11/19/2010 Market Recap: Buy Tuesday Sell Friday


Cobra's Market View Private Messaging System shows:


  TREND MOMENTUM COMMENT
Long-term 2 of 2 are BUY  
Intermediate 3 of 5 are SELL 5 of 5 are NEUTRAL SPY ST Model in BUY mode; Non-Stop in BUY mode.
Short-term Model is BUY, not confirmed though. 6 of 6 are NEUTRAL Uptrend not confirmed. I hold short position over the weekend for a speculation play, not because it’s safe to do so.
GANN DAY MOON:SOLAR CYCLE CONCLUSION
11/26 11/21 : 11/22 Week 11/26 Next pivot date: 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.
10/29 Market Recap: The last 2 months of year are bullish.
11/05 Market Recap: SPX daily bar completely out of BB may mean bulls are safe till the year end.
11/12 Market Recap: 77% chances the 11/05 high will be revisited in 3 weeks.
*1.0.1 S&P 500 SPDRs (SPY 15 min): Head and Shoulders Bottom breakout? Target $122.63.
*Stock Trader’s Almanac: 59% chances since 1988, buy Tuesday sell Friday in Thanksgiving week.
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.
11/12 Market Recap: Smart/Dump money confidence spread too high.
0.2.1 10Y T-Bill Yield: ROC(30) >= 9, topped? (Due to Quantitative Easing, I’m not sure if it still works)
6.2.3 VIX:VXV Trading Signals: Too low.
*0.2.2 Extreme Put Call Ratio Watch: CPC is too 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 09/07 L N/A Partial profits on 09/24.
ST Model 11/18 L 1.9*ATR(10) There still is a validity problem unless up huge the next Monday.
NYMO Sell 11/12 S Breakeven Reference only, not meant to be followed.

SHORT-TERM: COULD SEE MORE REBOUND, DON’T EXPECT TO GO VERY FAR THOUGH, THE NEXT PIVOT WINDOW IS FROM 11/24 TO 11/26

Three things to say:

  1. Not sure whether the rebound is over. I will temporarily assume more to go.
  2. Don’t expect the rebound to go too far, so maintain the forecast for expecting a 2nd leg down.
  3. The next possible pivot time window is from 11/24 to 11/26. My guess is it could be the pivot top.

Now let’s talk reasons. All are not very solid, so I’m actually neutral now (aka clueless), will have to wait and see.

Why the rebound may have more to go?

1.0.1 S&P 500 SPDRs (SPY 15 min), could be a Head and Shoulders Bottom breakout, the text book target is $122.63.

SPY15min 

The next week is Thanksgiving shortened trading week (close on Thursday and half day on Friday), the seasonality was bullish which according to the Stock Trader’s Almanac (2010), we should buy Tuesday then sell Friday. Hold until the next Monday after Thanksgiving week however, was a bad idea especially since year 2004.

Since 1988, Wednesday – Friday, gained 13 of 22 times (59%), with a total Dow point-gain of 657.51 versus Monday’s total Dow point-loss of 870.79, down five straight 2004 – 2009. The best strategy appears to be coming into the week long and exiting into strength Friday.

 ThanksgivingDow

Why I don’t expect the rebound to go too far?

6.2.3 VIX:VXV Trading Signals, as already mentioned in 11/18 Market Recap, VIX:VXV is too low, and it’s still pretty low on Friday.

VIXtoVXVRatioWatch 

0.2.2 Extreme Put Call Ratio Watch, it seems CPC too low wasn’t a good sign, well, mostly.

CPCWatch 

1.2.0 INDU Leads Market, INDU had a lower low already which could imply that SPX will have a lower low eventually. Refer HERE for more evidences about INDU Leads Market, if interested.

INDULeadsMarket 

1.1.0 Nasdaq Composite (Daily), looks like it’s very hard for COMPQ to hold its 10th gap. The anatomic charts below should be clear why I said COMPQ could hardly hold its 10th gap. Besides, if history could repeat this time, then at least 3 gaps would be filled before the pullback ends. This looks very substantial which I believe nobody would believe at the current stage. Well, let’s see.

CompqUnfilledGapsOct2009CompqUnfilledGapsDec2009
CompqUnfilledGapsApr2010CompqUnfilledGapsNov2010   

Why the next possible pivot time window is from 11/24 to 11/26? Why I think it could be the pivot top?

See chart blow, lots of reasons:

  1. Multiple Gann Day due from 11/24 to 11/27.
  2. Have you noticed that so far lots of important pivot date this year happened on month day 25 to day 27? Don’t believe such kind of date coincidence? Well, then how do you explain the magic day 6 I mentioned before as we just experienced the 02/05 bottom, the 05/06 crash and perhaps the 11/05 top?
  3. 15 week cycle due on week 11/26.
  4. The rebound so far this year, mostly took 5 to 7 trading days. The rebound now takes only 3 trading days, so could be 2 to 4 more trading days to go, which happens to be around 11/24 to 11/26.
  5. Remember the Thanksgiving seasonality mentioned above? It’s bullish until 11/26. The next Monday, however was bearish especially since year 2004. This also fits well with my seasonality chart 6.5.2c Week Seasonality Watch and 6.5.2b Month Day Seasonality Watch, which say the last trading week as well as the last 2 trading days each month since August 2009 were bearish. This, by the way, is the major reason, I think 11/26 could be the pivot top.

TimeAnalysis 

INTERMEDIATE-TERM: THE FIRST 2.5%+ PULLBACK AFTER A 40+ STRAIGHT UP TRADING DAYS WAS USUALLY A BUY

See 11/12 Market Recap for more details.

SEASONALITY: THANKSGIVING WEEK ARE KNOWN AS BUY TUESDAY SELL FRIDAY BUT I DON’T SEE MUCH EDGE SINCE 2004

According to Stock Trader’s Almanac (2010), since 1988, Wednesday – Friday, gained 13 of 22 times (59%), with a total Dow point-gain of 657.51 versus Monday’s total Dow point-loss of 870.79, down five straight 2004 – 2009. The best strategy appears to be coming into the week long and exiting into strength Friday.

The seasonality chart around Thanksgiving below is from sentimentrader.

holiday_thanksgiving 

For November seasonality chart please refer to 11/11 Market Recap for more details.

HIGHLIGHTS OF THE OTHER ETFS IN MY PUBLIC CHART LIST

SIGNAL COMMENT
QQQQ 11/16 S
NDX Weekly UP NASI STO(5,3,3) sell signal.
IWM  
IWM Weekly UP
CHINA Big red bar means more pullbacks ahead, so be careful.
CHINA Weekly UP
EEM
EEM Weekly UP
XIU.TO 11/16 S
XIU.TO Weekly UP
TLT
TLT Weekly DOWN
FXE
FXE Weekly UP
GLD
GLD Weekly UP
GDX 11/16 S
GDX Weekly UP
USO
WTIC Weekly UP
XLE 06/15 L
XLE Weekly UP %B is too high with negative divergence.
XLF 10/15 L
XLF Weekly UP
IYR
IYR Weekly UP Home builders are lagging.
XLB 11/16 S
XLB Weekly UP
  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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