10/12/2010 Market Recap: CPCI Too High


Cobra's Market View Private Messaging System shows:


  TREND MOMENTUM COMMENT
Long-term 2 of 2 are BUY  
Intermediate 3 of 3 are BUY 3 of 5 are NEUTRAL SPY ST Model in BUY mode; Non-Stop in BUY mode.
Short-term Model is BUY 5 of 6 are NEUTRAL The trend is up but I hold no long position 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.
10/08 Market Recap: AAII bull ratio (4-week average) too bullish.
10/08 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?
10/08 Market Recap: Up off-season usually means down earning season.
10/08 Market Recap: Institutions are selling into strength.
6.1.9a Extreme ISEE Index Readings Watch: SPX will close below 1165 within 2 days? Failed!
6.2.3 VIX:VXV Trading Signals: Record low.
*0.2.2 Extreme Put Call Ratio Watch: CPCI too high, topped?
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: CPCI TOO HIGH WAS NOT A GOOD SIGN

I just found that what I used as a title could control the market behavior. For example, in 09/10 Market Recap, I used title “Show me the strength”, so starting form the next trading day, the market began to show me the strength. And in 10/08 Market Recap, my title said “No 2 Consecutive Up Days for 3 Weeks ”, well, here we go, the market up 3 days in a row. So I’m thinking now, perhaps I should use a title like “Give me SPX 3000”, maybe in this way, we all can retire earlier?

Anyway, the market finally made 3 consecutive up days so what I mentioned in 10/05 Market Recap again becomes possible, that we could repeat what happened in April that after 10/05 breakout, there could be 16 more trading days upswing ahead. Here, my emphasis is not “16 more trading days”, I just use that number to remind bears to prepare for the worst. A general pattern, any new highs made before 2 or more consecutive pullback days are almost guaranteed to be tested before a real pullback could kick in. In another word, even the market sell off hard tomorrow, today’s high at SPX 1172 (near 1172 is OK, could be higher or lower) most likely will be tested after the pullback. Why? Because the market usually tries twice to break something, if failed then it will try the opposite direction and by the way, this is why the Double Top and Double Bottom are very common patterns.

Nothing else to say, one more bad sign today, see chart below, CPCI too high was not friendly to bulls.

CPCIWatch 

INTERMEDIATE-TERM: BEARISH BIASED

Maintain the intermediate-term bearish view. Below are summaries of all the arguments I’ve been blah blah recently:

  1. As mentioned in 10/08 Market Recap, commercial (smart money) holds record high short positions against Nasdaq 100.
  2. As mentioned in 10/08 Market Recap, AAII bull ratio (4-week average) is way too bullish.
  3. As mentioned in 10/08 Market Recap, institution selling keeps increasing.
  4. As mentioned in 10/08 Market Recap, statistically, a strong off-season could mean a weaker earning season.

SEASONALITY: OCTOBER EXPIRATION MONAY WAS BULLISH, EXPIRATION DAY WAS BEARISH

According to Stock Trader’s Almanac:

  1. Monday before October expiration, Dow up 24 of 29.
  2. October expiration day, Dow down 4 straight and 5 of last 6.

For October Seasonality chart please refer to 10/01 Market Recap.

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   Confirmed breakout, very bullish.
EMERGING UP 4.1.6 iShares MSCI Emerging Markets (EEM Weekly): EEM to SPX ratio too high.
*1.4.1 iShares MSCI Emerging Markets (EEM Daily): Hollow red bar, pullback?
CANADA UP TOADV MA(10) too high and has negative divergence.
BOND DOWN
EURO *UP
GOLD UP
GDX UP 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 *Black bar.
ENERGY UP *Hollow red bar, pullback?
FINANCIALS UP 4.4.2 Financials Select Sector SPDR (XLF Weekly): Head and Shoulders Top in the forming?
REITS UP 4.4.3 Real Estate iShares (IYR Weekly): Home builder is lagging.
MATERIALS UP Bearish Reversal Bar, 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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