05/26/2010 Market Recap: Not Bottomed, But…


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 3 of 5 are NEUTRAL Non-Stop Model is in SELL mode
Short-term 1 of 1 are SELL 6 of 6 are NEUTRAL SPY ST Model is in SELL mode
BULLISH 0.2.1 10Y T-Bill Yield: Bottomed?
0.1.1 SPX Intermediate-term Trading Signals: CPC MA(10) too high.
0.2.2 Extreme Put Call Ratio Watch: CPC MA(5) too high.
8.1.1 Normalized NATV/NYTV: Bottomed? 
6.3.2c Major Distribution Day Watch: Bottomed?
05/20 Market Recap: Intermediate-term Indicator Score from sentimentrader is too low.
0.1.3 Nasdaq 100 Index Intermediate-term Trading Signals: NYDNV too high.
*0.1.1 SPX Intermediate-term Trading Signals: NYADV oversold.
*8.1.0 Normalized NYTV: Bottomed?
*1.1.1 NYSE Composite Index Breadth Watch: Oversold.
BEARISH 0.1.1 SPX Intermediate-term Trading Signals: Ascending Broadening Wedge? Target: 1008 to 1019.
CONCLUSION  
SPY SETUP ENTRY DATE STOP LOSS INSTRUCTION: Mechanic signals, back test is HERE, signals are HERE.
TRADING VEHICLE:
SSO/SDS, UPRO/SPXU, RSP
ST Model
Reversal Bar    
NYMO Sell    
Non-Stop 05/11 S N/A For general direction guide only.
Others      
OTHER ETFs TREND *DTFMS COMMENT – *New update. Click BLUE to see chart if link is not provided.
QQQQ DOWN    
IWM DOWN    
CHINA DOWN BUY 2 green bar in a row usually means more on the upside.
EMERGING DOWN   Bearish 1-2-3 formation, target: $32.13
EUROPEAN DOWN   4.1.7 Vanguard European VIPERs (VGK Weekly): Bearish 1-2-3 formation, target $35.54.
CANADA DOWN   TOADV MA(10) oversold.
BOND UP   ChiOsc is way too low.
EURO DOWN SELL ChiOsc is way too high.
*6.4.5 GLD and UUP Watch: GLD black bar may mean UUP up tomorrow.
YEN UP  
GOLD UP   4.3.0 Gold Trust Shares (GLD Weekly): Head and Shoulders Bottom, target $129.99.
GDX UP  
OIL DOWN  
ENERGY DOWN   Bearish 1-2-3 formation, target: $46.47
FINANCIALS DOWN   Bearish 1-2-3 formation, target: $12.99
REITS DOWN   Head and Shoulders Top? Target: $44.28
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.
*DTFMS = Dual Time Frame Momentum Strategy. The signal is given when both weekly and daily STO have the same buy/sell signals.

SEASONALITY: THE LAST TRADING WEEK OF MONTH WAS BEARISH SINCE AUG 2009
 

See 05/21 Market Recap for more details.

Since some people wanted to know the seasonality around the Memorial Day, well, here we go. (Courtesy of sentimentrader)

holiday_memorial 

INTERMEDIATE-TERM: PULLBACK TARGET AROUND 1008 TO 1019, NEXT TIME WINDOW AROUND 06/06

See 05/21 Market Recap for more details.

WARNING: If you don’t understand the true meaning of overbought/oversold, please skip the session below. Generally, you should try your best not to trade against the trend. Trading purely based on overbought/oversold while against the trend is lethal to the health of your account. Before going further, please make sure you understand how to use the table above.
SHORT-TERM: NOT BOTTOMED BUT MAY SEE REBOUND FIRST

The drop today has fulfilled the forecast given by 6.4.1 Extreme NYADV Readings Watch about SPX will have a lower close ahead. So the last “bear insurance” is gone. Now the question becomes more important: Has the market bottomed?

Personally, I think not.

1.1.1 NYSE Composite Index Breadth Watch, NYADV:NYDEC MA(10) had a new low today, see green dashed vertical lines, either we’ll see a short-term rebound immediately starting from tomorrow then one more leg down to form a positive divergence before the market could actually be bottomed, or see green solid vertical lines, the market simply keeps dropping for a few days until broke the green dashed horizontal line below before bottoming.

NYADVvsNYDEC 

I’ve mentioned the chart below in 05/21 Market Recap, arguing market was not bottomed. I believe it’s very convincing and has proved right so far. Now take a look again, asking yourself, comparing with the past positive divergence, is the current 1 day only positive divergence enough for a bottom? At least visually, chances are not very good, right? Also according to a basic TA theory, a divergence need to maintain for certain period of time (the longer the better) to be considered reliable.

NYMO 

OK, I guess the 2 charts above should be enough to talk you into believing that the market is not bottomed. Now, back to the question raised by 1.1.1 NYSE Composite Index Breadth Watch. Which one would be? Keep dropping or rebound first then drop?

My guess is that “keep dropping” may have a little bit better chances. Three reasons:

6.5.2b Month Day Seasonality Watch, the month’s last 2 trading days were generally bearish.

MonthDaySeasonality 

Intraday Cumulative TICK from sentimentrader, big WOW again. Although I don’t believe a very high Cumulative TICK means people are way too bullish anymore (instead it should simply mean a change in trading characters), but so far the previous 6 WOWs were all deadly correct (see 05/18 Market Recap, 05/12 Market Recap, 05/03 Market Recap, 04/29 Market Recap, 04/20 Market Recap and 04/14 Market Recap), so at least I cannot deny that there’s a chance that this signal may work again this time.

IntradayCumTick 

0.2.0 Volatility Index (Daily), lots of indices and sectors daily chart are ugly today – open high close in red which is kind of a bearish reversal day. Among them, VIX daily chart is especially not friendly to bulls, looks very similar to the Hammer formed on 05/13. So be careful!

VIXDaily

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