10/21/2011 Market Outlook (Still it is 3 Push Up)


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SHORT-TERM: EXPECT PULLBACK SOON, HUGE UP MONDAY WOULD MAKE TUESDAY GOOD DAY TO BET PULLBACK

Two cents:

  1. The big picture, maintain what I said in 10/14 Market Outlook, it’s a 2 legged up and we’re now on the very 1st leg up.
  2. In the short-term, I believe the 1st leg up is near an end.

The chart below should help jogging your memory about the picture I see through my crystal ball. I see clearly 3 Push Down, so now should be 2 leg up. I’ve also via the signal called Selling Climax proved the possibilities are high that we’d see multi weeks rally in 10/14 Market Outlook. Except to shift the blue dashed lines (for illustrating directions) a little bit right to leave space for price bars, I didn’t change anything in the chart below, so it’s clear the rise of this week was expected. Well, more precisely, I didn’t expect bulls to spend a whole week to reach the point I drew last week, I thought it’d be much sooner  and we should’ve already rolled over this week. Anyway, the only plan changed here is it takes more time than I thought to unfold the pattern, so I still expect a little bigger pullback soon to mark the end of the 1st up leg.

3PushDown

I believe the 1st up leg would end as early as the next week. In 10/20 Market Outlook, I said a top of some kind could be near, and the Friday’s huge rally wasn’t enough to change my view because from the chart below, still clearly it’s 3 Push Up pattern. So here is my formal evil plan as illustrated by red dashed lines below.

SPYEvilPlan

Please be noted that in the chart above I didn’t deny the possibility of a huge up the next week (well, it’s typical of Cobra, always two sided, never certain on one direction) which would sure invalidate my evil plan based on 3 Push Up pattern. No, I cannot exclude such a possibility (you want to read someone always sure about what the next is, well, I’m not the one, there’s absolutely no sure thing in the stock market, everything is about odds, if someone always sure and always right, he won’t be blogging here, he’d pretty much the richest in the world), but I have enough evidences to prove that if indeed a huge up the next Monday, then it’d be all gone as early as the next Tuesday. So in some sense, a huge up Monday could be bears opportunity (for aggressive traders only of course, because it’s against the trend). OK, now let me present my witnesses below, why up huge could be bears opportunity:

  • Friday is another up 1.65% but not even close to a Major Accumulation Day, since we’re now beyond that 7 Days Rule time window, so 83% odds are certainly not something I would doubt without thinking twice, that it’d drop below the Friday’s close within 2 days.

UpBigNotMAD

  • The two of my ultimate weapons for watching overbought, NYMO and T2122, are now very close to extremes. I said several times before, although in the stock market there’s no sure thing but still there’re certain signals that simply cannot be argued, such as NYLOW (Hope you still remember when I mentioned this unarguable in 10/03 Market Outlook and 10/04 Market Outlook, I’m sure you all remembered what happened thereafter) and I believe NYMO is another unarguable signal (not as powerful as NYLOW, but for very short-term yet, it is the one).

NYMO
T2122

The last but not the least, there’re 3 things I’d like your attention:

Rydex traders (mostly retailers) are way too bullish, accumulated too large bullish assets. See red lines for what happened thereafter. That said, I don’t mean the market would drop immediately, but certainly it’s enough to raise a red flag.

RydexBullFundFlow

TNX ROC(30) >= 9 was used to be a fairly reliable top signal. You can check 8.2.1a Market top/bottom by ROC30 of 10Y T-Bill Yield 2001-2004 and 8.2.1b Market top/bottom by ROC30 of 10Y T-Bill Yield 2005-2008 for the past accuracy, but because of nowadays Fed’s unusual behaviours, I’m not sure if I could trust this signal anymore.

TNX

The chart below is to follow up the CPCE top signal I mentioned in 10/20 Market Outlook. It’s not confirmed on Friday, so not valid anymore.

CPCE

INTERMEDIATE-TERM: WE COULD SEE MULTIPLE WEEKS RALLY BUT MAINTAIN SPX DOWNSIDE TARGET AT 1,000

For why we could see multiple weeks rally, please see 10/14 Market Outlook for details.

For why SPX downside target at 1,000, please see 08/19 Market Outlook and 09/30 Market Outlook for details.

SUMMARY OF SIGNALS:
TREND MOMENTUM COMMENT
Long-term 3 of 3 SELL
Intermediate 5 of 5 BUY 5 of 5 NEUTRAL Cobra Impulse in BUY mode; Non-Stop in BUY mode.
Short-term *UP 6 of 6NEUTRAL
* = New update.

