08/04/2011 Market Outlook (Sell the Bounce?)


Cobra's Market View Private Messaging System shows:


SHORT-TERM: EXPECT REBOUND SOON, BUT REBOUND, IF ANY, IS SELL

Thee conclusions:

  1. Rebound, as early as tomorrow, no later than 3 trading days. The rebound size might not be small.
  2. Rebound, if any, is sell.
  3. Ironically, a red close tomorrow is actually good for bulls.

Everyone knows the market is oversold, therefore a rebound is just a matter of time. The question is when? My guess is tomorrow the earliest or no later than 3 trading days. The chart below is my main witness. NYSE Down Volume to NYSE Up Volume Ratio >= 35, seems a tradable bottom within 3 trading days.

MDD

Listed below are all the other heavy weight evidences arguing for a rebound. They’re no ordinary signals therefore are more reliable.

  • Usually a huge rebound after 3 Major Distribution Days. This even worked in year 2008, perhaps at that time was the only chart that worked, so very reliable.

MADandMDD

  • NYMO extremely oversold.

NYMO

  • T2116, Percent of NYSE stocks 2 std dev above MA(40).

T2116

IndicatorsAtExtremes

  • As mentioned in today’s Trading Signals, VIX rose 18%+ means 77% chances a green day tomorrow.

VIX

Why, rebound if any, is sell? I’ve been blah blah this for quite a time. It’s the law of inertia, NYMO new low means the downward movements are still accelerating, therefore very hard to reverse immediately. A visible NYMO positive divergence implies, a sizeable rebound then lower low while at the same time no new low on NYMO.

NYMOPositiveDivergenceNeeded

The chart below is another reason for sell, if rebound right away tomorrow, a SPX lower close is almost guaranteed.

NYADV

Why is a red tomorrow good for bulls? See chart below, a red Non Farm Payroll day tomorrow usually means a reversal which in the current case should mean a reverse up.

NFP

The last but not the least, a reminder, a typical Non Farm Payroll day intraday pattern is open high go lower or open low go higher. The chart below is from Bespoke.

NFPIntraday

INTERMEDIATE-TERM: IN DOWNTREND, HEAD AND SHOULDERS TOP, TARGETING SEP 2010 LOWS

See 08/03 Market Outlook for more details.

SEASONALITY: BEARISH FIRST 9 TRADING DAYS OF AUGUST

See 07/29 Market Outlook for more details. Also please see 07/29 Market Outlook for day to day August 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 SELL 4 of 5 NEUTRAL Cobra Impulse in SELL mode; Non-Stop in SELL 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 *Head and Shoulders Top, targeting Nov 2010 lows.
SSEC & Weekly DOWN  
EEM & Weekly UP  
XIU & Weekly DOWN *1.5.9 TSE McClellan Oscillator: Oversold.
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 *Head and Shoulders Top, targeting Nov 2010 lows.
  • * = 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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