07/21/2010 Market Recap: Direction Unclear but Bearish Biased


Cobra's Market View Private Messaging System shows:


  TREND MOMENTUM COMMENT
Long-term 2 of 2 are SELL    
Intermediate 2 of 3 are SELL 5 of 5 are NEUTRAL SPY ST Model in BUY mode; Non-Stop in BUY mode
Short-term Model is SELL 5 of 5 are NEUTRAL The model did nothing today, so no position overnight.
GANN DAY MOON/SOLAR CYCLE CONCLUSION
07/24, 07/27 07/26 / 07/23 07/29, 07/31 Next pivot date: 07/27 – 07/31
BULLISH
BEARISH 6.2.3 VIX:VXV Trading Signals: A little bit low.
SPY SETUP ENTRY DATE STOP LOSS INSTRUCTION: Mechanic signals, back test is HERE, signals are HERE.
TRADING PLATFORM:
SSO/SDS, UPRO/SPXU
Non-Stop 07/15 L N/A Be sure to check 8.2.2a to 8.2.2g to understand the risks.
ST Model 07/20 L 1.9xATR(10)

*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: WEEK AFTER JULY EXPIRATION, DOW DOWN 7 OF LAST 11

See 07/16 Market Recap for more details.

INTERMEDIATE-TERM: THE CORRECTION ISN’T OVER YET

See 07/02 Market Recap and 07/16 Market Recap for more details.

SHORT-TERM: DIRECTION NOT CLEAR, A LITTLE BIT BEARISH BIASED THOUGH

The SPY’s daily chart doesn’t look good today, a Dark Cloud Cover is formed which means a bearish reversal 60% of the time. However before seeing a follow through tomorrow, all I can say are that the market direction is not clear.

SPYShortTerm 

Although the direction is not clear, but from all the evidences I’ve gathered I’m leaning toward a little bearish biased, especially seeing the liquidity chart below(courtesy of stocktiming). Although the market up big yesterday but there wasn’t much liquidity inflow. My guess is only the Quantitative Easing II could solve the liquidity problem although I truly believe that Quantitative Easing II would only make things worse. Well, I’m not supposed to discuss issues other then TA in my daily report, so I’ll stop here.

liqs 

The chart below shows all the SPY bearish reversal bars since the March 2009 rally. It does not look bull friendly. Although not necessarily mean a down day tomorrow but with no exception, the low today is not THE LOW.

BearishReversalDay 

6.2.3 VIX:VXV Trading Signals, I know I’ve been blah blah about this chart for awhile, well, it’s still too low, so if the market keeps rebounding from here, I still suspect how far it could go. Please refer to 07/20 Market Recap for why I say so.

VIXtoVXVRatio 

IBM fell after ER yesterday, interestingly, according to Bespoke, IBM’s one day return (positive or negative) following earnings has been the same direction as the S&P 500 over the next five weeks 77% of the time:

Since 2001, IBM has traded up on the day after its earnings report 20 times. In the five weeks following those twenty periods, the S&P 500 has averaged a gain of 2.2% with positive returns 80% of the time. There have been fifteen occurrences where IBM traded down on the day following its earnings report. In the five weeks following those periods, the S&P 500 has averaged a decline of 3.7% with declines 73% of the time.

IBMERvsSPX 

HIGHLIGHTS OF THE OTHER ETFS IN MY PUBLIC CHART LIST

  TREND COMMENT – *New update. Click BLUE to see chart if link is not provided.
QQQQ DOWN 4.1.1 Nasdaq 100 Index (Weekly): Bearish 1-2-3 formation, target 1565.
IWM DOWN 4.1.2 Russell 2000 iShares (IWM Weekly): Ascending Broadening Wedge, target $54.79.
CHINA *UP *Testing MA(50), be careful as the trend is still down.
EMERGING UP 4.1.6 iShares MSCI Emerging Markets (EEM Weekly): Bear Flag?
EUROPEAN UP 4.1.7 Vanguard European VIPERs (VGK Weekly): Bearish 1-2-3 formation, target $35.45; Bear Flag?
CANADA DOWN 4.1.5 iShares CDN S&P/TSX 60 Index Fund (XIU.TO Weekly): Bearish 1-2-3 formation, target $15.30.
BOND UP
EURO UP
GOLD DOWN 4.3.0 Gold Trust Shares (GLD Weekly): Head and Shoulders Bottom, target $129.99.
GDX DOWN
OIL DOWN 4.4.0 United States Oil Fund, LP (USO Weekly): Bear Flag?
ENERGY DOWN 4.4.1 Energy Select Sector SPDR (XLE Weekly): Bearish 1-2-3 formation, target $43.14.
FINANCIALS DOWN
REITS DOWN 4.4.3 Real Estate iShares (IYR Weekly): Pay attention to XHB weakness!
MATERIALS DOWN 4.4.4 Materials Select Sector SPDR (XLB Weekly): Bearish 1-2-3 formation, target $27.35.
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