08/19/2011 Market Outlook (Lower Low Ahead?)


Cobra's Market View Private Messaging System shows:


SHORT-TERM: LOWER LOW AHEAD

Two conclusions:

  1. It’s rare the Friday’s low was the low although I still believe we’ll have a sizeable rebound (See 08/18 Market Outlook) no later than the next Tuesday.
  2. SPX downside target at 1,000, the correction may last 1 to 2 months on average. I’ll discuss this in the intermediate-term session.

Why is it rare the Friday’s low was the low?

VIXRose30PercentIn2Days

  • Red OE week this week, so 80% chances, either red the next week or at least a lower low first.

SeasonalityAfterRedOEWeek

Below is just to acknowledge that i do see the unusual high of Normalized CPC and CPCE, therefore at least a short-term bottom should be very close now. Just I don’t see any of my ultimate weapons for watching oversold are near extreme level yet, so I don’t believe it’s the time to do the bottom fish. Well, even it’s the time, I’ll just do the talk here as you all know that I never front run the market.

NormalizedCPCNormalizedCPCE

INTERMEDIATE-TERM: SPX DOWNSIDE TARGET  IS 1,000, THE CORRECTION COULD LAST 1 TO 2 MONTHS

In 08/05 Market Outlook, I mentioned the SPX downside target would be the monthly BB bottom which is around 1,000 for now. I didn’t have any solid evidences at that time therefore it was just a concept. Now, because of the statistics from Bespoke and Schaeffer below, I officially call for SPX downside target at 1,000 and the correction could last 1 to 2 months on average.

SPXMonthly
SPXDrop15PercentIn10DaysNegativeWeekFollowingDeathCross

The chart below is info only as many people use SPX weekly EMA13 and EMA34 bearish crossover as the long term sell signal which was clearly triggered this week. Historically thought, such a sell signal mostly didn’t work. The long term signal I like the most FOR NOW is 4.9.1 TSX Long Term Trading Signals which also applies to SPX as well and which issued sell signal at the end of July. Click the link to see the chart yourself. I’ll explain the idea (of long term investment for your 401K or RRSP) in another post later.

WeeklyEMACrossover

SEASONALITY: NO UPDATE

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 3 of 3 SELL
Intermediate 5 of 5 SELL 3 of 5 NEUTRAL Cobra Impulse in BUY mode; Non-Stop in SELL mode.
Short-term DOWN 5 of 6 NEUTRAL
  TREND COMMENT
QQQ & Weekly DOWN  
IWM & Weekly DOWN  
SSEC & Weekly DOWN 4.1.4 Shanghai Stock Exchange Composite Index (Weekly): Long term support broken.
EEM & Weekly DOWN  
XIU & Weekly DOWN  
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): Long term support broken.
IYR & Weekly DOWN  
XLB & Weekly DOWN *4.4.4 Materials Select Sector SPDR (XLB Weekly): BPMATE oversold.
  • * = 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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