01/29/2010 Market Recap: Gap Support Or Island Reversal?


Cobra's Market View Private Messaging System shows:


  TREND INDICATOR MOMENTUM INDICATOR COMMENT (Click link to see chart)
Long-term 3 of 3 are BUY    
Intermediate 3 of 3 are SELL 4 of 6 are NEUTRAL SPY ST Model is in SELL mode
Short-term 1 of 1 are SELL 4 of 8 are OVERSOLD   
BULLISH 2.4.4 NYSE McClellan Oscillator: Oversold.
0.0.6 Nasdaq 100 Index Intermediate-term Trading Signals: NADNV too high.
0.0.3 SPX Intermediate-term Trading Signals: *NYADV oversold, ChiOsc a little low.
BEARISH 2.0.0 Volatility Index (Daily): *Could be a Bull Flag in the forming.
CONCLUSION
SPY SETUP ENTRY DATE STOP LOSS INSTRUCTION: Mechanic signals, back test is HERE, signals are HERE.
TRADING VEHICLE:
SSO/SDS, UPRO/SPXU
ST Model 01/27 S 1.9 x ATR(10)
Reversal Bar    
NYMO Sell 01/21 S *01/28 High *Adjust Stop Loss
VIX MA ENV      
OTHER ETFs TREND COMMENT – *New update. Click BLUE to see chart if link is not provided.
QQQQ    
IWM    
CHINA Down Double Top or Bearish 1-2-3 Formation?
EMERGING    
CANADA Down Double Top, target $15.77. TOADV oversold.
1.5.2 TSE McClellan Oscillator: Oversold.
Could be a short-term rebound, but the big trend is down.
FINANCIALS  
REITS  
ENERGY   *Beware of Double Top.
OIL    
GOLD   01/29 Market Recap: *Rydex traders too pessimistic about gold.
DOLLAR UP Confirmed Head and Shoulders Bottom breakout!
3.1.1 US Dollar Index Bullish Fund (UUP 30 min): *ChiOsc too high, expect short-term pullback.
BOND   Could be a Bull Flag. So yield could rise while bond should fall.

INTERMEDIATE-TERM: MULTIPLE SUPPORT FOR SPX IS AROUND 1020-1040 AREA

2.0.0 Volatility Index (Daily), could be a Bull Flag in the forming so VIX could rise which means the SPX is doomed.

VIXDaily

Seasonality wise, the beginning of the February wasn’t good and neither the whole month.

FirstSeveralDaysOfFeb AvgMonthlyChange

3.1.0 PowerShares DB US Dollar Index Bullish Fund (UUP Daily), confirmed the Head and Shoulders Bottom again and again, this should put a tremendous pressure on the stock market. Because of zero interest rate, the dollar has been the main force for the carry trade fueling almost the entire 2009 rally. Now dollar becomes stronger and stronger so the carry trade has to be unwound which means sell stocks for cash to cover dollar shorts and which in turn means more selling for stocks and more covering for dollar shorts…

UUPDaily

So to summarize the above, most likely the pullback isn’t over yet. 4.1.0 S&P 500 Large Cap Index (Weekly), Fib confluences area plus MA89 plus Nov lows, so logically, the pullback target could be around 1020-1040 area. By the way, from the chart, we can see, the GDX and NYSI STO also have confirmed the intermediate-term down. 

SPXWeekly

The latest II Survey shows much less bulls but unfortunately those running bulls didn’t run into the bear’s camp, instead they’re in correction camp. So far from the red vertical lines, I don’t see high number of people in correction camp means anything significant for bulls.

IIChanges

SHORT-TERM: BEWARE OF ISLAND REVERSAL  

As mentioned in the After Bell Quick Summary, there’s a chance we could see a green Monday. 1.0.3 S&P 500 SPDRs (SPY 30 min), Declines to Advances ratio keeps decreasing meaning the sell pressure is constantly easing therefore it’s good for bulls too.

SPY30min

0.0.2 SPY Short-term Trading Signals, however beware of the possibility of an Island Reversal. If so, then pattern also confirms the intermediate-term downtrend, which is very bad, as so far till now, I have only indicators confirming intermediate-term down, no pattern confirmation yet which is far more reliable than indicators.

SPYShortTerm

About gold, looks like Rydex traders are too pessimistic about it, so gold could rebound, I’m not sure, as I have no idea how the strong dollar is going to affect the gold if indeed it rebounds.

 RydexPreciousMetalsAssets

STOCK SCREENER:  For fun only, I may not actually trade the screeners. Since SPY ST Model is in SELL mode, only SHORT candidates are listed. For back test details as well as how to confirm the entry and set stop loss please read HERE. Please make sure you understand the basic risk management HERE.

Screener

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