same patterns, for whatever positive news from the government, the market was pushed up before the news was released. This is so called buy on rumor, sell on news. Friday the market was sell on news. However there was no buy on rumor as far as I remember. Someone might say, INDU did rally for 300 plus points prior to the vote on Friday and that could be counted as pump and distribute. Come on, big moneys cannot sell that quickly like retail traders. Therefore I think there are two possible explanations to the selling off:
[*]Big moneys are getting a tremendous trouble and selling at any price;[*]Big money intentionally accumulated more positions at a low level.Which one is more likely? I don't know, period. End of conspiracy theory.
Okay, back to market analysis. Here is the conclusion:
The mid-term outlook is bullish, but I am not sure if there will be a big selling off in the near term. Monday, I think the probability of bouncing back up is very high, and the main reason is that the market is extremely oversold. Some readers may be waiting for my complaint -- maybe the oversold indicators won't work this time, and the market will probably go down to zero -- not yet.
&disp=P]0.0.4 SPX Sell Climax. In the evening of Thursday, a reader asked why we didn't see a three down days in a row prior to a bottom? Okay, here we go! According to this chart, any three consecutive down days could possibly be a bottom. Pay attention to the volume pattern, if the price is down on increased volume, and the oversold will be more obvious, as a result it will be more likely that the market is bottomed. Now we have seen three down days with this volume pattern.
http://lh6.ggpht.com/cobrasmarketview/SOguUGPJiHI/AAAAAAAABE4/9bWbcSL3pbU/1_thumb.png?imgmax=800
&disp=P]1.3.7 Russell 3000 Dominant Price-Volume Relationships. Price down volume up for two days, oversold. Note the green comments, what happened on the next day when the market was oversold similarly? Now we have seen two such days, which happens the first time on the chart.
http://lh5.ggpht.com/cobrasmarketview/SOguU_iFSnI/AAAAAAAABFA/43I07SYWhCk/2_thumb.png?imgmax=800
The following chart shows the relationship between weekly SPX and RSI. An oversold RSI on the weekly chart is extremely rare. It happened three times during the 2000 bear market, where the market went afterward?
http://lh4.ggpht.com/cobrasmarketview/SOguVtBhisI/AAAAAAAABFI/NsQaGIuuS54/3_thumb.png?imgmax=800
Look at the green curve on T2107, NYSE percent of stocks above MA200 is almost the lowest on the record.
http://lh3.ggpht.com/cobrasmarketview/SOguXAteNMI/AAAAAAAABFQ/XHVbGLUJ0A4/4_thumb.png?imgmax=800
&disp=P]2.4.3 Breadth Oversold/Overbought Watch. All indicators on the chart are extremely oversold.
http://lh3.ggpht.com/cobrasmarketview/SOguX8grLtI/AAAAAAAABFY/iZlg8gexqNc/5_thumb.png?imgmax=800
&disp=P]2.0.1 Volatility Index (Weekly). VIX has rallied for six weeks and this is the second time in the history.
http://lh4.ggpht.com/cobrasmarketview/SOguYrW56YI/AAAAAAAABFg/4hoGkthYszE/6_thumb.png?imgmax=800
&disp=P]1.1.0 Nasdaq Composite (Daily). NAMO at the bottom was oversold. By the way, prediction by the oversold NAMO has been quite accurate in the past.
http://lh3.ggpht.com/cobrasmarketview/SOguZR6NDQI/AAAAAAAABFo/LJgVziqkxpU/7_thumb.png?imgmax=800
&disp=P]1.1.6 QQQQ Short-term Trading Signals, bullish falling wedge, and STO at the top of the chart is at the support level. Furthermore there are a few other oversold indicators. The green dashed lines denote the locations where NAADV was oversold.
http://lh5.ggpht.com/cobrasmarketview/SOgua2WJJWI/AAAAAAAABFw/1qHrcGh9PgA/8_thumb.png?imgmax=800
&disp=P]1.0.3 S&P 500 SPDRs (SPY 60 min), &disp=P]1.1.4 PowerShares QQQ Trust (QQQQ 60 min), &disp=P]1.2.3 Diamonds (DIA 60 min), Bullish Falling Wedge, MACD, RSI positive divergence.
http://lh5.ggpht.com/cobrasmarketview/SOgubq_y4yI/AAAAAAAABF4/sMhFw6l0q_o/9_thumb.png?imgmax=800
&disp=P]1.0.4 S&P 500 SPDRs (SPY 15 min), &disp=P]1.1.5 PowerShares QQQ Trust (QQQQ 15 min), &disp=P]1.2.4 Diamonds (DIA 15 min), Bullish Falling Wedge, RSI positive divergence.
http://lh5.ggpht.com/cobrasmarketview/SOgucCGEboI/AAAAAAAABGA/PyQFNxX1C2I/10_thumb.png?imgmax=800
As a summary, the market is extremely oversold at the moment, and I don't believe the oversold is sustainable for very long. In addition, all major indices show consistent bullish pattern on daily, 60 min and 15 min charts. Therefore, at least the probability of rally in the short term is very high, in my opinion,.
&disp=P]5.0.2 S&P Sector Bullish Percent Index. Take a look at the Bullish Percent Index of a few important sectors, they are very close to the record low, aren't they? No further comments.
http://lh6.ggpht.com/cobrasmarketview/SOgudCF5w6I/AAAAAAAABGI/SglKTVSEBbE/11_thumb.png?imgmax=800
Posted by Cobra at 8:03 PM 2 comments http://www.blogger.com/img/icon18_email.gif
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Saturday, October 4, 2008About TRINQ Setup
http://1.bp.blogspot.com/_APmrYvpA45s/SOec5KAbWCI/AAAAAAAABEk/XMpGJbZ4FKM/s320/TRINQSetup.png
About TRINQ setup I occasionally mentioned in the past, the success rate counting was wrong.
It's obvious from the chart above, where the dashed lines mean correct predictions while the arrows mean incorrect predictions. So simply count all of them the results are that the success rate is only 52%. Therefore I've decided to drop this setup (no longer mention it in my blog from now on).
Posted by Cobra at 9:41 AM 0 comments http://www.blogger.com/img/icon18_email.gif
Thursday, October 2, 200810/02/2008 Market Recap: Market Oversold
Yesterday probably it was too early to predict the coming rally of the market by an Ascending Triangle which could breakout in either directions.In some sense, I might have been unintentionally influenced by the passage of bailout plan by the Senate.
Nevertheless, I think the market might rally tomorrow.Furthermore, I believe the intermediate outlook is promising.In fact, yesterday I forgot to say (sorry for this), I am not sure if we will see a lower low that is lower than Monday low before the mid-term rally, therefore you'd better to be cautious and do it modestly for the bottom fishing.This is also the question raised by a reader: why do we start bottom fishing while no mid-term buy signal shows up?If we do it after a mid-term buy signal, it will be following the trend, instead of bottom fishing.
&disp=P]2.4.4 NYSE McClellan Oscillator.Note the positive divergence prior to the market bottom previously.If the history repeats itself... you know what I am going to say.Note the red bar at the bottom, NYSE new low is positive divergence today, which is quite rare to see.
http://lh4.ggpht.com/cobrasmarketview/SOWN0AhGvzI/AAAAAAAABDo/C5zA_lHQ06o/1_thumb.png?imgmax=800
&disp=P]2.4.3 Breadth Oversold/Overbought Watch.RHNYA and NYA50R are still oversold.Once a breadth signal is oversold, it will be corrected very soon.Take a look at the two indicators on the following chart, has the black curve ever stayed below the blue line for very long?
http://lh4.ggpht.com/cobrasmarketview/SOWN1hYMUQI/AAAAAAAABDw/JO5mYJsbe68/2_thumb.png?imgmax=800
Evidence for tomorrow's bounce back:
&disp=P]1.3.7 Russell 3000 Dominant Price-Volume Relationships, 1674 stocks price down volume up, which means the market is oversold.Take a look at the green comments on the chart, what happened in the next day?
http://lh4.ggpht.com/cobrasmarketview/SOWN2cGVmMI/AAAAAAAABD4/y4GGktyqSG8/3_thumb.png?imgmax=800
&disp=P]1.0.4 S&P 500 SPDRs (SPY 15 min), &disp=P]1.1.5 PowerShares QQQ Trust (QQQQ 15 min), &disp=P]1.2.4 Diamonds (DIA 15 min), Bullish Falling Wedge, and both MACD and RSI show positive divergence.You may have seen this many times and know how accurate this pattern is.
http://lh4.ggpht.com/cobrasmarketview/SOWN3IUWpYI/AAAAAAAABEA/opFXYXLSDkw/4_thumb.png?imgmax=800
&disp=P]1.1.6 QQQQ Short-term Trading Signals. VXN is overbought, and RHCOMPQ is overbought too.More importantly, NAADV has reached a level where the rebound happens on the next day (refer to the green dashed lines).
http://lh6.ggpht.com/cobrasmarketview/SOWN31xRcjI/AAAAAAAABEI/OwSBN7poqv8/5_thumb.png?imgmax=800
&disp=P]1.1.7 TRINQ Trading Setup.TRINQ is much higher than 2.0, which means QQQQ should probably bounce back tomorrow.So far the success rate of this setup is 80%.
Canadian Market:
&disp=P]1.4.4 TSE McClellan Oscillator, oversold and the positive divergence at the same time.Today TSE plunged for over 800 points, but there were not many new lows compare with Monday, which I believe it's good.&disp=P]1.4.3 S&P/TSX Composite Index (15 min), 15-min chart has also bullish falling wedge plus MACD RSI positive divergence.
http://lh5.ggpht.com/cobrasmarketview/SOWN5owFG_I/AAAAAAAABEQ/zAQbyIWw0lw/6_thumb.png?imgmax=800
Some interesting charts:
&disp=P]5.0.2 S&P Sector Bullish Percent Index.The bullish percent index of the energy sector is the historical low, period.No further comments.
http://lh5.ggpht.com/cobrasmarketview/SOWN6d3mywI/AAAAAAAABEY/1_69KbyzRXI/7_thumb.png?imgmax=800
&disp=P]3.1.0 US Dollar Index (Daily).US dollar has rallied 8 days, it's overbought, it's invincible! Well, this rally is not because of strong US dollar but weak Euro, period.No further comments.
http://lh4.ggpht.com/cobrasmarketview/SOWN7HbyFcI/AAAAAAAABEg/vQjgX237ZVU/8_thumb.png?imgmax=800
Posted by Cobra at 8:13 PM 0 comments http://www.blogger.com/img/icon18_email.gif
Wednesday, October 1, 200810/01/2008 Market Recap: Breadth still oversold
From the perspective of the technical analysis, the market is bullish over the near term and the intermediate term.
Here is why the mid-term outlook is bullish: &disp=P]0.0.3 SPY Mid-term Trading Signals, VIX:VXV is above 1.1, which means the mid-term (90 days) volatility is lower than the current level and thus the probability of mid-term rally is relatively high.
http://lh3.ggpht.com/cobrasmarketview/SOQqrO56BLI/AAAAAAAABDI/VQeE5dGltRw/1_thumb.png?imgmax=800
Here is why the short-term outlook is bullish too: &disp=P]2.4.3 Breadth Oversold/Overbought Watch, RHNYA and NYA50R are still oversold, which means the probability of short-term bounce is very high.
http://lh6.ggpht.com/cobrasmarketview/SOQqr4JehcI/AAAAAAAABDQ/ApTRojY3n0Q/2_thumb.png?imgmax=800
&disp=P]3.0.2 Credit Risk Watch.StockCharts does not provide 3-month LIBOR so I use 1-month LIBOR instead.You don't need to comprehend the meaning of LIBOR.On the following chart, every time when the black curve is at a very high level the stock market denoted by the green curve will drop down.Now the black curve starts to drop down, which means the credit crisis is getting somewhat relieved.
http://lh6.ggpht.com/cobrasmarketview/SOQqsa_YT_I/AAAAAAAABDY/Xju9ToUNPNM/3_thumb.png?imgmax=800
Tomorrow, the probability of rising is high.
&disp=P]1.0.4 S&P 500 SPDRs (SPY 15 min), &disp=P]1.2.4 Diamonds (DIA 15 min), Ascending Triangle, relatively high probability of breakout at the upside.
http://lh3.ggpht.com/cobrasmarketview/SOQqtAWWrAI/AAAAAAAABDg/f8x6wyWurOw/4_thumb.png?imgmax=800
&disp=P]1.1.7 TRINQ Trading Setup, TRINQ is above 2.0 today, which means QQQQ will probably rise tomorrow.So far the success rate of this setup is 83%.
Posted by Cobra at 6:58 PM 0 comments http://www.blogger.com/img/icon18_email.gif
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Tuesday, September 30, 200809/30/2008 Market Recap: Major Accumulation Day
&disp=P]1.0.5 Major Accumulation/Distribution Days.Surprisingly today is a Major Accumulation Day.Concerning major accumulation day, a single day does not have significant meaning, what is important is the second one, so called Follow-through Major Accumulation Day.Today is the first one.Sep 18th is almost a major accumulation day, so today might be considered as the second one.
The theory of the major accumulation day is:
[*]Double major accumulation days predict a strong rally over the intermediate term.The historical data is in chart &disp=P]8.2.0 Major Accumulation Day 2007-2008 to chart &disp=P]8.2.5 Major Accumulation Day 1997-1998, so far it is 100% correct.A professor has studied this and here is the abstract:
"David Aronson, a professor of finance at Baruch College looked at instances in the market (from 1942 to present) when we have these double 90-90 days. His time frame for the second is much wider than what we just witnessed - 3 months. But the results are intriguing nonetheless. After the special circumstance of a double 90-90 day, the following 60 (trading) days have historically provided a return of +22% instead of a paltry 4.5% annualized otherwise. It is more remarkable when you consider that that return comes with the assumption that you enter the market on the close, after a double 9-to-1 signal was triggered and without adding any dividends!"
[*]The reason why Sep 18th may be the first major accumulation day can be referred to &disp=P]8.2.4 Major Accumulation Day 1999-2000 and &disp=P]8.2.5 Major Accumulation Day 1997-1998, where one of two major accumulation days does not meet the criteria strictly.Therefore, very likely today is a follow-through major accumulation day.On the other hand, I am not very sure about this, especially before the bailout plan is confirmed to be approved, I don't think the market would have a significant rally.[*]If today is the first major accumulation, be cautious to do the bottom fishing.On the following chart, the blue comment shows the reason, i.e., it's possible to see a massive selling off, and yesterday may not be the bottom.
http://lh4.ggpht.com/cobrasmarketview/SOL0aZG4lDI/AAAAAAAABCU/2XcTghxHkXQ/1_thumb.png?imgmax=800OK.What about the near term, for instance, tomorrow?Well, probably a pullback is due.
&disp=P]1.1.5 PowerShares QQQ Trust (QQQQ 15 min), &disp=P]1.0.4 S&P 500 SPDRs (SPY 15 min).The pattern looks like a bearish rising wedge, and the Fib 50 is tested back.Therefore, be cautious.
http://lh3.ggpht.com/cobrasmarketview/SOL0bSm_zNI/AAAAAAAABCc/dW8SfcMP4HM/2_thumb.png?imgmax=800
&disp=P]1.3.7 Russell 3000 Dominant Price-Volume Relationships.This is the primary concern today, up on decreased volume, 1391 stocks price up volume down, which is the most bearish one among four price-volume relationships.According to my statistics, very likely the market will pull back tomorrow or the next day.
http://lh5.ggpht.com/cobrasmarketview/SOL0cVCJzcI/AAAAAAAABCk/p6qaNETaGRk/3_thumb.png?imgmax=800
&disp=P]3.1.0 US Dollar Index (Daily), US dollar is overbought and it has rallied for seven days.So far the historical record is seven days of rally in July.Therefore US dollar may pullback, which is bearish to the stock market.
http://lh3.ggpht.com/cobrasmarketview/SOL0dd9PO9I/AAAAAAAABCs/-HxzK-QfhMU/4_thumb%5B1%5D.png?imgmax=800
&disp=P]1.1.7 TRINQ Trading Setup, TRINQ is below 0.6 today.According to this setup QQQQ will drop down tomorrow.The success rate is now 79%.
Of course I don't think this potential pullback can go very far (I said the same in the last week report, and INDU plunged for 777 points yesterday.Hopefully it doesn't happen again).The reason is that both NYA50R and RHNYA are still oversold on the chart &disp=P]2.4.3 Breadth Oversold/Overbought Watch.
http://lh5.ggpht.com/cobrasmarketview/SOL0eJyiQjI/AAAAAAAABC0/Bg8UCy7m0cI/5_thumb.png?imgmax=800
&disp=P]1.4.2 S&P/TSX Composite Index (60 min).TSX is right at the resistance on Canadian market.Tomorrow it might pull back as well.
http://lh4.ggpht.com/cobrasmarketview/SOL0exj2DxI/AAAAAAAABDA/z3U2P1qhoGc/6_thumb.png?imgmax=800
Posted by Cobra at 8:54 PM 0 comments http://www.blogger.com/img/icon18_email.gif
Monday, September 29, 200809/29/2008 Market Recap: Don't bet on the end of the world
I must admit that my prediction was wrong, the market does care the deal.Although the market is extremely oversold, I am not sure if this means the market would bounce back tomorrow.Under the current situation, it doesn't make much sense to say "stay clam" ... "stay defensive", etc.Everyone should have a plan in their mind, what to do if the market bounces back, and what else to do if the selling off continues.At the moment my long positions are not very heavy, and I also think that a oversold market could have a chance to bounce back, therefore I decide to hold my positions.Depending on how the market goes I will think about whether or not to do bottom fishing, but I will not be aggressive for sure.
During the trading hours a friend said -- Don't bet on the end of the world -- I think it makes sense at the time being.
From the perspective of technical analysis, the market is deeply oversold.I do not know if you still believe in the oversold indicators, but I list them as follows anyway.Probably it is the time to believe in the government.
&disp=P]2.4.3 Breadth Oversold/Overbought Watch.RHNYA is almost zero, extremely oversold.NYA50R is also oversold.Although it has not reached the July low, it will probably get there after one more day's selling off.
http://lh6.ggpht.com/cobrasmarketview/SOGgVbEfjJI/AAAAAAAABBc/qml9JeoYALw/1_thumb.png?imgmax=800
&disp=P]1.3.7 Russell 3000 Dominant Price-Volume Relationships.The dominant price-volume relationships today are 2183 stocks price down volume up, which indicates the market is oversold.According to the chart, every time after the price down volume up, the market bounces up nicely on the next day.Hopefully tomorrow is not an exception.
http://lh3.ggpht.com/cobrasmarketview/SOGgWQ5c0UI/AAAAAAAABBk/7z3aIhGhYcs/2_thumb.png?imgmax=800
&disp=P]2.0.0 Volatility Index (Daily).Several indicators are overbought.On the other hand, this chart reveals that today's low may not be the bottom.As I mentioned in the past, usually the bottom is formed as an intraday reversal, so the market is not likely bottomed out while the VIX is still a big while candle.
http://lh5.ggpht.com/cobrasmarketview/SOGgXv75wYI/AAAAAAAABBs/JiVdiZgre9M/3_thumb.png?imgmax=800
&disp=P]1.1.6 QQQQ Short-term Trading Signals.Note that in the past NAADV bounced back while the blue line reaches today's level twice.
http://lh4.ggpht.com/cobrasmarketview/SOGgYxvnzrI/AAAAAAAABB0/0l0OmZM_dfU/4_thumb.png?imgmax=800
&disp=P]1.1.7 TRINQ Trading Setup.TRINQ is much higher than 2.0, so QQQQ might bounce back.So far the success rate of this setup is 75%.
&disp=P]1.0.3 S&P 500 SPDRs (SPY 60 min), &disp=P]1.1.4 PowerShares QQQ Trust (QQQQ 60 min), &disp=P]1.2.3 Diamonds (DIA 60 min).Look at how oversold the RSI is.If you think it is not oversold enough, it will be after one more down.
http://lh6.ggpht.com/cobrasmarketview/SOGgZyWVjSI/AAAAAAAABB8/Cdye-5VrE8g/5_thumb.png?imgmax=800
&disp=P]1.4.4 TSE McClellan Oscillator.New low spikes on the Canadian market, which is an early sign of bottoming.&disp=P]1.4.2 S&P/TSX Composite Index (60 min), RSI on the 60-min chart is also oversold.By the way, on US market the new low spikes as well (refer to &disp=P]2.4.4 NYSE McClellan Oscillator), however it doesn't go beyond the level on 17th so I don't show it here.
http://lh6.ggpht.com/cobrasmarketview/SOGgbdJfvwI/AAAAAAAABCE/ELO41iCuJ-w/6_thumb.png?imgmax=800
&disp=P]1.0.6 S&P 500 Bullish Percent Index.Today it gives a mid-term sell signal, and the signal are confirmed by all three major indices, very bearish.&disp=P]0.0.0 Signal Watch and Daily Highlights shows the status of all signals.No comments at the moment, wait for the smoke to clear firstly.
http://lh3.ggpht.com/cobrasmarketview/SOGgcGvBuVI/AAAAAAAABCM/Sr9fs0nLgp0/7_thumb.png?imgmax=800
Posted by Cobra at 8:43 PM 1 comments http://www.blogger.com/img/icon18_email.gif
Saturday, September 27, 200809/26/2008 Market Recap: Encouraging
&disp=P]0.0.2 SPY Short-term Trading Signals.With so many bad news on Friday, it would not be a surprise to me if INDU dropped down 500 points.Surprisingly SPX held the Wednesday low, which is quite encouraging.I do not know whether or not the bailout deal can be reached by Monday, but it seems the market is ready to rally according to the chart.In the short term, because the breadth is still oversold, I doubt how big the downside space is even if there was no deal.
http://lh4.ggpht.com/cobrasmarketview/SN8Aruv2fUI/AAAAAAAABAc/h5uKdUM8cy4/1_thumb.png?imgmax=800
&disp=P]2.4.3 Breadth Oversold/Overbought Watch.The three important indicators for watching breadth oversold/overbought are put on the same chart as follows.It can be seen that RHNYA is deeply oversold, and the other two are also very close to the oversold region and show positive divergence as well.This is the primary evidence that I don't think the market has a big downside space.
http://lh4.ggpht.com/cobrasmarketview/SN8AspriLFI/AAAAAAAABAk/iAyOP5FyjtQ/2_thumb.png?imgmax=800
&disp=P]2.0.1 Volatility Index (Weekly).VIX has rallied for five weeks for the first time in the history.In the next week it is very likely that VIX will drop down, which will be bullish for the stock market.
http://lh5.ggpht.com/cobrasmarketview/SN8AtRDsiZI/AAAAAAAABAs/suOhcaZwYTU/3_thumb.png?imgmax=800
&disp=P]0.0.3 SPY Mid-term Trading Signals.Note that the positive divergence of MACD and RSI is very similar with the setup in March.Considered the current level of VIX:VXV, the market will very possibly have a terrific rally over the intermediate term just like the one from March to May.
http://lh4.ggpht.com/cobrasmarketview/SN8AuebnbiI/AAAAAAAABA0/iRuccqVZBj4/4_thumb.png?imgmax=800
As a summary, the intermediate term trend is bullish.
