09/02/2009 Market Recap: More negative signals

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CPCE confirmed that Market was topped.

VIX MA Envelop pattern suggests a down day tomorrow.

Red day after a Major Distribution Day suggests more declines ahead.

More charts about SPX Bullish Percent Index, TLT, GLD, USO.

  Trend Momentum Comments - Sample for using the trend table.
Long-term Up    
Intermediate Down Neutral  
Short-term Down Neutral  
My Emotion Down    

Two puzzles we discussed  in yesterday’s report for confirming the intermediate-term downtrend were solved by the market today. Unfortunately, they’re not “bull friendly”.

2.8.0 SPX:CPCE, look at the thick green line area, broken yesterday and then held today which means a top is confirmed.


2.0.0 Volatility Index (Daily), things are different this time, as today VIX was not sold off like what had happened in the past. I know, people may say, this doesn’t mean bearish. Well, take a look at 7.0.2 Extreme VIX ENV Behaviors Watch, from vertical red lines we can see, for the similar VIX ENV pattern in the past, the next day so far was all a red day and after that the market had higher odds of being sold off further than being a bottom.


In the After Bell Quick Summary, I’ve discussed  what had happened if we had a red day after a Major Distribution Day. The following chart should provide more clear view where only “red day” cases are marked on the chart. From the chart we can see, the odds of being sold off further was higher than being a bottom.


So, the bottom line, I believe more selling ahead. If however, you still need a further confirmation, then as mentioned in yesterday’s report, the 3rd condition, 0.0.3 SPX Intermediate-term Trading Signals, SPX 978 must be broken to confirm the down trend.


Several interesting charts for your info only:

1.0.9 S&P 500 Bullish Percent Index, this is the last intermediate-term sell signal triggered, which is the most reliable intermediate-term signals so far this year. So now all the intermediate-term signals in 0.0.0 Signal Watch and Daily Highlights are all on the sell side, while short-term the market still isn’t very oversold, take a look if you have time.


3.0.3 20 Year Treasury Bond Fund iShares (TLT Daily), Head and Shoulders Bottom breakout, the rise of TLT should not be good for the stock market.


3.3.0 streetTRACKS Gold Trust Shares (GLD Daily), Symmetrical Triangle breakout.


3.4.1 United States Oil Fund, LP (USO Daily), red hollow bar usually leads a reversal on the USO chart, so oil could rebound soon.


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