 

 

Chinese Transcript

SHORT-TERM: EXPECT PULLBACK SOON, HUGE UP MONDAY WOULD MAKE TUESDAY GOOD DAY TO BET PULLBACK

两点说明:

  1. 大方向,维持10/14 Market Outlook的说法,这是2 leg的up,我们现在还是1st leg up。
  2. 短期,我认为这个1st leg up已经接近尾声了。

下面的图帮大家回顾一下大方向,3 Push Down后应该是2 leg up,我在10/14 Market Outlook里也通过Selling Climax的证据论证了multi weeks rally的可能性。下面图的方向示意,我并没有改过,只是平移了一下,可以看到本周的上涨是在预料之中的,目前,我还是预期会有个比较大的pullback来标示1st up leg的结束。

3PushDown

我认为这个1st up leg最快应该在下周结束。在10/20 Market Outlook里,我提出了top的可能,今天的大涨并没有改变我的看法,因为从下面的图看,3 Push Up的pattern依然成立,所以下图红线的走法算是我比较正式的evil plan,供参考。

SPYEvilPlan

在上面的图里,我也标出了下周大涨特涨的可能,这样我的基于3 Push Up的所谓evil plan就无效了。我不能完全排除这样的可能性,但我有证据表明,如果周一大涨特涨的话,最快周二就会跌回来,因此,其实周一大涨特涨的话,可能是熊熊的机会(for aggressive traders only,因为这是against trend)。下面谈谈理由,为什么大涨特涨,是熊熊的机会。

UpBigNotMAD

  • 我的两个看overbought的终极武器,NYMO and T2122,已经非常接近extreme了。我曾经说过,有些信号是不能argue的,比如看底的NYLOW(如果大家还记得10/03 Market Outlook10/04 Market Outlook的话),这个NYMO也是其中之一。

NYMO
T2122

最后还有三个地方提醒大家注意一下:

Rydex traders (散户)太牛,买了很多牛fund,看看红线就知道此后都发生了什么。当然,这个图并不是说马上开跌,只是个warning。

RydexBullFundFlow

TNX ROC(30) >= 9是top信号,过去工作的很准,参见8.2.1a Market top/bottom by ROC30 of 10Y T-Bill Yield 2001-2004 and 8.2.1b Market top/bottom by ROC30 of 10Y T-Bill Yield 2005-2008,不过现在有Fed这么折腾,我已经不确定这个信号是否还有用了。

TNX

下面的图是follow up 10/20 Market Outlook里提到的CPCE top信号,这个信号今天没有confirm,因此无效了。

CPCE

INTERMEDIATE-TERM: WE COULD SEE MULTIPLE WEEKS RALLY BUT MAINTAIN SPX DOWNSIDE TARGET AT 1,000

For why we could see multiple weeks rally, please see 10/14 Market Outlook for details.

For why SPX downside target at 1,000, please see 08/19 Market Outlook and 09/30 Market Outlook for details.

SUMMARY OF SIGNALS:
TREND MOMENTUM COMMENT
Long-term 3 of 3 SELL
Intermediate 5 of 5 BUY 5 of 5 NEUTRAL Cobra Impulse in BUY mode; Non-Stop in BUY mode.
Short-term *UP 6 of 6NEUTRAL
* = New update.
  • Anonymous

    Thanks Cobra.
    nice weekend!

    • Anonymous

      Thanks Cobra. 

      BTW, the last Friday is the OE day. It may have some OE effect to make the market high in the end. Do you have any statistics/rule about the market move of the day after OE, in particular, an OE like last Friday, going to one direction extremely?  Thanks.

  • Anonymous

    Great analysis again. Thanks Cobra!

  • Ben_Bernanke

    I created this overlay of march 2008 to the most recent rally to prove definitively that we’re not in 2007/2008. There are no overlapping prices in this recent rally while in march 2008 there was. Therefore, this was never a bear market, just a correction in a long term bull market.

    The long term bearish forecasts will fail, as I said, even if new lows are made this year, which I highly doubt.

  • HighRev

    I think what it comes down to is whether the extreme sentiment readings are part of a kickoff, or a part of a last gasp reaction rally.

    I think you’re right about the short term odds for a pullback. (I’m still not confident this isn’t a rip-your-face-off rally though.)

  • ASTRO Decli Jupiter-Saturn 2007-2009-2011…
    http://astrofibo.blogspot.com/2011/10/astro-decli-2007-2009-2011.html

    • Anonymous

      How does one interpret these lines?

  • Anonymous

    Cobra, is your prediction for SP 1000 for this year or next year ??? Thanks   Also, I see a negative divergence on NYMO that could lead to pullback Monday.

    • Don’t know, seems impossible this year?

      • Anonymous

        Agree!