&disp=P]1.4.4 TSE McClellan Oscillator.On the Canadian market, both RHTSX and TSXA50R are oversold, and I think the market might bounce back.
http://lh5.ggpht.com/cobrasmarketview/SN8Avf5MX_I/AAAAAAAABA8/koCR1fsCk_w/5_thumb.png?imgmax=800
&disp=P]1.4.3 S&P/TSX Composite Index (15 min).The pattern looks like an Ascending Triangle, and the probability of upside breakout is relatively high.
http://lh3.ggpht.com/cobrasmarketview/SN8Av5mw0uI/AAAAAAAABBE/WF31HpCYjlQ/6_thumb.png?imgmax=800
&disp=P]3.1.0 US Dollar Index (Daily).US dollar may form a bear flag and thus may resume dropping soon.The correction of US dollar is a good news for commodities, and also favors a bullish Canadian market.By the way, &disp=P]3.2.1 Japanese Yen (Weekly), Bearish Harami, and I think Japanese Yen will possibly pull back, and this may offset the pullback of US dollar as well as its negative influence to the stock market.
http://lh6.ggpht.com/cobrasmarketview/SN8Aw3tfwqI/AAAAAAAABBM/OPbSWHvEgKc/7_thumb.png?imgmax=800
&disp=P]3.3.2 streetTRACKS Gold Trust Shares (GLD 60 min), Ascending Triangle.If US dollar goes down, GLD may rally again.
http://lh5.ggpht.com/cobrasmarketview/SN8AxSsgphI/AAAAAAAABBU/4vjbGr9Q5wQ/8_thumb.png?imgmax=800
&disp=P]3.4.3 United States Oil Fund, LP (USO 60 min), Symmetrical Triangle.The rising of oil may be continued.
As a summary, Canadian market will probably turn bullish, so will the commodities.
Posted by Cobra at 8:57 PM 1 comments http://www.blogger.com/img/icon18_email.gif
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Thursday, September 25, 200809/25/2008 Market Recap: No Title
No much to talk about today -- everyone is waiting for the outcome of 700B bailout plan.I don't know what will happen tomorrow, but it seems nothing concrete will be released before the weekend.Maybe the market will be disappointed tomorrow.But I guess the bailout plan will be passed anyway, and it would be a good news according to the market reaction today.
From the perspective of the technical analysis, we need an up day tomorrow, otherwise &disp=P]1.0.6 S&P 500 Bullish Percent Index may give a confirmed sell signal soon.
http://lh4.ggpht.com/cobrasmarketview/SNw_mdbeltI/AAAAAAAAA_8/BrMKdQsHU74/1_thumb.png?imgmax=800
The only good news for bulls is that RHNYA at the bottom of &disp=P]0.0.2 SPY Short-term Trading Signals chart is still oversold.
http://lh3.ggpht.com/cobrasmarketview/SNw_ngoYmtI/AAAAAAAABAE/dlBq1Dcnq88/2_thumb.png?imgmax=800
&disp=P]1.1.7 TRINQ Trading Setup.TRINQ closed below 0.6 today so tomorrow QQQQ may drop down.So far the success rate of this setup is 71%.
&disp=P]2.8.1 CBOE Options Total Put/Call Ratio. CPC is only 0.8 which is over bullish.However, normalized put/call ratio at the bottom of the chart is still in the bullish region so it seems okay at the moment.
http://lh4.ggpht.com/cobrasmarketview/SNw_oY4C5vI/AAAAAAAABAM/c4mNlSNgfi4/3_thumb.png?imgmax=800
&disp=P]1.4.3 S&P/TSX Composite Index (15 min).Canadian market looks slightly better.Bullish falling wedge, and positive divergence on both MACD and RSI.
http://lh4.ggpht.com/cobrasmarketview/SNw_pJI_LOI/AAAAAAAABAU/Kt2fLazfiEs/4_thumb.png?imgmax=800
Posted by Cobra at 6:49 PM 0 comments http://www.blogger.com/img/icon18_email.gif
Wednesday, September 24, 200809/24/2008 Market Recap: No Buy on Rumor then no Sell on News?
Firstly I would like to tell you that in the past few days it has been really difficult to analyze this news-driven market.So don't blame me too much if the success rate is low or the report is biased a bit.
From the perspective of the technical analysis, the market has been accumulating the upward momentum for a while.I believe that, the market will very likely rally once the Bailout Plan is approved.Furthermore, all indicators on &disp=P]0.0.1 Market Top/Bottomed Watch have given buy signals, which is really rare to see in the past, and it is not very likely that all signals are wrong.Moreover, &disp=P]0.0.3 SPY Mid-term Trading Signals has two valid mid-term buy signals.Therefore, at the moment I tend to bet on the long side.
A reader raised a question to the judgement of market bottom over the intermediate term.I think this question makes some sense, so I put it here fore your information.Personally I think the reliability of those signals that mentioned by the reader is slightly lower than five signals in &disp=P]0.0.1, so I make my judgement based on chart &disp=P]0.0.1.Nevertheless, I could be wrong, and you have do your own due diligence prior to any actions.
You mention about intermediate term buy signal. However, I believe there are also some charts which are still bearish (i.e. charts that say Bottom not in yet). Wonder why the bullish bias is preferred?
For example, T2101 brown curve needs to go down for some time before bottom - is it down yet?
(Cobra: here is the T2101 today)
http://lh4.ggpht.com/cobrasmarketview/SNsIEUNDFyI/AAAAAAAAA_c/S1M_DPf67Do/1_thumb.png?imgmax=800
SPY drop 3 days in a row - not happening yet?
McClellan Oscillator (&disp=P]2.2.1) - No positive divergence yet?
NYSE advancing issue (&disp=P]2.4.2) - normally a series of lows, now only 1st low?
Nasdaq Total Volume/NYSE Total Volume (&disp=Phttp://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2393449&cmd=show&disp=P]2.3.4) - now above "high" level again?
With above, wonder if it is possible short or medium term bullish?
Concerning whether or not the bailout plan will be approved, and whether the amount of fund will be kept as 700B finally, here is my two cents but you don't take it too serious.You may have noticed that the market behaved differently than what it did in the past.Previously if the congress was arguing an act, the market would rally in advance with the rumor and last (note: the trend really lasts continuously) until the last moment when the act was approved.However, the market is dropping down without significant bounce.As a result, if the market was typical buy on rumor, sell on news in the past, will it not sell on news since there is no buy on rumor this time?Does it mean that the market is betting that the bailout plan will be approved with satisfaction?
&disp=P]0.0.2 SPY Short-term Trading Signals.Although SPY went up today, actually both SPX and NYA dropped down.Because of the increase of advancing issues (relative to the down of NYA), NYAD can be considered as positive divergence.In addition RHNYA is still oversold.So the market may likely bounce back in the short term.
http://lh4.ggpht.com/cobrasmarketview/SNsIFeND6bI/AAAAAAAAA_k/cZlpIyLp21g/2_thumb.png?imgmax=800
&disp=P]1.0.4 S&P 500 SPDRs (SPY 15 min), &disp=P]1.1.5 PowerShares QQQ Trust (QQQQ 15 min), &disp=P]1.2.7 Diamonds (DIA 15 min), &disp=P]1.3.6 Russell 2000 iShares (IWM 15 min).On the 15-min charts of all major indices, MACD and RSI show positive divergence which means the downward momentum is weakened.Of course the pattern on the charts also looks like a Descending Triangle.So I am not sure if the market will break the descending triangle and drop down.A possible scenario is that, in the morning the market may break downward and then bounce back afterward, finally we may see a small candle on the daily chart and wait for the news on the next day.
http://lh6.ggpht.com/cobrasmarketview/SNsIGDamP_I/AAAAAAAAA_s/9cUtfYW_-bc/3_thumb.png?imgmax=800
&disp=P]1.1.7 TRINQ Trading Setup.TRINQ is lower than 0.6, so QQQQ may drop down tomorrow according to this setup.So far the success rate of this setup is 74%.
3 month T-Bill Yield went down again today.This means the fund is getting nervous which is good and bad, because the major central banks in the world will probably do something should it drop further down.
http://lh4.ggpht.com/cobrasmarketview/SNsIG4dJyhI/AAAAAAAAA_0/bOxP3eaGFs8/4_thumb.png?imgmax=800
Posted by Cobra at 8:40 PM 0 comments http://www.blogger.com/img/icon18_email.gif
Tuesday, September 23, 200809/23/2008 Market Recap: No Title
As you can see the market is somewhat emotional and driven by news.From the perspective of the Technical Analysis, two buy signals in &disp=P]0.0.3 SPY Mid-term Trading Signals are still valid, so I assume the trend is up over the intermediate term.In the near term, the market may likely rally tomorrow.
&disp=P]0.0.2 SPY Short-term Trading Signals.Here is the evidence for tomorrow's rally.NYAD indicates that there are more Advancing issues today compare with yesterday, which is a positive divergence.RHNYA at the bottom of the chart is oversold, which also support the rebound of the market.In addition, VIX is overbought which is also bullish to the market.
http://lh3.ggpht.com/cobrasmarketview/SNmmy0geALI/AAAAAAAAA_E/yWPZmo9HLY8/1_thumb.png?imgmax=800
&disp=P]1.1.5 PowerShares QQQ Trust (QQQQ 15 min), Bullish Falling Wedge, MACD, RSI positive divergence.
http://lh4.ggpht.com/cobrasmarketview/SNmmzjk0SyI/AAAAAAAAA_M/uBFOrJAXoXE/2_thumb.png?imgmax=800
&disp=P]3.0.1 Yield Curve.Today UST3M went down again, which means the short of fund.This is bearish.
http://lh4.ggpht.com/cobrasmarketview/SNmm0k68CVI/AAAAAAAAA_U/2dWBWk3HqOg/3_thumb.png?imgmax=800
Posted by Cobra at 7:32 PM 6 comments http://www.blogger.com/img/icon18_email.gif
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Monday, September 22, 200809/22/2008 Market Recap: No continuous down days ever?
Today the market pulled back as expected.Although the selling-off is a bit massive, the mid-term buy signals are still valid.However the trend could be changed if the market goes down tomorrow as much as today, then the last Thursday bottom could be tested.
Will the market go further down?My conclusion is that a rebound is possible, and even if the pullback continues the magnitude will not be as huge as today.
The following chart shows the evidence for rebound.Since September, there have been never two down days in a row.If this pattern is continued to be valid, hopefully the selling-off will not appear tomorrow.Furthermore, VIX at the bottom of the chart is still overbought which favors a rebound of the market.
http://lh5.ggpht.com/cobrasmarketview/SNhhLy0tw3I/AAAAAAAAA-c/VmWHEu3gkzk/1_thumb.png?imgmax=800
&disp=P]1.0.4 S&P 500 SPDRs (SPY 15 min), &disp=P]1.2.7 Diamonds (DIA 15 min).The pattern on 15-min charts look like a Bullish Falling Wedge, which may possibly cause a rebound of the market.In addition, RSI is oversold and at a level where the market usually does not plunge hard.
http://lh5.ggpht.com/cobrasmarketview/SNhhMrfmQDI/AAAAAAAAA-k/qy2VYBQWqrc/2_thumb.png?imgmax=800
&disp=P]3.0.1 Yield Curve.The yield is going up which means the things are getting better.
http://lh4.ggpht.com/cobrasmarketview/SNhhNcjCCqI/AAAAAAAAA-s/N9DATW6-Yxs/3_thumb.png?imgmax=800
&disp=P]3.1.0 US Dollar Index (Daily).US dollar is oversold and testing the Fib 50 and 50-day moving average.If the drop stops here, the market could be improved.
http://lh6.ggpht.com/cobrasmarketview/SNhhObGQwfI/AAAAAAAAA-0/OYK1QM8OQ4M/4_thumb.png?imgmax=800
&disp=P]3.4.3 United States Oil Fund, LP (USO 60 min).Oil is overbought.
http://lh3.ggpht.com/cobrasmarketview/SNhhPD3KnHI/AAAAAAAAA-8/jqu32YKfm-A/5_thumb.png?imgmax=800
Posted by Cobra at 8:23 PM 2 comments http://www.blogger.com/img/icon18_email.gif
Sunday, September 21, 200809/19/2008 Market Recap: Good Follow-Through
In this weekend I reorganized the technical indicators in my chart-book and arranged the important ones on chart series numbered with 0.x.x.If you are too busy to go through all the charts, just check out 0.x.x.
Conclusion:
[*]Over the intermediate term the market should have a decent upside room.[*]It is unclear if the market goes up or down on Monday.However we may see a pullback in the near term.Mid-term signals:
&disp=P]0.0.3 SPY Mid-term Trading Signals.There are two mid-term buy signals, where one of them BPSPX is confirmed and I will show you.It is also encouraging that VIX:VXN is still in the buy zone, which means the market should have a decent upside room in the mid-term.
http://lh5.ggpht.com/cobrasmarketview/SNaBKnfQRMI/AAAAAAAAA9M/QoW1Rtow1Mk/1_thumb.png?imgmax=800
&disp=P]1.0.6 S&P 500 Bullish Percent Index.All three major indices have confirmed the buy signal.On this chart, once all three indices agree with each other, the success rate is very high.
http://lh4.ggpht.com/cobrasmarketview/SNaBLhMDfdI/AAAAAAAAA9U/qJnH7pZgBf4/2_thumb.png?imgmax=800
&disp=P]2.3.3 NYSE Total Volume.The market bottom pattern is quite convincing.
http://lh6.ggpht.com/cobrasmarketview/SNaBMkSp9XI/AAAAAAAAA9c/F-HMWHbC1f8/3_thumb.png?imgmax=800
&disp=P]3.2.1 Japanese Yen (Weekly).Black candle and Fib 50, very likely it will pull back, and this is bullish to the stock market.
http://lh4.ggpht.com/cobrasmarketview/SNaBNqdzscI/AAAAAAAAA9k/LYd3y_6B8RU/4_thumb.png?imgmax=800
&disp=P]1.4.4 TSE McClellan Oscillator.Canadian market also gives a buy signal.According to the golden candles, it seems the market has bottomed out.
http://lh6.ggpht.com/cobrasmarketview/SNaBO5Xop6I/AAAAAAAAA9s/4oNHUQsjDP4/5_thumb.png?imgmax=800
Short-term signals:
&disp=P]0.0.2 SPY Short-term Trading Signals.The breadth indicators are at relatively extreme range.So we may see a pullback soon or later.
http://lh4.ggpht.com/cobrasmarketview/SNaBQcAY9iI/AAAAAAAAA90/jGvx5iDvjS0/6_thumb.png?imgmax=800
&disp=P]2.8.0 CBOE Options Equity Put/Call Ratio.This is over bullish and isn't sustainable.
http://lh4.ggpht.com/cobrasmarketview/SNaBRvSvUXI/AAAAAAAAA98/2Ep8o_QVWwQ/7_thumb.png?imgmax=800
&disp=P]1.0.3 S&P 500 SPDRs (SPY 60 min), &disp=P]1.1.4 PowerShares QQQ Trust (QQQQ 60 min), &disp=P]1.2.3 Diamonds (DIA 60 min).Note the resistance.RSI is close to the resistance, too.
http://lh3.ggpht.com/cobrasmarketview/SNaBSkgeMgI/AAAAAAAAA-E/BPBfZG4l_vk/8_thumb.png?imgmax=800
A few interesting charts:
&disp=P]3.4.1 United States Oil Fund, LP (USO Daily).It rallied for three days with a decrease of the volume.This pattern is quite bearish.
http://lh6.ggpht.com/cobrasmarketview/SNaBTyQYnDI/AAAAAAAAA-M/_dRMytbNyys/9_thumb.png?imgmax=800
The following chart is very interesting.Take a look at two industrial groups which are highest above 50-day moving average and lowest below it, respectively.Note that the problematic banks and home builders did not go under along with the recent selling-off.On the contrary, the resource group dropped a lot.What kind of information does this chart give us?It is still a open question, and your comments and discussion are appreciated.
http://lh6.ggpht.com/cobrasmarketview/SNaBUasGjWI/AAAAAAAAA-U/puiMJiIONKM/10_thumb.png?imgmax=800
Posted by Cobra at 10:16 AM 4 comments http://www.blogger.com/img/icon18_email.gif
Thursday, September 18, 200809/18/2008 Market Recap: Follow-through wanted
Today many people were very excited about the massive rally of the market, and the government seems capable of doing anything they want. However my conclusion is that, the rally was too steep so it did not look like an ordinary Reversal Day which forms the intermediate term bottom. Therefore a follow-through tomorrow is wanted. Personally I will wait until the next Monday, and see what kind of great resolution our government can come up during a productive weekend before taking further actions.
&disp=P]0.0.0 Signal Watch and Daily Highlights. Now many oversold signals have been corrected.
http://lh4.ggpht.com/cobrasmarketview/SNMNq1Ilf5I/AAAAAAAAA80/hTbsCaw-1Go/1_thumb.png?imgmax=800
&disp=P]1.2.7 Diamonds (DIA 15 min). Today's rally stopped at at Fib 61.8 which is also a resistance. Let's see if the resistance can be taken out tomorrow. For other major indices it is similar, and you may refer to the chart book for more details.
http://lh6.ggpht.com/cobrasmarketview/SNMNrmQYpEI/AAAAAAAAA88/1eajU6NUHF0/2_thumb.png?imgmax=800
&disp=P]1.4.2 S&P/TSX Composite Index (60 min). Canadian market looks good, bullish falling wedge. Positive divergence on both MACD and RSI.
http://lh3.ggpht.com/cobrasmarketview/SNMNsYCGYZI/AAAAAAAAA9E/A-5BTjMN_vA/3_thumb.png?imgmax=800
&disp=P]1.1.C TRINQ Trading Setup. Only this indicator predicts a downside risk for tomorrow's market, as TRIN closed below 0.6. So far the success rate of this setup is 77%, and it has been correct for the recent four times. Therefore I guess it will not be accurate tomorrow.
Posted by Cobra at 7:25 PM 1 comments http://www.blogger.com/img/icon18_email.gif
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Wednesday, September 17, 200809/17/2008 Market Recap: No follow-through, market in panic mode
At the beginning of the report, I would like to have your attention on the following chart.I believe we are witnessing the history, and the market is in a panic mode.The interest rate of 90-day short-term bond is nearly zero!As far as the historical record on the chart, this never happened before.I think this may be connected with a series of events that happened recently, and it seems the market is having a big trouble because the chart predicts an immediate necessity of rate cut by the Federal Reserve.
http://lh4.ggpht.com/cobrasmarketview/SNHwUAO6HWI/AAAAAAAAA78/G-a4LZAsyTE/1_thumb.png?imgmax=800
Today's conclusion:
[*]Today's low might not be the bottom;[*]The market may bounce back tomorrow.If it doesn't, very likely the bottom will be formed in a few days.&disp=P]0.0.0 Signal Watch and Daily Highlights.Besides &disp=P]2.7.0 NYSE % of Stocks Above 50 Day MA (Daily), all my indicators have signaled a market bottom or predicted a rebound.But are we there yet?As I said previously, currently my daily report has to involve a factor of guess.Therefore, my dear readers, pretty much you are on your own now.I am afraid that the past success rate is unsustainable at the time being, especially the analysis of the short-term direction.
http://lh5.ggpht.com/cobrasmarketview/SNHwUyS8QOI/AAAAAAAAA8E/2PgWeZROdAE/2_thumb.png?imgmax=800
Other than the indicators, my criterion for pinpointing a bottom are:
[*]Very often the market will keep dropping for three days.In addition it should not open low close high everyday, because in this way no one will cut loss but fish the bottom -- "Wow!It opens low again, let's rush in and get the money!".On the contrary, any rebound on any trading day should fail consistently, while people get an impression that every rebound is a chance to cut loss, every time after the rebound people should feel regret -- why didn't I run away at the last rebound?Now the market is like a hell... well, thank God, here is one more rebound, let's run quickly right now!This is why I doubt the market was not at the bottom yesterday.[*]Usually the day of the market bottom is the reversal during the trading hours, and close in green.In the morning the market will open low and keep dropping down, and it looks like the magnificent selling-off will repeat once again.Around the noon the market may start to bounce back, while the rally should be definitely not like the suddenly appeared big candles that happened today.On the other hand, the market should behave like a orderly propagating wave -- advance two steps and decline one step, so on and so forth.The idea is that a quick rally cannot accumulate sufficient shares at a low price, so a quick rally is more likely for distribution while a waving rally is for accumulation.As a summary, I tend to believe that the market is not bottomed yet.Anyway we have a pattern to follow, so you may keep it in mind before catching a bottom.
Don Worden gave a projection of SPX target in today's report.I found a good match on the SPX monthly chart and this makes me a little nervous.
What was missing? The market hadn't gone down enough after slicing through those July closing lows that I had been harping on for several days last week. After the key level had been shattered, the market needed an appropriate run on the downside--sometimes referred to as a measured move. Roughly speaking, the market could be expected to drop a distance roughly equaling that from the May high to the July low. For the SP-500 that was about 1425 to 1200. Starting at the August high, a measured move would extend from the August high (1300) to approximately 1075. (Mathematical precision not expected). Such a move would offer a logical objective. And it still stands.
&disp=P]1.0.0 S&P 500 Large Cap Index (Daily), Measured Move，target, 1073.
&disp=P]1.0.2 S&P 500 Large Cap Index (Monthly).The Fib 61.8 on the monthly chart is about 1073.Is this good match by chance?I don't think so.
http://lh6.ggpht.com/cobrasmarketview/SNHwVr32qbI/AAAAAAAAA8M/X0FNg5cv09E/3_thumb.png?imgmax=800
Where will the market go tomorrow?Two reliable indicators are oversold today.If the market is not panic, there is a great chance the market may bounce back.
&disp=P]2.2.1 NYSE McClellan Oscillator, oversold.
&disp=P]2.4.2 NYSE - Issues Advancing.The blue line have touched the green horizontal line, so it is oversold.In the past the market will bounce back if NYADV is oversold, no exception so far.Additionally, there is a bit positive divergence on the chart, which is the first step of forming a bottom.Of course SPX may have a new low, however it should be fine as long as NYADV does not form a lower low.
http://lh5.ggpht.com/cobrasmarketview/SNHwWhIFHZI/AAAAAAAAA8U/QLoOxfZiEkQ/4_thumb.png?imgmax=800
&disp=P]2.0.0 Volatility Index - NYSE (Daily).STO has reached a level where it often reversed in the past.Therefore VIX may pull back which is bullish to the stock market.By the way, the market seldom bottoms out while VIX closes at such a big white candle as today.Therefore this chart also says that today's low is not the bottom from another perspective.
http://lh6.ggpht.com/cobrasmarketview/SNHwX61B27I/AAAAAAAAA8c/rxZ5AJ4uMw8/5_thumb.png?imgmax=800
&disp=P]1.0.4 S&P 500 SPDRs (SPY 15 min), &disp=P]1.2.7 Diamonds (DIA 15 min), &disp=P]1.3.6 Russell 2000 iShares (IWM 15 min), positive divergence on MACD and RSI, bullish.
http://lh5.ggpht.com/cobrasmarketview/SNHwYld5hBI/AAAAAAAAA8k/GkG4tTzslPQ/6_thumb.png?imgmax=800
&disp=P]1.4.4 TSE McClellan Oscillator.Canadian market is oversold.&disp=P]1.4.3 S&P/TSX Composite Index (15 min), positive divergence on MACD and RSI on the 15-min chart.
http://lh5.ggpht.com/cobrasmarketview/SNHwZpfhFMI/AAAAAAAAA8s/yFtQphe8Kfw/7_thumb.png?imgmax=800
Posted by Cobra at 11:08 PM 1 comments http://www.blogger.com/img/icon18_email.gif
Tuesday, September 16, 200809/16/2008 Market Recap: Reversal Day
Today is a Reversal Day.The last time I called reversal day was on July 1st 2008, however the title of the market recap on the next day was 07/02/2008 Market Recap: Reverse Reversal Day, so the follow-through tomorrow is very important.
