SHORT-TERM: COULD SEE MORE REBOUND, DON’T EXPECT TO GO VERY FAR THOUGH, THE NEXT PIVOT WINDOW IS FROM 11/24 TO 11/26
Three things to say:
- Not sure whether the rebound is over. I will temporarily assume more to go.
- Don’t expect the rebound to go too far, so maintain the forecast for expecting a 2nd leg down.
- The next possible pivot time window is from 11/24 to 11/26. My guess is it could be the pivot top.
Now let’s talk reasons. All are not very solid, so I’m actually neutral now (aka clueless), will have to wait and see.
Why the rebound may have more to go?
The next week is Thanksgiving shortened trading week (close on Thursday and half day on Friday), the seasonality was bullish which according to the Stock Trader’s Almanac (2010), we should buy Tuesday then sell Friday. Hold until the next Monday after Thanksgiving week however, was a bad idea especially since year 2004.
Since 1988, Wednesday – Friday, gained 13 of 22 times (59%), with a total Dow point-gain of 657.51 versus Monday’s total Dow point-loss of 870.79, down five straight 2004 – 2009. The best strategy appears to be coming into the week long and exiting into strength Friday.
Why I don’t expect the rebound to go too far?
1.1.0 Nasdaq Composite (Daily), looks like it’s very hard for COMPQ to hold its 10th gap. The anatomic charts below should be clear why I said COMPQ could hardly hold its 10th gap. Besides, if history could repeat this time, then at least 3 gaps would be filled before the pullback ends. This looks very substantial which I believe nobody would believe at the current stage. Well, let’s see.
Why the next possible pivot time window is from 11/24 to 11/26? Why I think it could be the pivot top?
See chart blow, lots of reasons:
- Multiple Gann Day due from 11/24 to 11/27.
- Have you noticed that so far lots of important pivot date this year happened on month day 25 to day 27? Don’t believe such kind of date coincidence? Well, then how do you explain the magic day 6 I mentioned before as we just experienced the 02/05 bottom, the 05/06 crash and perhaps the 11/05 top?
- 15 week cycle due on week 11/26.
- The rebound so far this year, mostly took 5 to 7 trading days. The rebound now takes only 3 trading days, so could be 2 to 4 more trading days to go, which happens to be around 11/24 to 11/26.
- Remember the Thanksgiving seasonality mentioned above? It’s bullish until 11/26. The next Monday, however was bearish especially since year 2004. This also fits well with my seasonality chart 6.5.2c Week Seasonality Watch and 6.5.2b Month Day Seasonality Watch, which say the last trading week as well as the last 2 trading days each month since August 2009 were bearish. This, by the way, is the major reason, I think 11/26 could be the pivot top.
INTERMEDIATE-TERM: THE FIRST 2.5%+ PULLBACK AFTER A 40+ STRAIGHT UP TRADING DAYS WAS USUALLY A BUY
See 11/12 Market Recap for more details.
SEASONALITY: THANKSGIVING WEEK ARE KNOWN AS BUY TUESDAY SELL FRIDAY BUT I DON’T SEE MUCH EDGE SINCE 2004
According to Stock Trader’s Almanac (2010), since 1988, Wednesday – Friday, gained 13 of 22 times (59%), with a total Dow point-gain of 657.51 versus Monday’s total Dow point-loss of 870.79, down five straight 2004 – 2009. The best strategy appears to be coming into the week long and exiting into strength Friday.
The seasonality chart around Thanksgiving below is from sentimentrader.
For November seasonality chart please refer to 11/11 Market Recap for more details.
HIGHLIGHTS OF THE OTHER ETFS IN MY PUBLIC CHART LIST
|NDX Weekly||UP||NASI STO(5,3,3) sell signal.|
|CHINA||Big red bar means more pullbacks ahead, so be careful.|
|XLE Weekly||UP||%B is too high with negative divergence.|
|IYR Weekly||UP||Home builders are lagging.|
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- 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.
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- UP = Intermediate-term uptrend. Set when I see at least one higher high and higher low on weekly chart.
- DOWN = Intermediate-term downtrend. Set when I see at least one lower high and lower low on weekly chart.