07/11/2011 Market Outlook (Not Even a Bear Flag)


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SHORT-TERM: SELLING MIGHT NOT BE OVER YET

Two cents:

  1. The selling might not be over yet.
  2. Still think the 07/07 Highs will be revisited. However, there’s one minor problem I’d like your attention in case the lower odds case does happen that there’s no revisit of the 07/07 highs.

Why isn’t the selling over? Because so far there’s not even a Bear Flag. A strong pullback like we had today usually should be 2 legged, without Bull Flag could mean the very 1st down leg isn’t over yet. The argument is based on experiences so it’s not a solid one. Just think it as my wild-est-est-est-est-(inser 100 est here)-est guesses.

SPY60min

There’re some misunderstandings in today’s intraday comment. I was kidding, might be too Chinese, I didn’t mean I was bullish but when the market fell sharply then I suddenly didn’t care bulls anymore. The chart below is the evil plan I hatched in 07/01 Market Outlook, so far goes as planed, right? The argument at that time was NYMO too high so there should be a sharp pullback, so today’s market action is well expected. As for why I still think the 07/07 Highs will be revisited? There’re 2 important statistics backing me up:

  • As mentioned in 07/05 Market Outlook, it’d be a firework, skyrocketing high (indeed) then fell back to the ground (indeed), while this “fell back to the ground” is buy, because statistically, on average a new high would be within 15 calendar days. In fact, there’s only 1 out of 13 cases, it took 79 calendar days for the market to reach a new high while the rest cases, mostly reached a new high within 2 weeks.
  • As mentioned in 07/07 Market Outlook, when NYHGH had a new high and also above 450, it’s exactly the top only 1 out of 28 cases. So chances are very low that 07/07 High is the top.

As you all know, TA is not crystal ball, so cannot really tell you what will be happening in the future. All it can tell you is what happened thereafter when in the past the similar cases happened and hopefully the history repeats itself this time again. So, for now, all I can tell you are that based on the historical pattern, chances are high that 07/07 highs will be revisited within 2 weeks.

SPXEvilPlan

About this new high forecast, there’s one catch I’d like your attention. It’s just a warning though, I need gather more evidences before making it a solid conclusion. See chart below, when I said NYMO too high there’d be a sharp pullback, I was eyeing at the March 2009. The NYMO at that time was very high and indeed the pullback thereafter was sharp, however, at that time, for the same 2 days pullback vs the previous 2 days up, clearly, the pullback moved less therefore weaker and according to my “n vs n” rule, it’s clearly a buyable dip. While, nowadays, the last 2 days pullback had actually exceeded the whole previous 4 days advances, therefore it doesn’t look like a normal pullback anymore. So again whether we’ll see a low odds cases (no new highs), we’ll have to wait and see.NYMO

 

INTERMEDIATE-TERM: BULLISH JULY

See 07/01 Market Outlook and 07/05 Market Outlook for more details.

SEASONALITY: BULLISH MONDAY BEARISH FRIDAY, BEARISH JULY EXPIRATION WEEK

According to Stock Trader’s Almanac:

  1. Monday before July expiration, Dow up 6 of last 7.
  2. July expiration day, Dow down 6 of last 10, off 390 points (4.6%) in 2002.

Also see 07/01 Market Outlook for July seasonality chart

ACTIVE BULLISH OUTLOOKS:

ACTIVE BEARISH OUTLOOKS:

SUMMARY OF SIGNALS FOR MY  PUBLIC CHART LIST: 

  TREND MOMENTUM COMMENT
Long-term 2 of 2 BUY
Intermediate 5 of 5 BUY 5 of 5 NEUTRAL Cobra Impulse in BUY mode; Non-Stop in BUY mode.
Short-term 6 of 6 NEUTRAL
  TREND COMMENT
QQQ & Weekly UP  
IWM & Weekly UP ChiOsc too high.
SSEC & Weekly UP  
EEM & Weekly UP
XIU & Weekly DOWN  
DAX & Weekly UP  
TLT & Weekly DOWN  
UUP & Weekly DOWN
GLD & Weekly UP Symmetrical Triangle?
USO & Weekly UP  
XLE & Weekly UP  
XLF & Weekly UP
IYR & Weekly UP  
XLB & Weekly UP ChiOsc too high.
  • * = 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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