10/08/2009 Market Recap: Short-term top coming?


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Summary:

Could be very close to at least a short-term top.

  TREND MOMENTUM   COMMENT - Sample for using the trend table.
Long-term Up      
Intermediate Down Neutral    
Short-term Up Neutral    
SETUP DATE INSTRUCTION STOP LOSS Mechanic trading signals for reference only. Back tested since 2002.
Index ST Model I     Stopped out long with gain on 10/01. No position held now.
Index ST Model II   10/06 High *Stopped out short flat on 10/08.  No position held now.
VIX ENV 10/08 *Move stop loss 10/08 Low Long on 10/06. *Tighten stop or let it run, it's up to you.
Reversal Bar 10/08 *Move stop loss 10/08 Low Long on 10/05. *Tighten stop or let it run, it's up to you.
         

INTERMEDIATE-TERM: MAINTIAN THE CONSOLIDATION THEN PULLBACK FORECAST

Maintain the forecast for “consolidation then pullback”. At least we’re now very close to a short-term top. And need watch the pullback strength closely to gauge if the pullback (if any) actually is an intermediate-term top. Is it possible the forecast being wrong? Of course. If 09/23 high is taken then no argue, Index ST Model I will issue a buy signal and I’ll sure follow. Will it then be too late? Well, don’t forget the short-term long entered via VIX ENV and Reversal Bar Setup. The short position entered via following Index ST Model II was stopped out today flat. Since I’m expecting a top, why still let the short position be stopped out? Well, the most important rule for me is to try the best no to lose money. I'd rather miss the chance to earn a fortune than to loss the money.

1.1.3 QQQQ Short-term Trading Signals, remember the 2 prophecies beard with the QQQQ black bar? 1. gap down open tomorrow morning; 2. Very close to a short-term top.

QQQQShortTerm

I mentioned the chart below on Tuesday’s report: extreme low CPCE means a consolidation then pullback. Comparing with the past marked with the blue dashed vertical lines as well as the blue cycles, we can see that so far now the market could still be considered as in the consolidation stage.

SPXandCPCEWatch

The following char is from www.sentimentrader.com – statistically we should have a pullback soon. By the way, I’ve put this setup into my watch list. I’ll report it in the future as soon as I see it’s triggered.

20091007_breadth

1.0.2 S&P 500 SPDRs (SPY 60 min), indeed the SPY made its 12th unfilled gap today. I won’t show this chart again as you should now very tired of me showing this chart again and again. Well, let’s take a look at 1.1.0 Nasdaq Composite (Daily), even with the more strict “high to low gap” rule, COMPQ still has 8 unfilled gaps, which is too much.

COMPQDaily

1.0.9 SPX Cycle Watch (60 min), a cycle is due tomorrow, looks like it could be a top.

SPX60minCycle

1.0.4 S&P 500 SPDRs (SPY 15 min), could be a Descending Triangle in the forming. There’re lots of supports around the text book target area so looks to me the target is logical.

SPY15min

The Bottom Line: At minimum, I believe the gap today will be filled soon therefore it’s prudent not to become too bullish at this stage.

SHORT-TERM: NO UPDATE

INTERESTING CHARTS: NONE

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