03/16/2012 Market Outlook (Simply a Week in Review)


Cobra's Market View Private Messaging System shows:


Maintain the call for fireworks:

  1. Basically, up then down. The up swing could last on average 4 weeks, rising on average 3%, the down swing could last 3 weeks.
  2. If we’re simply repeating what happened after year 2000, then the pullback is not only back to where the fireworks began, it should fall deeply underground.
  3. Such a fall back to the ground or underground is a buy opportunity. Whether the rebound thereafter could make a decisive new high would determine whether I need adjust my current evil plan.

So accordingly here’s the evil plan. The main idea is highlighted, the red cycle is where I need adjust the plan. I’ll explain later why 6.5%+ pullback, since it’s the 3rd part of my entire evil plan so whether it’s right or wrong, doesn’t matter much.

EvilPlanDaily

THE SHORT-TERM:

Not sure about the next Monday. According to the 61.8% Measured Move mentioned in 03/15 Market Outlook, there might be still a little bit on the upside. After that we’ll have to wait and see.

EvilPlan60min

THE STATISTICS:

QQQ up 11 weeks in row. It happened only twice in the past. One kept charging up the next week and one finally down the next week but still gapped high first.

QQQUp11Weeks

Seasonality wise, form now to the end of March is not very bull friendly. But of course, I know, no one believes this anymore, including me.

MarchSeasonality

The next OE Day is in 5 weeks. Usually 5-Week cycle is weaker than the more commonly 4-Week cycle. The screenshot below is from Schaeffer.

FiveWeekCycle

THE BIG PICTURE:

Now let me explain why I think we’ll see fireworks. It’s simply a summary of the conclusions I made for the week, not much new things here.

The main reason for calling fireworks is, SPX Opened and Closed above BB Top, the pattern thereafter is to skyrocket high then fall back to the ground. Since the year 2000, 4 out of 5 cases not only fell to the ground but deeply underground. But, no matter what, there’ll be a rebound to a new high, so such a fall is a buy opportunity.

OutOfBBStatistics
OutOfBB

I believe most of you here at least won’t publicly challenge the “up” part of the call, as the market is so bullish. So here I just want to present more evidences supporting the “down” part of my call:

  • SPX closed too high above BB top. This is the major reason I believe eventually the price would fall back to the ground. By the way, the chart also proves we’ll see the “up” part first as well.

TooHighAboveBB

  • Another reason is nowadays SPX keeps making a new high with NYMO constantly below zero. This argues the internal is not strong so the push up could mainly because of some heavy weighted stocks therefore the quality is suspicious.

NYMO

  • The 3rd reason is the gravity. If in this world there’s only one indicator that still works then it must be that price cannot be too high above its moving average as you Earth people still cannot overcome the gravity. The chart below illustrated what happened when SPX was too high above MA200. We’re not that extreme yet, but at least we now know that sky is not the only limit.

TooFarAboveMA200

The last but not the least, why could see a from high to low 6.5%+ pullback? Because with no exception, since the year 2000, March (or around March) every year has been the turning point for a 6.5%+ swing. Either it’s swing high or swing low, apparently we’re not at swing low, so chances are a 6.5%+ pullback is due.

MarchPivot

THE INTERMEDIATE-TERM TREND IS UP

THE LONG-TERM ACCORDING TO OUR SIMPLE STRATEGY IS LONG SINCE JANUARY

  • According to the January Barometer, 80%+ chances, 2012 will end in positive territory.

 

 

CHINESE TRANSLATION

维持放焰火的判断:

  1. 冲上去,然后掉回来。冲上去的平均时间是4周,平均涨幅3%。此后下跌的时间大约3周。
  2. 如果是重复2000年以后的情况的话,这个掉回来,可能不是就是掉到地板上就完了,多半还会掉到地底下去。
  3. 这个掉到地上或者地底下,是买的机会。此后的反弹能否决定性地创出新高是决定我是否需要调整我的evil plan的地方。

下面是根据以上判断作出的evil plan。主要是高亮区域的部份,红圈圈是我需要根据情况作出修正的地方,再后面的6.5%+ pullback,本文后面会再次解释。这是第三步了,所以对错与否,不重要。

