02/10/2011 Market Recap: 2.5%+ pullback either has started or never?


Cobra's Market View Private Messaging System shows:


  TREND MOMENTUM COMMENT
Long-term 2 of 2 are BUY  
Intermediate 3 of 5 are BUY 4 of 5 are NEUTRAL SPY ST Model in BUY mode; Non-Stop in BUY mode.
Short-term 6 of 6 are NEUTRAL
GANN DAY MOON:SOLAR CYCLE CONCLUSION
01/26,02/04 02/02 : 02/04 02/13,02/19 Next pivot date: 01/26,02/04
BULLISH 09/27 Market Recap: 9 POMO within 20 trading days means 14%+ up in 3 months.
4.1.0 S&P 500 Large Cap Index (Weekly): Cup with Handle, target 1428.
BEARISH 1.0.6 SPY Unfilled Gaps: 27 unfilled gaps, the max is 27.
01/07 Market Recap: Strong Off-Season means poor Earning Season.
4.0.4 Dow Theory: Averages Must Confirm: BPSPX is way too overbought.
4.0.1 SPX Long-term Trading Signals: Weekly EMA(13) is way too high above weekly EMA(34).
4.1.0 S&P 500 Large Cap Index (Weekly): Price is now too high above MA(200).
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
ST Model 02/01 L Breakeven On 02/03, stopped out of long position entered on 02/01 flat.
Short-term N/A N/A Trend is UP. I hold trapped short position overnight.
My Thoughts I see no reason to short but am not convinced yet this is the primary 3 of 3 to much much higher.

SHORT-TERM: 2.5%+ PULLBACK EITHER HAS STARTED OR NEVER

First of all, we must admit, today’s sharp gap down then sharp reversal to close in green is in general a very bullish pattern, so chances are good that the market may follow-through thereafter. So the conclusion today: "2.5%+ pullback either has started or never” is rather speculative, for fun only.

Two reasons:

  1. As mentioned in 02/04 Market Recap, 61 trading day is a threshold for not having 2.5%+ pullbacks, today is the 59th trading day which means if indeed we’ll have a 2.5%+ pullback, it should be within days.
  2. INDU has been up 7+ days in a row, the chart below shows all the past 9 such cases since year 2000. Among them, 5 out of 9, a 7+ consecutive up days was followed immediately by a 2.5%+ pullback, while the other 4 cases, there’re none. So if the history still repeats, then today should either be the start of the 2.5%+ pullback as today is the very first red day after INDU 8 consecutive up days (that 5 out 9 cases); Or we have to wait for another 89 trading days before any meaningful pullback (the other 4 cases). Besides, by the way, even indeed the pullback has started, bears better not hope too much because only 1 out of 9 cases it’s a start of a meaningful pullback while the others simply took a few days breadth. This should make sense because this is still Earth where everything complies with the law of  inertia so it’s very rare that a strong up momentum like 8 consecutive up days would reverse all of sudden without slowing down first.

INDU7ConsecutiveUpDays

The chart below illustrates what I’ll close watch tomorrow. Still the same old blah blah, you want to be a bear, sure, but firstly, show me at least an intraday lower low (so called 1-2-3 Trend Change).

SPY60min

INTERMEDIATE-TERM: WHETHER THIS IS PRIMARY 3 OF 3 TO GALAXY FAR FAR AWAY WE MAY KNOW WITHIN 2 WEEKS

See 02/04 Market Recap for more details.

SEASONALITY: BEARISH THE NEXT WEEK FOR NASDAQ, FEBRUARY SEASONALITY IS GENERALLY NOT BULLISH

See 02/04 Market Recap for more details.

HIGHLIGHTS OF THE OTHER ETFS IN MY PUBLIC CHART LIST

SIGNAL COMMENT
QQQQ 01/28 S
NDX Weekly UP BPNDX is way too overbought.
IWM
IWM Weekly UP
CHINA
CHINA Weekly DOWN
EEM
EEM Weekly DOWN
XIU.TO 02/04 L TOADV MA(10) is a little too high, all led to a pullback of some kind recently.
XIU.TO Weekly UP
TLT
TLT Weekly DOWN
FXE
FXE Weekly UP
GLD
GLD Weekly DOWN STO is way too oversold, led to a rebound the last 2 times.
GDX 02/03 L
GDX Weekly DOWN
USO
WTIC Weekly UP
XLE 02/09 S
XLE Weekly UP Too far above MA(200).
XLF 10/15 L
XLF Weekly UP Testing resistance which also is multiple Fib confluences area.
IYR
IYR Weekly UP
XLB 02/09 S
XLB Weekly UP BPMATE is way too overbought.
  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 trading signals will be given in this report except the mechanical signals such as SPY ST Model.
  3. * = New update; Blue Text = Link to a chart in my public chart list.
  4. 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.
  5. UP = Intermediate-term uptrend. Set when I see at least one higher high and higher low on daily chart.
  6. DOWN = Intermediate-term downtrend. Set when I see at least one lower high and lower low on daily chart.
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