  • Anonymous

    thanks a lot

  • ROB

    I like all your charts, but I hope you’ll look at a monthly global dow , ($GDOW) . The Global Dow is also favoured on Danerics elliot wave blog, http://danericselliottwaves.blogspot.com/  
    The global dow has already broken down through all bollinger band supports, and of course is rallying with all index’s presently . $GDOW is presently at 1850 with middle bollinger band resistance around 2000, and it isn’t oversold by my eye. I’m not saying I’m a bull here, but I’m certainly sitting back to see if I get a good short entry for a 2 week swing, and it’s not there for me . We can still go up a lot here, or crash a lot , I don’t see a swing trade , near term we have lot’s of room before a tell on what’s next . I see a confirmed bear cycle that isn’t over and normally would give some good swings for a careful trader. I have also used the $ted on daily time frames with stockcharts, (ted spread), it seems locked on overbought, which is because crisis is euro based, or were going to really crash badly for awhile???? Normally $ted flashes great short and long swings prior to august correction anyway. good trading

    • Thanks for the insight. I just expect some short-term pullback and I’m well prepared that we don’t get it at all. Trade this market requires no logic but imagination. 

      • ROB

        Hi every one , if you just look at long term charts of pass corrections, a very common rally should take you to past lows and obvious resistance . For this correction were looking at june lows for a minimum target . If were in a bear market and we get an obvious tell this resistance will not be breached, a tricky bear will surpass these lows and then fall apart. If were in a bull market it’s a given historically to blow right through this resistance made last and re-enforced in june . Normally a bull market will correct after completely blowing over this resistance and may or may not fall through the new support, either way it’s a buy.
        take a look,
        good trading,
        Rob

  • Anonymous

    thx,ding

  • Anonymous

    Cobra, I clicked the AD of Telus, there is some problem. Please check it ! I found same problem in HT9. Did this problem decrease your AD fee ?

    • No. Click is enough. Thanks.

  • hey cobra what is the test you would like that we test ? I just got a text . wanted to help out . if you need to test something

    • Thanks, I’ve finished the test. I just want to reduce the image size I post every time. Not important.

  • Anonymous

    Cobra Da: when you say below Friday’s low, you mean below  1215? or 1229?

    • don’t understand your question, where I said below Friday’s low?

  • Anonymous

    One thing that is on the bulls’ side is breadth. It was strong on Friday, as it has been since Oct 4 bottom. On the other hand, VIX still was not able to break 30 and OEX put / call interest is now standing at 1.538, highest in weeks, if not months. Certainly, the bells are ringing but it could take a while for things to play out. BTW, I do not trust breadth too much,the reason being that the rally before the flash crash of 2010 was also supported with breadth.

    GLTA and thanks to Cobra for his hard work as usual.

  • Anonymous

    THX!!!

  • uempel

    I see a pivot at 1245/55, good for a short term play, perhaps only intraday. But nota bene: the dip I expect Monday or Tuesday might nor occur, and the major short term trend is up, not down. Last but not least: Cobra does not approve these contratrend games of mine…

    • According to your chart on the right side, seems SPX hit wall here, why 1245/55? Anyway, 1245/55 is not far away, I won’t be surprised we reach there, good short opportunity I see.

  • in my humble opinion i really don’t see us going back down to 1000 spx in the near future.

    • uempel
      • i know the news is horrible but try to concentrate solely on what the charts are telling you, i wouldn’t short this market unless you are day trading and very nimble.

        • uempel

          You are a funny guy, you write about a “troubled trader” and “horrible news”, tell us to focus on charts (hell, this is a TA blog) – come on, who are you? A young boy, a backoffice clerk, an old teacher? Seems to me the only thing you want is that we click your name so that you can count the views… And I bet my ass you ain’t long – even though you babble about a new high by the end of December.

          • Anonymous

            Thank you for saying that.  I was fixing to if you hadn’t.  All we need here is another Ben Bernanke babbling daily about something they know nothing about.

            • Ben_Bernanke

              Something I know nothing about? That’s the funniest thing I’ve read. You are a moron. I’ve been calling for a rally for some time and it’s come true. I was bearish in June when everyone else was bullish. Your dishonesty and lying will come back to curse you. I guarantee it.

              My indicators have proven cobra’s forecast wrong for calling for 1,000 by 10/19. I get no credit for it. I wish I was a blogger who could only get credit when I’m right and never get called out when I’m wrong.

              It is people like Texas Gordon who make the markets so profitable for people like me. I’m grateful for them.

              Did you know that successful traders rely on the stupidity of the masses to make money? If there was no bell curve, we couldn’t win in this market.

              I’m done with the people here. I was trying to help because I do play the inside game, but I’m done wasting my time with these people. See ya.

              • Anonymous

                perhaps if your discourse didn’t include patronizing remarks toward others on this blog, you might be more welcome here. 

                happy trails.

            • time will tell big mouth fool.
              😉

              • Let’s stop this here, thanks. 

                • no problem we’re all friends here. my trades are documented, entry points and dates,except for my long term commodity portfolio which was started prior to the blog.

