03/23/2009 Market Recap: Very Short-term Overbought


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Now the market is very overbought in the very short term, and it may pull back in tomorrow morning.  Since CPC is lower than 0.8 again, 65% of the chance is to close in green according to 7.0.4 Extreme CPC Readings Watch.  Other short-term and intermediate-term signals are more or less overbought as well but not at extreme levels, so I am not sure if they will play out.  Based on the normalized CPC on 2.8.1 CBOE Options Total Put/Call Ratio, I still doubt the upside room of this rally.  On the other hand, in term of operation I will buy dip with no argument in order to hedge my short positions because the intermediate-term rally may last for a couple of days longer.

Take a look at two charts as follows which show why the intermediate-term rally could go further.

2.8.0 CBOE Options Equity Put/Call Ratio.  Finally we have a double confirming trend line.  However it may take some time should CPCE decisively breaks out this trend line.

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1.1.4 Nasdaq 100 Index Intermediate-term Trading Signals.  NDXA50R at the bottom of the chart is very close to 80, and the level of 80 is a top even in a bull market.  Of course, this also means we need to be patient for a few days.

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OK, now let’s see how overbought the market is.

0.0.3 SPX Intermediate-term Trading Signals.  Overbought in the intermediate-term as you can see, both NYADV and NYUPV have made a historical high.

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7.0.1 Extreme NYADV and NYMO Readings Watch.  Short-term overbought on the following chart.  The last time NYADV stayed for 4 days at the overbought level, but this time it may not stay that long in my opinion.

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1.0.3 S&P 500 SPDRs (SPY 30 min) and 1.0.4 S&P 500 SPDRs (SPY 15 min).  Over the very short-term, overbought all over the charts for all applicable indicators, therefore I believe the market will pull back in tomorrow morning.

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1.0.7 NYSE - TICK (30 min).  TICK is too high which means the market may pull back in tomorrow morning.

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1.3.7 Russell 3000 Dominant Price-Volume Relationships.  Here is the biggest problem with today’s rally, 1592 stocks price up volume down.  Anyway, who cares? He he.

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7.0.7 SPX and VIX Divergence Watch.  For your information only, VIX is reluctant to go down while the stock market is flying high.  Nothing beyond that.

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