12/12/2011 Market Outlook (Follow Through Needed)


Cobra's Market View Private Messaging System shows:


SHORT-TERM: IN WAIT AND SEE MODE BUT I’M BEARISH BIASED

First of all, starting from the this week:

  1. We’ll have a drill (test post) to make sure all the paid members are able to read member only posts. Our customer services would make sure every paid members have registered and login-ed and indeed are able to read the post. We’ll test every member’s email address as well.
  2. Then we’ll start to lock the daily report one by one gradually. This is to make sure a smooth transition to a paid member only site from a free site. Our customer services again would make sure every unexpected problems being solved before taking the next step further.

Although I’m sure, given the quality of the members management software it demonstrated in the last couple of weeks (when you did your registration) 99% paid members would have no problem in reading the member only posts but I just don’t want that 1% paid members feel frustrated for not being able to read if I suddenly lock all the reports, so the above steps are absolutely necessary. I thank you in advance for your patience. After all, we’ll spend many years together, so well begun is half done.

Meanwhile, those who’re still wondering to be or not to be (the member), this is your last chances to consider this $10 per month deal, which I can guarantee you won’t be available in the future. Our regular monthly membership rate would be at least $29.99 per month. Yes, we’ll have a promotion now or then but the best promotion deal would never go below $19.99 and no way it’s a monthly rate, you’d have to pay, say, $249.99 to get this equivalent monthly rate , so take a little time to think about whether you'd like to take this opportunity or not. Consider we’re the stock you want to buy,  see us as still in our early IPO stage, and your fundamental analysis would be my demonstration of the perseverance and talent for the past 4 years, then it should be not very difficult to foresee our long-term growth potential. So again, don’t miss the deal. I honestly think this is one of a few best deals you could ever find.

 

You can read today’s chart pattern as bullish or bearish depends on you usually wave your hoof or claw, so whether bears will have a follow through tomorrow is very important. Huge up, then bullish; Small range day, then we’ll have to wait for another day; Huge down, then bearish. Personally, I’m bearish biased, as this could be a start of an intermediate-term downtrend. I’ll present my witnesses shortly, just before that let’s take a look at how the chart can be read as either bullish or bearish:

  1. Bulls: Obviously, this is a typical 3 Push Down, so the low was in or very close. Bears, I warn you, run as fast as you can before you get hurt!
  2. Bears: This is a typical 1-2-3 Trend Change, so the trend is confirmed down. Bulls, wake up, you think simply a meeting then all the debt problems are gone?

SPYEvilPlan

Now, let’s see why I’m bearish biased.

  • First of all, this is the 2nd Major Distribution Day within 5 days, so chances are the selling isn’t over yet. We may or may not see a rebound tomorrow.

2MDDWithin5Days

  • Secondly, SPX dropped 1%+ while VIX was down too, unfortunately the back test doesn’t show any bullish edge for tomorrow. Rather from the chart below, in most similar past cases, there’s more down ahead.

VIXDownOnSPXBigRed

  • Last but not the least, it could be a Stick Sandwich pattern which means “Bearish continuation 62% of the time”.

StickSandwich

A very unique thing today is we saw a Major Distribution Day followed by a Major Accumulation Day then again a Major Distribution Day. Such a case happened only once in the past 2,000 trading days, see chart below. I won’t bet for another Major Accumulation Day tomorrow though, because trading wise, we should not always think of reversal of reversal of reversal then again bet another reversal, as if we keep thinking like this, you’d find you pretty much trade against the current trend in most cases. To trade, you must be pure hearted, up is up, down is down, don’t ever try to explain to yourself that this could be a trap, after all the odds of reversal is low in most cases (so we shouldn’t bet on it). (Well, I know, after reading this, some couldn’t help thinking that market would sure slap me on the face tomorrow. Yes, that’s exactly what I’m thinking when I’m typing this. Tricky mind, isn’t it?)

