12/31/2010 Market Recap: A top of some kind within the next 2 weeks?


Cobra's Market View Private Messaging System shows:


  TREND MOMENTUM COMMENT
Long-term 2 of 2 are BUY  
Intermediate 5 of 5 are BUY 4 of 5 are NEUTRAL SPY ST Model in BUY mode; Non-Stop in BUY mode.
Short-term 6 of 6 are NEUTRAL
GANN DAY MOON:SOLAR CYCLE CONCLUSION
01/05-01/07 01/04 : 01/06 Next pivot date: 01/07
BULLISH 09/27 Market Recap: 9 POMO within 20 trading days means 14%+ up in 3 months.
10/01 Market Recap: Positive September plus mid-term election means 11%+ up to year end.
10/29 Market Recap: The last 2 months of year are bullish.
11/05 Market Recap: SPX daily bar completely out of BB may mean bulls are safe till the year end.
BEARISH 1.0.6 SPY Unfilled Gaps: 23 unfilled gaps, the max was 24.
12/20 Market Recap: Smart/Dumb money confidence spread too high.
0.2.1 10Y T-Bill Yield: ROC(30) >= 9, topped? (Due to Quantitative Easing, I’m not sure if it still works)
1.2.0 INDU Leads Market: INDU had a lower low, so SPX might follow eventually?
8.2.7b Record High ISEE Equities Only Index Readings 2010: Record high, top is close?
12/14 Market Recap: Too many Sentimentrader’s indicators are at bearish extremes.
8.1.4 Normalized CPC: Too low, so topped?
0.2.3 NYSE McClellan Oscillator: Hindenburg Omen confirmed.
0.1.1 SPX Intermediate-term Trading Signals: CPC MA(10) too high, so topped?
6.2.3 VIX:VXV Trading Signals: Too low, so topped?
0.0.2 Combined Intermediate-term Trading Signals: Trend line broken, so topped?
*12/31 Market Recap: Lowest ATR(10) readings in 13 years, so topped?
SPY SETUP ENTRY DATE STOP LOSS INSTRUCTION: Mechanic signals, back test is HERE, signals are HERE.
TRADING PLATFORM:
SSO/SDS, UPRO/SPXU
Non-Stop 09/07 L N/A
ST Model Buy mode doesn’t mean long, a 2nd buy signal is needed to enter long.
Short-term N/A N/A Trend is NOT CLEAR. I hold both long and short over the weekend.
MY STRATEGY:  STOCK BOND EURO OIL GOLD
Long but I will be very careful here. Long Long Long

SHORT-TERM: NO IDEA ABOUT THE NEXT WEEK, BUT A TOP OF SOME KIND COULD BE WITHIN THE NEXT 2 WEEKS

No idea about bear or bull the next week. However, my best guess is a top of some kind is within the next 2 weeks.

Three reasons:

  • Time analysis. See intermediate-term session below, maintain pivot date around 01/05 to 01/12.
  • See chart below for what happened with very low ATR readings (equivalent to very low volatility)? Now we have the lowest ATR(10) readings in 13 years (which means the volatility most likely can only go up and as all you have known an up volatility usually means a down price).

ATRandTheMarketTop

  • A huge up the next week would not only mean that SPX is then too far away from its MA(200), but also could trigger 2 short setup that had above 70% winning rate (see 11/05 Market Recap for those 2 setups). So in another word, at the most, the market could be up another week, the next next week would not be very pleasant.

SPXWeekly

One thing I want your attention though. I’m not sure if it’s because of my market recap, looks like the majority of people attending my forum are expecting a 5%+ pullback in January (The survey is in Chinese, but I happen to know some English, so I did a little translation, you’ll need just read the annotation boxes). Does this mean that retailers are way too bullish, therefore there won’t be any pullback? Well, we’ll have to wait and see. Simply from AAII and II, retailers are very bullish, so whether the people in my forum are “no ordinary retailers” or not, we’ll have to wait until the January ends. LOL. By the way, the past survey shows that those “no ordinary retailers” were mostly correct. I’m not sure about this time though, looks too bearish even to me. Or am I too bullish?