&disp=P]0.0.0 Signal Watch and Daily Highlights.The green signals on the left hand side of the chart has never been so magnificent.In the short-term the market is deeply oversold, so a short-term bounce is very likely.Some mid-term breadth signals have not been oversold, which might mean the bottom is not there yet, it could also be positive divergence, at the moment I do not have a conclusion yet.Recently the market often opened at low and raised immediately without any dip, and this has been so consistent that people have no enough panic to be washed out.Therefore I tend to believe that if we get a follow-through tomorrow, the bounce might be short lived.
http://lh6.ggpht.com/cobrasmarketview/SNCHq7bO5GI/AAAAAAAAA7A/1xOvY3TXD0c/1_thumb.png?imgmax=800
&disp=P]0.0.2 Market Top/Bottomed Watch.Five indicators to pinpoint a market bottom are all signaled.
http://lh3.ggpht.com/cobrasmarketview/SNCHsKeCIrI/AAAAAAAAA7I/We7lUlD_p6g/2_thumb.png?imgmax=800
&disp=P]1.0.3 S&P 500 SPDRs (SPY 60 min), &disp=P]1.1.8 PowerShares QQQ Trust (QQQQ 60 min), &disp=P]1.2.3 Diamonds (DIA 60 min), &disp=P]1.3.2 Russell 2000 iShares (IWM 60 min).Positive divergence on MACD and RSI on 60-min charts of all major indices.Very bullish.
http://lh6.ggpht.com/cobrasmarketview/SNCHs-o6BOI/AAAAAAAAA7Q/J-X4tcRxeqU/3_thumb.png?imgmax=800
&disp=P]2.0.0 Volatility Index - NYSE (Daily), Bearish Shooting Star.Very possibly VIX will pull back, which means the stock markets may rally.
http://lh3.ggpht.com/cobrasmarketview/SNCHuAo29VI/AAAAAAAAA7c/MlKqlko8Ddk/4_thumb.png?imgmax=800
&disp=P]1.1.C TRINQ Trading Setup.The is the only indicator which predicts the market may drop tomorrow.TRINQ is less than 0.6, which is over bullish.So far the success rate is 72%, and the last three times are all correct.So I doubt if it will be correct tomorrow, which in turn means the rally of QQQQ might continue tomorrow.
As I mentioned in the beginning, there are few charts with question marks.They might mean the mid-term downtrend is not completely over, or probably positive divergence.At the moment I do not have a conclusion.
&disp=P]2.2.1 NYSE McClellan Oscillator.In the last few times when the market reached the bottom, the black curve touched the green horizontal line.However the black curve is still far from that green line currently, which means the market is not oversold.
http://lh6.ggpht.com/cobrasmarketview/SNCHvMaJvmI/AAAAAAAAA7k/3BNsn7KcyCw/5_thumb.png?imgmax=800
&disp=P]2.7.0 NYSE % of Stocks Above 50 Day MA (Daily).This chart has the similar issue.Now the black curve is still quite far from the green line.
http://lh3.ggpht.com/cobrasmarketview/SNCHv6VLMrI/AAAAAAAAA7s/_hsE6kA5U0A/6_thumb.png?imgmax=800
&disp=P]2.4.2 NYSE - Issues Advancing.I believe the prediction of this chart is still valid, which means SPX will probably have a new close lower than 1192.
http://lh6.ggpht.com/cobrasmarketview/SNCHxNlhf6I/AAAAAAAAA70/0DLg3ONTv8A/7_thumb.png?imgmax=800
Posted by Cobra at 9:29 PM 0 comments http://www.blogger.com/img/icon18_email.gif
Monday, September 15, 200809/15/2008 Market Recap: Are we there yet?
&disp=P]0.0.0 Signal Watch and Daily Highlights, today many indicators predict that the market might have bottomed.You may refer to my &disp=P]chart book by the chart numbers.
http://lh6.ggpht.com/cobrasmarketview/SM83072juxI/AAAAAAAAA54/i0Rr48OVrdU/1_thumb.png?imgmax=800
Are we there yet?I tend to think not yet.However there are so many reliable signals which have track records in the history, from now on my analysis may involve a factor of guess, so you may need to do your own due diligence.My suggestion is to reduce the weight on short positions, but wait for a while before opening long positions.
Besides technical indicators, my criteria to judge a market bottom is essentially panic.How can a market be panic?Take a look at the following chart.Since the last year, it is typical that the market drops for at least three days before a bottom.Today is the first down day, isn't it?
http://lh3.ggpht.com/cobrasmarketview/SM832jeZgUI/AAAAAAAAA6A/6wJAkkxyAQU/2_thumb.png?imgmax=800
&disp=P]2.0.0 Volatility Index - NYSE (Daily).VIX has broken out of ENV massively, which is good.According to the patterns on the chart, does the market reach a bottom while VIX is such a big while candle?Usually the bottom day is a sharp intraday reversal, while VIX closes at a black candle, or Doji (cross).Now VIX candlestick pattern is different, right?
http://lh5.ggpht.com/cobrasmarketview/SM834mePeMI/AAAAAAAAA6I/FLTC8JPGevE/3_thumb.png?imgmax=800
&disp=P]2.4.2 NYSE - Issues Advancing.Today the curve has another lower low, which means the selling strength is not weakened, and SPX may have a new low close that is lower than 1192.As I mentioned previously, the market usually does not reach a bottom before a positive divergence appears on this chart.Now we have not seen it, have we?
http://lh4.ggpht.com/cobrasmarketview/SM836KZ82NI/AAAAAAAAA6Q/PCU25I2dS64/4_thumb.png?imgmax=800
The green curve on T2101 on the Telechart goes up steadily, which means the absolute value of the difference between Advancing and Declining is enlarging continuously, in turn this says the selling strength has not been weakened.On this chart, usually the market reach a bottom after the brown curve (10 day moving average of the green curve) goes down for some time (which means the difference between Advancing and Declining is decreasing -- the selling strength is weakening).At this moment, however, the brown curve is still rising.
http://lh5.ggpht.com/cobrasmarketview/SM8360t-3rI/AAAAAAAAA6Y/Y8TsosaWcyM/5_thumb.png?imgmax=800
&disp=P]5.3.0 Financials Select Sector SPDR (XLF Daily), today it broke down with heavy volume.Since there is no significant support below the current level, it seems Financial sectormay go down to test the July bottom, which is very bearish.
http://lh5.ggpht.com/cobrasmarketview/SM838fT8LLI/AAAAAAAAA6g/uPA0wCKCi18/6_thumb.png?imgmax=800
As a summary, I think the market probably is not at a bottom.
Tomorrow is the Fed Day.Concerning the Fed Day, allow me to reiterate that:
[*]At least lock some part of your profit;[*]On the Fed Day, the market may behave like a roller coaster -- go up hundred of points in minutes, then go downhundred of points in minutes, then go up... So experienced traders will take a rest tomorrow.[*]The true direction of the market will not reveal itself before a few days later.If the market goes up tomorrow, bulls should not feel too excited.If it goes down, bears should not feel too relieved either.&disp=P]3.0.1 Yield Curve, the difference between the current value and the Fed Rate is huge, which implies that the market expects a rate cut.Tomorrow Fed may, I guess, cut the rate by 0.50.In addition, US3TM goes down sharply which is not good.Actually the current level is lower than the July low (note the red circle), which means we have a bigger trouble than we did in July.Does it imply that the July low will be taken out?
http://lh6.ggpht.com/cobrasmarketview/SM839X01-6I/AAAAAAAAA6o/QgPfwuPknss/7_thumb.png?imgmax=800
Here are some interesting charts.
&disp=P]1.1.8 PowerShares QQQ Trust (QQQQ 60 min), it seems QQQQ is forming a bullish falling wedge.
http://lh5.ggpht.com/cobrasmarketview/SM83-DrdD2I/AAAAAAAAA6w/1lXc6TgSxBg/8_thumb.png?imgmax=800
&disp=P]1.1.C TRINQ Trading Setup.Today TRINQ closed at above 2.0, which predicts that QQQQ might go up.The success rate of this setup is 68% so far.
&disp=P]1.4.3 S&P/TSX Composite Index (15 min), Bullish Falling Wedge.
http://lh5.ggpht.com/cobrasmarketview/SM83-zX2nUI/AAAAAAAAA64/DNDQe_nGoxY/9_thumb.png?imgmax=800
Posted by Cobra at 9:37 PM 0 comments http://www.blogger.com/img/icon18_email.gif
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Saturday, September 13, 200809/12/2008 Market Recap: The Bigger Picture
Firstly I would like to give my two cents concerning LEH:
Concerning that the market opened at low and closed at high on Thursday and Friday, I suspect this is a speculative play to bet the US government would bail out LEH.
[*]If the US government decided to bail out LEH on Monday, it would imply that the government might potentially bail out all companies in trouble.This would surely be a good news, even better than bailout of FRE/FNM, and the market might rally in the short term.However the long term influence is unimaginable, so the bailout may not happen.[*]If the bailout does not happen but some banks inject money to LEH, you may refer to what happened at the time when FRE/FNM was bailed out.I don't think this is a better stimulus than that, actually the consequence might be bearish.[*]If the speculative play on Thursday and Friday turns out to be real, will the market open at high and let speculative players run away?[*]I keep saying that Wall Street's game is different at the third time.On Thursday and Friday, the market opened at low and closed at high.If the market opens at low again on Monday, will it rise and close at high one more time?In my opinion, LEH event may be a key turning point of the market movement, either upward or downward.It seems like a irresolvable puzzle unless the government stands out.
Recently the market is very volatile and confusing.My suggestion is to forget the near-term oscillation and check out the bigger picture.Thus I will review the common used market bottom indicators and see if we have seen or are approaching a bottom.
Here is my conclusion:
[*]Very likely the mid-term bottom is not there yet.[*]Over the short term the market is due for a pullback.The evidences for short-term pullback:
&disp=P]1.3.7 Russell 3000 Dominant Price-Volume Relationships.On Friday 1030 stocks were price up volume down, thus we have seen three days of bearish price-volume relationship.Therefore the probability of short-term pullback is very high.
&disp=P]1.0.4 S&P 500 SPDRs (SPY 15 min), bearish rising wedge.Negative divergence on MACD and RSI.So it is due for a pullback.
http://lh6.ggpht.com/cobrasmarketview/SMyoziifl9I/AAAAAAAAA4Q/25Bx5IH45-4/1_thumb.png?imgmax=800
&disp=P]1.0.3 S&P 500 SPDRs (SPY 60 min), &disp=P]1.1.8 PowerShares QQQ Trust (QQQQ 60 min), &disp=P]1.2.3 Diamonds (DIA 60 min).The resistance on RSI is quite strong since it held well on Friday.
http://lh6.ggpht.com/cobrasmarketview/SMyo0X6ol8I/AAAAAAAAA4Y/dWZI_zesZv0/2_thumb.png?imgmax=800
&disp=P]3.1.1 US Dollar Index (Weekly), US dollar hit the resistance and formed a bearish shooting star.It looks like being due for a pullback.
http://lh4.ggpht.com/cobrasmarketview/SMyo1tgNsBI/AAAAAAAAA4g/J50ZfUHFSMo/3_thumb.png?imgmax=800
&disp=P]3.2.3 US Dollar/Japanese Yen Ratio.From the negative divergence on MACD and RSI as well as the bearish shooting star on 3.1.1, the pullback of US dollar is bearish to the stock market.
http://lh6.ggpht.com/cobrasmarketview/SMyo2bGI7cI/AAAAAAAAA4o/yQTs5dsoorY/4_thumb.png?imgmax=800
Now let's review the market bottom indicators.
&disp=P]0.0.2 Market Top/Bottomed Watch is the most important chart for pinpointing the market bottom.Take a look at those comments in red boxes, how does the bottom look like previously?How does the pattern look like currently?The market is not likely at the bottom, right?Just to remind you that this is a matter of probability, maybe this time is different.However, technical analysis does not consider this kind of low probability event or "this time is different".
http://lh5.ggpht.com/cobrasmarketview/SMyo3U7zpFI/AAAAAAAAA4w/HghQOFV5nXo/5_thumb.png?imgmax=800
&disp=P]2.0.0 Volatility Index - NYSE (Daily).VIX is not high enough.Some people have been saying over and over again that maybe VIX will not spike up this time.Every time they were disappointed by the new spike of VIX.Hmmh... maybe VIX will not spike this time?
http://lh6.ggpht.com/cobrasmarketview/SMyo4eGIwnI/AAAAAAAAA44/bU1uCV9xU-g/6_thumb.png?imgmax=800
&disp=P]2.3.3 NYSE Total Volume.In the last week the volume of major indices spiked up and gave people an illusion that the market has bottomed out.However NYSE Total Volume is the one which reveals out the volume genuinely.It isn't high enough, is it?Especially the normalized volume at the bottom of the chart, note how previous bottoms look like marked by the green dashed lines.The bottom is not reached before the black curve crosses above the blue line.Maybe this time is different? YMYD.
http://lh4.ggpht.com/cobrasmarketview/SMyo5NELD-I/AAAAAAAAA5A/qys5YTi1syI/7_thumb.png?imgmax=800
&disp=P]2.4.2 NYSE - Issues Advancing.This chart predicts that there will be a new low close ahead for SPX which is lower than 1224.Usually the market bottoms out after a positive divergence is formed on the chart.So far the pattern is still lower low, which means there will a series of closes lower than 1224, and only when NYADV forms highs lows continuously at the same time SPX can reach a bottom.If you get confused, you may refer to the positive divergence before the July bottom.
http://lh4.ggpht.com/cobrasmarketview/SMyo6ZLuNnI/AAAAAAAAA5I/iod3hevy7Sw/8_thumb.png?imgmax=800
As a summary, I don't think the market has bottomed out.
A few interesting charts:
&disp=P]1.4.0 S&P/TSX Composite Index (Daily).The Canadian market has rallied for three days while the volume decreased continuously.This pattern has been mentioned many times -- it is due for a pullback.
http://lh3.ggpht.com/cobrasmarketview/SMyo7TSROKI/AAAAAAAAA5Q/SNOmxphb7m4/9_thumb.png?imgmax=800
&disp=P]1.4.3 S&P/TSX Composite Index (15 min), Bearish Rising Wedge predicts a pullback is due.
http://lh6.ggpht.com/cobrasmarketview/SMyo8fDY_LI/AAAAAAAAA5Y/BXBVrUQNzls/10_thumb.png?imgmax=800
&disp=P]3.0.1 Yield Curve.UST3M is lower than Fed Rate by 0.5 point, which means the market is in trouble and it's possible that the Fed might cut the rate.You may have heard this through the media.
http://lh3.ggpht.com/cobrasmarketview/SMyo9I1KogI/AAAAAAAAA5g/CuRhkFI36Zk/11_thumb.png?imgmax=800
&disp=P]3.3.0 streetTRACKS Gold Trust Shares (GLD Daily).Since the US dollar is due for a pullback, the gold price may rise.Bullish morning star, positive divergence on MACD and RSI, STO is on the support, all these look good.
http://lh3.ggpht.com/cobrasmarketview/SMyo-PdKdfI/AAAAAAAAA5o/-l58jRvRr3U/12_thumb.png?imgmax=800
&disp=P]3.4.3 United States Oil Fund, LP (USO 60 min).Positive divergence on MACD and RSI.
http://lh3.ggpht.com/cobrasmarketview/SMyo-5mjI-I/AAAAAAAAA5w/igch0eztc4s/13_thumb.png?imgmax=800
Posted by Cobra at 11:02 PM 2 comments http://www.blogger.com/img/icon18_email.gif
Thursday, September 11, 200809/11/2008 Market Recap: Market breadth and Dominant Price-Volume Relationships
The stock market soared today but in fact it was very weak which can be seen on the breadth.Tomorrow it could be bearish.
Mid-term signals:
&disp=P]0.0.0 Signal Watch and Daily Highlights, the last mid-term signal 2.2.0 NYSE McClellan Chart has given a sell signal, so all mid-term signals are sell.Here I emphasis again, this is nota trading advice.Mid-term signals are usually lagging indicators, and you should do your own due diligence.
http://lh3.ggpht.com/cobrasmarketview/SMn8K4mmZFI/AAAAAAAAA3Y/Rja68UtfUiA/1_thumb%5B1%5D.png?imgmax=800
The evidences to support the potential short-term pullback:
The Dominant Price-Volume Relationships yesterday was 1383 stocks price up volume down, which is the most bearish one among the price-volume relationships.The past statistics proves that the market may pull back as late as tomorrow.However, the dominant price-volume relationship today has not been improved, 947 stocks price up volume down which is less than the threshold of 1000 but doesn't disprove the price-volume relationship yesterday.This predicts a potential pull back tomorrow.
Now let's look at the breadth today -- the index went up but the number of stocks declined is greater than that advanced, moreover there are more new lows.The similar situation happened once on July 1st while the stock opened low and went up as well.Where did the market go afterward?Check it out yourself on the chart.
http://lh5.ggpht.com/cobrasmarketview/SMn8L4QgOFI/AAAAAAAAA3g/E-CkONaaVg8/2_thumb.png?imgmax=800
&disp=P]1.0.3 S&P 500 SPDRs (SPY 60 min), &disp=P]1.2.3 Diamonds (DIA 60 min), they may test the channel resistance.Note that RSI has reached the resistance also.
http://lh3.ggpht.com/cobrasmarketview/SMn8MsJHWlI/AAAAAAAAA3o/RNCbT84e2yE/3_thumb.png?imgmax=800
&disp=P]1.1.8 PowerShares QQQ Trust (QQQQ 60 min).RSI is approaching the resistance too.Let's see if it can break out tomorrow.
http://lh5.ggpht.com/cobrasmarketview/SMn8NCHXuHI/AAAAAAAAA3w/wo8yFoCCKrw/4_thumb.png?imgmax=800
&disp=P]1.1.C TRINQ Trading Setup.TRINQ is only 0.39 today, which means QQQQ is due for a pullback.But the success rate of this setup is only 63% so far.
As a summary, although &disp=P]2.3.0 NYSE High-Low Index is still oversold today which supports a short-term rebound.However considering other signals I think the probability of getting a pullback is higher.
A few interesting charts for your information:
&disp=P]3.1.0 US Dollar Index (Daily).US dollar is invincible, maybe it will never get pulled back?
http://lh3.ggpht.com/cobrasmarketview/SMn8OHwBRLI/AAAAAAAAA34/KzafG0zRRqY/5_thumb.png?imgmax=800
&disp=P]3.3.0 streetTRACKS Gold Trust Shares (GLD Daily).GLD is oversold and STO is testing the support.
http://lh6.ggpht.com/cobrasmarketview/SMn8PKfUp0I/AAAAAAAAA4A/U2m6FXA5e-8/6_thumb.png?imgmax=800
The rebound of Canadian market has the same weak breadth issue.Note the red dashed lines on the following chart, the probability of dropping down is quite high after getting weak breadth during the market rising days.
http://lh5.ggpht.com/cobrasmarketview/SMn8QJ6PITI/AAAAAAAAA4I/yZ_hvfpfLe4/7_thumb.png?imgmax=800
Posted by Cobra at 10:21 PM 2 comments http://www.blogger.com/img/icon18_email.gif
Wednesday, September 10, 200809/10/2008 Market Recap: No Title
Today the market consolidated on decreased volume, and the short-term direction is unknown.Let's see how it goes tomorrow.
&disp=P]2.3.0 NYSE High-Low Index.It is oversold, so the chance of market rising tomorrow is a bit high, but not entirely sure.
http://lh5.ggpht.com/cobrasmarketview/SMikLuLSY6I/AAAAAAAAA2g/D_y5bD2Y1eY/1_thumb.png?imgmax=800
&disp=P]1.3.7 Russell 3000 Dominant Price-Volume Relationships.The dominant price-volume relationship today is 1383 stocks went up on decreased volume, which is very bearish.However it should not be overly relied on because of the big candle yesterday.Here I just remind you the pattern of Dominant Price-Volume Relationship: if the market goes up tomorrow, the probability of selling-off on the next day will be very high.Of course the market could drop tomorrow.You may check the comments in red quote boxes on the chart for more information.
http://lh4.ggpht.com/cobrasmarketview/SMikMSduJjI/AAAAAAAAA2o/Diy9dFFofMc/2_thumb.png?imgmax=800
&disp=P]1.0.4 S&P 500 SPDRs (SPY 15 min).Here is why SPX pulled back before the market was closed -- it hit the resistance.Tomorrow it may challenge the resistance again.
http://lh5.ggpht.com/cobrasmarketview/SMikNWTraZI/AAAAAAAAA2w/XpwSnnRE6Wg/3_thumb.png?imgmax=800
&disp=P]1.1.A PowerShares QQQ Trust (QQQQ 15 min).Over the short term QQQQ looks bullish because of the falling wedge as well as the positive divergence of MACD and RSI.
http://lh3.ggpht.com/cobrasmarketview/SMikOWApfiI/AAAAAAAAA24/w5mKaPrO28Y/4_thumb.png?imgmax=800
However, don't be excited because QQQQ may go another direction.I think the following chart &disp=P]5.7.3 Technology Select Sector SPDR (XLK 60 min) may be more important, and very likely the pattern is a Descending Triangle which has a high probability of breaking downward.If Tech doesn't do well, QQQQ won't be good.
http://lh3.ggpht.com/cobrasmarketview/SMikPZZZGgI/AAAAAAAAA3A/A3wbyO5Z8co/5_thumb.png?imgmax=800
&disp=P]3.1.0 US Dollar Index (Daily).US dollar is going up again although I have been talking about overbought for some time.The problem is that US dollar went up today and Japanese Yen pulled back significantly, while the stock market didn't go up much.This means Japanese will not have a overbought problem any longer, while US dollar will not keep overbought forever, this means the market outlook is bearish.
&disp=P]3.3.1 streetTRACKS Gold Trust Shares (GLD Weekly).The long term support line of GLD is broken, and the level at 65 could provide a support.
http://lh5.ggpht.com/cobrasmarketview/SMikQa57-dI/AAAAAAAAA3I/YZWHECObi24/6_thumb.png?imgmax=800
The last chart is T2101.The green curve on the chart denotes the absolute value of NYSE Advancing - Declining.If the green curve goes up, it means the difference between Advancing and Declining is increasing, consequently the trend is strong.The blue curve in the background denotes the market is going down while the green curve is going up, this means the downward trend is very strong.The market will not reverse before the downward trend gets weakened which is represented by a U-turn of green curve.Therefore, the charts tells that the downward trend has a long way to go.The brown line is a moving average, which is clearer to see the trend since the green curve has more whipsaws.
http://lh4.ggpht.com/cobrasmarketview/SMikRepSebI/AAAAAAAAA3Q/yFvSpeXeluY/7_thumb.png?imgmax=800
Posted by Cobra at 9:53 PM 0 comments http://www.blogger.com/img/icon18_email.gif
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Tuesday, September 9, 200809/09/2008 Market Recap: The 2nd Major Distribution Day
Before the analysis of today's market, I would like to give you some explanations to my report just in case any readers get confused.
