10/07/2011 Market Outlook (Bearish Reversal and Red NFP Day)

Cobra's Market View Private Messaging System shows:

SHORT-TERM: NOT SURE IF THE REBOUND IS OVER, THE OCT 4 LOW IS THE KEY TO WATCH

The chart below explains how I read the market:

Because the 3rd lower low is much shallower than the 2nd lower low, so pattern wise, chances are very high that the Oct 4 low is the low.
From the fact we had a Red Non Farm Payroll day as well as a Bearish Reversal day this Friday, I cannot exclude the possibility that the rebound since the Oct 4 low was over or very close. Pay attention the wording here, I’m not sure and that’s why I said I cannot exclude the possibility.
As per 2 judgements above, I believe the route A in the chart below has the best chances that if indeed a pullback the next week, chances are it won’t be a lower low. The route B is essentially the same as route A, so I don’t bother to discuss it here.
There’s one minor defect for the above judgements though as I cannot explain the NYSI weekly STO sell signal mentioned in 09/30 Market Outlook which pretty much argues that route C has the highest odds. Let me just put this question aside for now as there’re some rare cases the market did rebound for a few more weeks after such a sell signal and plus we could only know C after both A and B are failed so we should have plenty of time to respond if indeed C.

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Now let me prove why I cannot exclude the possibility that the rebound since the Oct 4 low was over or very close:

Red Non Farm Payroll day WAS usually a turning point.

Besides the red Non Farm Payroll day, Friday is also a Bearish Reversal Day.

I see price overlay on the IBM daily chart, looks like a 3 Push Up therefore could be a Double Top in the forming. Take a look at the AAPL daily chart below, we should then know what would happen after a 3 Push Up to test the previous high. The AAPL today, could be the tomorrow’s IBM. And since IBM weights more 12% in INDU, so if IBM goes down then so will INDU.

INTERMEDIATE-TERM: SPX DOWNSIDE TARGET IS 1,000

See 08/19 Market Outlook and 09/30 Market Outlook for details.

SEASONALITY: NO UPDATE

See 09/30 Market Outlook for October day to day seasonality chart.

SUMMARY OF SIGNALS:

	TREND	MOMENTUM	COMMENT
Long-term	3 of 3 SELL
Intermediate	5 of 5 SELL	4 of 5 NEUTRAL	Cobra Impulse in SELL mode; Non-Stop in SELL mode.
Short-term	UP	6 of 6 NEUTRAL

* = New update.

Chinese Transcript

SHORT-TERM: NOT SURE IF THE REBOUND IS OVER, THE OCT 4 LOW IS THE KEY TO WATCH

下面的图示意了我对目前大盘的解读：

因为the 3rd lower low比the 2nd lower low要浅很多，所以从形态上讲，Oct 4 low是the low的可能性非常大。
从本周五的Red Non Farm Payroll day以及Bearish Reversal bar看，不能排除自Oct 4 low以来的反弹已经结束的可能。注意，我不确定，所以我说不能排除结束的可能。
根据上面两个判断，我认为下图中A走法的可能性最大，下周如果有pullback的话，多半不会形成lower low。B的走法其实跟A没有多少差别，所以这里就不讨论了。
以上的判断，并不能很好的解释09/30 Market Outlook里提到的NYSI Weekly STO Sell signal。几率上讲，C的走法的可能性应该比较大。关于这个疑问，我们先放一放，因为毕竟不能排除少数几个case，大盘连续反弹几周的可能。反正要证明C，至少也是在A和B都失败以后，因此我们有足够的时间准备。

下面证明一下为什么说不能排除在Oct 4 low以来的反弹已经结束的可能：

Red Non Farm Payroll day往往是转折点。

周五除了是red Non Farm Payroll day以外，还是个Bearish Reversal Day。

IBM这一轮反弹overlap的厉害，看着像是3 Push Up，因此很可能是在做Double Top。看看AAPL就知道这样的3 Push Up to test the previous high以后会发生什么了，AAPL的今天多半就是IBM的明天。大家知道，IBM在INDU里占了12%，因此如果IBM不好的话，INDU也不会好到哪里去。