09/12/2011 Market Outlook (Bullish Reversal Day)


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SHORT-TERM: A BOTTOM WAS IN OR VERY CLOSE, NOT VERY BRIGHT TOMORROW THOUGH

Today could be at least a short-term bottom (or close), because from the chart below, the exceptions were exceptionally rare, that a day like today, mostly meant at least a few days rebound, when SPY gapped down, made a lower low but eventually closed in green. As mentioned in today’s Trading Signals, I saw reversal bars everywhere, so don’t just remind me that you see VIX black bar or UUP black bar, etc etc.

BullishReversalDay

The only thing I’m worried today is the reversal happened just one hour before the close which is pretty much unlike a typical bullish reversal day. The chart below is from Bespoke, happens to prove what I’m worried. That said, a 80% chances of red tomorrow doesn’t necessarily prove that the bottom wasn’t in or close, it only says, market may move back and forth tomorrow (or even for a few more days), so be prepared.

LaterDayRally

If indeed the bottom was in, then where the target might be? See the chart below, as mentioned in the weekend report, since the rebound a > a’ while pullback b’ > b, so it implies that bulls are weakening while bears are getting stronger, therefore if the same rule continues, the rebound this time should be weaker than the last time which means it’ll end within the tinted area.

SPYEvilPlan

1.2.0 INDU Leads Market, some may point out that INDU had a lower low today, so it should mean that SPX would have a lower low eventually. Well, possibly. Just the lower low today is not lower than the last Swing Low, therefore is not a significant lower low. Besides, even eventually SPX had a lower low but still it doesn’t prove the bottom wasn’t in or close, as it’s still possible we have a rebound first then fall back to make a lower low. Honestly, I personally find very reluctant to believe that the bottom was in, just I really don’t have any solid evidences to prove what I rather believe.

INDULeadsMarket

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

See 08/19 Market Outlook for details.

SEASONALITY: BULLISH FRIDAY

According Stock Trader’s Almanac, September Triple Witching, Dow up 6 straight and 7 of last 8.

See 09/02 Market Outlook for September seasonality.

SUMMARY OF SIGNALS FOR MY  PUBLIC CHART LIST: 

TREND MOMENTUM COMMENT
Long-term 3 of 3 SELL
Intermediate 3 of 5 BUY 4 of 5 NEUTRAL Cobra Impulse in BUY mode; Non-Stop in BUY mode.
Short-term DOWN 6 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.
XIU & Weekly DOWN
DAX & Weekly DOWN  
TLT & Weekly UP  
UUP & Weekly UP Breakout of long time consolidation area, not confirmed thought, but be careful.
GLD & Weekly UP  
USO & 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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