SHORT-TERM: EXPECT PULLBACK SOON, HUGE UP MONDAY WOULD MAKE TUESDAY GOOD DAY TO BET PULLBACK

Two cents:

  1. The big picture, maintain what I said in 10/14 Market Outlook, it’s a 2 legged up and we’re now on the very 1st leg up.
  2. In the short-term, I believe the 1st leg up is near an end.

The chart below should help jogging your memory about the picture I see through my crystal ball. I see clearly 3 Push Down, so now should be 2 leg up. I’ve also via the signal called Selling Climax proved the possibilities are high that we’d see multi weeks rally in 10/14 Market Outlook. Except to shift the blue dashed lines (for illustrating directions) a little bit right to leave space for price bars, I didn’t change anything in the chart below, so it’s clear the rise of this week was expected. Well, more precisely, I didn’t expect bulls to spend a whole week to reach the point I drew last week, I thought it’d be much sooner  and we should’ve already rolled over this week. Anyway, the only plan changed here is it takes more time than I thought to unfold the pattern, so I still expect a little bigger pullback soon to mark the end of the 1st up leg.

3PushDown

I believe the 1st up leg would end as early as the next week. In 10/20 Market Outlook, I said a top of some kind could be near, and the Friday’s huge rally wasn’t enough to change my view because from the chart below, still clearly it’s 3 Push Up pattern. So here is my formal evil plan as illustrated by red dashed lines below.

SPYEvilPlan

Please be noted that in the chart above I didn’t deny the possibility of a huge up the next week (well, it’s typical of Cobra, always two sided, never certain on one direction) which would sure invalidate my evil plan based on 3 Push Up pattern. No, I cannot exclude such a possibility (you want to read someone always sure about what the next is, well, I’m not the one, there’s absolutely no sure thing in the stock market, everything is about odds, if someone always sure and always right, he won’t be blogging here, he’d pretty much the richest in the world), but I have enough evidences to prove that if indeed a huge up the next Monday, then it’d be all gone as early as the next Tuesday. So in some sense, a huge up Monday could be bears opportunity (for aggressive traders only of course, because it’s against the trend). OK, now let me present my witnesses below, why up huge could be bears opportunity:

  • Friday is another up 1.65% but not even close to a Major Accumulation Day, since we’re now beyond that 7 Days Rule time window, so 83% odds are certainly not something I would doubt without thinking twice, that it’d drop below the Friday’s close within 2 days.

UpBigNotMAD

  • The two of my ultimate weapons for watching overbought, NYMO and T2122, are now very close to extremes. I said several times before, although in the stock market there’s no sure thing but still there’re certain signals that simply cannot be argued, such as NYLOW (Hope you still remember when I mentioned this unarguable in 10/03 Market Outlook and 10/04 Market Outlook, I’m sure you all remembered what happened thereafter) and I believe NYMO is another unarguable signal (not as powerful as NYLOW, but for very short-term yet, it is the one).

NYMO
T2122

The last but not the least, there’re 3 things I’d like your attention:

Rydex traders (mostly retailers) are way too bullish, accumulated too large bullish assets. See red lines for what happened thereafter. That said, I don’t mean the market would drop immediately, but certainly it’s enough to raise a red flag.

RydexBullFundFlow

TNX ROC(30) >= 9 was used to be a fairly reliable top signal. You can check 8.2.1a Market top/bottom by ROC30 of 10Y T-Bill Yield 2001-2004 and 8.2.1b Market top/bottom by ROC30 of 10Y T-Bill Yield 2005-2008 for the past accuracy, but because of nowadays Fed’s unusual behaviours, I’m not sure if I could trust this signal anymore.

TNX

The chart below is to follow up the CPCE top signal I mentioned in 10/20 Market Outlook. It’s not confirmed on Friday, so not valid anymore.