MDDthenMADthenMDD

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 BUY mode; Non-Stop in BUY mode.
Short-term *? 6 of 6 NEUTRAL
* = New update.

 

 

Chinese Translation

SHORT-TERM: IN WAIT AND SEE MODE BUT I’M BEARISH BIASED

先通知一下,从本周起:

  1. 我会先发一个会员only的测试贴,所有已经付费的会员可以借此检查一下是否自己有足够的权限来看这个贴。我的目的是要确认每个已经付费的会员,都已经成功的注册,并且可以login读会员only的帖子。同时我也会测试各位会员是否能收到email。
  2. 完成上述测试后,我会逐步的锁定每天的报告,我会在解决了每一步转换期间暴露出来的所有问题后才进行更多的锁定,这个动作是保证从free site到member only site的无缝隙转换。

从目前的会员管理软件表现出来的质量看,绝大多数会员付费和注册的过程都很顺利,因此我确定,我如果突然锁定所有的发帖的话,99%的会员是不会有不能读会员only报告的问题的。我只是不希望那剩下的1%的会员会因为暂时不能读帖而感到很愤怒,毕竟是已经付了钱了。所以上述的两个步骤,我认为是非常必要的。希望大家能够理解和支持。在此先谢谢大家的耐心。毕竟,好的开端是成功的一半,我不希望一开始就让大家很失望。

同时,还没有决定是否加入的,这应该是最后的机会了。$10一个月的deal,我可以保证以后是绝对不会再有了。以后的标准收费将不会少于$29.99每月。我们当然时不时的会有优惠期,但这个优惠价,最低不会低于$19.99每月,并且铁定不是按月付费,您得一次性付一年$249.99才能有相当于这个每月的$19的会费。所以稍微花点时间考虑一下吧,过了这村,就没有那店了。我看到有个同学的比喻很好,就是把我这个看成一支股票,现在我还是在IPO阶段,以我过去四年表现出来的毅力和天才,我这只股票应该有很大的长期增长潜力。我觉得这个比喻是再恰当不过了。老实说,我自己也确确实实认为这个deal是非常少见的好deal。谢谢!

 

今天的图形可以做两种解释,取决于你惯用蹄子还是惯用爪子,所以明天熊熊是否有follow through非常重要。明天大涨,那么牛;明天小棒棒,那么要等后天;明天大跌,那么熊。我个人的解读偏熊,有可能这是一个intermediate-term下跌的开始。理由我们下面会谈。先看一下为什么会有两种解释:

  1. 牛牛:这是3 Push Down,所以low was in或者very close了。
  2. 熊熊:这是1-2-3 Trend Change,所以确认trend down了。

SPYEvilPlan

下面谈谈我为什么偏熊。

2MDDWithin5Days

  • 其次,今天SPX大跌1%+,但是VIX也跌了。Back test显示明天并没有bullish edge,反而从图上看,此后绝大多数情况都还有的跌。

VIXDownOnSPXBigRed

  • 最后,今天SPY daily搞了个Stick Sandwich,有62%的可能继续下跌。

StickSandwich

今天还有个比较特别的地方是,Major Distribution Day followed by Major Accumulation Day then again Major Distribution Day。这种事情过去2,000个交易日里就发生了一次,大家看一下吧。我认为明天是Major Accumulation Day的可能性不大,毕竟我们交易,不能总想着反转然后反转然后反转然后又反转,总是这么想的话,你会发现你绝大多数情况下都是trading against trend。交易要有颗单纯的心,涨了就是涨了,跌了就是跌了,反转是小概率事件,我们不可以总是去赌的。

MDDthenMADthenMDD

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 BUY mode; Non-Stop in BUY mode.
Short-term *? 6 of 6 NEUTRAL
* = New update.
  • tytobebad

    Any edge on FED DAY when day before is a MDD ?

    • Usually up on Fed Day.

  • D

    I think distribution day then accumulation day then distribution day completely describes our market right now.  Great post as always Cobra!