[*]Do not expect I will give a clear and firm signal to go short or long the market.Different market signals always have conflicts with each others, and you have to do your own due diligence all the time.What I intend to do is to list those key signals to you, which can save you plenty of time on reading over a hundred of charts.From these conflicting signals, you however should judge whether the market will likely rise or drop.
When the market is in range bounding, new traders may find it difficult to make a judgement.In my report I will tell you how the market will likely go in term of probability.You have to decide when it is the best time to move -- the probability at 50% or 90%.Just don't expect a probability of 100%.[*]My official list of signals is &disp=P]0.0.0 Signal Watch and Daily Highlights.I will update the chart from time to time, and you may choose several signals on the chart as your trading guidance.However, these signals by no means represent my market outlook.I just report those signals, again, not make a decision on your behalf.One thing for sure is that, my trading follows the signals in 0.0.0 as it should.[*]At the end of my daily market recap, there are usually some charts where RSI2 are extremely oversold or overbought.But this part is not an emphasis partially because an oversold market can become even more oversold, so can an overbought market.For instance, I have been saying the energy sector is due for a rebound for several days, while the extreme situation is that the market does not go as expected day after day.My intention is to remind you but not to give your a trading advice.I may or may not trade on them.For new traders, I kindly advice you do not trade against the trend shown by the mid-term signals on 0.0.0 chart, even if the market is extremely oversold or overbought.Take the energy sector for instance again, because most mid-term signals on 0.0.0 chart are bearish red, new traders should refrain from touching this sector although it is extremely extremely oversold at the time being.[*]At last, if you find my daily market recap informational, please access my chart book.I attach those charts in my chart book in this report is for your convenience.However you may still learn some new things or discover more information by accessing the chart book.Therefore I strongly recommend you to do so.Today we got no follow-through since all the gain yesterday was overridden by today's selling-off, so the mid-term outlook is still Bearish.Of course in case the market claims all the loss back tomorrow, I will have a new analysis.Nevertheless, the second day follow-through is very important and a single-day up/down does not mean anything because the market seems irrational in these days.On the other hand, the following analysis will tell you that the probability of following through today's selling off is high.
I tend to believe that the market showed a true direction today.Compare with three evidences presented in the last report:
[*]&disp=P]1.0.7 S&P 500 Large Cap Index (Major Accum/Dist Days).Today is the second Major Distribution Day, and the emotion is much stronger than yesterday.Concerning the major distribution day, it usually comes out as double instead of single.Once we have the second major distribution day, we have 50% of chance to see a big bounce back, of course another 50% of chance is to get the 3rd major distribution day.Therefore this is not a really bad news.
http://lh4.ggpht.com/cobrasmarketview/SMdiR2nN0tI/AAAAAAAAA1Y/by_kfBbK4SM/1_thumb.png?imgmax=800[*]&disp=P]2.0.0 Volatility Index - NYSE (Daily), Bullish Morning Star, so the probability of rising further is very high.Be reminded that this is totally different from the situation yesterday where the market raised but VIX only went down slightly.
http://lh5.ggpht.com/cobrasmarketview/SMdiTdRgmMI/AAAAAAAAA1g/gkM5nQcp17I/2_thumb.png?imgmax=800[*]&disp=P]3.0.3 20 Year Treasury Bond Fund iShares (TLT Daily).Bond is rising madly and overbought.Different from yesterday, the direction of Bond is consistent with the stock market today.The problem I worried about yesterday showed up today:
&disp=P]3.1.0 US Dollar Index (Daily), Doji (a cross pattern).US dollar looks exhausted.For the last few times of Doji pattern, the bullish up move was continued.However the Doji today didn't make a new high, which is much more bearish than previous ones.Furthermore, today's candle is a inside bar (the candle is the range of previous candle completely), which has a name called Harami in the candlestick patterns.At the current level with so many overbought signals as well as the negative divergence, the Harami hints that the probability of pullback is high.
http://lh5.ggpht.com/cobrasmarketview/SMdiVFrlu9I/AAAAAAAAA1o/WsgXJ_1q4-0/3_thumb.png?imgmax=800
&disp=P]3.2.0 Japanese Yen (Daily).The key support on Japanese Yen held well today, and Yen has bounced back from the support.The pattern looks similar to a Bullish Morning Star (not exactly as some people can see), so Yen may rise further tomorrow.
http://lh6.ggpht.com/cobrasmarketview/SMdiWOI-O9I/AAAAAAAAA1w/78bjuNOF864/4_thumb.png?imgmax=800
The pair of US dollar and Japanese, one goes up and another goes down.Take into account of Bullish Morning Star on the VIX chart, also considering that there is no significant positive divergence on the intraday charts of major indices, as a result I tend to believe tomorrow the market may be bearish.
Here are few interesting charts.
&disp=P]0.0.1 Simple SPY Trading System.VIX has broken out ENV on the upper side, and it is overbought.However this may not be a sufficient evidence to a rebound according to the above analysis.Note RHNYA is close to oversold region again.Therefore if the market sells off tomorrow, RHNYA will be oversold, and the market might bounce back on the day after tomorrow hopefully.By the way, I guess there will be a patriot rally on September 11th, the day after tomorrow.
http://lh4.ggpht.com/cobrasmarketview/SMdiXUCnvvI/AAAAAAAAA14/zfTBymRCuk4/5_thumb.png?imgmax=800
&disp=P]2.4.2 NYSE - Issues Advancing.Today it is a new low again.The explanation has been given previously so I won't say again this time.What you should know is that a new low means SPX will likely have a lower close ahead.
http://lh4.ggpht.com/cobrasmarketview/SMdiYQ4DgQI/AAAAAAAAA2A/dBWBW5IUxUQ/6_thumb.png?imgmax=800
&disp=P]1.1.6 PowerShares QQQ Trust (QQQQ Daily), oversold.Some people may "yeah, yeah, yeah!".Well, oversold is oversold.
&disp=P]1.1.B QQQQ and VXN.VXN crossed above ENV and is overbought.So QQQQ has a chance to bounce back.
&disp=P]1.1.C TRINQ Trading Setup.TRINQ is greater than 2 today, which means the market might go up tomorrow.The success rate of this setup is 59% only, just for your information.
&disp=P]1.4.0 S&P/TSX Composite Index (Daily).Take a look at how crazy it is -- Canadian market has plunged for over 1600 points during just a few days.It is oversold, of course.Take notice at ATR at the bottom of the chart, it is very high.Has it bottomed out?Of course I have doubt.
http://lh4.ggpht.com/cobrasmarketview/SMdiZ8idFlI/AAAAAAAAA2I/wW1gTsS0IAU/7_thumb.png?imgmax=800
&disp=P]1.4.4 TSE McClellan Oscillator.Another evidence to support that Canadian market is approaching to a bottom is the golden bar of new low spikes, which is one of bottoming characteristics.I am not really convinced at the moment.You may have your own decision to bottom-fishing or not.
http://lh4.ggpht.com/cobrasmarketview/SMdia54BOLI/AAAAAAAAA2Q/1z-GEwcuVRY/8_thumb.png?imgmax=800
&disp=P]3.4.1 United States Oil Fund, LP (USO Daily), oversold.
&disp=P]5.0.2 S&P Sector Bullish Percent Index,note the bottom half of the chart shows that the energy sector is in the buy zone from the perspective of the Bullish Percent Index.It is very close to a ten-year low.Again, do your own due diligence prior to any action.
http://lh5.ggpht.com/cobrasmarketview/SMdicGSFnlI/AAAAAAAAA2Y/rZhnoN9aS7g/9_thumb.png?imgmax=800
Posted by Cobra at 11:00 PM 0 comments http://www.blogger.com/img/icon18_email.gif
Monday, September 8, 200809/08/2008 Market Recap: No impressive, need see more actions
Conclusion: I'm not impressed, let's see how it goes tomorrow.
&disp=P]0.0.0 Signal Watch and Daily Highlights contains the latest status of the market.There is no arrow on the chart, so no change at all.
http://lh5.ggpht.com/cobrasmarketview/SMYF26KTWNI/AAAAAAAAA0I/Aj53yO3LDTM/1_thumb%5B1%5D.png?imgmax=800
&disp=P]1.0.7 S&P 500 Large Cap Index (Major Accum/Dist Days).Besides the price change and volume, the Up:Down Volume has also to be considered for judging the strength of movement.Some readers may have noticed that today is not a Major Accumulation Day.It is clear on the following chart that the up:down volume is merely 1.77 today, which is far from impressive.Take a look at those up:down volumes corresponding to those big white candles, you will know what I mean.
http://lh3.ggpht.com/cobrasmarketview/SMYF3uEifTI/AAAAAAAAA0Q/85arYB59ATo/2_thumb.png?imgmax=800
&disp=P]3.0.3 20 Year Treasury Bond Fund iShares (TLT Daily).We got an issue here -- how come the bond went up so much while the stock market is so bullish?Today's candle isn't small at all, which means the money still flies to safety.Not impressive.
http://lh5.ggpht.com/cobrasmarketview/SMYF4kdMDqI/AAAAAAAAA0Y/gHCQBbEJZ9w/3_thumb.png?imgmax=800
&disp=P]2.0.0 Volatility Index - NYSE (Daily).Just like the red hollow candles a few days ago, VIX didn't go down much while SPX was up huge.
http://lh5.ggpht.com/cobrasmarketview/SMYF5pJIRgI/AAAAAAAAA0g/slB_txuvFhk/4_thumb.png?imgmax=800
Aforementioned issues are not saying today's rally is suspicious.Actually I mean many people are not convinced yet.So the true market direction is unknown until a few days later.
At the moment I have two concerns to the future direction of the market:
&disp=P]3.1.1 US Dollar Index (Weekly).It is extremely overbought and has reached the resistance.Where will it go next?If it pulls back, the market will be affected because of carry trade and the rebound of commodity.
http://lh4.ggpht.com/cobrasmarketview/SMYF6unbhHI/AAAAAAAAA0o/XdxpNWWyBlk/5_thumb.png?imgmax=800
&disp=P]2.8.1 CBOE Options Total Put/Call Ratio.The yellow region at the bottom still looks too bullish to be a sign of the market bottom.
http://lh6.ggpht.com/cobrasmarketview/SMYF7RpCi7I/AAAAAAAAA0w/wbrXFgMQg9M/6_thumb.png?imgmax=800
Some interesting charts today:
&disp=P]1.1.6 PowerShares QQQ Trust (QQQQ Daily).It is extremely oversold, and the volume spiked up today.It looks like a capitulation and may bounce back.
&disp=P]1.1.A PowerShares QQQ Trust (QQQQ 15 min).The positive divergence of MACD and RSI supports the bounce back.
http://lh5.ggpht.com/cobrasmarketview/SMYF8GjiIFI/AAAAAAAAA04/upds_EuPt_8/7_thumb.png?imgmax=800
&disp=P]3.4.3 United States Oil Fund, LP (USO 60 min), it's also oversold.And the obvious positive divergence of MACD and RSI on the 60-min chart supports the bounce back as well.
http://lh6.ggpht.com/cobrasmarketview/SMYF85I4ltI/AAAAAAAAA1A/eN-adqAe8gU/8_thumb.png?imgmax=800
&disp=P]5.2.0 Energy Select Sector SPDR (XLE Daily).It has dropped 7 days.The heavy volumes look like a rebound is coming from my point of view.
http://lh3.ggpht.com/cobrasmarketview/SMYF-ERkZfI/AAAAAAAAA1I/mTAru4Iv4V8/9_thumb.png?imgmax=800
Here is how T2123 looks like in year 2000.
http://lh5.ggpht.com/cobrasmarketview/SMYF-3zzGDI/AAAAAAAAA1Q/mv5DO_tGLb4/10_thumb.png?imgmax=800
Posted by Cobra at 10:13 PM 0 comments http://www.blogger.com/img/icon18_email.gif
Saturday, September 6, 200809/05/2008 Market Recap: Bottomed or Just the Beginning
Conclusion:
[*]I think we are in confirmed intermediate term down trend.Breaking of support on Thursday was the confirmation.Big moneys takes time to move and adjust their positions.So a broken chart has a very low probability of being recovered in the near term.[*]The market may likely bounce back.Although there is no evidence on the intraday charts of major indices, NYSE High-Low Index is extremely overbought, in addition with the help of treasury news I believe the market will possibly bounce back.Evidence of short term bounce:
&disp=P]2.3.0 NYSE High-Low Index, oversold.The probability of market rebound, which is denoted by the green line at the background, is very high while the black line reaches the green horizontal line.
http://lh4.ggpht.com/cobrasmarketview/SMNzJS-nkqI/AAAAAAAAAyM/kLAVO6W-YnE/1_thumb.png?imgmax=800
&disp=P]2.0.0 Volatility Index - NYSE (Daily), Bearish Dark Cloud Cover and the resistance on STO, so I think VIX should drop down which means the market may bounce back.
http://lh3.ggpht.com/cobrasmarketview/SMNzKgsBFyI/AAAAAAAAAyU/PBfIQimIATE/2_thumb.png?imgmax=800
&disp=P]3.2.0 Japanese Yen (Daily).Japanese Yen is also Bearish Dark Cloud Cover pattern.STO and RSI support the pullback of Yen, which in turn means the market might rise.
http://lh5.ggpht.com/cobrasmarketview/SMNzLl-PYCI/AAAAAAAAAyc/Eyy4qCldYMg/3_thumb.png?imgmax=800
&disp=P]1.1.6 PowerShares QQQ Trust (QQQQ Daily).QQQQ is extremely oversold and STO is right on the support.Volume looks like a typical capitulation pattern.The big chance is QQQQ will go up.
http://lh5.ggpht.com/cobrasmarketview/SMNzNGAJxHI/AAAAAAAAAyk/Msi0lAiaJJA/4_thumb.png?imgmax=800
&disp=P]1.0.3 S&P 500 SPDRs (SPY 60 min).The target of rebound is at Fib 50, which is the key support broken on Thursday and now turns into resistance.Because of the rescue of Treasury, it is extremely like the market opens at Fib 50.Never forget the possibility of fade gap.I don't believe such a news is sufficient for breaking the resistance above Fib 50, the reason is: Buy on Rumor Sell on News.
http://lh5.ggpht.com/cobrasmarketview/SMNzNotbbeI/AAAAAAAAAys/2x0CtgXAsGQ/5_thumb.png?imgmax=800
&disp=P]5.3.0 Financials Select Sector SPDR (XLF Daily).After reading the chart you will know why the Financials is strong recently is related with this rumor.Now the rumor got confirmed, will Sell on News happen?I guess that, the majority of fund is still riding the fence, and thus the money to push up the market is limited.Due to the sector rotation, what those limited money can do is flowing back and forth across different sector.When the money is pressing down this sector, it will be pushing up another sector at the same time.Afterward it may sharply make a U-turn to do the opposite.
&disp=P]5.0.2 S&P Sector Bullish Percent Index.On this chart you should be able to tell the sector rotation.But the issue is that, the energy sector has been very close to the historical low.I am not saying the sector rotation must happen this time, or the money will flow into the energy sector due to the rotation.However, the energy sector does look attractive, doesn't it?You may carry out further investigation and see if the Bullish Percent Index of the energy sector is the closest to the historical low among the all sectors?
http://lh5.ggpht.com/cobrasmarketview/SMNzPSjALvI/AAAAAAAAAy0/tlJRlcRUyT8/6_thumb.png?imgmax=800
The following chart precisely shows the anti-correlation between the energy sector and the financial sector.
http://lh5.ggpht.com/cobrasmarketview/SMNzP_AGsAI/AAAAAAAAAy8/46wnHbXOsmg/7_thumb.png?imgmax=800
So my conclusion is that, soon the Financials Sector will likely be sold on news and the Energy Sector will bounce back because of the rebound of US dollar and the crude oil.
Let's take a look at US dollar.&disp=P]3.1.1 US Dollar Index (Weekly) retraced exactly to Fib 38.2, the location at where the rebound is likely finished.Furthermore, RSI14 at the bottom is very close to the overbought level.Don't forget our new weapon -- drum please -- STO is a sell signal already.
http://lh5.ggpht.com/cobrasmarketview/SMNzQ-ey0JI/AAAAAAAAAzE/L_sbk4exBBM/8_thumb.png?imgmax=800
Evidences for the intermediate term down trend have been listed many times in the past.Now let's put them together just for clarification.What I really mean is that the probability of that all signals are wrong this time is quite low.
&disp=P]0.0.5 Weekly STO and the Market Top/Bottom.Hopefully you have no different opinion to this signal based on Weekly STO5.Now I have officially added it to 0.0.0 Signal Watch and Daily Highlights.During the past, is there any time the market stopped dropping while STO was still above 20?No.Therefore, I believe the last Friday low will not be likely the bottom even if the market rises significantly in the next week.
http://lh4.ggpht.com/cobrasmarketview/SMNzRwA95HI/AAAAAAAAAzM/Rc898VAoix0/9_thumb.png?imgmax=800
&disp=P]1.0.6 S&P 500 Bullish Percent Index.Note the blue boxes on the chart.If any individual index gives a sell/buy signal, probably it is a whipsaw.If all three indices give the same signal at the same time, so far it never gets wrong.So we have a confirmed sell signal, right?
http://lh6.ggpht.com/cobrasmarketview/SMNzSus4NzI/AAAAAAAAAzU/kCQnGganGmY/10_thumb.png?imgmax=800
&disp=P]2.3.3 NYSE Total Volume.The normalized total volume denoted by the black line at the bottom has reached a new low.I just don't believe the market could bottom at this place.
http://lh5.ggpht.com/cobrasmarketview/SMNzTniPgFI/AAAAAAAAAzc/xIcF_stV8Uo/11_thumb.png?imgmax=800
&disp=P]2.8.0 CBOE Options Equity Put/Call Ratio.Now it seems this chart gave the earliest signal to point out the rebound was over.Unfortunately the signal was overlooked.
http://lh4.ggpht.com/cobrasmarketview/SMNzUbUfQyI/AAAAAAAAAzk/G3AzDltL15c/12_thumb.png?imgmax=800
&disp=P]2.8.1 CBOE Options Total Put/Call Ratio.Similar with 2.3.3, the normalized CPC ratio at the bottom is over bullish, and I am not convinced that the market was bottomed here.
http://lh4.ggpht.com/cobrasmarketview/SMNzVeVvYYI/AAAAAAAAAzw/4Yhj1wGBhG8/13_thumb.png?imgmax=800
The T2123 chart in Telechart is obtained by accumulating the difference between the value of 4-week-high and 4-week-low everyday, which is used to inspect the intrinsic strength of the market.T2123 is one of my key intermediate term signal, which is equally important as &disp=P]NYSI.Take a look how the blue line (denotes the market) acts while how the green line crosses below the brown line.Now we just got a sell signal, and there are few whipsaws on the chart.
http://lh3.ggpht.com/cobrasmarketview/SMNzWMh_LsI/AAAAAAAAAz4/rpBfHiM5amg/14_thumb.png?imgmax=800
The only indicator which has not confirmed the mid-term sell signal is &disp=P]2.2.0 NYSE McClellan Chart.Why?Take a look at &disp=P]2.4.0 NYSE Advance-Decline Issues (Daily), the green line denotes the market has broken out and been going down, but the black line denotes NYAD is still quite high.This is a positive divergence and it directly causes 2.2.0 is still buy signal so far.This divergence might be because the financial sector has been strong recently, and this sectorhas the heaviest weight in NYSE.The only hope of bulls is whether the market will be pushed higher with the help of strong financial sector.We will see in the next week.
http://lh5.ggpht.com/cobrasmarketview/SMNzW8juvbI/AAAAAAAAA0A/LqDOTQmYzOE/15_thumb.png?imgmax=800
Posted by Cobra at 11:23 PM 6 comments http://www.blogger.com/img/icon18_email.gif
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Thursday, September 4, 200809/04/2008 Market Recap: Major Distribution Day
Conclusion today:
[*]There are a few mid-term sell signals, especially &disp=P]1.0.6 S&P 500 Bullish Percent Index, all three major indices confirm the sell signal at the same time.Therefore it is very likely the down leg begins, and the target is at least the low in July.[*]We also get a few short-term oversold signals so the probability of market rebound is high.On the other hand, no signal clearly indicates that the market will bounce back tomorrow.&disp=P]0.0.0 Signal Watch and Daily Highlights contains all the signals.Read it and you will know what kind of situation the market is at present.
http://lh4.ggpht.com/cobrasmarketview/SMDE-aBO_EI/AAAAAAAAAwc/ocwE0Bzfj2k/1_thumb.png?imgmax=800
Firstly let's take a look at the evidence to prove the mid-term trend is bearish.
&disp=P]1.0.7 S&P 500 Large Cap Index (Major Accum/Dist Days).This is the main topic today, Major Distribution Day.The theory is that it does not appear in single.In a few weeks we will see another one unless a Major Accumulation Day happens before it.
http://lh3.ggpht.com/cobrasmarketview/SMDE_eiljSI/AAAAAAAAAwk/vEbUiPs1Ix8/2_thumb.png?imgmax=800
&disp=P]2.4.2 NYSE - Issues Advancing.This chart is not very easy to read, basically you just pay attention to the Divergence.Look at the pale gray line, it usually forms a series of higher low before the market approaches a bottom.Now we have the first lower low, which means the trend of SPX will keep going down before a series of higher low shows up.
http://lh5.ggpht.com/cobrasmarketview/SMDFAWX_RMI/AAAAAAAAAws/mIvjIzi_Ejg/3_thumb.png?imgmax=800
&disp=P]1.0.6 S&P 500 Bullish Percent Index.As I said before, the sell signal is confirmed.
http://lh3.ggpht.com/cobrasmarketview/SMDFBVXVyxI/AAAAAAAAAw0/NNrGNRdTfTk/4_thumb.png?imgmax=800
As a summary, all above signals mean the market will be quite weak from now on.
Next let's take a look which signals are supporting a short-term rebound.
&disp=P]1.0.4 S&P 500 SPDRs (SPY 15 min).This is why I am not sure if the market will bounce back tomorrow, i.e., the positive divergence on MACD and RSI is to short to firmly support the rebound.Compare with &disp=P]1.4.3 S&P/TSX Composite Index (15 min) you will see even if the divergence becomes very significant, a rebound may still not show up.By the way, according to 1.4.3, I think Canadian market may likely bounce back.
http://lh3.ggpht.com/cobrasmarketview/SMDFCDE-uJI/AAAAAAAAAw8/RLc1BJiSEdI/5_thumb.png?imgmax=800
http://lh5.ggpht.com/cobrasmarketview/SMDFCxUh96I/AAAAAAAAAxE/sdHF6OOOj34/6_thumb.png?imgmax=800
&disp=P]2.0.0 Volatility Index - NYSE (Daily).Besides the famous MA10 ENV is broken upward significantly, STO is also testing the resistance.Therefore it may reverse in the short-term, which means the market might bounce back.
http://lh5.ggpht.com/cobrasmarketview/SMDFEE-4W-I/AAAAAAAAAxM/xF4b01NtJY0/7_thumb.png?imgmax=800
&disp=P]1.1.6 PowerShares QQQ Trust (QQQQ Daily), oversold, and STO is on the support level too.Thus it has a chance to bounce back.
http://lh5.ggpht.com/cobrasmarketview/SMDFFQHr9II/AAAAAAAAAxU/ieFjXRE3aX0/8_thumb.png?imgmax=800
&disp=P]1.1.C TRINQ Trading Setup, TRINQ is greater than 2 today.Therefore QQQQ might bounce back tomorrow according to the TRINQ pattern.However, be reminded that the success rate of TRINQ setup is about 61%.
