05/16/2011 Market Outlook (Descending Triangle)


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SHORT-TERM: IN WAIT AND SEE MODE

Still no conclusion today. Could be a Descending Triangle in the forming which feels bad, but before a confirmed breakdown a Descending Triangle is just a possibility. Especially:

  1. Unlike its brother SPY, RSP (S&P Equal Weight ETF) has no lower low yet, which means the pullback today was not broad based. So cannot exclude the possibility that someone deliberately push down some heavy weighted stocks to make the market look bad, therefore the seriousness of today’s pullback is in question. However, about the “broad based”, there’s a more advanced topic which is beyond the scope of today’s report. If interested, take a look at 5.0.3 S&P Sector SPDRs I (5 min) and 5.0.4 S&P Sector SPDRs II (5 min), then you’ll know which sectors didn’t take part in today’s pullback.
  2. The Descending Triangle has no 3rd touch on either the upside or the downside yet, so there’re chances that the triangle is incomplete. Again, there’s a more advanced topic about the 3rd touch which is too complicated to discuss here. So let’s just make it simple here: the 3rd touch is not a must though.

Trading wise, as I’ve been blah blah lots of times in the past, signals can be confirmed and confirmed, there’s no end of it, so to a certain risk level where you feel comfortable, an action should be taken. Take now for an example, although officially chart patterns aren’t bad enough to confirm a downtrend yet but I certainly do think to sell the very first bounce may not be a very bad idea.

SPY60min

One chart may worth your attention today:

8.1.1 Normalized NATV/NYTV, this is another form of the famous 0.2.4 Nasdaq Total Volume/NYSE Total Volume. So called normalize means MACD(10, 200, 1), so that the base, which usually various from different period can be eliminated. Anyway, see dashed red lines, the signal WAS very reliable in calling a top. I know some may argue AGAIN that due to C reverse split so the volume nowadays is useless. Well, again, my responsibility is to tell you all the signals I see, while whether you believe or disbelieve or regard as a joke, are totally up to you, I don’t care (as long as you don’t say bad words directly into my face of course, LOL). Regarding TA signals, although there’re lots of times that they don’t work at all, but personally, I’d try my best not to think that this time might be different because if I always think that this time is different, then the conclusion drawn on it could hardly be objective.

NormalizedNATVtoNYTVRatio

INTERMEDIATE-TERM: SPX NOW IN 1352 TO 1381 WAVE 5 PRICE TARGET AREA, WATCH FOR POTENTIAL REVERSAL

Maintain what I said in 05/06 Market Outlook. Need pay attention to the possibility that wave 5 ends while primary wave 3 sharply down has started. Still just an attention, not even a warning though.

SEASONALITY: BULLISH MONDAY, BEARISH FRIDAY

According to Stock Trader’s Almanac:

  • Monday before May expiration, Dow up 19 of last 22, average gain 0.6%.
  • May expiration day, Dow down 12 of last 20, average loss 0.2%.

For May seasonality day by day please refer 04/29 Market Outlook.

ACTIVE BULLISH OUTLOOKS:

ACTIVE BEARISH OUTLOOKS:

HIGHLIGHTS OF THE OTHER ETFS IN MY PUBLIC CHART LIST: 

  TREND COMMENT
QQQ & Weekly UP  
IWM & Weekly UP  
SSEC & Weekly DOWN  
EEM & Weekly DOWN Double Top breakdown? Be careful. 
XIU & Weekly DOWN  
TLT & Weekly UP  
FXE & Weekly DOWN  
GLD & Weekly UP  
GDX & Weekly DOWN  
USO & Weekly DOWN  
XLE & Weekly DOWN  
XLF & Weekly DOWN *Descending Triangle breakdown? Be careful.
IYR & Weekly UP  
XLB & Weekly DOWN  
  • * = New update; Blue Text = Link to a chart in my public chart list.
  • UP = Intermediate-term uptrend. Set when weekly buy signal is triggered.
  • DOWN = Intermediate-term downtrend. Set when weekly sell signal is triggered.
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