12/05/2011 Market Outlook (Was the top in?)

SHORT-TERM: A TOP OF SOME KIND COULD BE IN

A top of some kind could have been in, need see whether SPY could make a higher high tomorrow to confirm of course. My FEELING is we might see another push up attempt tomorrow morning but such an attempt wouldn’t be able to make a higher high. If indeed the top was in, the pullback thereafter is short-term in nature or about to test the 11/25 lows, we’ll have to wait and see. Trading wise, in today’s Intraday Signals, I’ve made it very clear, don’t front run, unless you know what you’re doing. Calling a top is against the trend therefore not easy to be right. Then what to do when I call the top? Well, take partial profits, no aggressive long etc etc, because chances are I might be a little early in calling a top or bottom but eventually in most cases I’d be right eventually, so take a little caution when I’m calling a top or bottom won’t be a very bad idea.

List below are reasons why I think the top was in.

• CPCE trend line broken, frequent readers here should know this is a fairly reliable top signal. It needs to hold above the trend line tomorrow to confirm the top of course.

• VIX dipped below its BB bottom for 4 days in a row. From the chart below, clearly it means at least a short-term pullback. In addition, SPX made a new high today while VIX didn’t make a new low, such a divergence usually is a top sign.

• 3 reversal like bars in a row, should mean something.

• DAX had 2 black bars in row, so the chances of reversal should be even higher and we all know DAX leads.

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

See 11/18 Market Outlook for more details.

Chinese Transcript

SHORT-TERM: A TOP OF SOME KIND COULD BE IN

A top of some kind可能in了，当然要看明天是否还有higher high，我的感觉是明天大盘还会尝试上攻，不过这个上攻应该不会有higher high了。当然，如果真的top was in的话，接下来的回调是短期性质的还是去测试11/25的lows，还要再看。操作上，我在今天的Trading Signals里已经提了，除非你知道你在干什么，否则还是不要抢跑（做空）的好。猜顶是against trend，因此不容易准的。那，我喊顶的时候，该做啥呢？套点利啊，不要再多加long仓了啊，等等。老读者都知道，可能我喊顶或者底会早那么一点点，但是最终大多数情况下我都是会对的，所以看我喊了，操作上就小心点，应该没有大错了。

下面谈一下top was in的理由。

• CPCE trend line broken了，这个老读者都知道，是个很可靠的看顶信号，当然，也是要明天confirm，hold above trend line才算。

• VIX连着4天跌破BB bottom，从图上看，至少都是有短期回调的。此外，今天SPX新高，但是VIX却没有新低，这种divergence往往是top sign。

• 连着三根反转棒，多少也得给反转棒点面子哈。

• DAX连着两根黑棒棒，反转几率应该相当高了。我们都知道DAX leads，所以如果DAX反转的话，SPX也好不到哪去。

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

See 11/18 Market Outlook for more details.