11/24/2010 Market Recap: More Rebound then a 2nd Leg Down


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 SELL mode; Non-Stop in BUY mode.
Short-term Model is *BUY 6 of 6 are NEUTRAL I hold both long and short overnight.
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. Failed!
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: 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, so top is close?
0.2.2 Extreme Put Call Ratio Watch: CPC is too low, so top is close?
*
11/22 Market Recap: OEX put call ratio surges, so top is close?
6.3.2b Major Distribution Day Watch: 2 MDD within 5 days means more pullback ahead?
11/23 Market Recap: SPX down 1.4%+ but ISEE Equities Only Index > 200 means more pullbacks.
*11/24 Market Recap: MAD right after MDD means rebound then a 2nd leg down.
*
0.2.2 Extreme Put Call Ratio Watch: CPCI 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 11/23 S 1.9*ATR(10)
NYMO Sell 11/12 S 11/12 High *Adjust stop loss. Reference only, not meant to be followed.

SHORT-TERM: MORE REBOUND THEN A 2ND LEG DOWN

The huge rebound today was expected, especially if you paid enough attention to the chart I gave yesterday about 2 Major Distribution Day within 5 Trading Days (6.3.2b Major Distribution Day Watch), so I’ll maintain what I said yesterday that the intermediate-term is in danger of turning into downtrend.

For short-term, I’ll say: Be careful! Because on one hand people were buying crazy while on the other hand the OEX Put Call Ratio skyrocketed high again. So basically, I’ll maintain what I said in today’s After Bell Quick Summary: An immediate higher high (higher than today’s high) is almost guaranteed on Friday, probably we’ll see more rebound thereafter but eventually there will be a 2nd leg down.

Let’s begin with how crazy people were buying today. If you’ve been reading my blog since the beginning of this year, you may remember the WOW. Remember what happened thereafter (See HERE for the past 11 WOWs)? I’m not sure if I can say WOW today but the Nasdaq Intraday Cumulative TICK is, well, a little bit too extreme. The reading of 7431 is extreme even in that amazing WOW age, so be careful here.

NDXIntradayCumTICK 

On the other hand, still remember what I mentioned in 11/22 Market Recap about skyrocketed high OEX Put Call Ratio? Well, more extremes today. This is very likely an intermediate-term top sign. Please refer to 11/22 Market Recap for the past history.

OEXPutCallRatio 

Since the OEX Put Call Ratio skyrocketed high then inevitably the CPCI is very high too. The chart below highlighted all recent cases whenever CPCI >=1.90. At least it’s a short-term top, wasn’t it? The failed cases were very very rare, weren’t it? Here, let me emphasis again, I draw conclusion only from charts, so don’t tell me because of blah blah blah, so this time is different or it’s way too illogical. If you always tend to think that this time is different, then better forget about TA, period.

CPCIWatch 

The last evidence, not the least of course, about why we’ll see more rebound then a 2nd leg down. See chart below, marked by dashed blue lines are all past cases a Major Accumulation Day happened right after a Major Distribution Day (This is exactly what happened today and yesterday). The samples are too few but combining all the evidences I’ve given recently and how crazy the market is now, so odds are good that we may repeat exactly the past pattern – rebound then a 2nd leg down. So again, be careful!

MADRightAfterMDD 

INTERMEDIATE-TERM: 2 MAJOR DISTRIBUTION DAYS WITIN 5 DAYS MEANS MORE PULLBACKS AHEAD

The intermediate-term is in danger of entering a downtrend. See 11/23 Market Recap for more details.

SEASONALITY: 59% CHANCES, BUY TUESDAY SELL FRIDAY COULD BE A WINNING TRAD IN THANKSGIVING WEEK SINCE 1988

See 11/19 Market Recap for more details.

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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