11/05/2010 Market Recap: Firework


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 5 of 6 are NEUTRAL The trend is up, I hold partial long position over the weekend.
GANN DAY MOON:SOLAR CYCLE CONCLUSION
11/04,11/14,11/26 11/06 : 11/07 Next pivot date: 11/04 – 11/08, 11/24 – 11/26
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.
10/26 Market Recap: Average 2.7% gain during the 8 trading days surrounding midterm election.
10/29 Market Recap: The last 2 months of year are bullish.
1.0.0 S&P 500 SPDRs (SPY 60 min): Ascending Triangle breakout to be confirmed, target $122.24.
BEARISH 1.0.6 SPY Unfilled Gaps: 21 unfilled gaps, the max was 21.
10/29 Market Recap: AAII bull ratio (4-week average) too bullish.
10/29 Market Recap: Commercial (smart money) short Nasdaq 100 heavily according to COT Report.
10/08 Market Recap: Up off-season usually means down earning season. Failed!
10/29 Market Recap: Institutions are selling into strength.
6.4.0 SPX and NYMO Divergence Watch: New high on negative NYMO readings, topped? Failed!
4.1.0 S&P 500 Large Cap Index (Weekly): NYSI STO(5,3,3) sell signal.
6.1.9b Extreme ISEE Index Readings Watch: ISEE Indices & ETFs Only Index <= 30, top close? Failed!
6.4.2c Extreme TICK Readings Watch: Extremely low TICK guarantees a lower low/close ahead? Failed!
T2111, percent of NYSE stocks 2 std dev above MA(200) is a little bit high.
T2112, percent of NYSE stocks 2 std dev above MA(40) is a little bit high.
11/04 Market Recap: Percent of SPX stocks 1 std dev above MA(50) is too high.
11/04 Market Recap: 41% of the Sentimentrader’s indicators are at bearish extremes which is too high.
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 10/27 Low
NYMO Sell 10/28 S 2*ATR(10) Reference only, not meant to be followed. *Stopped out with loss on 11/04.

SHORT-TERM: ABOVE 70% CHANCES, SPX WILL CLOSE BELOW THIS WEEK’S CLOSE WITHIN WEEK OR TWO

The SPX weekly bar is very interesting, see chart below:

  1. Marubozo bar on the widest range in 7 weeks (WR7) which could mean a buying exhaustion (Name it “Exhaustion Bar” from now on, the back test below also requires weekly %B >= 1).
  2. After a stair down in volume for 3 up weeks, the volume suddenly increased which also could mean a buying exhaustion.

From the back test below, we can see, short at the Friday’s close and cover on the very first red weekly bar close, both have 70% or more winning rate. Considering all the bearish extremes mentioned in 11/04 Market Recap are still valid (see table above) and even become more extreme, so the back test should be trustworthy, beware the possible short-term pullback. Besides, pay attention to what happened after an Exhaustion Bar, see bars highlighted in red, in most cases, the market would consolidate for awhile which fits well the pattern I’m going to mention in the intermediate-term session below.

ExhaustionBar 

INTERMEDIATE-TERM: SPX MAY SHOOT HIGH THEN FALL BACK TO WHERE IT STARTS WHICH USUALLY IS THE 2ND BUY OPPORTUNITY

The very unique thing happened on Friday is that SPX has a daily bar completely out of BB which is very very rare for SPX. From the statistics below we can see, all such cases thereafter were undergoing a pattern similar to the firework – shot high then fell to the ground which may provide the 2nd buy opportunity:

  1. Intermediate-term was bullish, average 3.4% rise and could last on average 21 calendar days.
  2. With on exception, after shooting high, all fell to where the shooting started. I’ve zoomed into all those 12 cases so you can clear see that the fall to the ground was actually the 2nd buy opportunity.
  3. From the monthly chart, even it’s year 2000 and year 2007, there’s at least one more month to rise before the top was in, considering the strong seasonality in September and December so chances are very good that bulls are safe for the rest of this year.

OutOfBB 

So to summarize above, bulls may have 2 chances to load: A possible short-term pullback as mentioned in the short-term session and after the firework falling to the ground. While for bears, the shooting high could be a short opportunity and if lucky enough, maybe it’s the year 2000 or year 2007 kind of  top, just the chances are very low though, 2 out of 12 cases since 1991.

I’ll keep watching the institutions actions, whether buying like crazy after the Quantitative Easing II announcement or via we retailers are dreaming of earlier retirement, they simply are distributing. I’ll keep you informed if anything interesting happens.

InstitutionalBuyingAndSellingAction 

SEASONALITY: LAST 2 MONTHS OF YEAR ARE BULLISH

See 10/29 Market Recap for more details.

HIGHLIGHTS OF THE OTHER ETFS IN MY PUBLIC CHART LIST

SIGNAL COMMENT
QQQQ 10/15 L
NDX Weekly UP %B too high with negative divergence.
NASI STO(5,3,3) sell signal.
NDX:SPX too high.
*Too far away from MA(200) (PPO(1,40,1) too high).
IWM
IWM Weekly UP
CHINA 07/15 L
CHINA Weekly UP
EEM *ChiOsc is too high.
EEM Weekly UP *EEM:SPX too high.
XIU.TO 08/31 L TOADV MA(10) too high.
XIU.TO Weekly UP
TLT *ChiOsc is too low.
TLT Weekly DOWN
FXE
FXE Weekly UP
GLD
GLD Weekly UP
GDX 10/29 L *ChiOsc a little high.
GDX Weekly UP *BPGDM too high, pullback?
USO
WTIC Weekly UP
XLE 06/15 L
XLE Weekly UP
XLF 10/15 L *Complex Head and Shoulders Bottom or Double Bottom breakout, target $16.74.
XLF Weekly UP
IYR
IYR Weekly UP Home builders are lagging.
XLB 11/02 L
XLB Weekly UP *BPMATE overbought. XLB:SPX a little too high.
  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. Position reported in short-term session of the table above is for short-term model only, I may or may not hold other positions which will not be disclosed.
  3. 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 trading signals will be given in this report except the mechanical signals such as SPY ST Model.
  4. * = New update; Blue Text = Link to a chart in my public chart list.
  5. Trading signals in OTHER ETFs table are mechanical signals. See HERE for back test results. 08/31 L, for example, means Long on 08/31.
  6. UP = Intermediate-term uptrend. Set when I see at least one higher high and higher low on weekly chart.
  7. DOWN = Intermediate-term downtrend. Set when I see at least one lower high and lower low on weekly chart.
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