Cobra's Market View Private Messaging System shows:
SHORT-TERM: EXPECT PULLBACK SOON BUT IT MIGHT JUST BE A TEMPORARY TOP
The market is a little bit overbought, not enough for me to officially use overbought as the title though. Some old readers may remember that I don’t use overbought as the title easily because all the overbought signals I watch are not normal signals therefore they’re quite reliable (so don’t tell me overbought can be more overbought, just search my past record to see what happened when I officially used overbought as the title. The most recent time I used overbought as the title was in 07/26 Market Recap). The purpose I mention the potential overbought in advance today is to remind bulls, especially if the market can manage another up day tomorrow, better take some profits as a pullback shall be imminent. Of course, the pullback, if indeed, most likely is just a short-term pullback.
Now let’s take a look at some of my so called not normal overbought signals.
Percent of SPX stocks 1 std dev above MA(50), the signal was originated from Bespoke. See highlighted in red, they’re all very close to a short-term top while today’s reading is the highest among them.
T2122, NYSE 4-week New High/Low Ratio, this is my ultimate weapon for watching overbought, now is very close to an extreme level.
1.0.0 S&P 500 SPDRs (SPY 60 min), chart pattern wise, a huge Bearish Rising Wedge could be in the forming which is pretty reliable as both top and bottom trend lines are 3 points validated. Besides, a 3rd Rounding Top could be in the forming, which if indeed the 3rd time is the charm, since the previous 2 were bullish Rounding Top, so the 3rd one could be bearish.
6.2.2a VIX Trading Signals (BB), this is to follow up what I mentioned in 10/11 After Bell Quick Summary, the SPX short setup was triggered today. Please refer to 04/13 Market Recap for back test results.
INTERMEDIATE-TERM: BEARISH BIASED
Maintain the intermediate-term bearish view. Below are summaries of all the arguments I’ve been blah blah recently:
- As mentioned in 10/08 Market Recap, commercial (smart money) holds record high short positions against Nasdaq 100.
- As mentioned in 10/08 Market Recap, AAII bull ratio (4-week average) is way too bullish.
- As mentioned in 10/08 Market Recap, institution selling keeps increasing.
- 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:
- Monday before October expiration, Dow up 24 of 29.
- 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
|QQQQ||UP||4.1.1 Nasdaq 100 Index (Weekly): NDX to SPX ratio too high.|
|CHINA||Confirmed breakout, very bullish.|
|EMERGING||UP||4.1.6 iShares MSCI Emerging Markets (EEM Weekly): EEM to SPX ratio too high.|
|CANADA||UP||TOADV MA(10) too high.|
|BOND||DOWN||*Hollow red bar, rebound?|
|GDX||UP||4.3.1 Market Vectors Gold Miners (GDX Weekly): GDX to SPX ratio too high.|
|FINANCIALS||UP||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): Black bar under important resistance, pullback?
|REITS||UP||4.4.3 Real Estate iShares (IYR Weekly): Home builder is lagging.|