&disp=P]2.3.0 NYSE High-Low Index, this is the hope in the next Monday.If it keeps going down tomorrow, it may get oversold and the market will have a better chance to bounce back on the next Monday.
http://lh5.ggpht.com/cobrasmarketview/SMDFGIAkUdI/AAAAAAAAAxc/luaDlcuDYSo/9_thumb.png?imgmax=800
As a summary, in the short term bulls can hope for rebound but it may not happen tomorrow.
As what I said yesterday, I am not clear how the market will solve the issue of the short-term pullback of US dollar.Today the market tanked while US dollar raised like crazy.Once US dollar pulls back, what will happen?I am not optimistic.
&disp=P]3.1.0 US Dollar Index (Daily), overbought.The negative divergence still exists in the indicators.
http://lh6.ggpht.com/cobrasmarketview/SMDFHLCxwTI/AAAAAAAAAxk/Mk5j7e5isOM/10_thumb.png?imgmax=800
&disp=P]3.2.0 Japanese Yen (Daily).The chart of Japanese Yen looks bullish, Breakout Ascending Triangle.Of course, it is overbought too.Besides RSI2 is extremely overbought, RSI14 is also testing the resistance, so in the short-term it may pull back.Then the stock market may not look too bad if US dollar pulls back at the same time, hopefully.
http://lh5.ggpht.com/cobrasmarketview/SMDFIHfkt2I/AAAAAAAAAxs/79CdlXOw7Fo/11_thumb.png?imgmax=800
&disp=P]3.4.1 United States Oil Fund, LP (USO Daily), oil is still oversold and holds on the support.
http://lh5.ggpht.com/cobrasmarketview/SMDFJg0WIaI/AAAAAAAAAx0/S-8LPVx6WEI/12_thumb.png?imgmax=800
&disp=P]5.2.0 Energy Select Sector SPDR (XLE Daily).XLE may help the market bounce back.It is oversold and the volume still looks like a typical capitulation to me.It should probably bounce back.
http://lh5.ggpht.com/cobrasmarketview/SMDFLJNg_GI/AAAAAAAAAx8/5T9PEbwCIl4/13_thumb%5B1%5D.png?imgmax=800
&disp=P]5.2.2 Energy Select Sector SPDR (XLE 15 min).The positive divergence on MACD and RSI is actually fairly powerful.
http://lh4.ggpht.com/cobrasmarketview/SMDFL0lA1qI/AAAAAAAAAyE/mvNPsHLr07E/14_thumb.png?imgmax=800
If oil bounces back, so should be the Canadian market.&disp=P]1.4.0 S&P/TSX Composite Index (Daily), oversold.&disp=P]1.4.3 S&P/TSX Composite Index (15 min), as I said before the positive divergence on MACD and RSI is very significant.The Canadian market index dropped almost 1000 points within 3 days, how crazy it is.
Posted by Cobra at 10:35 PM 0 comments http://www.blogger.com/img/icon18_email.gif
Wednesday, September 3, 200809/03/2008 Market Recap: Destined to up tomorrow?
Today I would like to give you the conclusion first:
[*]As what I said before, if three down days cannot claim all the gain in the three up days, it means the up strength is stronger than the down strength.Today the market shows a little stronger up strength which is a good news.The market is still range bounded but at least it is not confirmed bearish.[*]If SPX has three down days in a row, I said that on the fourth day we will see a rebound.So tomorrow the market might go up according to this observation.However, besides this reason there is no other evidence to support the suspected rebound.I don't know how the market will resolve this puzzle, maybe a simple explanation is an overbought market can become even more overbought.Well, if the market indeed rises I think it's better to close a part of long positions since the market has been overbought already.&disp=P]0.0.1 Simple SPY Trading System.Above conclusions can be seen on this chart.Keep an eye on NYADV at the bottom.If it rises tomorrow, it may get overbought and the bounce (if we ever see one) could be a one-day wonder.
http://lh4.ggpht.com/cobrasmarketview/SL9uxyOVilI/AAAAAAAAAvU/YTsb7FYDHj4/1_thumb.png?imgmax=800
&disp=P]1.1.A PowerShares QQQ Trust (QQQQ 15 min).MACD and RSI show positive divergence.QQQQ probably has a chance to bounce back tomorrow.
http://lh3.ggpht.com/cobrasmarketview/SL9uyiY9MyI/AAAAAAAAAvc/tUwURyPUb8k/2_thumb.png?imgmax=800
&disp=P]1.1.4 Semiconductor Holders (SMH Daily).This chart supports the possible rebound of QQQQ as well.The oversold SMH is the primary reason why Nasdaq is so weak recently.On the chart you can see that it had rallied 9 days continuously... finally it turned to oversold from extremely overbought.
http://lh5.ggpht.com/cobrasmarketview/SL9uzxE6_gI/AAAAAAAAAvk/WEBOP8YpGuc/3_thumb.png?imgmax=800
&disp=P]5.3.0 Financials Select Sector SPDR (XLF Daily).Look at this chart, XLF has rallied for 6 six days and this never happened before.I feel reluctant to say it is overbought and due for a pullback tomorrow.But in term of probability the pullback will happen for sure.I don't know if XLF can help the broad market to rally.If it pulls back, how can the whole market rally?
http://lh6.ggpht.com/cobrasmarketview/SL9u1O1qfUI/AAAAAAAAAvs/eiPfZCWK4MU/4_thumb.png?imgmax=800
&disp=P]3.1.0 US Dollar Index (Daily).The Doji (i.e., the cross) candlestick pattern looks very toppy.Tomorrow it should go down a bit, which is bearish to the stock market.
http://lh5.ggpht.com/cobrasmarketview/SL9u2AfxcKI/AAAAAAAAAv0/0ujAxJiJxr0/5_thumb.png?imgmax=800
&disp=P]3.4.1 United States Oil Fund, LP (USO Daily), oversold and at the support.Two red hollow candles, high probability of reversal.Will the stock market still go up?
http://lh3.ggpht.com/cobrasmarketview/SL9u3LlTQ8I/AAAAAAAAAv8/6cL0kaIQC8c/6_thumb.png?imgmax=800
&disp=P]5.2.0 Energy Select Sector SPDR (XLE Daily), oversold.Yesterday I said it never drops longer than three days recently, well, today is the fourth down day.So no pattern is absolutely accurate.Anyway, the volume still looks a capitulation so I believe it will bounce back soon.As I said yesterday, the rebound of XLE is bearish to XLF, and in turn bearish to the broad market.
http://lh5.ggpht.com/cobrasmarketview/SL9u4lPHhCI/AAAAAAAAAwE/YyiXtm4Igcg/7_thumb.png?imgmax=800
As a summary, although I really wish the market could rally tomorrow, I cannot find any strong evidence.Maybe aforementioned indicators might not have an accurate timing and might keep as it is for a while.This gives me a feeling that, the rally tomorrow -- if we can ever see one -- seems not sustainable and might be farfetched.I do not deny the possibility of rally but I do not feel optimistic to the post-rally days either.
Just for your information, today actually there is a mid-term bottom signal.Because the present inflation rate is quite high (the data from the government denies it though), the trend of bond is not necessarily the opposite to the stock market.As a result, I doubt its applicability.&disp=P]3.0.0 10Y T-Bill Yield, note that the green dashed line accurately pinpoints the bottoms of the stock market, which is shown by the pale green line in the background.Does it mean we are going to see a massive rally?For the validation of this signal, you may refer to &disp=P]8.0.4 Market top/bottom by ROC30 of 10Y T-Bill Yield 2005-2008, &disp=P]8.0.5 Market top/bottom by ROC30 of 10Y T-Bill Yield 2001-2004.Note that the validation was done in a low-inflation history, which is different from the current situation.
http://lh5.ggpht.com/cobrasmarketview/SL9u5WXwDrI/AAAAAAAAAwM/O7XpwCIi1rE/8_thumb.png?imgmax=800
&disp=P]1.4.4 TSE McClellan Oscillator.Note the green circles at the bottom of the chart.The Canadian market is oversold.Of course, RHTSX can stay at zero for some time.However, if the oil and the energy sector are going to bounce back according to aforementioned analysis, the Canadian market will have a chance, too.
http://lh5.ggpht.com/cobrasmarketview/SL9u6HYtdDI/AAAAAAAAAwU/GwFSmHNGWl0/9_thumb.png?imgmax=800
Posted by Cobra at 10:15 PM 2 comments http://www.blogger.com/img/icon18_email.gif
Tuesday, September 2, 200809/02/2008 Market Recap: Stuck in a Range
&disp=P]0.0.1 Simple SPY Trading System, Bearish Engulf (which means the current red candle completely engulfs the first one) is formed at a key resistance, so it is no doubt that the daily chart today is very bearish.The trading range formed during the last week, however, still holds so far, which means the market virtually goes nowhere.Tomorrow if the selling-off continues, we can see which direction of the trend is stronger according the my judgement to the trend strength -- whether 3 up days or 3 down days has greater magnitude -- and we will know where the Mr. Market will go.
http://lh6.ggpht.com/cobrasmarketview/SL4auiRx4vI/AAAAAAAAAto/qx6UNq_37Js/1_thumb.png?imgmax=800
There are the following three points for your attention:
[*]VIX ENV at the bottom.Note the green circles, VIX may break above ENV if the market dives tomorrow.Even if VIX doesn't, it will be overbought after further rally according to &disp=P]2.0.0 Volatility Index - NYSE (Daily).In this case the market may bounce back on the day after tomorrow.I have mentioned a few times that there will be a tradable rebound after three down days in a row recently.If the market goes down tomorrow it will be three down days, so in some sense bulls shouldn't feel too depressed.[*]NYADV at the very bottom of the chart.Note the red circles, NYADV will be overbought if the market rises tomorrow.Overbought NYADV is a accurate pattern and thus the probability of market going down on the day after tomorrow will be big.Therefore if the market rallies, bears should not feel nervous.In addition, the success rate of NYADV is higher than VIX ENV in term of timing -- what I mean is that VIX ENV may have a delay.[*]&disp=P]1.0.0 S&P 500 Large Cap Index (Daily), the candlestick pattern of the index daily chart is not a Bearish Engulf, then it doesn't seem that bearish (by no means it is not bearish).Let me re-emphasis that for candlestick pattern, one should always refer to the Index ETF chart.The open price of NYSE indices are often delayed, and the gap isn't clear on the chart and so the candlestick pattern analysis may be inaccurate.Today we have seen a typical pattern.
http://lh4.ggpht.com/cobrasmarketview/SL4avxImoRI/AAAAAAAAAtw/GL8I11jOn5o/2_thumb.png?imgmax=800Conclusion: most likely the market will be stuck in a range this week, and both bulls and bears will have a chance to runaway or open new positions.
What will happen tomorrow then?I tend to be bearish although QQQQ may have a hope.
Let's take a look at QQQQ first.
&disp=P]1.1.6 PowerShares QQQ Trust (QQQQ Daily).I think the yellow region provides a strong support and should not break easily.Furthermore, both STO and RSI2 show positive divergence which is good.
http://lh4.ggpht.com/cobrasmarketview/SL4axcEoucI/AAAAAAAAAt8/Ezpwty43y1Q/3_thumb.png?imgmax=800
&disp=P]1.1.8 PowerShares QQQ Trust (QQQQ 60 min).I agree that QQQQ is in a down price channel, and the channel has been validated by three points.However today it is right on the lower edge and might bounce back.Take notice of the positive divergence on MACD and RSI.
http://lh6.ggpht.com/cobrasmarketview/SL4ayel25TI/AAAAAAAAAuE/ESTQZaTCEvY/4_thumb.png?imgmax=800
&disp=P]1.1.A PowerShares QQQ Trust (QQQQ 15 min),there is also positive divergence on MACD and RSI.
http://lh6.ggpht.com/cobrasmarketview/SL4azJ3fvkI/AAAAAAAAAuM/z0e2KhwXbVs/5_thumb.png?imgmax=800
&disp=P]1.1.B QQQQ and VXN.You can see that VXN ENV might be break upward if QQQQ dives tomorrow, so at least it might bounce back the day after tomorrow.However be careful that the VIX/VXN signal itself is accurate but its timing is not.
http://lh3.ggpht.com/cobrasmarketview/SL4a0cDjBrI/AAAAAAAAAuU/ceMSdq0YWVk/6_thumb.png?imgmax=800
Here are some negative factors to the tomorrow market.
&disp=P]2.0.0 Volatility Index - NYSE (Daily).It has broken the Bullish Falling Wedge today, which is one of the most bearish signals for bulls.In the short term, as aforementioned it might get overbought, however the breakout today probably means VIX will be rising for a while, which in turn means the down leg of the market will likely start to grow.Before the trading range in 0.0.1 is broken, the down leg will not be confirmed so you don't have to act in advance.By the way, take a look at this &disp=P]2.0.2 Volatility Index 30-day/90-day Ratio, does it seem the top has passed?
http://lh6.ggpht.com/cobrasmarketview/SL4a1VJerqI/AAAAAAAAAuc/NtNJyVk4AgI/7_thumb.png?imgmax=800
&disp=P]3.1.0 US Dollar Index (Daily).US dollar rallied again, and this time the stock market didn't go up but US dollar got overbought.I still think this is a bearish rising wedge pattern (I moved the lines a bit).Moreover, the negative divergence on the chart are not to be ignored.All these mean US dollar may pull back at least in the short term, which is bearish to the stock market.
http://lh5.ggpht.com/cobrasmarketview/SL4a2gZ4qsI/AAAAAAAAAuk/9Wk9wmzqT2c/8_thumb.png?imgmax=800
&disp=P]3.4.1 United States Oil Fund, LP (USO Daily), oversold.Note the positive divergence on MACD and RSI.With the possibility of US dollar pullback,oil may very likely bounce back.
http://lh5.ggpht.com/cobrasmarketview/SL4a4NCi3xI/AAAAAAAAAus/rHq666XibtY/9_thumb.png?imgmax=800
Now take a look at the following chart and be reminded the anti-correlation between XLE (energy sector) and XLF (financial sector).
http://lh3.ggpht.com/cobrasmarketview/SL4a4uaCYSI/AAAAAAAAAu0/sYwA8TByoCw/10_thumb.png?imgmax=800
Then take a look at &disp=P]5.2.0 Energy Select Sector SPDR (XLE Daily), it's oversold and right on the support.The volume looks like a capitulation to me.So the probability of rebound is quite high.
http://lh4.ggpht.com/cobrasmarketview/SL4a5_XmrcI/AAAAAAAAAu8/tCBF9MURFWc/11_thumb.png?imgmax=800
&disp=P]5.3.0 Financials Select Sector SPDR (XLF Daily).It is overbought and has rallied for five days.Note that other than the mad short squeeze after July 15th, it hasn't had a 5 up days in a row.The black candle has a very high probability of reversal.Also considered the factor of XLE, I think XLF will not be optimistic tomorrow.
http://lh5.ggpht.com/cobrasmarketview/SL4a7XGpfcI/AAAAAAAAAvE/HgnZHNH-ztM/12_thumb.png?imgmax=800
&disp=P]5.1.0 Consumer Discretionary Select Sector SPDR (XLY Daily).XLY contains home builders and retailers, recently it often leads the rally.On the chart, however, it has been rejected the third time by the 200 days moving average.The Doji today is formed at the key resistance, which is likely a reversal.
http://lh3.ggpht.com/cobrasmarketview/SL4a8XbjwvI/AAAAAAAAAvM/0-ZkOS8EKXo/13_thumb.png?imgmax=800
By the way, many candlestick patterns, such as Bearish Engulf and Doji, will be more accurate at a key resistance.Of course they have to be confirmed on the next day, which is tomorrow.
So let's see how it goes tomorrow.God Bless America!
Posted by Cobra at 10:04 PM 0 comments http://www.blogger.com/img/icon18_email.gif
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Sunday, August 31, 200808/29/2008 Market Recap: Weekly STO indicator sees a top coming
Take a look at this chart: &disp=P]0.0.5 Weekly STO and the Market Top/Bottom.Think about how the market (denoted by the green line) goes every time when STO gives a sell signal (black line cross downward red line).
http://lh6.ggpht.com/cobrasmarketview/SLr2kMZDxNI/AAAAAAAAAro/4DXt3HwrA4Q/1_thumb.png?imgmax=800
This chart says:
[*]Most likely the market is in the top area instead of bottom area.[*]Violent oscillation is one of the market top characteristics, which is also exactly what we saw recently.As indicated as green circles, we cannot rule out the possibility of seeing one or two weeks of sideway or even higher high.Some people may have many bull market patterns that the market keeps going up for two months after the weekly STO sell signal.Is it possible that the market is at the beginning or middle of two up months?
&disp=P]2.0.1 Volatility Index - NYSE (Weekly).Note that STO is at a multiple-year low.The probability of dropping even lower isn't zero but should be quite low.
http://lh6.ggpht.com/cobrasmarketview/SLr2lSYWoTI/AAAAAAAAArw/Pw9qHdJcWV8/2_thumb.png?imgmax=800
&disp=P]2.0.0 Volatility Index - NYSE (Daily).Weekly chart shows the high possibility of rising VIX, so the pattern in the following chart is very likely a Bullish Falling Wedge.
http://lh4.ggpht.com/cobrasmarketview/SLr2mpyrCiI/AAAAAAAAAr4/iyzVhZKrmpk/3_thumb.png?imgmax=800
&disp=P]2.0.2 Volatility Index 30-day/90-day Ratio.Don't forget where we are on this chart.I don't think the market has a big upside room.
http://lh3.ggpht.com/cobrasmarketview/SLr2nazvukI/AAAAAAAAAsA/QuyczWBumoE/4_thumb.png?imgmax=800
&disp=P]3.1.1 US Dollar Index (Weekly).STO is at a multiple-year new high.US dollar may consolidate at the current level or moderately pull back.
http://lh6.ggpht.com/cobrasmarketview/SLr2oqrNOnI/AAAAAAAAAsI/QzeWlYJXBfQ/5_thumb.png?imgmax=800
&disp=P]3.1.0 US Dollar Index (Daily).If you trust in the weekly char, you may agree that the Bearish Rising Wedge on the following chart isn't a wishful thinking.Take further notice at the negative divergence of all indicators.
http://lh5.ggpht.com/cobrasmarketview/SLr2poUABjI/AAAAAAAAAsQ/acCA9Ok2Wzs/6_thumb.png?imgmax=800
&disp=P]2.8.1 CBOE Options Total Put/Call Ratio.Note the yellow region, normalized CPC is still a bit low which is not good.
http://lh4.ggpht.com/cobrasmarketview/SLr2qX6wcWI/AAAAAAAAAsY/L3Q4TAf5N0g/7_thumb.png?imgmax=800
&disp=P]2.3.3 NYSE Total Volume.This is too low.The rally since July 15th is always on a decreasing volume, and I think it is bearish.
http://lh4.ggpht.com/cobrasmarketview/SLr2rXncEEI/AAAAAAAAAsg/u1HNy1bq8Do/8_thumb.png?imgmax=800
Many bulls are arguing that this year is an election year, and republicans won't let the stock market crash.This sounds like the rumored Olympic rally in Chinese market in the past.Concerning this argument, here is a paragraph of August 29th Market Message by John Murphy,
... ... September has been the weakest month of the year since 1950 with an average S&P 500 loss of -0.6. October is also a tricky month. It often starts off weak and ends strong. October has included some of the market's worst declines. The good news, however, is that October has often marked major bottoms... ...
... ... presidential election years are usually up years. Most of those gains come in the second half of the year. The last seven months have seen gains in 13 of the last 14 election years (the only exception being in 2000 when the election results were delayed). That would seem to bode well for this year ending strong. A study of presidential year patterns seems to show two distinct patterns. Several bottoms took place by mid-year (1996, 1988, 1984). Others took place during October (2004 and 1992). That doesn't help us determine whether this year's bottom is behind us or ahead of us. It does mean, however, that odds favor the market ending the year on a stronger note once it gets beyond the dangerous September/October period.
In summary, the market may very close to a mid-term top.A better scenario could be a one to two weeks of sideway and even a higher high.But don't hope too much, we cannot rule out the possibility that we have missed the top.Of course this is just my guess.Always remember that there is no mid-term sell signal on &disp=P]0.0.0 Signal Watch and Daily Highlights.In term of operation, I will do short-term counter-trend short at high, but still hold mid-term long positions which has been reduced.
What will happen next week?The market won't move on Monday, for sure.What about Tuesday?It's not very clear given some evidence from both bullish and bearish sides.I guess, SPX will drop a bit due to pullback of financials.
Bearish reasons:
&disp=P]5.3.0 Financials Select Sector SPDR (XLF Daily).This is the main reason I guess SPX will drop a bit.XLF has rallied for four days.Besides the mad rally after July 15th, this never happened before.
http://lh4.ggpht.com/cobrasmarketview/SLr2siRH9oI/AAAAAAAAAso/Rm-DLJ8cks8/9_thumb.png?imgmax=800
Take a look at the XLF 15-min chart, bearish rising wedge, MACD and RSI negative divergence.So it should pullback unless there is a really good breaking news on Tuesday causes XLF rally by 3%.
http://lh3.ggpht.com/cobrasmarketview/SLr2tdAXXWI/AAAAAAAAAsw/4EdwbgziVE0/10_thumb.png?imgmax=800
&disp=P]1.0.4 S&P 500 SPDRs (SPY 15 min).This is a typical bearish 1-2-3 format, lower low, and it means that the pullback will continue on Tuesday.
http://lh5.ggpht.com/cobrasmarketview/SLr2uD1uwxI/AAAAAAAAAs4/P3ghw0SVpiY/11_thumb.png?imgmax=800
Bullish reasons:
&disp=P]1.1.6 PowerShares QQQ Trust (QQQQ Daily).QQQQ was weak on Friday.But on the daily chart it has pulled back on to a support.The yellow region is a consolidation area and the support should be quite strong.I am not convinced that QQQQ could dive down cross such a strong support region at the first try.
http://lh3.ggpht.com/cobrasmarketview/SLr2vLO4OsI/AAAAAAAAAtA/UXlP_vqZWQY/12_thumb.png?imgmax=800
&disp=P]1.1.8 PowerShares QQQ Trust (QQQQ 60 min).Because of bullish falling wedge pattern, the 60-min chart also supports the short-term rebound argument.Of course it doesn't mean QQQQ will bounce back immediately on Tuesday.
http://lh6.ggpht.com/cobrasmarketview/SLr2vvRZt3I/AAAAAAAAAtI/bnm284EiadE/13_thumb.png?imgmax=800
&disp=P]1.3.6 Russell 2000 iShares (IWM 15 min).The pattern on IWM looks like a symmetrical triangle.It might go up.
