04/29/2009 Market Recap: The 5th Unfilled Gap


Cobra's Market View Private Messaging System shows:


  Trend Momentum Comments - Sample for using the trend table. Warning: This is NOT a trading recommendation!
Long-term Down   Idea for trading intermediate-term under primary down trend.
Intermediate Up Neutral According to $NYA50R and $CPCE, the market might be topped.
Short-term Up Neutral  
Report Focused On Buyable dip or the market topped?
Today’s Summary Firework trading setup was triggered, but not sure this time as a pullback is expected as early as tomorrow.

Today’s report contains some speculation, please take these with a grain of salt:

  1. The market made a higher high today, but I suspect it’s a fake head;
  2. If the market gaps down tomorrow, the gap may not be filled since the 3rd time is the charm.  Monday and Tuesday were both gap down and immediately going higher, so don’t expect the 3rd time is the same.
  3. SPY has now 5 unfilled gaps, and the probability of filling the 5th gap is very high, which means SPY has a need to pullback in the near term.  Also if tomorrow the market gaps up again, don’t expect the 6th gap could hold.
  4. Still maintain the “seesaw” forecast. Unlike yesterday, today bears have more edges so at least expect a short term pullback as early as tomorrow.

Firstly let’s review bulls’ edge:

7.0.4 Extreme CPC Readings Watch, 2.8.3 SPX:CPCE, CPC < 0.8, so 64% chances the market may close in green tomorrow,  CPC < 0.8 also has triggered the firework trading setup which so far worked very well.  However I am not sure about this time, as for reasons, please refer to the “Bears’ Edge” bellow.

SPXvsCPCE

Now bears’ edge:

0.0.2 SPY Short-term Trading Signals, higher high and Symmetrical Triangle breakout, but three evidences make me think it might be a fake head:

  1. Unable to close above 875, a long shadow was left and it seems like being rejected by the overhead resistance.
  2. The first move out of a volatility contraction (in this case a Symmetrical Triangle) is usually a "false" move, leading to a larger and more sustained trend in the direction opposite the initial break.
  3. Too many and too long period of negative divergences.  Like a volcano, the market will burst out eventually.

SPYShortTerm

1.0.2 S&P 500 SPDRs (SPY 60 min), 5 unfilled gaps plus a couple of negative divergences.  The speculation about gaps is mentioned in the beginning of this report, anyway, this chart looks very bearish.

SPY60min

T2103 of Telechart, Zweig Breadth Thrust.  You should know how accurate this indicator is now.

T2103

Intraday Cumulative Tick - NYSE from www.sentimentrader.com.  Recently this chart is also quite accurate.  TICK is at such a level that the market won’t go much higher even if it does go up tomorrow.

CumTICK

Lastly check out what happened the next day after the Fed Days.  Especially when the market soared up on the Fed Day, what happened the next day?

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