04/01/2009 Market Recap: 2 vs 2 Bear Won


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7.1.0 Use n vs n Rule to Identify a Trend Change.  Two down days versus two up days, bear won because the downside movement is bigger.  Even if SPX goes above 833, bulls would have spent three days to breakeven what bears get in two days, so this conclusion still hold.  You may check the chart by yourself the difference between recent N vs N and previous ones during the strong rally.

nvsnNow

8.0.3 Use n vs n Rule to Identify a Trend Change 2008.  Some of you may wonder why bears won today after getting a higher high.  Regardless of higher high, let’s see how to use this rule to pinpoint two trend changes in May and August in 2008.  You may also apply this rule to catch the trend changes from Oct 2008 to Mar 2009.  I can guarantee this is very simple and effective.  All in all, my market recap is based on observed evidences which is surely past evidences.  Therefore, exception can always happen which is out of my control.  Furthermore, from these trend changes you can see that, every time of the trend change takes several times of N vs N instead of a single shot.  So, although I believe the uptrend is weakening according to the current N vs N, but bears are not exempted of being burned out.

nvsn2008

7.0.2 SPX and CPC Divergence Watch.  You might still remember the firework setup while CPC is below 0.8 some time ago.  In the past, this kind of rally would have caused CPC falling below 0.8.  While today CPC advanced a little bit and formed a negative divergence.  On the following chart, you can see that this is a sign of short-term pullback.

SPXandCPC

1.3.7 Russell 3000 Dominant Price-Volume Relationships, 1316 stock price up volume down, quite bearish.  But 1316 is not a big number, and it may not be strong enough to support a pullback tomorrow.

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