&disp=P]3.2.0 Japanese Yen (Daily).It is testing the important resistance again.The black candle is rather bearish but this is bullish to the stock market.Note that the Japanese Yen is probably forming an Ascending Triangle, and finally break out the resistance and go up.This is consistent with judgement that the US dollar may consolidate or pull back.
http://lh6.ggpht.com/cobrasmarketview/SLr2wpQx4iI/AAAAAAAAAtQ/7EpzDPQ7x8c/14_thumb.png?imgmax=800
Concerning this chart, whether the TA is accurate or my feeling is more reliable: &disp=P]5.2.3 Energy Select Sector SPDR (XLE 60 min).It surprised me that MACD and RSI negative divergence, and XLE will drop further.
If XLE drops, Canadian market will likely pull back.
&disp=P]1.4.4 TSE McClellan Oscillator.This is the main reason I think the Canadian market will pull back.The black line is too high.
http://lh3.ggpht.com/cobrasmarketview/SLr2xSOjlQI/AAAAAAAAAtY/iOrOyrHcMc8/15_thumb.png?imgmax=800
&disp=P]1.4.0 S&P/TSX Composite Index (Daily), overbought, bearish rising wedge.
http://lh5.ggpht.com/cobrasmarketview/SLr2yqzIo4I/AAAAAAAAAtg/F45SmzGWKTY/16_thumb.png?imgmax=800
&disp=P]1.4.3 S&P/TSX Composite Index (15 min).MACD and RSI show negative divergence.By the way, this negative is quite impressive.
Posted by Cobra at 12:53 PM 5 comments http://www.blogger.com/img/icon18_email.gif
Thursday, August 28, 200808/28/2008 Market Recap: Very Close to Overbought
&disp=P]0.0.1 Simple SPY Trading System has no material change today.The mid-term direction is still undetermined because of no higher high, so we have to wait and see tomorrow's market.Now bulls are facing an improved situation as the frontline has been pushed to the upper range, and it will be bears' turn to defend itself.
http://lh5.ggpht.com/cobrasmarketview/SLd_7Ow5g9I/AAAAAAAAAqo/zJXRi5lvtS0/1_thumb.png?imgmax=800
&disp=P]0.0.0 Signal Watch and Daily Highlights.Take a look at the summary of all signals.Mid-term signals are all green, but there are several new orange warning signals which mean near-term overbought, that's it.You may like to pay more attention to this chart, which clearly and briefly show the mid-term and short-term situations.For new traders, you just follow the mid-term signal and disregard the up and down everyday.For fast hands, you may do counter-trend trades according to occasional warning signals, which of course is riskier.
http://lh6.ggpht.com/cobrasmarketview/SLd_8ObOuPI/AAAAAAAAAqw/Ht0zDvw1xN4/2_thumb.png?imgmax=800
In the short-term, we have a few reliable breadth indicators are overbought or close to overbought.So if the market rises tomorrow, I believe the short trades will have a high probability of success -- unless we are in a Final Climax Run which has been talked for a long time.
&disp=P]2.2.1 NYSE McClellan Oscillator.It is a bit too high.
http://lh3.ggpht.com/cobrasmarketview/SLd_9pJlF3I/AAAAAAAAAq4/aQYQWhvEc30/3_thumb.png?imgmax=800
&disp=P]2.4.2 NYSE - Issues Advancing.It is a bit too high as well.
http://lh6.ggpht.com/cobrasmarketview/SLd__B4OrjI/AAAAAAAAArA/ceAhBMdfuSY/4_thumb.png?imgmax=800
&disp=P]2.8.1 CBOE Options Total Put/Call Ratio.This is over bullish.
http://lh6.ggpht.com/cobrasmarketview/SLeABAzCtbI/AAAAAAAAArI/wYvV_ORUMzo/5_thumb.png?imgmax=800
&disp=P]1.0.3 S&P 500 SPDRs (SPY 60 min), &disp=P]1.2.3 Diamonds (DIA 60 min), RSI overbought.Of course, RSI sometimes can stay as overbought for very long.However, this doesn't happened recently according to the chart even during the mad rally after July 15th.Therefore in term of probability, the market is due for a pullback tomorrow.
http://lh4.ggpht.com/cobrasmarketview/SLeACWpnV_I/AAAAAAAAArQ/bEKLzuAJkl8/6_thumb.png?imgmax=800
&disp=P]1.0.4 S&P 500 SPDRs (SPY 15 min), &disp=P]1.1.A PowerShares QQQ Trust (QQQQ 15 min), &disp=P]1.2.7 Diamonds (DIA 15 min).You may notice that the second day pullback has been accurately predicted by the negative divergence of MACD and RSI on the 15-min chart.As a result, tomorrow the market will likely pull back.
http://lh6.ggpht.com/cobrasmarketview/SLeADjNETVI/AAAAAAAAArY/Sm8uwTKchGo/7_thumb.png?imgmax=800
&disp=P]1.4.3 S&P/TSX Composite Index (15 min).MACD and RSI show negative divergence on the Canada market.The prediction yesterday is inaccurate.Tomorrow it might pull back.
&disp=P]3.0.3 20 Year Treasury Bond Fund iShares (TLT Daily).STO is overbought and TLT is due for a pullback.Take notice that Bond is not always anti-correlated with the stock market (denoted by SPX).Therefore it is normal that Bond went up today with the rising of the stock market.
http://lh3.ggpht.com/cobrasmarketview/SLeAEwEwRGI/AAAAAAAAArg/DxRbbABsWDU/8_thumb.png?imgmax=800
&disp=P]2.0.0 Volatility Index - NYSE (Daily).VIX didn't go down much.Just for your information.
Posted by Cobra at 9:50 PM 0 comments http://www.blogger.com/img/icon18_email.gif
Wednesday, August 27, 200808/27/2008 Market Recap: No Direction
The only useful conclusion today is: there are a few bearish signals but they are not deterministic.If the market does not correct these signals but rises further, it will be a good chance to short.
&disp=P]2.3.3 NYSE Total Volume.It went down further and looks very bearish.Some people may claim this is connected with the labor day long weekend, but it wasn't like this in the end of last August on the chart.
http://lh5.ggpht.com/cobrasmarketview/SLYxxqD81QI/AAAAAAAAApg/sUzEQstfWMQ/1_thumb.png?imgmax=800
&disp=P]2.3.4 Nasdaq Total Volume/NYSE Total Volume.It is a bit too high and won't look good if QQQQ rises tomorrow.
http://lh4.ggpht.com/cobrasmarketview/SLYxykFb35I/AAAAAAAAApo/Z5HkoEP7dFY/2_thumb.png?imgmax=800
&disp=P]2.8.1 CBOE Options Total Put/Call Ratio.It is merely 0.82 which is too bullish.If CPC dives down tomorrow, the situation will not be good.
http://lh4.ggpht.com/cobrasmarketview/SLYxze5EYiI/AAAAAAAAApw/dOR6-zSMgkU/3_thumb.png?imgmax=800
By the way, recently the momentum has been quite weak, and the breadth indicators often give bearish warnings.On the other hand, it is interesting that no mid-term sell signal ever shows up on &disp=P]0.0.0 Signal Watch and Daily Highlights.Take a look at the following chart, it is green, isn't it?
http://lh5.ggpht.com/cobrasmarketview/SLYx0AKKzZI/AAAAAAAAAp4/QRJftdjsM9k/4_thumb.png?imgmax=800
In addition, &disp=P]2.3.0 NYSE High-Low Index is too close to the oversold region.Consequently the downside space is limited even the market violently sells off from now on.
http://lh4.ggpht.com/cobrasmarketview/SLYx06AuRWI/AAAAAAAAAqA/eqIsjMAc084/5_thumb.png?imgmax=800
Therefore, at the moment I am not sure whether the market will go up or down in the mid-term, most likely SPX will oscillate between 1260 and 1290 until a breaking event happens.
As aforementioned, the market would better to correct a bit in order to be bullish in the mid-term.Will it go up or down tomorrow?There is no deterministic signal, although I incline to up first and then down.
Here is the reason why the market may go down eventually tomorrow.Note the volume pattern, if the volume doesn't keep up during the second day's rally, the third day may likely be a down day.
http://lh4.ggpht.com/cobrasmarketview/SLYx1n7vcdI/AAAAAAAAAqI/cUUBxpfTEbA/6_thumb.png?imgmax=800
&disp=P]1.0.4 S&P 500 SPDRs (SPY 15 min), &disp=P]1.1.A PowerShares QQQ Trust (QQQQ 15 min), &disp=P]1.2.7 Diamonds (DIA 15 min).These 15-min charts show why the market pulled back several times.The pattern on last Friday looks like an Island Reversal and the gap should be a resistance.However, MACD and RSI don't show negative divergence so the market could go up in the morning and probably will break today's high, such that MACD and RSI will show negative divergence and finally the market will roll over.
http://lh3.ggpht.com/cobrasmarketview/SLYx2aNrMEI/AAAAAAAAAqQ/RZ_AvEcnHZ8/7_thumb.png?imgmax=800
&disp=P]1.4.3 S&P/TSX Composite Index (15 min).In order to have a better understanding of negative divergence of MACD and RSI, let's take a look at the Canada market.On the chart, MACD and RSI have formed negative divergence, so the probability of selling-off tomorrow is high.You may also take a look at &disp=P]3.3.0 streetTRACKS Gold Trust Shares (GLD Daily) and &disp=P]3.4.1 United States Oil Fund, LP (USO Daily).A black candle, which often means reversal, shows up on the daily charts of gold and oil.This isn't a good news to TSX which is heavily influenced by gold and oil.In plain English, tomorrow TSX may fall.
http://lh6.ggpht.com/cobrasmarketview/SLYx3GCTcdI/AAAAAAAAAqY/b2pFPSEqcJ0/8_thumb.png?imgmax=800
&disp=P]1.4.4 TSE McClellan Oscillator.This chart has improved significantly.Note that the black candles in the middle is rising finally.At the same time, the golden candles (refers to new 52 weeks low) at the background of black candles are falling continuously, which is also a good sign.TSX market is gaining strength.
http://lh5.ggpht.com/cobrasmarketview/SLYx4LdmskI/AAAAAAAAAqg/FG5b_q80OcY/9_thumb.png?imgmax=800
Posted by Cobra at 10:04 PM 2 comments http://www.blogger.com/img/icon18_email.gif
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Tuesday, August 26, 200808/26/2008 Market Recap: Support held, bulls still have chances
There is no significant signal today, so here is a short report.
&disp=P]0.0.1 Simple SPY Trading System.Small candle after a big candle is a typical consolidation, but the breakout direction is unknown.On the chart, bulls are on the edge of cliff.If the market breaks out downward it will be quite bad.So keep an eye on the support at 126.50, which has to hold.The trading rule of consolidation is on the chart &disp=P]8.1.0 Small Body Bar Trading Rule.
http://lh6.ggpht.com/cobrasmarketview/SLTWg8ImolI/AAAAAAAAApI/b9y7fpbIIpo/1_thumb.png?imgmax=800
Will the support hold tomorrow?I guess yes.
&disp=P]1.0.4 S&P 500 SPDRs (SPY 15 min), &disp=P]1.1.A PowerShares QQQ Trust (QQQQ 15 min), &disp=P]1.2.7 Diamonds (DIA 15 min), &disp=P]1.3.6 Russell 2000 iShares (IWM 15 min).On 15-min charts of all major indices there is a common pattern: MACD and RSI positive divergence.Do you remember that the rebound of market in the morning was predicted according to this pattern yesterday?The consolidation today has made the positive divergence more significant.You can take a look what happened after similar kind of positive divergence.Furthermore, the yellow region is quite encouraging because it should provide good support because of heavy trading volume.
http://lh4.ggpht.com/cobrasmarketview/SLTWh7cg37I/AAAAAAAAApQ/WyCDJUCgP0o/2_thumb.png?imgmax=800
&disp=P]2.3.0 NYSE High-Low Index.In case the support doesn't hold tomorrow, this indicator is very close to the oversold region.Note that every time the black line reaches the oversold region marked by the green horizontal line, the pale green line denoted the market will bounce back in the near term, no exception so far.Therefore, even if the support breaks, it won't be terrible since the market may bounce back in the near term.On the other hand, by no means I suggest not to cut loss once the support is broken but only doubt the magnitude of selling-off after the broken support.
http://lh3.ggpht.com/cobrasmarketview/SLTWiqzQe8I/AAAAAAAAApY/gCV_yKA2cbM/3_thumb.png?imgmax=800
Posted by Cobra at 9:22 PM 0 comments http://www.blogger.com/img/icon18_email.gif
Monday, August 25, 200808/25/2008 Market Recap: Support Still Holds
In the weekend report, I said that it would be a good chance to short if today the market went up, on the other hand if the market went down we would see if the support still hold, and the uptrend would be still intact if the support hold.
&disp=P]0.0.1 Simple SPY Trading System, support hasn't been touched yet.So it is unconfirmed if this is a another leg down before tomorrow's market close.
http://lh5.ggpht.com/cobrasmarketview/SLNqB9sKCRI/AAAAAAAAAoo/z5HW8SzyEAw/1_thumb%5B1%5D.png
Will the support break tomorrow?Maybe, maybe not, at least in the morning the market may bounce back according to the chart.
&disp=P]1.0.4 S&P 500 SPDRs (SPY 15 min). In the yellow region it's a 3-day consolidation which provides a good support, at the same time MACD and RSI show positive divergence which means the downward momentum is not strong enough, so tomorrow morning the market may bounce back. &disp=P]1.1.A PowerShares QQQ Trust (QQQQ 15 min), &disp=P]1.2.7 Diamonds (DIA 15 min), on these two charts MACD and RSI show positive divergence as well.&disp=P]1.3.2 Russell 2000 iShares (IWM 60 min) On the Russel 2000 60-min chart MACD and RSI show positive divergence.
http://lh6.ggpht.com/cobrasmarketview/SLNqQ5oHxzI/AAAAAAAAAow/tkz7S_UNmW0/2_thumb.png
&disp=P]1.1.C TRINQ Trading Setup.This time its prediction is correct, so let's use it one more time.Today TRINQ is almost 3.0, so tomorrow the market should bounce back.
http://lh6.ggpht.com/cobrasmarketview/SLNqRvZEeGI/AAAAAAAAAo4/3l-vPzGY_dk/3_thumb.png
&disp=P]3.0.3 20 Year Treasury Bond Fund iShares (TLT Daily), breakout, but such a gap up Doji looks exhausted.Furthermore, a black candle has a high chance of reversal.Therefore tomorrow TLT may pullback which is bullish to the stock market.
http://lh4.ggpht.com/cobrasmarketview/SLNqSH2AiII/AAAAAAAAApA/YEdMPGNNH5E/4_thumb.png
As a summary, tomorrow bulls may see some hope.
Posted by Cobra at 7:30 PM 0 comments http://www.blogger.com/img/icon18_email.gif
Sunday, August 24, 200808/22/2008 Market Recap: Two potential topping signals
Firstly here is the conclusion: next week the market may start another ledge down to test the July 15 low. If the market rallies on Monday and Tuesday, do not chase high. If it pulls back on Monday and Tuesday, check the trend strength according to the following chart -- if support denoted by the red line still holds during the three days of pullback, maybe the uptrend is ok and buying dip is fine.
http://lh5.ggpht.com/cobrasmarketview/SLGVjVjuZrI/AAAAAAAAAm8/dBAQiQeK2G0/1_thumb.png?imgmax=800
I have concern to two indicators, which positions are certainly bearish to bulls and at least means the upside room is limited.
&disp=P]2.0.2 Volatility Index 30-day/90-day Ratio. The way to read this chart has been introduced in How to Read Breadth Charts in Cobra's Market View. Some may say the reliability of this chart is not high because of its short history. However, think about the 90-day expected volatility is much higher than the current volatility, it means the mid-term trend is upward, doesn't it?
http://lh3.ggpht.com/cobrasmarketview/SLGVkCchIoI/AAAAAAAAAnE/-PAx9x1Tjbo/2_thumb.png?imgmax=800
&disp=P]2.3.3 NYSE Total Volume. Some people may have different opinions on this chart. But we have to admit that the market is going in a similar way with the one in this May -- prices going up and volume going down, which means the institutions are not heavily involving and the current rally is not a broad based one. If this situation goes not change, the rally will not be sustainable.
http://lh4.ggpht.com/cobrasmarketview/SLGVlNCaamI/AAAAAAAAAnM/jbAP3eOccHk/3_thumb.png?imgmax=800
Now let's read the weekly chart.
&disp=P]1.0.1 S&P 500 Large Cap Index (Weekly), &disp=P]1.2.1 Dow Jones Industrial Average (Weekly). Very likely the pattern is a Bearish Rising Wedge.
http://lh3.ggpht.com/cobrasmarketview/SLGVl9smObI/AAAAAAAAAnU/4ay6zVexjiE/4_thumb.png?imgmax=800
&disp=P]1.1.2 Nasdaq Composite (Weekly). It has been blocked by the primary downtrend line for two weeks. My feeling is bearish because of the fact that a Hanging Man like candle shows up at the key resistance. The RSI indicator at the top of the chart looks like a pivot point in a bear market.
http://lh4.ggpht.com/cobrasmarketview/SLGVmoA8wII/AAAAAAAAAnc/Cns6shHJq-s/5_thumb.png?imgmax=800
&disp=P]3.1.1 US Dollar Index (Weekly). US dollar has been pushing up the stock market, now it is facing the resistance on STO.
http://lh4.ggpht.com/cobrasmarketview/SLGVnaGN7eI/AAAAAAAAAno/6DXL8B6M6nc/6_thumb.png?imgmax=800
&disp=P]3.2.1 Japanese Yen (Weekly). Japanese Yen is the opposite as it is on the STO support. The combination of weak 3.1.1 and strong 3.2.1 seems bearish to the stock market.
http://lh6.ggpht.com/cobrasmarketview/SLGVoewzWSI/AAAAAAAAAnw/Y_E7XlA183g/7_thumb.png?imgmax=800
&disp=P]3.4.2 United States Oil Fund, LP (USO Weekly). The oil is on the support of STO.
http://lh5.ggpht.com/cobrasmarketview/SLGVpLDfsvI/AAAAAAAAAn4/ORSBqym6phw/8_thumb.png?imgmax=800
&disp=P]3.3.1 streetTRACKS Gold Trust Shares (GLD Weekly). Similarly, GLD is on the STO support, too. The means the commodity may bounce back which is bearish to the stock market.
http://lh5.ggpht.com/cobrasmarketview/SLGVpwt07fI/AAAAAAAAAoA/Ulitr50aVfQ/9_thumb.png?imgmax=800
According to aforementioned analysis, the mid-term trend is bearish.
What about the near-term trend, e.g. the next week? I am not sure if there will be a pivot point. On the daily chart, SPX and INDU may start pullback on Monday, on the other hand QQQQ and IWM may continue higher.
&disp=P]1.3.7 Russell 3000 Dominant Price-Volume Relationships. The dominant price-volume relationship is 1348 stocks price up volume down, so the chance of market down on Monday or Tuesday is very high.
&disp=P]0.0.1 Simple SPY Trading System. Price went up for three days but volume kept going down. For this pattern, on the fourth day which is the next Monday, the probability of down is high. Note the VIX ENV, &disp=P]SPY on 15-min chart may be a Ascending Triangle so it might break upward but this would cause VIX breaks ENV. On &disp=P]0.0.2 Market Top/Bottom Watch, every time VIX break ENV downward the market is potentially topped. Therefore if the market rallies next Monday, I will consider it a good opportunity to short.
http://lh4.ggpht.com/cobrasmarketview/SLGVquv86fI/AAAAAAAAAoI/Etb4nkedOp4/10_thumb.png?imgmax=800
&disp=P]1.0.3 S&P 500 SPDRs (SPY 60 min), &disp=P]1.2.3 Diamonds (DIA 60 min). On the charts, the Friday rally looks like a typical testing back the breakout point after a breakout of the rising wedge.
http://lh6.ggpht.com/cobrasmarketview/SLGVrhiG9aI/AAAAAAAAAoQ/aytofFBSsBE/11_thumb.png?imgmax=800
&disp=P]1.0.4 S&P 500 SPDRs (SPY 15 min), &disp=P]1.2.7 Diamonds (DIA 15 min). The patterns look like a Ascending Triangle but MACD and RSI shows a bit of negative divergence. Considered that the breakout of ascending triangle is dual directional, likely this time it will breakout downward. I am saying it is impossible to break out upward, however shorter time frame will be overridden by longer time frame if the latter (e.g. the daily chart) is bearish. I wish it could break out upward -- because that would be a perfect short entry since the big trend is down and upward breakout means four days of rally.
http://lh3.ggpht.com/cobrasmarketview/SLGVsQVYXjI/AAAAAAAAAoY/MiclKKWaS1g/12_thumb.png?imgmax=800
&disp=P]1.1.6 PowerShares QQQ Trust (QQQQ Daily), &disp=P]1.3.0 Russell 2000 iShares (IWM Daily). Morning Star, so the probability of further rally is very high.
http://lh6.ggpht.com/cobrasmarketview/SLGVtRi7wzI/AAAAAAAAAog/OTezJxLsGiw/13_thumb.png?imgmax=800
&disp=P]1.1.C TRINQ Trading Setup. This chart says QQQQ may pull back on Monday. My statistics shows that the edge of TRINQ setup is marginal. If the chart is inaccurate again on Monday, the success rate is merely 61% and the edge is indeed small. Then I will drop it. Let's give this chart one more chance.
Posted by Cobra at 10:09 AM 1 comments http://www.blogger.com/img/icon18_email.gif
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Saturday, August 23, 2008How to Read Breadth Charts in Cobra's Market View
Some readers may not be familiar with the breadth charts (denoted by 2.x.x) in my Stockcharts public chartbook.Here is a brief introduction.
All breadth charts use the follow convention consistently:
Black line at the foreground denotes the signal itself, while the pale green line at the background denotes the market.Usually red horizontal line means the green line will likely reverse and go down once the black line reaches this level, green horizontal line means green line will likely reverse and go up once the black line reaches here.In this way, you don't really need to know much about the technical detail of the breadth chart, andjust pay attention to how far away the black line is from the green/red horizontal lines.The pale green line at the background is for the reference and to convince you that the relative position of the black line between red and green lines does influence the market (pale green line at the background).
