10/07/2010 Market Recap: Up Huge with No Follow-through


Cobra's Market View Private Messaging System shows:


  TREND MOMENTUM COMMENT
Long-term 2 of 2 are BUY  
Intermediate 3 of 3 are BUY 4 of 5 are NEUTRAL SPY ST Model in BUY mode; Non-Stop in BUY mode.
Short-term Model is BUY 6 of 6 are NEUTRAL The trend is up and I hold partial long position overnight because the mini price target hasn’t met, not because it’s safe to hold overnight.
GANN DAY MOON:SOLAR CYCLE CONCLUSION
10/10-10/11 10/07 : 10/08 10/11 Next pivot date: 10/05 – 10/11
BULLISH 0.1.1 SPX Intermediate-term Trading Signals: Head and Shoulders Bottom breakout, target 1242.
09/27 Market Recap: 9 POMO within 20 trading days means 14%+ up in 3 months.
10/01 Market Recap: Positive September plus mid-term election means 11%+ up to year end.
10/05 Market Recap: 16 more trading days upswing? *See 10/07 Market Recap, I have doubt now.
1.2.0 INDU Leads Market: mini SPX target 1173.
BEARISH 1.0.6 SPY Unfilled Gaps: 19 unfilled gaps, the max is 19.
09/23 Market Recap: SPX down 3 days means 79% chances to close below 09/23 close in 10 days.  Failed!
09/27 Market Recap: AAPL is now too stretched.
10/01 Market Recap: AAII bull ratio (4-week average) too bullish.
10/01 Market Recap: Commercial (smart money) short Nasdaq 100 heavily according to COT Report.
*6.3.1b Major Accumulation Day Watch: 2 consecutive down days after MAD was a bad sign.
*6.4.3a SPY Bearish Reversal Day Watch: Bearish Reversal Day, pullback?
SPY SETUP ENTRY DATE STOP LOSS INSTRUCTION: Mechanic signals, back test is HERE, signals are HERE.
TRADING PLATFORM:
SSO/SDS, UPRO/SPXU
Non-Stop 09/07 L N/A Partial profits on 09/24.
ST Model 09/24 L Breakeven

SHORT-TERM: NO FOLLOW-THROUGH AFTER EACH HUGE UP DAY, DOESN’T FEEL LIKE A STRONG UPTREND

As mentioned in yesterday’s report, today must close in green otherwise it’d be a bad sign for having 2 consecutive red days after a Major Accumulation Day. Unfortunately, not only today we have 2 red days in a row but also it’s a bearish reversal day. From charts below we can see, both cases could mean some short-term weakness ahead.

MADWatchSPYBearishReversalDayWatch 

Frankly, although now feels that Fed or YES WE CAN are capable of anything therefore the stock market would fly to the sky, but in reality:

  1. All the 3 huge up day we had recently had no follow-through thereafter while instead each kept having more and more reversal like bars.
  2. As mentioned in 10/04 Market Recap, QQQQ down 6 days in a row normally happened only in an intermediate-term downtrend.

Put all above together, this simply doesn’t feel like a strong uptrend. So my conclusion is:

  1. Although I’m not implying that you should short but at least don’t get too bullish now.
  2. 10/05 to 10/11 may indeed contain an important pivot date which could mean a top of some kind.
  3. For intermediate-term, I’ll reiterate the bearish view.

NoFollowThrough 

As for tomorrow’s Non Farm Payroll, except all I’ve mentioned in today’s After Bell Quick Summary, let me quote Bespoke again:

If Friday’s report comes in significantly stronger and the market opens up, history says not to chase it. If the report comes in much weaker than expected and the market opens down, investors should look to buy on weakness.

NFPDayWatch 

INTERMEDIATE-TERM: SEEMS 11%+ RISE GUARANTEED BEFORE YEAR END, I’M SKEPTICAL HOWEVER

See 10/01 Market Recap for details.

SEASONALITY: OCTOBER IS BULLISH

See 10/01 Market Recap for October Seasonality chart.

HIGHLIGHTS OF THE OTHER ETFS IN MY PUBLIC CHART LIST

TREND COMMENT
QQQQ *UP 4.1.1 Nasdaq 100 Index (Weekly): NDX to SPX ratio too high.
IWM UP
CHINA  
EMERGING *LA 4.1.6 iShares MSCI Emerging Markets (EEM Weekly): EEM to SPX ratio too high.
CANADA UP TOADV MA(10) too high and has negative divergence.
BOND *DOWN
EURO UP *Bearish Reversal Bar, pullback?
GOLD *LA *Bearish Engulfing, pullback?
GDX *DOWN 4.3.1 Market Vectors Gold Miners (GDX Weekly): GDX to SPX ratio too high.
*3.2.1 Market Vectors Gold Miners (GDX Daily): Bearish Engulfing, pullback?
OIL *DOWN *Bearish Engulfing, pullback?
ENERGY UP *Bearish Reversal Bar, pullback?
FINANCIALS *LA 4.4.2 Financials Select Sector SPDR (XLF Weekly): Head and Shoulders Top in the forming?
*3.4.0 Financials Select Sector SPDR (XLF Daily): Bearish Engulfing, pullback?
REITS UP 4.4.3 Real Estate iShares (IYR Weekly): Home builder is lagging.
*3.4.1 Real Estate iShares (IYR Daily): Black bar, pullback?
MATERIALS UP *Bearish Engulfing, pullback?

  1. Please make sure you understand how to use the table above. The purpose of this report is to provide info so contradictory signals are always presented.
  2. Conclusions can be confirmed endlessly, but trading wise, you have to take actions at certain risk level as soon as you feel the confirmation is enough. There’s no way for me to adapt to different risk levels therefore no specific buy/sell signals will be given in this report except the mechanical signals such as SPY ST Model.
  3. * = New update.
  4. Blue Text = Link to a chart in my public chart list.
  5. LA = Lateral Trend.

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