*Please make sure you understand how to use the table above. The main purpose of this report is to provide information so contradictory signals are always presented.
SEASONALITY: WEEK AFTER TRIPLE WITCHING, DOW DOWN 15 OF LAST 22, ALSO MARCH IS KNOWN AS A TURNING MONTH
CYCLE ANALYSIS: COULD BE A CYCLE TOP WITH MINIMUM 6.5% DOWN SWING
INTERMEDIATE-TERM: EXPECT ROLLER COASTER AHEAD
See 03/19 Market Recap for more details.
SHORT-TERM: BULLISH REVERSAL! MARKET COULD REBOUND FURTHER IF NO BIG DOWN TOMORROW
As mentioned in today’s After Bell Quick Summary, the big rally today conforms with the past “post Bearish Engulfing day” pattern so according to this pattern, the market should start to drop tomorrow, or consolidate (or small rise) for a few days before pulling back.
My guess is the market may consolidate (or small rise) here for a few days before dropping, because the “post Bearish Engulfing day” pattern is pure speculation, after all the char should weight more, while on today’s chart bullish reversal bars are everywhere, so the chances for the market to keep advancing are very good. 2.0.0 Volatility Index (Daily), the blue rectangles illustrate what had happened in the past when VIX bearish reversal bar like today was formed. Of course, I don’t expect the market to rise big either because the VIX to VXV ratio below is way too low. Take a look at a longer history view on 6.2.3 VIX:VXV Trading Signals then you’ll know what I mean.
If the market chooses to keep rising, then it could rise to around 03/25. See chart below. Apply the Fib extension from 2007 all time high to 2009 March low, interestingly, all important Fib nodes, 25%, 38.2%, 50% and 61.8% are important turning points, so logically the market could turn on 03/25 which happens to be the Fib 75%, another important Fib node. Of course, if the market starts to drop BIG tomorrow, then it could pullback till 03/25 before any meaningful rebound.
STOCK SCREENER: For fun only, I may not actually trade the screeners. Since SPY ST Model is in BUY mode, only LONG candidates are listed. For back test details as well as how to confirm the entry and set stop loss please read HERE. Please make sure you understand the basic risk management HERE.
Looks like it’s too late to long stocks now as the market is way too overbought. Waiting for a better chance.