11/30/2011 Market Outlook (Exhaustion Bar?)


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SHORT-TERM: MORE UP AHEAD BUT MIGHT NOT GO VERY FAR

Three cents:

  1. More up ahead. I really mean more, not just a higher high tomorrow.
  2. Cannot exclude the possibility that today’s bar is an exhaustion bar, so if we see several small range bars in the following days, or small bar tomorrow with almost the same huge volume like today, then be careful of pullbacks.
  3. On a little bit bigger picture, maintain the forecast that the 11/25 lows will be revisited. So many reasons mentioned in 11/25 Market Outlook and 11/28 Market Outlook, simply they cannot go away with just one day huge up as you Earth people still pretty have no clue on how to overcome the inertia. Only the day of such a revisit has to be postponed. And for now, I have no idea when, will have to wait and see. The reason I mention this here, is to let you know, yes, I still remember what I said, I’ll put this aside for now and sure bring it out to scare bulls when the time comes.

Combining all the conclusions made above, the chart below shows my evil plan (for direction only, forget about the magnitude and the time).  Again, I’m not sure if the expected pullback is the pullback (to test the 11/25 lows), we’ll have to wait and see.

SPYEvilPlan

The chart below explained what exhaustion bar looks like. After a series of push up or huge rise, a sudden volume surge with biggest bar usually means all buyers are convinced and step in, therefore leave no one to lift the market in the following days hence the pullback becomes inevitable thereafter. By the way, isn’t today’s news about releasing the credit freeze among banks? Then how come there’s no improvement on TED? Which I’ve marked below, so be careful.

ExhaustionBar

The last but not the least, why do I expect more up ahead?

  • 2 Major Accumulation Day within 5 days, it’s used to mean an intermediate-term bottom and nowadays still it implies the market at least have several up days ahead.

2MADin5Days

  • Today is Major Accumulation Day, so chances are we’ll see a higher high tomorrow, at least rarely today’s high is the high.

HHGuaranteed

  • INDU has already closed above MA(200) and we all know INDU leads. Why? Tell me which way is easier to make the indices look good? Lift 30 of INDU components (or more precisely IBM only – I’m kidding but it’s true. Don’t know why IBM? Well, INDU is price weighted Index and IBM is the most expensive one.) or lift all 500 of SPX components?

INDULeads

INTERMEDIATE-TERM: EXPECT MULTIPLE WEEKS SELLING AHEAD, TARGETING JUNE 2010 LOWS AROUND SPX 1010ISH

See 11/18 Market Outlook for more details.

SUMMARY OF SIGNALS:
TREND MOMENTUM COMMENT
Long-term 3 of 3 SELL
Intermediate 3 of 5 SELL 5 of 5 NEUTRAL Cobra Impulse in SELL mode; Non-Stop in SELL mode.
Short-term DOWN 4 of 6 NEUTRAL
* = New update.

 

 

Chinese Transcript

SHORT-TERM: MORE UP AHEAD BUT MIGHT NOT GO VERY FAR

三点说明:

  1. 还有的涨,应该不只就是明天有higher high而已。
  2. 不能排除今天是buy exhaustion的可能,因此后面连续几天都是小棒棒,或者明天小棒棒但volume跟今天相当的话,小心回调。
  3. 稍微大点的方向,暂时维持11/25 lows还是要去的判断,11/25 Market Outlook11/28 Market Outlook里给了那么多理由不会因为一天的大涨就不成立。你们地球人克服惯性的可能不大,只不过这个revisit lows的时间要推迟。至于什么时候开始revisit lows,只能走一步看一步了,所以这里先交代一下,表示我还记得这件事,等到适当的时机,我再拿出来吓唬牛牛。

综合以上3点,我预计下面的走法如下(仅仅是示意方向,请忽略时间和幅度)。目前我不能确定是否几天后开始的回调就是要去测试11/25的lows,这个要再看。

SPYEvilPlan

下面的图解释了Exhaustion,就是长了一段时间或者一定幅度后,突然放量且是biggest bar,这个很可能意味着想买的银都已经买了,这样大盘会因为没有买盘而掉下来。顺便说,今天的消息并没有让TED有所改善,下面的图里我也标出来了,大家注意一下。

ExhaustionBar

最后解释一下为什么说还有的涨?

  • 5天内有了2个Major Accumulation Day,这在以前可是中期底部的信号哈,现在至少表示还能涨几天。

2MADin5Days

  • 今天是Major Accumulation Day,很大机会明天会有higher high,至少今天是顶的可能性不大。

HHGuaranteed

  • INDU已经close above MA(200)了。

INDULeads

INTERMEDIATE-TERM: EXPECT MULTIPLE WEEKS SELLING AHEAD, TARGETING JUNE 2010 LOWS AROUND SPX 1010ISH

See 11/18 Market Outlook for more details.

SUMMARY OF SIGNALS:
TREND MOMENTUM COMMENT
Long-term 3 of 3 SELL
Intermediate 3 of 5 SELL 5 of 5 NEUTRAL Cobra Impulse in SELL mode; Non-Stop in SELL mode.
Short-term DOWN 4 of 6 NEUTRAL
* = New update.
  • Anonymous

    I like the observations but the comment about TED seems inaccurate. Just glancing over historical data of TED I see that TED today is historically, pretty much average or below average, not indicating anything. Furthermore, a rising TED historically has not always correlated with falling markets. In fact, in more cases a rising TED always preceded a new high in the market, not a new low (so TED lags). Only in the recent credit crisis did the TED have good predictive power, and those events come along very rarely.

    The current TED environment is more supportive of a new S&P high than renewed lows, in my opinion.

  • Anonymous

    thx,ding

  • Anonymous

    Thanks Cobra.  Your analysis of the exhaustion bar seems reasonable, although I like to keep an open mind about it.  It is good to distinguish between high volume reversal (e.g. Oct 4-5) and high volume that occurs after the reversal has already taken place (such as today).   The general TA idea that rising prices on high volume is just plain bullish, regardless of exactly when the volume occurs.  You would insist that it is important to notice exactly when the volume surge occurs.   I tend to agree with you and think we may well top out tomorrow but we shall see!

  • Seawaves

    Thanks, Cobra.
    when zooming in at the bottom, one can see NYMO and SPX did show somewhat divergence…

    • Not big enough. I want a visible divergence.

  • uempel

    TA aficionados might like this chart, but the chart ain’t helpful: doesn’t give us any indication about what’s next.

  • Very detailed analysis, your brain must overheat at some point! anyway, I wanted to point out your inertia theory. I integrate wave analysis (NOT EW) in my system and I see the wave from 1074 to 1292 as an “impulsive” intermediate wave. We then had an ABC correction and now it is my belief that the market will continue it’s bull run from 1074. Like you said, waves have inertia and the ABC was just a correction before launching on another run. Therefore, my question to you is why do you think the 11/25 bottom will be visited if the whole move from 1074 was a bullish run? Just curious about how you see it as I agree on the theory but not so in corrective waves.. if anything, if the market keep up these levels we will most likely see 1400 fairly soon.

    • The revisit was based on statistics. Rarely, down 7 days in a row or close 3+ days below BB bottom or a bar body completely out of BB bottom, means exactly bottom. Just sometimes it does take while to revisit the low, so it might fit your count too.

      • Thanks for explaining.. 

  • Michel G

    I think SP toped in the overnight. Now we could have a long run downstairs. Unless Merkozys come with something great, which i don’t expect…

  • uempel

    Looks as though SPX was stopped just beneath the target. Support is the gridline at 1242.50 and the breakout at 1237, resistance is the gridline up at 1252.5

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