07/10/2009 Market Recap: A few positive signs

Summary:

A few positive divergences may mean a rebound for SPX.

QQQQ may have different story.

Intermediate-term not bottomed yet, rebound if any, is just a rebound.

I see a few positive divergences so it’s very likely that the market may rebound. But if there’s a rebound, it’s just a rebound, after that, the market may continue to drop. The bottom line is that the intermediate-term has not bottomed yet.

0.0.3 SPX Intermediate-term Trading Signals, a few positive divergences.

2.4.4 NYSE McClellan Oscillator, if you see the current positive divergence the same as that of Feb and March, well, the market is bottoming…

2.0.1 Volatility Index (Weekly), black bar, at least in the recent past the VIX dropped in the following weeks. If VIX drops next week then SPX will rise.

3.0.0 10Y T-Bill Yield, this even argues for a bottom now. Check dashed vertical green lines with the green curve which represents the SPX, it looks like that use ROC30 to find the market top/bottom worked pretty good. For longer history accuracy, please refer to 8.0.4 Market top/bottom by ROC30 of 10Y T-Bill Yield 2005-2008 and 8.0.5 Market top/bottom by ROC30 of 10Y T-Bill Yield 2001-2004. Well, again the signal worked so far so good.

So the conclusion is that SPX may rebound.

But, QQQQ may have a different story. 1.1.4 Nasdaq 100 Index Intermediate-term Trading Signals, simply compare this chart with the previous 0.0.3 SPX Intermediate-term Trading Signals, we can see that Nasdaq 100 doesn’t have much positive divergence and most importantly, it rose 3 days in a row with volume decreased 3 days in a row, this kind of price volume negative divergence often leads to a pullback.

Besides, please don’t forget this chart: 1.1.7 Normalized QQQQ:SPY, I still don’t believe that QQQQ can outperform SPY this much without any meaningful correction.

OK, if SPX rebound big next week, does it mean that the market is bottomed? Well, let’s take a look at some charts.

7.0.9 NYADV and NYUPV Divergence Watch, still remember that I used the divergence to find the market top? The original chart is posted below for record only.

So divergence for the top then could be convergence for the bottom? Well, yes, that’s take a look at the updated chart below. Think about how likely that the market is bottomed now?

8.0.6 Use NYTV to catch the market top/bottom, NYSE volume is very slow recently, this is a sign of top. The red vertical lines of this chart should provide enough info for how likely when NYSE volume is low that market is rather near a top than a bottom.

8.0.1 Use NATV/NYTV to catch the market top/bottom, likewise, the market is rather near a top than a bottom.

So to summarize, I don’t think the market is bottomed even though chart 3.0.0 10Y T-Bill Yield says so, which has very good accuracy in the past.