07/29/2011 Market Outlook (Lower low then close the week in green)


Cobra's Market View Private Messaging System shows:


SHORT-TERM: LOW WAS IN OR VERY CLOSE, BUT THE REBOUND LIKELY BE ANOTHER SELL OPPORTUNITY

Two cents:

  1. Low was in or very close. However, most likely it’s just a tradable bottom not the low.
  2. Bears have at least one more chance to sell the bounce.

Why was low in or very close?

  • The chart below says, VIX weekly rose 40%+, 76% chances green the next week but also 76% chances there’ll be a lower low first.

VIXWeeklyRose40Percent

  • As mentioned in the Friday’s Trading Signals, Cobra Impulse System detected the low and therefore requested to cover the short position. The chart below shows all the past cases when such a low was detected. Not absolutely the low but should be close enough, shouldn’t it?

PanicLow

NYMO

  • QQQ hollow red bar.

QQQHollowRedBar

Why will bears have at least one more chance to sell the bounce?

Still it’s the law of inertia, SPY down 5 days in a row means selling pressure is high therefore a V shape reversal is rare, at least the low will be revisited sometimes later. Listed in the charts below are all the past cases since year 2000 when SPY down 5 or more consecutive days, should be enough to prove what I said. The revisit of the low can sometimes be higher low but from the charts we can see that more likely it’s going to be a lower low.

SPXDown5Days0
SPXDown5Days1
SPXDown5Days2
SPXDown5Days3
SPXDown5Days4

INTERMEDIATE-TERM: OFFICIALLY TO ME IS IN DOWNTREND

In wait and see mode, no update.

SEASONALITY: BEARISH FIRST 9 TRADING DAYS OF AUGUST

According to Stock Trader’s Almanac:

  1. First trading day in August weak, Dow down 9 of last 13, up 1.1% in 2007 and 1.3% in 2009.
  2. First 9 trading days of August are historically weak.

The below seasonality char about August is from Bespoke.

AugSeasonalityMonthByMonth

The below August day by day seasonality chart is from Sentimentrader.

AugSeasonalityDayByDay

ACTIVE BULLISH OUTLOOKS:

ACTIVE BEARISH OUTLOOKS:

SUMMARY OF SIGNALS FOR MY  PUBLIC CHART LIST: 

TREND MOMENTUM COMMENT
Long-term 2 of 2 BUY
Intermediate 4 of 5 SELL 4 of 5 NEUTRAL Cobra Impulse in SELL mode; Non-Stop in BUY mode.
Short-term DOWN 3 of 6 OVERSOLD
  TREND COMMENT
QQQ & Weekly UP 4.1.1 Nasdaq 100 Index (Weekly): SOX lags, be careful.
IWM & Weekly *DOWN  
SSEC & Weekly *DOWN  
EEM & Weekly UP  
XIU & Weekly *DOWN  
DAX & Weekly *DOWN  
TLT & Weekly *UP  
UUP & Weekly DOWN
GLD & Weekly UP  
USO & Weekly UP  
XLE & Weekly UP  
XLF & Weekly DOWN
IYR & Weekly *DOWN 4.4.3 Real Estate iShares (IYR Weekly): XHB lags, be careful.
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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