CPCE

INTERMEDIATE-TERM: WE COULD SEE MULTIPLE WEEKS RALLY BUT MAINTAIN SPX DOWNSIDE TARGET AT 1,000

For why we could see multiple weeks rally, please see 10/14 Market Outlook for details.

For why SPX downside target at 1,000, please see 08/19 Market Outlook and 09/30 Market Outlook for details.

SUMMARY OF SIGNALS:
TREND MOMENTUM COMMENT
Long-term 3 of 3 SELL
Intermediate 5 of 5 BUY 5 of 5 NEUTRAL Cobra Impulse in BUY mode; Non-Stop in BUY mode.
Short-term *UP 6 of 6NEUTRAL
* = New update.

 

 

Chinese Transcript

SHORT-TERM: EXPECT PULLBACK SOON, HUGE UP MONDAY WOULD MAKE TUESDAY GOOD DAY TO BET PULLBACK

两点说明：

  1. 大方向，维持10/14 Market Outlook的说法，这是2 leg的up，我们现在还是1st leg up。
  2. 短期，我认为这个1st leg up已经接近尾声了。

下面的图帮大家回顾一下大方向，3 Push Down后应该是2 leg up，我在10/14 Market Outlook里也通过Selling Climax的证据论证了multi weeks rally的可能性。下面图的方向示意，我并没有改过，只是平移了一下，可以看到本周的上涨是在预料之中的，目前，我还是预期会有个比较大的pullback来标示1st up leg的结束。

3PushDown

我认为这个1st up leg最快应该在下周结束。在10/20 Market Outlook里，我提出了top的可能，今天的大涨并没有改变我的看法，因为从下面的图看，3 Push Up的pattern依然成立，所以下图红线的走法算是我比较正式的evil plan，供参考。

SPYEvilPlan

在上面的图里，我也标出了下周大涨特涨的可能，这样我的基于3 Push Up的所谓evil plan就无效了。我不能完全排除这样的可能性，但我有证据表明，如果周一大涨特涨的话，最快周二就会跌回来，因此，其实周一大涨特涨的话，可能是熊熊的机会（for aggressive traders only，因为这是against trend）。下面谈谈理由，为什么大涨特涨，是熊熊的机会。

UpBigNotMAD

  • 我的两个看overbought的终极武器，NYMO and T2122，已经非常接近extreme了。我曾经说过，有些信号是不能argue的，比如看底的NYLOW（如果大家还记得10/03 Market Outlook和10/04 Market Outlook的话），这个NYMO也是其中之一。

NYMO
T2122

最后还有三个地方提醒大家注意一下：

Rydex traders （散户）太牛，买了很多牛fund，看看红线就知道此后都发生了什么。当然，这个图并不是说马上开跌，只是个warning。

RydexBullFundFlow

TNX ROC(30) >= 9是top信号，过去工作的很准，参见8.2.1a Market top/bottom by ROC30 of 10Y T-Bill Yield 2001-2004 and 8.2.1b Market top/bottom by ROC30 of 10Y T-Bill Yield 2005-2008，不过现在有Fed这么折腾，我已经不确定这个信号是否还有用了。

TNX

下面的图是follow up 10/20 Market Outlook里提到的CPCE top信号，这个信号今天没有confirm，因此无效了。

CPCE

INTERMEDIATE-TERM: WE COULD SEE MULTIPLE WEEKS RALLY BUT MAINTAIN SPX DOWNSIDE TARGET AT 1,000

For why we could see multiple weeks rally, please see 10/14 Market Outlook for details.

For why SPX downside target at 1,000, please see 08/19 Market Outlook and 09/30 Market Outlook for details.

SUMMARY OF SIGNALS:
TREND MOMENTUM COMMENT
Long-term 3 of 3 SELL
Intermediate 5 of 5 BUY 5 of 5 NEUTRAL Cobra Impulse in BUY mode; Non-Stop in BUY mode.
Short-term *UP 6 of 6NEUTRAL
* = New update.