Take &disp=P]2.0.2 Volatility Index 30-day/90-day Ratio for example.For your convenience, I put a few red and green vertical dashed lines on the chart.Note that every time the black line touches the green line, the pale green line (denotes the market) at the background at the position of green vertical dashed line is usually at the bottom.So is the case for the black line touch touching the red line.Now take a look at the position of the black line, is it fairly close to the red horizontal line which marks the market top? It means the market is approaching the top, doesn't it?
http://lh5.ggpht.com/cobrasmarketview/SLDVKZV3VaI/AAAAAAAAAmc/0kaTKSjmBDw/1_thumb.png?imgmax=800
After reading the above explanation, take a look at &disp=P]3.2.4 Yen RSI and the Market Bottom, you got it, right?
http://lh3.ggpht.com/cobrasmarketview/SLDVKxAPg-I/AAAAAAAAAmk/pVa5oPCrqlI/2_thumb.png?imgmax=800
&disp=P]2.3.0 NYSE High-Low Index follows the same convention.
http://lh5.ggpht.com/cobrasmarketview/SLDVLg8GsRI/AAAAAAAAAms/sIB0sABBP9E/3_thumb.png?imgmax=800
So is the &disp=P]2.7.0 NYSE % of Stocks Above 50 Day MA (Daily).
http://lh3.ggpht.com/cobrasmarketview/SLDVMq3oWAI/AAAAAAAAAm0/sVVS3mgFKhQ/4_thumb.png?imgmax=800
Posted by Cobra at 8:27 PM 0 comments http://www.blogger.com/img/icon18_email.gif
Thursday, August 21, 200808/21/2008 Market Recap: A Possible Bear Flag
&disp=P]0.0.1 Simple SPY Trading System, today's rally is very weak, since the two days of rally hasn't claimed a half of loss, up on decreased volume. The chart pattern looks like a Bear Flag, very bearish.
http://lh3.ggpht.com/cobrasmarketview/SK5Lo5IlE0I/AAAAAAAAAk4/VRp-ATnhqgg/1_thumb.png?imgmax=800
&disp=P]1.0.4 S&P 500 SPDRs (SPY 15 min), Bearish Rising Wedge on the 15-min chart, and the price peak today is right at Fib 50, at where the retracement usually stops. So I feel very bearish.
http://lh4.ggpht.com/cobrasmarketview/SK5LpsKfpiI/AAAAAAAAAlA/_VU4crvjWbg/2_thumb.png?imgmax=800
On the other hand, I had expected that INDU might plunge for two or three hundred points based on the huge rally of both Japanese Yen and crude oil. Eventually the market went up. Maybe tomorrow we still have a little bit of hope.
&disp=P]3.2.0 Japanese Yen (Daily). Look at how big the rally of Yen is, what an amazing gap up! The good news is that it hits a strong resistance, and might pull back tomorrow.
http://lh4.ggpht.com/cobrasmarketview/SK5LqhBvI3I/AAAAAAAAAlI/Kz0m0KfMn1A/3_thumb.png?imgmax=800
&disp=P]3.4.1 United States Oil Fund, LP (USO Daily). USO also gapped up dramatically, and it also hits a strong resistance and it's overbought at the moment. Hopefully it could pull back tomorrow.
http://lh4.ggpht.com/cobrasmarketview/SK5Lr_--CiI/AAAAAAAAAlQ/keN1yqdvVu8/4_thumb.png?imgmax=800
Does the rally of SPX have any connection with the strong Energy sector? The following chart shows that the pulling-up during the trading hours was not caused by the Energy sector. Probably SPX could continue its rally tomorrow. On the other hand, even in case it rallies, the pattern will be still a Bear Flag if it closes at a small candlestick, and finally the trend will be down anyway. Therefore at least close part of your long position.
http://lh6.ggpht.com/cobrasmarketview/SK5LskFhtrI/AAAAAAAAAlY/yq2UyHy4A38/5_thumb.png?imgmax=800
QQQQ has a higher chance of rebound tomorrow. These two days the candles have a high probability of reversal.
http://lh3.ggpht.com/cobrasmarketview/SK5LtSL7xqI/AAAAAAAAAlg/F6C63t7TICg/6_thumb.png?imgmax=800
&disp=P]1.1.A PowerShares QQQ Trust (QQQQ 15 min), MACD and RSI show positive divergence.
http://lh3.ggpht.com/cobrasmarketview/SK5LuAWsY6I/AAAAAAAAAlo/bAio_2oTTNA/7_thumb.png?imgmax=800
&disp=P]1.1.4 Semiconductor Holders (SMH Daily), oversold, and STO is at the lowest level ever, which will help QQQQ to bounce back.
http://lh4.ggpht.com/cobrasmarketview/SK5LvnTfYXI/AAAAAAAAAlw/oiImgLqzVUI/8_thumb.png?imgmax=800
&disp=P]1.3.0 Russell 2000 iShares (IWM Daily). IWM also has a chance of rebound since the STO is on the support. &disp=P]1.3.6 Russell 2000 iShares (IWM 15 min), MACD and RSI show positive divergence as well.
http://lh6.ggpht.com/cobrasmarketview/SK5Lw19wKXI/AAAAAAAAAl4/bcT9RdiMIX8/9_thumb.png?imgmax=800
&disp=P]2.3.0 NYSE High-Low Index. It is still very close to the oversold region which gives a bit of hope to bulls. However note that during the beginning of July, this indicator was staying in the oversold region while the market didn't bounce back significantly. I guess this time won't be an exception.
http://lh5.ggpht.com/cobrasmarketview/SK5Lx8kP1NI/AAAAAAAAAmA/x5oJAV7kUMo/10_thumb.png?imgmax=800
&disp=P]2.3.3 NYSE Total Volume. Note the red circle at the bottom of the chart. This chart looks very bearish, what we can hope is merely a small rebound.
http://lh3.ggpht.com/cobrasmarketview/SK5LyvOuRWI/AAAAAAAAAmM/9IrHMJdYxtw/11_thumb.png?imgmax=800
&disp=P]2.0.2 Volatility Index 30-day/90-day Ratio, Market is doomed. Even if we get a big rally, this chart shows that the upside room of the market is limited. I am even thinking why we are waiting for a rally? It seems a winning trade just short from here based on this chart.
http://lh3.ggpht.com/cobrasmarketview/SK5LzK5AY_I/AAAAAAAAAmU/QUZlhfnKHyE/12_thumb.png?imgmax=800
Conclusion: the market leaves a little bit of hope to bulls. Based on the breadth indicators, what we can hope at the moment is nothing more than a rebound.
Posted by Cobra at 10:17 PM 1 comments http://www.blogger.com/img/icon18_email.gif
Wednesday, August 20, 200808/20/2008 Market Recap: No Title
Support on major indices holds well today.&disp=P]2.8.0 CBOE Options Equity Put/Call Ratio mentioned yesterday is not confirmed.By the way, you may refer to &disp=P]0.0.0 Signal Watch and Daily Highlights for the up-to-date signals and status of markets any time, and I also put a short summary on the chart.
http://lh4.ggpht.com/cobrasmarketview/SKzn0VdqE8I/AAAAAAAAAjw/v95ERPu92tY/1_thumb.png?imgmax=800
Based on the trend strength analysis by looking at two days up two days down, tomorrow the market has to go up significantly to fix the damage caused by recent selling-off.The candle today is similar to the one yesterday, and it is considered as consolidation.Therefore if the consolidation region is broken downward tomorrow, the situation will be very bearish because it means the downtrend momentum is very strong.Under this situation the short-term oversold signals usually don't work, so you may short no matter how oversold the indicators are.Just remember that this is a theoretical strategy but not a trading advice.
http://lh3.ggpht.com/cobrasmarketview/SKzn0wpr3qI/AAAAAAAAAj4/B15D0-dJt2w/2_thumb.png?imgmax=800
&disp=P]2.0.2 Volatility Index 30-day/90-day Ratio.If the market indeed goes up dramatically, keep an eye on this chart.If VIX plunges heavily, the chart may give a market top signal.The history of this chart isn't very long, but so far the market top and bottom signals are all correct.Therefore we should not overlook it.
http://lh4.ggpht.com/cobrasmarketview/SKzn1iRtFiI/AAAAAAAAAkA/uFdVNr_M5jM/3_thumb.png?imgmax=800
&disp=P]2.3.0 NYSE High-Low Index.If the market plunges tomorrow, don't to be too nervous.Since this chart is very close to the oversold region, I think we can still look forward a rebound in the near term.
http://lh5.ggpht.com/cobrasmarketview/SKzn2ctzd3I/AAAAAAAAAkI/3G9ZaHNSC74/4_thumb.png?imgmax=800
The summary is... no conclusion :-) How Mr Market solves the aforementioned issues is an open question at the time being, let's go and see.According to my climax run theory, I guess the market may rally for a few days at a slow and moderate pace, then go above 1320 to squeeze the bears and trap some small bulls.At the same time, VIX:VXN gives a sell signal, then the market goes south.Well, remember this is just a guess.
&disp=P]1.1.6 PowerShares QQQ Trust (QQQQ Daily), &disp=P]1.3.0 Russell 2000 iShares (IWM Daily).Black candle again, high probablity of reversal.Note that QQQQ daily chart shows a double gold at the bottom, which can be considered as a mid-term sell signal.By the way this double gold also shows up on &disp=P]1.0.0 S&P 500 Large Cap Index (Daily).
http://lh3.ggpht.com/cobrasmarketview/SKzn3fvlofI/AAAAAAAAAkQ/iFP9CQCYDPg/5_thumb.png?imgmax=800
&disp=P]1.1.A PowerShares QQQ Trust (QQQQ 15 min), &disp=P]1.3.6 Russell 2000 iShares (IWM 15 min).MACD and RSI show positive divergence, which means a high probability of rebound.
http://lh6.ggpht.com/cobrasmarketview/SKzn4Of16lI/AAAAAAAAAkY/oPz4kAS6hC4/6_thumb.png?imgmax=800
&disp=P]3.0.3 20 Year Treasury Bond Fund iShares (TLT Daily).The resistance has been tested for three days, and today it closed as a Doji, additionally STO is still in the overbought region, therefore I believe the bond may go down which is bullish to the stock market.
http://lh3.ggpht.com/cobrasmarketview/SKzn5VJFW_I/AAAAAAAAAkg/n4-wogcJPNM/7_thumb.png?imgmax=800
&disp=P]5.0.1 Select Sector SPDRs, support holds, good.I have told the pattern yesterday -- it may go up for two days.Let's see if it does or not.
http://lh3.ggpht.com/cobrasmarketview/SKzn6TIhe0I/AAAAAAAAAko/NhdylDIHHh8/8_thumb.png?imgmax=800
Conclusion is, tomorrow the rebound may continue.
&disp=P]1.4.0 S&P/TSX Composite Index (Daily).Canada market seems pretty bullish, Evening Star, moreover MACD and RSI show positive divergence.The chance of going up is big.However I have not figured out how Canada market could go up if US market goes down?The only explanation is the oil will likely soar.Of course another possibility is US market might keep bullish for a few more days.
http://lh4.ggpht.com/cobrasmarketview/SKzn7deO2FI/AAAAAAAAAkw/2ixiiq4KrkU/9_thumb.png?imgmax=800
Posted by Cobra at 8:58 PM 2 comments http://www.blogger.com/img/icon18_email.gif
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Tuesday, August 19, 200808/19/2008 Market Recap: Uptrend is in jeopardy
Today we got several mid-term sell signals, and they will be confirmed if tomorrow the selling off continues.Therefore the market is better to go up, and ought to go up dramatically.
Take a look at the Damage first, just to realize how serious the problem is.
On the following chart, 4 candles in the green circle are 2 days up 2 days down, at the end the two down days didn't claim all the gain during the two up days.This means the upward momentum was stronger than the downward momentum, good.Look at the blue circle, two up days could no longer cover the loss during the two down days, which means the upward momentum was weakened, warning.Let's look at the red circle, the recent two days down is much more violent than the two days up, thus the trend weakening is confirmed, and probably means the trend reversal, bad.Now we would like to see if the market can bounce back for two days, and if the rally can fully cover the loss.
http://lh3.ggpht.com/cobrasmarketview/SKurONcPh6I/AAAAAAAAAiQ/b_7sbh5-jYU/1_thumb.png?imgmax=800
&disp=P]0.0.1 Simple SPY Trading System, the Rising Wedge is broken, however the first fence is still there so far.On the other hand, INDU on &disp=P]0.0.3 INDU leads the Market has broken the first fence.If you believe that INDU leads the market, very likely SPX and COMPQ will follow.
http://lh3.ggpht.com/cobrasmarketview/SKurO5akKsI/AAAAAAAAAiY/HZcOBqsJkDY/2_thumb.png?imgmax=800
&disp=P]1.0.6 S&P 500 Bullish Percent Index, BPSPX sell signal.This needs the confirmation from BPINDU and BPCOMPQ though.So tomorrow is critical.
http://lh6.ggpht.com/cobrasmarketview/SKurPkzA_CI/AAAAAAAAAig/GyrpkPZoVl4/3_thumb.png?imgmax=800
&disp=P]2.2.1 NYSE McClellan Oscillator, sell signal.If it keeps below zero, our principal mid-term indicator, &disp=P]2.2.0 NYSE McClellan Chart, will give a sell signal.
http://lh5.ggpht.com/cobrasmarketview/SKurQjqnBQI/AAAAAAAAAio/BYhT5T_F3dM/4_thumb.png?imgmax=800
&disp=P]2.8.0 CBOE Options Equity Put/Call Ratio, downtrend line is broken.Well, you can draw another line, but if tomorrow it goes up further this will be confirmed.
http://lh5.ggpht.com/cobrasmarketview/SKurRatchMI/AAAAAAAAAiw/rZy0moA41Gk/5_thumb.png?imgmax=800
As a summary, the situation is not so good.Unless we get a super big green candle and cover the loss during the past two days, you'd better sell highs instead of buying dip.
Will the market bounce back tomorrow?
The answer is maybe.
&disp=P]2.0.0 Volatility Index - NYSE (Daily), black candle.In the history shown on the chart, the probability of reversal is quite high.It is well know that VIX is a contrarian indicator, if it plunges the market will probably soar.
http://lh4.ggpht.com/cobrasmarketview/SKurSbw3peI/AAAAAAAAAi4/MduswjL-qaE/6_thumb.png?imgmax=800
&disp=P]2.3.0 NYSE High-Low Index, it is very close to oversold.If it goes down tomorrow it may be indeed oversold, and then the probability of rebound on the day after tomorrow will be high.
http://lh3.ggpht.com/cobrasmarketview/SKurTKaLU6I/AAAAAAAAAjA/ZxhdvN7D-kM/7_thumb.png?imgmax=800
&disp=P]1.1.6 PowerShares QQQ Trust (QQQQ Daily), this has a high probability of rebound.It has three down days in a row, while three consecutive down days almost never happened since June.Also note that the volume has kept increasing during the past three days.Price down on increasing volume often means oversold, so it has a good chance of rebound tomorrow.&disp=P]1.3.0 Russell 2000 iShares (IWM Daily) is similar.
http://lh4.ggpht.com/cobrasmarketview/SKurUSB7vNI/AAAAAAAAAjI/KlEr6cGMyNY/9_thumb.png?imgmax=800
&disp=P]1.1.A PowerShares QQQ Trust (QQQQ 15 min), &disp=P]1.3.6 Russell 2000 iShares (IWM 15 min).On the 15-min charts, MACD and RSI show obvious positive divergence.So they have a chance of rebound.
http://lh4.ggpht.com/cobrasmarketview/SKurU0R9oGI/AAAAAAAAAjQ/0i7aIoaoT6Q/10_thumb.png?imgmax=800
&disp=P]1.1.4 Semiconductor Holders (SMH Daily), semi is oversold.If it bounces back, QQQQ will be more likely to do the same.
&disp=P]1.0.3 S&P 500 SPDRs (SPY 60 min), &disp=P]1.2.3 Diamonds (DIA 60 min), RSI is oversold.Take a look at what happened while RSI was oversold like this previously.
http://lh3.ggpht.com/cobrasmarketview/SKurVlON4XI/AAAAAAAAAjY/l7gPiR3-vog/11_thumb.png?imgmax=800
&disp=P]1.0.4 S&P 500 SPDRs (SPY 15 min), it looks a double bottom, and the target is 128.
http://lh3.ggpht.com/cobrasmarketview/SKurWWuiC4I/AAAAAAAAAjg/9iumETRS1uU/12_thumb.png?imgmax=800
&disp=P]5.0.1 Select Sector SPDRs,the Financial sector XLF, note that the volume pattern of two down days in a row -- if the volume increased on the second day, it means oversold, and on the third day XLF bounced back.Hopefully this time won't be an exception.XLF would better not go further down, today low is the last fence.
http://lh3.ggpht.com/cobrasmarketview/SKurXNlbHiI/AAAAAAAAAjo/2URVttmcetQ/13_thumb.png?imgmax=800
&disp=P]1.4.2 S&P/TSX Composite Index (60 min), &disp=P]1.4.3 S&P/TSX Composite Index (15 min).On the Canada market chart, MACD and RSI show obvious positive divergence.So it will probably bounce back.
Posted by Cobra at 10:27 PM 0 comments http://www.blogger.com/img/icon18_email.gif
Monday, August 18, 200808/18/2008 Market Recap: Support still holds, critical test tomorrow
&disp=P]0.0.1 Simple SPY Trading System, previous low, 20 days moving average as well as the trend line still hold as the support.According to my climax run statement, the pullback today shows the market is healthy.However it will not be so if we see another selling off as violent as today's one.If it happens, you'd better not jump in too early and wait for my analysis prior to any action.
http://lh6.ggpht.com/cobrasmarketview/SKpRnh4t38I/AAAAAAAAAhY/gHI0r3Jhclk/1_thumb.png?imgmax=800
&disp=P]5.3.0 Financials Select Sector SPDR (XLF Daily).XLF leaded today's selling off but has not broken the support although it is not very close to it.On the chart, it seems the number of consecutive down days of XLF seems always more than one.So tomorrow it may go down further, but the heavy selling off will be bad.
http://lh5.ggpht.com/cobrasmarketview/SKpRo8G3zTI/AAAAAAAAAhg/TbKbzAQP2wo/2_thumb.png?imgmax=800
Now the question is, is it possible that the support holds firmly tomorrow?
The answer is, very possible.
&disp=P]1.1.C TRINQ Trading Setup shows the sign of possible rebound tomorrow.Both TRINQ and TRIN are higher than 2.0, which is over bearish, so the market may bounce back.So far the success rate is 11/16.
http://lh6.ggpht.com/cobrasmarketview/SKpRqMNXGZI/AAAAAAAAAho/Wo7sL8MSpWs/3_thumb.png?imgmax=800
&disp=P]1.0.3 S&P 500 SPDRs (SPY 60 min).On the 60-min chart, it is obvious that the Rising Wedge has not broken yet.Note that RSI is on the support, so there is a chance of rebound tomorrow.
http://lh6.ggpht.com/cobrasmarketview/SKpRrDzfjBI/AAAAAAAAAhw/kHcomQAmBrk/4_thumb.png?imgmax=800
&disp=P]1.1.8 PowerShares QQQ Trust (QQQQ 60 min).The RSI support on the QQQQ 60-min chart has never broken since July.So it will probably not this time.
http://lh5.ggpht.com/cobrasmarketview/SKpRsEqOp3I/AAAAAAAAAh4/AubaeQAjHf8/5_thumb.png?imgmax=800
&disp=P]3.0.3 20 Year Treasury Bond Fund iShares (TLT Daily).TLT is overbought, and STO is testing the resistance.Most importantly it has rallied for three days but the volume kept decreasing, which is a bearish pattern.Tomorrow it might pull back and cause the money flows back to the stock market.Note that the anti-correlation between the bond market and the stock market is not completely confirmed, and the movement of TLT is not entirely against the stock market direction.Further investigation needs to be carried out to confirm this analysis.
http://lh4.ggpht.com/cobrasmarketview/SKpRt0giFCI/AAAAAAAAAiA/JTMAh52R4mA/6_thumb.png?imgmax=800
&disp=P]1.4.2 S&P/TSX Composite Index (60 min).On the 60-min chart of the Canada market, both MACD and RSI show positive divergence.Although it failed to rebound, tomorrow it might succeed.
http://lh5.ggpht.com/cobrasmarketview/SKpRvp00NxI/AAAAAAAAAiI/nGlbAzfdw0Q/7_thumb.png?imgmax=800
1.5.0 Shanghai Stock Exchange Composite Index (Daily).Now I put $HSI and FXI together on a single chart, and hopefully can get more insights.I guess the China market leads.Now $SSEC broke the support, FXI may follow soon.Let's wait and see.
Posted by Cobra at 9:53 PM 0 comments http://www.blogger.com/img/icon18_email.gif
Sunday, August 17, 2008A letter from Sam: Three Peaks and the Domed House Redux
Here is a letter from Sam, who is a reader of my blog:
I was looking at your chart, 1.2.2, a long term monthly chart of the DOW..... it has the appearance of George Lindsay's "3 Peaks and a Domed House" pattern, which portends much lower prices on the DOW, as we would be on the final downslope.
Compare 1.2.2 to the picture of this pattern at this site: http://bigpicture.typepad.com/comments/2004/12/three_peaks_and.html
Do you agree?
http://lh5.ggpht.com/cobrasmarketview/SKjPRDBU3hI/AAAAAAAAAhA/PCoq8oP1DTg/1_thumb.jpg?imgmax=800
http://lh4.ggpht.com/cobrasmarketview/SKjPSDprAdI/AAAAAAAAAhI/D1hjJ_lVuV0/2_thumb.png?imgmax=800
Thanks for all of your work.....I like it very much! By the way.....check this chart of CVX...it is completing a 3 peak dome house, as are COP, DIG, and XOM!
http://stockcharts.com/h-sc/ui?s=CVX&p=D&yr=3&mn=0&dy=0&id=p92720173075
http://lh5.ggpht.com/cobrasmarketview/SKjPTUZ3J3I/AAAAAAAAAhQ/ms4c8NI8me0/3_thumb.png?imgmax=800
Thank you, Sam!
Posted by Cobra at 6:24 PM 0 comments http://www.blogger.com/img/icon18_email.gif
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Sunday, August 17, 200808/15/2008 Market Recap: Market Weakening but not Topped Yet
Firstly I'd like to give you the conclusion: Monday the market may pull back further, probably it will be quite weak during the entire week.But I do not think the market is topped at the moment, and the pullback is a good chance to buy dip.
Take notice at following two points:
[*]if the market doesn't pull back but goes up next week, do not chase it,actually it will be necessary to lock the profit.
&disp=P]0.0.2 Market Top/Bottom Watch is the evidence why the market has not topped.Note the red dashed line, every time when the market topped, VIX stretches out of the lower edge of ENV, and now it is close but has not there.This is why I believe it's highly possible that market is not topped, on the other hand, it also shows why we should lock profit instead of chasing high if the market goes up next week.Every time when VIX breaks down the ENV, the market might be potentially topped.
http://lh5.ggpht.com/cobrasmarketview/SKhwOMF4otI/AAAAAAAAAfM/yIQKAmfqR84/1_thumb.png?imgmax=800[*]Do not buy dip on the day when the market plunges.Wait for the reversal signal prior to any action.
&disp=P]1.0.0 S&P 500 Large Cap Index (Daily), &disp=P]1.2.0 Dow Jones Industrial Average (Daily).Two indices didn't even claim the two previous days' loss when the US dollar and Japanese Yen soared last Friday.This is a sign of weakening momentum, and might be an early warning of the trend reversal.Note that the Bearish Rising Wedge is very obvious, so the outlook is not optimistic. Because it is unclear that continuous diving down will happen to break the Rising Wedge, it's better not to buy dip at the pullback day.Better safe than sorry.
http://lh4.ggpht.com/cobrasmarketview/SKhwPaeGFDI/AAAAAAAAAfU/VnB6wbiDGA4/2_thumb.png?imgmax=800&disp=P]1.0.5 S&P 500 Large Cap Index Year-to-Date Performance.On the chart it shows INDU is the weakest and may lead the downtrend.Therefore it could be the short candidate.
http://lh3.ggpht.com/cobrasmarketview/SKhwQxojC0I/AAAAAAAAAfc/Xk0sZ0wWS6M/3_thumb.png?imgmax=800
&disp=P]1.3.7 Russell 3000 Dominant Price-Volume Relationships.This is the main evidence why I think the market will pull back on Monday.The dominant Price-Volume Relationships on Thursday is 1314 stocks price up volume down, there is no dominant Price-Volume Relationship on Friday and Russell 3000 rallied a bit. According to my past investigation, very often the pullback will be postponed for a day after the Dominant Price Up Volume Down , which means the next Monday the market may go down.