EvilPlanDaily

THE SHORT-TERM:

不确定周一的涨跌,根据03/15 Market Outlook提出的61.8% Measured Move,可能还有一点涨幅。然后再看吧。

EvilPlan60min

THE STATISTICS:

QQQ连涨11周,过去总共就发生了2次,一次下周继续涨,另一次,下周总算收红了,不过是高开。

QQQUp11Weeks

Seasonality讲,到三月底的这一段是相对比较bearish的。当然,我知道,没有人相信这个了,我也不信了,呵呵。

MarchSeasonality

由于下一个OE Day是5周以后,5-Week cycle相较于4-Week cycle是比较bearish的。下面的截屏来自Schaeffer

FiveWeekCycle

THE BIG PICTURE:

这里主要解释为什么会有放焰火的判断。是对本周所有报告得出的结论的总结,没有多少新内容。

放焰火的判断主要来自,SPX Opened and Closed above BB Top,此后的pattern都是冲上去,掉下来,2000年以后4 out of 5 cases都掉得很厉害,但此后又都会反弹出新高,因此这个掉下来是买的机会。

OutOfBBStatistics
OutOfBB

相信大家都对冲上去没有异议,大盘实在太牛了。所以这里只是提供更多地证明,证明的确我们这次还是会掉下来的:

  • SPX closed too high above BB top。这个是我认为会掉下来的主要理由。当然,这个图也证明了,先涨一段时间才可能掉下来。

TooHighAboveBB

  • 另一个理由是,现在SPX经常性的new high但NYMO却经常性的below zero。这个反映internal不是很强,这一轮上涨是权重股带动,因此有拉高指数出货的嫌疑。看看历史就知道这意味着什么了。

NYMO

  • 第三个理由是地球重力。这个世界如果还剩最后一个indicator还工作的话,那就是价格不能偏离均线太远,因为你们地球人还无法克服重力的影响。下面的图讲述了过去SPX离MA200太远后发生的故事。我们现在当然还没有到达那么extreme,所以可能还有涨,但是至少我们已经知道,这个上涨的限度在哪里了,好像不是sky is the only limit。

TooFarAboveMA200

最后解释一下为什么会有from high to low 6.5%+ pullback的说法,因为自2000年以来没有例外,三月份(附近)都是一个6.5%+ swing的转折点。不是swing high就是swing low,我们现在显然不可能是swing low啦,所以应该有6.5%+的pullback。

MarchPivot

THE INTERMEDIATE-TERM TREND IS UP

THE LONG-TERM ACCORDING TO OUR SIMPLE STRATEGY IS LONG SINCE JANUARY

  • According to the January Barometer, 80%+ chances, 2012 will end in positive territory.
  • Great report ,Cobra. I believe, ES will struggle big time to get above 1410 on the current upswing. We had a strong green weekly bar ending on its high, so my conservative expectation for this week is a doji with a probe a little higher from here.  Also, Friday was a NR7 day – always something to watch out for.

  • HK88

    If the market rises this week, I do not think that tech will lead the charge. It could be financials as the money flow shows such a rotation. Also, I see that in the past, market never kept rising with negative NYMO this long (it has been more than a month and NYMO was positive only twice or so), this is really historic. 

    Cobra, just to understand, the ground this time is around 1400 right? So according to stats, market is supposed to rise 3% on average here and then fall back to 1400? Did I get that right?

    Thx

    • The ground should be 1394, the day when SPX opened and close out of BB.

  • ajvs

    Cobra,

    I was checking your numbers in the evil plan. I do think that the next leg up will reach 100% Fibonacci, not 61.8%. Do you know why? Using your numbers,  100% Fibonacci is exactly the edge of the cliff, before 2008 crash, or 144.44.

    Thanks again for your awesome work

  • johnnywa

    Cobra which count do you favor?The Evil Plan were it looks like top at1410 and down to 1340 or the Big picure were it looks like a top at 1420 and pulkback to 1370.Thanks Johnny

    • No preference, I just know up then down then up, that’s it.

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