HTSentimentSurvey
AAIIBullRatioIIBullRatio

INTERMEDIATE-TERM: COULD BE WAVE 5 UP TO SPX 1300+, PIVOT TOP COULD BE AROUND 01/05 TO 01/12

In 12/17 Market Recap, I’ve tried to talk you into believing the next pivot date is around 01/05 to 01/12. I’d like to update all the reasons again here. The VIX reason is retired (VIX does up as expected but price not down) but I managed to find 2 other reasons.

Why 01/05?

  • Counting 28 trading days from the TED Spread top happens to be on 01/05. And are there any other factors that makes 01/05 so special? Well, remember the Magic Day 6? See Gann Day table below, since year 2000, there’re at least 2 pivot dates around 01/05.

GannDay

  • 01/07 is Non Farm Payroll day which according to the chart below is most likely a pivot day. The most recent example is 11/05.

NFPDayWatch

Why 01/12?

  • The most important reason is from chart 8.2.9c QQQQ – 2002 to 8.2.9k QQQQ – 2010, check by yourself in my public chart list, starting from the 8th trading day in January (which is 01/12) until the end of the month, QQQQ has been bearish since year 2002 without exception.
  • From 08/27 bottom to 11/05 high, SPX up 49 trading day, so 49 * Fib 61.8% = 30, adding from 11/29 bottom, what we get then happens to be on 01/11.

PivotDate

SEASONALITY: BULLISH TUESDAY, JANUARY’S 1ST 5 DAYS IS AN EARLY WARNING SYSTEM

According to Stock Trader’s Almanac:

  1. Second trading day of the year, Dow up 12 of last 17. Also Santa Rally ends on the day.
  2. January’s first five day is an early warning system. The last 37 up first five days were followed by full-year gains 32 times, for an 86.5% accuracy ratio and a 14.0% average gain in all 37 years.

The chart below is from Sentimentrader and the statistics above January is from Schaeffer which says the whole January in the last 10 years was a little negative.

Seasonality

HIGHLIGHTS OF THE OTHER ETFS IN MY PUBLIC CHART LIST

SIGNAL COMMENT
QQQQ 12/21 L
NDX Weekly UP  
IWM  
IWM Weekly UP
CHINA Clear breakdown below consolidation range, be careful.
CHINA Weekly UP
EEM
EEM Weekly UP
XIU.TO 12/02 L *TOADV MA(10) a little too high.
XIU.TO Weekly UP
TLT *Breakout, so TLT could be bottomed. Need watch the trend line resistance though.
TLT Weekly *UP
FXE *3.1.1 US Dollar Index Bullish Fund (UUP Daily): 1-2-3 trend change, so dollar could be topped.
FXE Weekly DOWN
GLD *Could be an Ascending Triangle in the forming.
GLD Weekly UP
GDX 12/17 S
GDX Weekly UP
USO
WTIC Weekly UP
XLE 06/15 L
XLE Weekly UP
XLF 10/15 L
XLF Weekly UP
IYR
IYR Weekly UP Home builders are lagging.
XLB 12/01 L
XLB Weekly UP BPMATE is way too overbought.
  1. Please make sure you understand how to use the table above. The purpose of this report is to provide info so contradictory signals are always presented.
  2. Position reported in short-term session of the table above is for short-term model only, I may or may not hold other positions which will not be disclosed.
  3. Conclusions can be confirmed endlessly, but trading wise, you have to take actions at certain risk level as soon as you feel the confirmation is enough. There’s no way for me to adapt to different risk levels therefore no trading signals will be given in this report except the mechanical signals such as SPY ST Model.
  4. * = New update; Blue Text = Link to a chart in my public chart list.
  5. Trading signals in OTHER ETFs table are mechanical signals. See HERE for back test results. 08/31 L, for example, means Long on 08/31.
  6. UP = Intermediate-term uptrend. Set when I see at least one higher high and higher low on weekly chart.
  7. DOWN = Intermediate-term downtrend. Set when I see at least one lower high and lower low on weekly chart.
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