  • Anonymous

    Interesting that the rsp-cpce chart turned up today and not down on a day like today. Usually a pretty reliable signal.

    • That’s because CPCE down a lot today and this explains why VIX down too. People are buying lots of calls.

  • Anonymous

    Not sure why the bearish bias. More down, maybe, but the Dow already is leading higher, so the focus should be on buying dips for professional traders. Let the amateurs pick the short entries because they will eventually get blown out of their positions. I maintain some short hedge but only as a hedge. Good long value right now.

  • BB Finance

    Cobra,
    You are the master of chart patterns and TA. So I fully agree with your reasoning. I would like to add my two cents. In my blog I have mentioned about liquidity flow and behaviour of AUD. Both suggest that there will be more selling.
    May be you care to read the post.
    http://bbfinance.blogspot.com/2011/12/patience-is-paying-off.html
    It is not my idea to promote my blog here. So if you wish, you can de-activate the hyper-link. 
    Thanks,

  • Anonymous

    Thanks Cobra, didn’t the daily bar printed on SPY have too large of a tail to be a “stick sandwich” though?  I thought it looked like a signal bar to buy above.  

    • I think you have to take the gap into consideration, so in this case look at SPX daily chart might feel more bearish.

  • Seawaves

    NYMO shows somewhat divergence. Bears, be careful.

  • Anonymous

    Anything possible day Tuesday in my opinion.  I would not have too rigid bias for tomorrow and go with the flow whatever fed imagines.  The fed has many imaginative mind, so surrealistic at times and unbelievable. Trade carefully

    • Yes, I know the statistics is very bullish this week especially if we have a big down Monday which we did.

  • uempel

    BPNYA down 0.94%, BPCOMPQ down 0.68%, BPNDX down 1.69%, BPSPX down 0.46% and both BPOEX and  BPINDU are flat. As to the sectors: all were flat except BPUTIL (Utilites), down 0.2%, BPDISC (Consumer discretionary) down 1.96% and BPHEAL (Healthcare) down 3.57%.

    Bearish signals are that BPSPX has been rejected at 62 and might be rolling over, SPX keeps on failing to break the 200 DMA at 1264, cu was down 3.07% and the Shanghai Composite and India both look very weak. 

    As to the bullish signals – support DMA 377 held today, so did WMA 75, seasonality is bullish and everybody is expecting a Santa rally, me too (but this ain’t necessarily a bullish signal…).

  • Allan Sun

    Cobra, did you consider the current movement of the future and foreign markets when you compose your report?

    1. DJIA future flip to green by 24 points as of 0:00.
    2. Indian Sensex flip to green by roughly 0.3%.
    3. Both Nikkei and Hang Seng climb higher after opening low. (At least Hang Seng predicted Monday’s fall on DJIA, while Nikkei failed to do so.)

    • No. I don’t consider futures because anything can happen overnight when the volume is thin.

  • Anonymous

    BanZhang,

    I did compare recent pattern (Flip-flap of MAD and MDD).
    http://www.hutong9.net/forum.php?mod=viewthread&tid=152772

    In recent two cases (one 08/08. another 10/04 which is more like present pattern), at final, they all moved up first before went lower.

  • uempel

    Gann/ellipse combo suggests further upside to 1245/50. A break above the upper blue line into the next rhomboid up there would be bullish signal. Support is the black gridline which held on Monday.

  • Allan Sun

    The bad news over the weekend has been overly priced in on Monday. Tuesday usually open higher to compensate for the overreaction on Monday.

    The Psychological flow for weekend bad news behaves like below:

    Monday: Awareness >> Sharp Fall and Overreaction
    Tuesday: Denial >> Pull Back to correct the overreaction
    Wednesday: Reconfirmation >> Another round of accelerated fall

  • Anonymous

    thx,ding

  • Pingback: 12/12/2011 Market Outlook (Follow Through Needed)()

© 2013 Cobra's Market View — All Rights Reserved.