          • you are quite the jerk,you deserve your self. stay short.
             lol

            • I know Uempel very well, he’s my friend, I’m sure he trades very well. Please just stop here, thanks.

            • uempel

              Not sure if I’m a jerk or not: I sold short aapl a few weeks ago and so far so good. It’s a long term thing, I expect to hold the position for more than a few weeks or months… Stoploss is at the recent high. 

              And yes, I guess I’ll be shorting ES this week, I’m waiting for SPX to rise a bit further and then I’ll sell to open. Persuant the decline/sideways move I’ll stick with the trade or cover. And afterwards, yes afterwards, I might go long… By the way, instead of dishing out new names for Texas and me please tell us what your positions are. Long ES since October 5th? Congrats. And if bulls (like you) look closely at this long term momentum chart they’ll see that they can stick to their positions a little bit longer.But buyer beware: GS sent out a dreary FA report on Friday. Longterm FA scenarios for equities don’t look good. Positive outcome has a 20% success rate. This doesn’t mean the market can’t rally a little bit longer…

      • HighRev

        I don’t know, but when I look at the first graph in the series (the IT’S ALL CONNECTED graph), the biggest arrows I see emanate from the U.S.

        And Spain is actually a CREDITOR nation (using the data presented on that first graph).

        France is too, but it looks like its borrows are not as credit worthy as Spain’s.

        I’m still scratching my head on this one.

        I’m ALWAYS sceptical of conventional wisdom (which BTW was saying about a year ago that Spain was the next “domino” while I was saying that Italy was the next problem and that at the end of the day there’s nothing like a great distraction to keep people from seeing what’s right under their nose, that is to say, in this case, the U.S.).

        I’m not sure Italy dissolves as a nation (which is another way of saying that I don’t think it’s too likely things get much worse in Europe than they already are, the bad news is most probably priced in, and the big boys who are buying up all that “worthless” European paper will probably come out smelling like roses).

        Now if Uncle Sam were to catch a cold . . .

    • Anonymous

      It  depends on what  you mean by “near future”.

  • i received a letter from a troubled trader, he gave me permission to reprint it as it might help many traders. i also posted some of ray dalio’s note book notes that applies perfectly to this anonymous but well to do chicago trader.  click on my name for the link.

    best of luck cobra and others. thanks for this forum where we can help each other and thanks for the great charts and thorough analysis, you are on my personal blog list .

  • very good odds that the strongest part of intermediate wave 3 is about to occur,still think we can easily see new 52 week highs by end of december, 2011.
    obviously there will be a few detours along the way but we will get there – that’s based on elliott wave.

  • cobra, just out of curiosity which screen capture software do you use, i’m looking to change from jing?

  • cobra, i just posted the roadmap for monday and weekend summary, click on my name for the link.

  • Anonymous

    Bull or bear be aware of who you are playing with!  http://www.etfdigest.com/davesdaily/

  • uempel

    I don’t follow INDU and I don’t like INDU, I just happened to see this P&F chart which looks incredibly strong. Maximum downside at the mom is about 1%. If SPX closes above 1240  Monday its P&F chart will look alike. Monday is going to be interesting, ES in the very early morning 1240ish…

  • Anonymous

    West Coast port traffic (LA, LB, Oak, Sea, Tac) is showing a clear trend of dropping imports year-over-year, but exports is a mixed picture with some ports showing strong growth still in exports year-over-year.

    East Coast port traffic (NY, NJ, Sav, Charl, Virg) is showing a stagnant trend for both imports and exports.

    Overall, suggests that Asia demand remains healthy for now and Europe demand is stagnating.  US import picture is deteriorating, and dropping in a pronounced manner on the West Coast.

    • Any data, charts, links?

      • Anonymous

        I have not compiled all the data from the different port websites.  It took hours to find the data in the first place and none of it is in compilable form so it would have to be done manually.

        Background info:

        LA, LB, Oak, Sea, Tac account for nearly 90% of all west coast port container traffic
        NY, NJ, Sav, Charl, Virg account for over 60% of all east coast port container traffic
        West Coast accounts for about 50% of US container traffic, East Coast about 40%, Gulf Coast 10%

  • thanks cobra laoda!

  • ES targets 1262 to 1295, could happen in hours or days.  

    Euro is primarily driving this piggy up, and Cable is tagging along

    http://oahutrading.blogspot.com/2011/10/es-targets-1262-to-1295.html

  • Gord Lawson

    Great stuff Cobra. I use Astrology as well as technicals on the markets.
    Wednesday is a New Moon and a perigee New Moon (closest path to earth for this orbit). Also known as a super Moon.
    Markets usually change direction within 1 day so looking for a turn Oct 25-Oct 27.

    http://trading-daze.blogspot.com/

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