NAMO on &disp=P]1.1.B QQQQ and VXN is still overbought.COMPQ is due for further pullback.
http://lh3.ggpht.com/cobrasmarketview/SKhwU4i_yZI/AAAAAAAAAfk/20f7F57dqt8/4_thumb.png?imgmax=800
1.1.0 Nasdaq Composite (Daily), right below the resistance.
&disp=P]1.1.8 PowerShares QQQ Trust (QQQQ 60 min).MACD and RSI show negative divergence.
&disp=P]1.1.A PowerShares QQQ Trust (QQQQ 15 min).Descending Triangle, and the target is 47.43.
http://lh6.ggpht.com/cobrasmarketview/SKhwV5PiGxI/AAAAAAAAAfw/gK6qCtqjs2I/5_thumb.png?imgmax=800
&disp=P]1.3.2 Russell 2000 iShares (IWM 60 min).Bearish Rising Wedge.MACD and RSI show negative divergence.
&disp=P]3.2.4 Yen RSI and the Market Bottom.When Yen is at the red line level, the market usually reached a short-term top.
http://lh6.ggpht.com/cobrasmarketview/SKhwWggfkjI/AAAAAAAAAf4/DCS13Iyz1rM/6_thumb.png?imgmax=800
As a summary, the market may pull back on Monday.
&disp=P]1.1.2 Nasdaq Composite (Weekly).It has not broken the major downtrend line.COMPQ has rallied for five weeks, which is rare even in a bull market.Therefore the pullback next week is a reasonable expectation.
http://lh3.ggpht.com/cobrasmarketview/SKhwYIWyrhI/AAAAAAAAAgA/wwiez_41Ahk/7_thumb.png?imgmax=800
&disp=P]1.3.1 Russell 2000 iShares (IWM Weekly).It has rallied for six weeks, which is rare even in a bull market.So it is due for a pullback.
http://lh4.ggpht.com/cobrasmarketview/SKhwY5UENiI/AAAAAAAAAgI/qEpmv5BF_tQ/8_thumb.png?imgmax=800
&disp=P]5.0.2 S&P Sector Bullish Percent Index.BPENER is almost at the historical low.So maybe it is an entry point for XLE.
http://lh3.ggpht.com/cobrasmarketview/SKhwZ6BL2bI/AAAAAAAAAgQ/qRu8cU58hHk/9_thumb.png?imgmax=800
&disp=P]5.2.0 Energy Select Sector SPDR (XLE Daily).MACD is buy signal already.RSI and STO show positive divergence.
http://lh6.ggpht.com/cobrasmarketview/SKhwbmjnXqI/AAAAAAAAAgY/R4kckaWH6v8/10_thumb.png?imgmax=800
&disp=P]5.2.3 Energy Select Sector SPDR (XLE 60 min).MACD and RSI show positive divergence.
&disp=P]5.0.1 Select Sector SPDRs.Since the rally on July 15th XLF has not formed a higher high, obviously the momentum is weak.The aforementioned analysis shows XLE may rebound soon.Considered that XLF and XLE are anti-correlated, the rally of XLE may further weaken XLF.Therefore the market will look weak next week.
http://lh6.ggpht.com/cobrasmarketview/SKhwckKzdCI/AAAAAAAAAgg/ezCLTYxPbx8/10_thumb%5B1%5D.png?imgmax=800
As a summary of aforementioned analysis, on the weekly chart we will very likely see a red candle next week.
&disp=P]1.4.4 TSE McClellan Oscillator.Buy signal.By the way, this is invented by me, not McClellan, although I borrow his idea.Considered that XLE is potential buy, TSX on the Canada market will likely rebound.RHTSX at the bottom of the chart is still oversold, so the probability of rebound is high.
http://lh5.ggpht.com/cobrasmarketview/SKhweVB_QNI/AAAAAAAAAgo/tpF3ux5mHEo/11_thumb.png?imgmax=800
&disp=P]3.1.1 US Dollar Index (Weekly).It is now confirmed breakout.Note the RSI and STO on the top of chart, US dollar may have upside room, so does the market.
http://lh4.ggpht.com/cobrasmarketview/SKhwfnNpM5I/AAAAAAAAAgw/E9tOQhL-7w8/12_thumb.png?imgmax=800
&disp=P]3.3.1 streetTRACKS Gold Trust Shares (GLD Weekly).GLD may be on the support.But STO shows more downside room.Take notice that the "Bump and Run Reversal" comment has been put there many days ago.
http://lh5.ggpht.com/cobrasmarketview/SKhwhryKaYI/AAAAAAAAAg4/RbQ-OGWEqU0/13_thumb.png?imgmax=800
&disp=P]3.4.2 United States Oil Fund, LP (USO Weekly).STO shows further downside room.
Posted by Cobra at 11:40 AM 0 comments http://www.blogger.com/img/icon18_email.gif
Thursday, August 14, 200808/14/2008 Market Recap: No Title
There are only a few signals which indicate the market may be due for a pullback tomorrow.But I think it doesn't matter if the market really pulls back.Especially for QQQQ, it will look healthy if it pulls back tomorrow.
&disp=P]1.3.7 Russell 3000 Dominant Price-Volume Relationships, the Dominant Price-Volume Relationship is 1314 stocks price up volume down, which is quite bearish.Note that the probability of seeing correction on the next trading day is high once the red comment shows up.
http://lh6.ggpht.com/cobrasmarketview/SKUSw2jdLJI/AAAAAAAAAeU/JgUO8jl37yA/1_thumb.png?imgmax=800
&disp=P]1.1.C TRINQ Trading Setup.TRINQ is only 0.39 todaywhich is over bullish.Considered the up on decreased volume, I think QQQQ has a big chance to pullback tomorrow.So far the success rate is 10/16, especially the recent two times have been inaccurate, so the probability of being inaccurate tomorrow will not be high.
http://lh6.ggpht.com/cobrasmarketview/SKUSxkeOI4I/AAAAAAAAAec/_wvqdY8YJLU/2_thumb.png?imgmax=800
&disp=P]1.1.B QQQQ and VXN.NAMO is still overbought, and Negative Divergence which I consider it unsustainable.If QQQQ rallies further tomorrow, take notice on VXN MA(10) Envelop which is very close to oversold region.
http://lh6.ggpht.com/cobrasmarketview/SKUSyTW7NAI/AAAAAAAAAek/HxjloEmlNa0/3_thumb.png?imgmax=800
&disp=P]1.1.4 Semiconductor Holders (SMH Daily).After 9 days of rally, it is due for a pullback.
http://lh3.ggpht.com/cobrasmarketview/SKUS0MbpWgI/AAAAAAAAAes/iJ1G6aDUruk/4_thumb.png?imgmax=800
&disp=P]1.1.A PowerShares QQQ Trust (QQQQ 15 min).The Bearish Rising Wedge is quite obvious.
http://lh5.ggpht.com/cobrasmarketview/SKUS0ydYd-I/AAAAAAAAAe0/nA6465uKLZ0/5_thumb.png?imgmax=800
&disp=P]1.1.2 Nasdaq Composite (Weekly).COMQ is testing the major downtrend line again.
http://lh5.ggpht.com/cobrasmarketview/SKUS2C2fuSI/AAAAAAAAAe8/U28aRqFzvNw/6_thumb.png?imgmax=800
&disp=P]3.1.1 US Dollar Index (Weekly).It looks like a breakout.If tomorrow US dollar goes up further, the breakout will be confirmed.
http://lh4.ggpht.com/cobrasmarketview/SKUS3OayW-I/AAAAAAAAAfE/Aoli-ajRsik/7_thumb.png?imgmax=800
Posted by Cobra at 10:23 PM 0 comments http://www.blogger.com/img/icon18_email.gif
Wednesday, August 13, 200808/13/2008 Market Recap: A Few Good Signs
A few signals show the pullback may have finished today, but they are not completely convincing.
&disp=P]3.2.0 Japanese Yen (Daily).The sharp reversal during the trading hours caused the sharp reversal of the stock market too.On the chart the pattern is a bearish Dark Cloud Cover, and it is testing back the previous support.Therefore it may likely go further down and thus the probability of market up tomorrow is quite high.
http://lh3.ggpht.com/cobrasmarketview/SKO6_6HcvJI/AAAAAAAAAdk/P515qUeWwsA/1_thumb.png?imgmax=800
&disp=P]2.0.0 Volatility Index - NYSE (Daily).Today it closed a cross and looks like a reversal.Therefore the market may go up.
http://lh5.ggpht.com/cobrasmarketview/SKO7BJ591eI/AAAAAAAAAds/fnalr29ChkI/2_thumb.png?imgmax=800
&disp=P]3.0.3 20 Year Treasury Bond Fund iShares (TLT Daily).Bearish Engulf, the bond will likely dive down which means the stock market may rally.
http://lh6.ggpht.com/cobrasmarketview/SKO7C6BDklI/AAAAAAAAAd0/-20zbAlwGKU/3_thumb.png?imgmax=800
Conclusion, tomorrow it might be good to buy dip but the following factors have to be taken into account.
&disp=P]1.1.6 PowerShares QQQ Trust (QQQQ Daily).Inside bar for two days and the momentum seems very strong, but the breakout direction is unclear.STO is still overbought, and NAMO on &disp=P]1.1.B QQQQ and VXN is overbought too.So I do not think QQQQ will still soar radically.More likely it may pullback.
http://lh5.ggpht.com/cobrasmarketview/SKO7EL6hf8I/AAAAAAAAAd8/n1cIg5gGpWs/4_thumb.png?imgmax=800
&disp=P]1.1.4 Semiconductor Holders (SMH Daily), this is why I do not believe QQQQ will go up significantly.SMH has rallied for 8 days but today it closed a black candle, which hints a big pullback.If SMH go down, COMPQ will have sufficient strength to continue the uptrend.
http://lh3.ggpht.com/cobrasmarketview/SKO7F6G82PI/AAAAAAAAAeE/p3YGRHgXuiU/5_thumb.png?imgmax=800
My market view keeps the same as yesterday, if QQQQ pulls back further it will be healthy.If it rallies tomorrow, I will not buy dip because it looks like too bullish to be trustable -- QQQQ is almost going up vertically.
&disp=P]1.0.0 S&P 500 Large Cap Index (Daily), &disp=P]1.2.0 Dow Jones Industrial Average (Daily).According to the volume pattern, they are forming Bearish Rising Wedge from my point of view.No conclusion yet, just have your attention.
&disp=P]5.3.0 Financials Select Sector SPDR (XLF Daily).XLF did not hold at $21, and now the target is the fence below it.Keep an eye on it tomorrow, if the fence is broken, the bearish rising wedge on 1.0.0 and 1.2.0 will become valid, and you'd better think twice before buying dip.At least I will wait for one more day.
http://lh5.ggpht.com/cobrasmarketview/SKO7HBS5t_I/AAAAAAAAAeM/SnZx8qWsDMk/6_thumb.png?imgmax=800
Posted by Cobra at 9:57 PM 0 comments http://www.blogger.com/img/icon18_email.gif
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Tuesday, August 12, 200808/12/2008 Market Recap: QQQQ Holds the Key
According to the Climax Run theory I talked about these days, the market seems healthy due to the pullback today, and so far I have not seen any market topping signals and thus I assume it is a chance to open long positions.Just to be clear, I am not saying the market could not reverse the trend and plummet, but the probability is relatively low because the big moneys may have not completely dumped their positions yet in just a month of rally.Unless there is really bad news, the market may not go south abruptly.
&disp=P]2.3.4 Nasdaq Total Volume/NYSE Total Volume.This chart might be the first one which gives a topping signal.You should be cautious when buying dip, especially when QQQQ is so bullish the possibility of triggering a signal on this chart is high.Similar with put call ratio, because Nasdaq is considered as relatively risky investment, it means the money is too crazy to avoid the risk and the market is over bullish while the Nasdaq volume is much greater than the NYSE volume, in other words, it will be a early warning of the market top.
http://lh3.ggpht.com/cobrasmarketview/SKJfnZC_AgI/AAAAAAAAAc8/7qgfdkUHbA4/1_thumb.png?imgmax=800
&disp=P]1.1.B QQQQ and VXN.NAMO is still overbought.Therefore if QQQQ rallies sharply tomorrow, no chasing high.&disp=P]1.1.6 PowerShares QQQ Trust (QQQQ Daily), QQQQ closed with a Doji, which means 50% of chance is continuation, and 50% of chance is reversal.I guess it will be a reversal because STO is overbought, NAMO on &disp=P]1.1.B QQQQ and VXN is also overbought, &disp=P]1.1.4 Semiconductor Holders (SMH Daily) has rallied for 7 days and is overbought, too.
http://lh4.ggpht.com/cobrasmarketview/SKJfoA9ptHI/AAAAAAAAAdE/Ull3XSMJjOw/2_thumb.png?imgmax=800
&disp=P]5.3.0 Financials Select Sector SPDR (XLF Daily) this is the key tomorrow.It is on a very important support that it should not go under.Once the support is broken, the next one is at 19.75 which means the entire market may pullback at the same time.
http://lh3.ggpht.com/cobrasmarketview/SKJfpRajNMI/AAAAAAAAAdM/eDLtRHoMfpE/3_thumb.png?imgmax=800
&disp=P]3.1.1 US Dollar Index (Weekly).After so many days of sharp rally, US dollar is closing to the primary downtrend line.Pay attention to the battle.
http://lh6.ggpht.com/cobrasmarketview/SKJfqTRe7nI/AAAAAAAAAdU/JGC572oPR_0/4_thumb.png?imgmax=800
&disp=P]1.1.2 Nasdaq Composite (Weekly).Here is another downtrend line, and Nasdaq has not passed it.
As a summary, this is a buyable dip providing that QQQQ will pullback instead of rally tomorrow.
&disp=P]1.4.0 S&P/TSX Composite Index (Daily). Concerning the Canada market, RSX is testing the support once again, and the pattern is a Descending Triangle.I guess it won't break because US dollar is approaching a very important resistance and may take a rest now, moreover the oil on &disp=P]3.4.1 United States Oil Fund, LP (USO Daily) is oversold and due for rebound.In addition, RHTSX on &disp=P]1.4.4 TSE Bullish Percent Index is extremely oversold.Therefore TSX probably won't go down further.
http://lh6.ggpht.com/cobrasmarketview/SKJfr66443I/AAAAAAAAAdc/Fc2YZ6SyJR8/5_thumb.png?imgmax=800
&disp=P]1.5.0 Shanghai Stock Exchange Composite Index (Daily).The China market is oversold.
&disp=P]1.6.0 Hong Kong Hang Seng (Daily).The Hong Kong market is oversold, too.
&disp=P]3.3.0 streetTRACKS Gold Trust Shares (GLD Daily).GLD is oversold.
Posted by Cobra at 9:14 PM 2 comments http://www.blogger.com/img/icon18_email.gif
Monday, August 11, 200808/11/2008 Market Recap: NAMO Overbought
Besides the extremely overbought NAMO on &disp=P]1.1.B QQQQ and VXN, there is no special signal today and thus it is unclear if the market will go up or down.The previous analysis on the climax run still holds, i.e., if the market rallies during the next two days people who have no short positions would better lock some profit, and I will watch if there is any market topping signals.If you don't have many long positions to date and no fast hand, do not open long positions now.The reason is: if the rally is healthy the market will pull back at some point; if it is the final climax run, you probably will buy at the peak price if you open long positions at this point.Whether one should short QQQQ based on overbought NAMO, well, besides NAMO there is no other signal to support the short.NAMO is simply the difference between EMA(13) and EMA(39) on NAAD, and no rule says how high a reading is considered as overbought.As such shorting QQQQ may be against the trend, slow hands should definitely stay away.
http://lh3.ggpht.com/cobrasmarketview/SKEVvzbKNuI/AAAAAAAAAcA/oN-txmccbp4/1_thumb.png
Tomorrow you may keep any eye on &disp=P]2.8.1 CBOE Options Total Put/Call Ratio, where CPC is a bit low at 0.86.If fast hands find it declines further down below 0.8, it can be considered to trade against the trend.Again, remember the market may go up for six consecutive days during the Climax Run, so consider the risk.
http://lh6.ggpht.com/cobrasmarketview/SKEVwgoa4tI/AAAAAAAAAcI/OwjoyH1b4Cw/2_thumb.png
Another chart &disp=P]0.0.1 Simple SPY Trading System, if the rally continues tomorrow and the volume is smaller than today at the market is closing, in other words if price up volume down for three days, the probability of seeing a pullback is high.Again, the pullback may last one day only.Slow hands do not do it.
&disp=P]1.1.2 Nasdaq Composite (Weekly) is testing the up channel, keep an eye on it tomorrow.&disp=P]1.3.1 Russell 2000 iShares (IWM Weekly), the up channel is broken.&disp=P]1.3.0 Russell 2000 iShares (IWM Daily), IWM has almost claimed back all its loss.How bullish it is!
http://lh6.ggpht.com/cobrasmarketview/SKEVx2bJErI/AAAAAAAAAcQ/aCmpkbYSwiI/3_thumb.png
&disp=P]1.1.4 Semiconductor Holders (SMH Daily).It seems a Double Bottom.However it is overbought and the STO indicator is testing the resistance.
http://lh4.ggpht.com/cobrasmarketview/SKEVzHMmRiI/AAAAAAAAAcY/iXDpISeQHSw/4_thumb.png
&disp=P]1.5.1 Shanghai Stock Exchange Composite Index (Weekly), the last fence of the China stock market is broken.There is no any support until 1780.Not good!
http://lh6.ggpht.com/cobrasmarketview/SKEVz8bJ01I/AAAAAAAAAcg/Inu1fJeguq8/5_thumb.png
&disp=P]3.1.0 US Dollar Index (Daily).The chart of US dollar may not be entirely right.It is overbought though.
&disp=P]3.3.0 streetTRACKS Gold Trust Shares (GLD Daily).GLD is miserable.
&disp=P]3.4.2 United States Oil Fund, LP (USO Weekly), the support on Oil is broken too.
How the trends of three above stuff develop, I have no idea at the moment.Let's watch for a few more days.Take notice that the various markets are highly correlated in these days, and both currency and commodity do matter to the stock market.The following chart shows the pullback of today's market, and you can see the strong correlation between the oil and the stocks.Actually the impact of oil price movement on the stock market fluctuation has lasted for some time.I have two open questions to readers: how long will the US dollar keep bullish?How low can the oil price decline?
http://lh6.ggpht.com/cobrasmarketview/SKEV0hZiMkI/AAAAAAAAAco/eGqK5UusshM/6_thumb.png
Posted by Cobra at 9:47 PM 2 comments http://www.blogger.com/img/icon18_email.gif
Sunday, August 10, 200808/08/2008 Market Recap: No Signs of Top Yet
I am quite surprised to the Friday big rally.However I have not found any signals to prove the market may have topped although I have looked though all my indicators.Thus I suppose the market is strong so far, and the good strategy is to buy on low while risky one is to short on high.My point is there will usually be a climax run prior to the trend reversal.The market may only be topped when it keeps going up for 4 days regardless of the sentiment.If we still see the pullback in the next week, the market is still healthy and it will be a good chance to buy dip.
Will the market pullback next week?
&disp=P]1.1.B QQQQ and VXN.The old friend NAMO is overbought again and due for pullback.
http://lh5.ggpht.com/cobrasmarketview/SJ-r8dMoh3I/AAAAAAAAAaw/zc3l-DFRnQY/1_thumb.png
&disp=P]1.1.C TRINQ Trading Setup.TRINQ closed at 0.6 last Friday, so the next Monday may be down.So far the success rate is 10/15 and it still has an edge.
http://lh6.ggpht.com/cobrasmarketview/SJ-r9bn1v5I/AAAAAAAAAa4/LF73OkqNf1U/2_thumb.png
&disp=P]1.1.0 Nasdaq Composite (Daily).It is a Bearish Rising Wedge, and STO is overbought.
http://lh3.ggpht.com/cobrasmarketview/SJ-r-4sohkI/AAAAAAAAAbA/PS7ehtM6KS8/3_thumb.png
&disp=P]1.1.A PowerShares QQQ Trust (QQQQ 15 min).Both MACD and RSI show negative divergence.
http://lh5.ggpht.com/cobrasmarketview/SJ-sAMl5NLI/AAAAAAAAAbI/G8H7ddT-ujU/4_thumb.png
&disp=P]3.1.0 US Dollar Index (Daily).This is why the market was so strong last Friday.However US dollar is overbought, and both RSI and STO have reached a record high level.
http://lh5.ggpht.com/cobrasmarketview/SJ-sBaWA_OI/AAAAAAAAAbQ/lMFJfxNNlcI/5_thumb.png
As a summary I think the market will likely have a pullback in the short term.
&disp=P]1.3.1 Russell 2000 iShares (IWM Weekly).Although it has proven to be wrong to short QQQQ as a hedge, long IWM is so far so good.IWM is the best among major indices.But after five weeks of rally, it is very close to up channel.Be cautious.
http://lh5.ggpht.com/cobrasmarketview/SJ-sCuvHGOI/AAAAAAAAAbY/5NNsRZxkUjw/6_thumb.png
&disp=P]3.3.0 streetTRACKS Gold Trust Shares (GLD Daily).GLD is testing an important support line.
http://lh4.ggpht.com/cobrasmarketview/SJ-sDyFNywI/AAAAAAAAAbg/f7ZD5UNd-iQ/7_thumb.png
&disp=P]3.4.2 United States Oil Fund, LP (USO Weekly).The oil is also on an important support.
http://lh3.ggpht.com/cobrasmarketview/SJ-sF8w0yjI/AAAAAAAAAbo/c3C9cB9kgHQ/8_thumb.png
&disp=P]3.4.3 United States Oil Fund, LP (USO 60 min).The pattern looks like a Bullish Falling Wedge.In addition, MACD and RSI show positive divergence.
http://lh3.ggpht.com/cobrasmarketview/SJ-sG6nEFYI/AAAAAAAAAbw/BuN3XdUf8s8/9_thumb.png
Whether or not the oil bounce back at the current level has a big impact to the stock market.Given the complex political situation I don't know where the oil price will go.Let's wait for a few more days.
&disp=P]1.0.7 Sector Bullish Percent Index.This is a new chart, at the moment it is not a concern and I just want to have your attention.$BPENER shows the energy sector is very close to the buy zone, but $BPFINA means the financial sector is approaching previous sell zone.As a result, the market will go down soon or later.
http://lh4.ggpht.com/cobrasmarketview/SJ-sHzqpRmI/AAAAAAAAAb4/UPeRltwQuVM/10_thumb.png
Posted by Cobra at 8:04 PM 3 comments http://www.blogger.com/img/icon18_email.gif
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