08/05/2011 Market Outlook (Rebound, maybe, but the low might not be in yet)


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

Still the old cliche, rebound, may be, but such a rebound most likely is a sell opportunity.

I’ve mentioned lots of evidences in 08/04 Market Outlook arguing for a rebound. They become even more extreme after the Friday session, so will maintain the conclusion that a sizeable rebound could be within 3 trading days (starting from 08/05). Listed below are all the extremes I mentioned recently. Among them, the T2122 is newly added which I hope you still remember is my ultimate weapon for watching oversold and overbought. It’s not there yet, but close, worth paying attention now.

T2122


T2116
NYMO
IndicatorsAtExtremes

I’ve been blah blah in almost all my recent Market Outlook about the law of inertia, arguing such a strong push down, usually the very first rebound would fail. My main argument so far is NYMO missing positive divergence. Today, I’d like you to meet my 3 other witnesses:

  • Take a look at the bottom patterns when correction was larger than 14% (which means the push down was very strong). Personally, I even think we’re now still on the very 1st leg down.

3PushDown

VIXRose35PercentIn2Days0
VIXRose35PercentIn2Days1
VIXRose35PercentIn2Days2
VIXRose35PercentIn2Days3

  • By Friday close, we had another day that SPY daily body is completely below its BB bottom. Listed below are all the cases since year 2000. Also arguing that it’s rare the Friday’s low is exactly the low, at least it’ll be revisited later assuming huge rebound starting from the next Monday. Also you can check my public chart list for more histories, starting from 8.3.6a SPY Daily Bar Completely Below BB Bottom – 1993.

SPYDailyBarCompletelyBelowBBBottom0
SPYDailyBarCompletelyBelowBBBottom1
SPYDailyBarCompletelyBelowBBBottom2
SPYDailyBarCompletelyBelowBBBottom3
SPYDailyBarCompletelyBelowBBBottom4
SPYDailyBarCompletelyBelowBBBottom5
SPYDailyBarCompletelyBelowBBBottom6

INTERMEDIATE-TERM: CONCEPT ONLY, THE WORSE CASE SPX DOWNSIDE TARGET  IS 1,000

I have no solid evidences to talk you into believing some scary intermediate-term target. The chart below is concept only. Generally, most big pullbacks in a bull market ended at BB mid line. We’re now at such a general target and if the market cannot hold here, then the next target would be the BB bottom which is around SPX 1,000.

SPXMonthly

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 3 SELL
Intermediate 5 of 5 SELL 3 of 5 NEUTRAL Cobra Impulse in SELL mode; Non-Stop in SELL mode.
Short-term DOWN 4 of 6 *NEUTRAL
  TREND COMMENT
QQQ & Weekly *DOWN 4.1.1 Nasdaq 100 Index (Weekly): SOX lags, be careful.
IWM & Weekly DOWN  
SSEC & Weekly DOWN  
EEM & Weekly *DOWN  
XIU & Weekly DOWN 1.5.9 TSE McClellan Oscillator: Oversold.
DAX & Weekly DOWN  
TLT & Weekly UP  
UUP & Weekly DOWN
GLD & Weekly UP  
USO & Weekly *DOWN  
XLE & Weekly *DOWN *4.4.1 Energy Select Sector SPDR (XLE Weekly): BPENER oversold.
XLF & Weekly DOWN *4.4.2 Financials Select Sector SPDR (XLF Weekly): Testing long term support, critical time.
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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