05/06/2010 Market Recap: The Good, The Bad and The Ugly


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 2 of 3 are SELL 5 of 5 are NEUTRAL Non-Stop Model is in BUY mode
Short-term 1 of 1 are SELL 5 of 6 are OVERSOLD SPY ST Model is in SELL mode
ATTENTION 1.0.6 SPY Unfilled Gaps: 10 unfilled up gaps (max was 18), 2 unfilled down gaps. 
0.1.1 SPX Intermediate-term Trading Signals: Could be an Ascending Broadening Wedge in the forming.
BULLISH 0.2.0 Volatility Index (Daily): More than 20% above MA(10).
*0.2.1 10Y T-Bill Yield: Bottomed?
*0.2.3 NYSE McClellan Oscillator: Oversold.
*0.2.6 NYSE - Issues Advancing: Oversold.
BEARISH 04/20 Market Recap: Record high Climax Buying.
04/20 Market Recap: Weekly Bearish Engulfing could mean a top.
*6.4.1 Extreme NYADV Readings Watch: At least one lower close ahead.
CONCLUSION 0.0.2 Combined Intermediate-term Trading Signals, although the primary sell signal is not yelling yet, but sometimes NYSI and BPSPX sell signals did work, so be careful here.
SPY SETUP ENTRY DATE STOP LOSS INSTRUCTION: Mechanic signals, back test is HERE, signals are HERE.
TRADING VEHICLE:
SSO/SDS, UPRO/SPXU
ST Model *The short sell was triggered on 05/06. But since there could be some rollbacks so I’m not sure how the SPY daily charted will be affected. Will give more details later.
Reversal Bar    
NYMO Sell    
Non-Stop    
VIX MA ENV      
OTHER ETFs TREND TRADE COMMENT – *New update. Click BLUE to see chart if link is not provided.
QQQQ DOWN  
IWM DOWN  
CHINA DOWN  
EMERGING DOWN  
EUROPEAN DOWN  
CANADA ?   Breakdown below a huge consolidation area, doesn’t look good.
BOND UP  
EURO DOWN  
YEN *UP    
GOLD UP   4.3.0 streetTRACKS Gold Trust Shares (GLD Weekly): Head and Shoulders Bottom, target $129.99. Also there’s a small Head and Shoulders Bottom, target $121.96.
OIL DOWN
ENERGY *?  
FINANCIALS DOWN  
REITS UP
MATERIALS DOWN    

*Please make sure you understand how to use the table above. The main purpose of this report is to provide information so contradictory signals are always presented.

SEASONALITY: MONDAY AND FRIDAY ARE BULLISH

See 04/30 Market Recap for more details.

CYCLE ANALYSIS: COULD BE A CYCLE BOTTOM AROUND 05/07 TO 05/10

See 05/05 Market Recap for more details.

INTERMEDIATE-TERM: EXPECT ROLLER COASTER AHEAD OR THE MARKET COULD BE TOPPED

See 04/30 Market Recap for more details.

SHORT-TERM: COULD SEE REBOUND BUT AT LEAST A LOWER THEN TODAY’S CLOSE AHEAD

A big mess today. I heard that some transactions are to be cancelled, so I’m not sure how it will affect the index chart. But overall, I don’t believe the story of accidently putting a “B” instead of “M”. Well, you can try the similar thing tomorrow to order 1K stocks (not to fill 1,000, instead you fill 1K, I mean the K), then see what your broker’s reaction…

The Ugly:

All I wanted to say today were already in the After Bell Quick Summary:

  1. The huge Yen Carry Trade unwind happened before the crash. Must something terrible have happened. It’s not because of “B” instead of “M”.
  2. We might see short-term rebound. But most likely today’s panic low will be retested, because today’s event may force some large funds to liquidate.
  3. Of course, today’s market action fits well from all aspects to be regarded as capitulation, so if you think this is an ultimate bottom, sure, I have no evidence to against you.

Since it’s a big mess, so I cannot bring out a bunch of charts and point to you how much the technical damage was done. Sure, they’re ugly, but the Wall Street could make them look good as early as tomorrow. I’m no Wall Street, so all I can do are simply list some still “watch-able” charts below and hopefully you won’t feel too bored.

The Bad:

6.4.1 Extreme NYADV Readings Watch, this chart almost guarantees SPX will have a lower close than today’s close ahead.

NYADV 

0.2.3 NYSE McClellan Oscillator, way too oversold, see dashed vertical lines, very likely we’ll see a rebound. This is one of my favorite signals, very reliable. The bad news is, NYMO usually has to form a positive divergence before the SPX could be bottomed, so the NYMO new low today actually proves what I mentioned in 05/05 Market Recap – after a rebound there usually will be a 2nd leg down to at least test the previous low.

NYMO 

The Good:

0.2.1 10Y T-Bill Yield, Yield dropped too fast which usually make stocks become more attractive. The signal is very reliable, please refer to chart 8.2.1a Market top/bottom by ROC30 of 10Y T-Bill Yield 2001-2004 and 8.2.1b Market top/bottom by ROC30 of 10Y T-Bill Yield 2005-2008 for the past performance. Of course, one signal may not be enough to call a bottom, so as usual, I put this into the table above. Let’s see how many signals will be accumulated before the market actually bottoms.

TNX 

Listed below are some signals arguing for a rebound tomorrow. For more short-term rebound signals, please click the "5 of 6 are OVERSOLD" in the table above, they’re all pretty reliable signals.

 0.2.0 Volatility Index (Daily), VIX rose more 18%, as has discussed in 05/04 Market Recap, there’re more than 80% chances a green day tomorrow.

VIX 

6.3.2a Major Distribution Day Watch, today is yet another Major Distribution Day (NYSE Down Volume : NYSE Up Volume >= 9) which means 69% chances a green day tomorrow. Just be sure to look at the left part of the chart to see what had happened when so many Major Distribution Days happened all together within a short period of times.

MDD

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