SHORT-TERM: LOWER CLOSE AHEAD BUT TRADABLE BOTTOM WITHIN 4 TRADING DAYS
Three cents:
- Whether the rebound since the Oct 4th was over, depends on whether the Nov 1st lows being decisively broken. Before that, officially this still is a clear uptrend.
- I expect more selling ahead, most likely a lower close ahead. Pay attention, this time I used “Lower Close” instead of “Lower Low”.
- I expect a tradable bottom (aka sharp rebound) within 4 trading days at most.
The chart below explains why the official down trend only begins after the Nov 1st lows being decisively broken. Theoretically, breakdown below the Nov 1st lows would confirm the 1-2-3 Trend Change pattern (therefore officially a downtrend), but the reality is, if the breakdown is not enough then it could be seen as an ABC corrective down where A down = 2 down, therefore cannot exclude the possibility that, what we have now, is merely a dent on the way to the Galaxy far far away. Only breakdown below the dashed blue line around $120, could such an ambiguity be eliminated and if indeed, the text book target would be around $114. So again, whether the pullback today means “bears coming”, we’d have to wait for the next couple of days.
The chart below illustrated the short-term target. Both 100% Measured Move point to the Nov 1st lows, so more likely the Nov 1st lows will be revisited.
Yes, I know, just a Measured Move (well, 2 Measured Moves to be exact) doesn’t prove more down ahead, so listed below are the 3rd party evidences besides the chart pattern. Why lower close ahead? The very basic theory behind is simple, it’s the law of inertia, a huge down day like today means strong down momentum therefore rarely was today’s low the low.
- NYADV too low. This is why I said lower close ahead.
- TRIN too high.
- Today is a Major Distribution Day.
The last but not the least, a good news for bulls. If huge sell off again tomorrow, no need to panic (well, you can yell at our Intraday Forum though), because chances are we’d have a tradable bottom no later than the next Tuesday (within 4 trading days the most).
INTERMEDIATE-TERM: WE COULD SEE MULTIPLE WEEKS RALLY, WILL NEED REASSESS SPX 1,000 DOWNSIDE TARGET
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. I’m not sure about this call anymore, will need more evidences to reassess.
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Chinese Transcript
SHORT-TERM: LOWER CLOSE AHEAD BUT TRADABLE BOTTOM WITHIN 4 TRADING DAYS
三点说明：
- 是否自10月4号以来的中期反弹结束了，还要看11月1号的lows是否decisively broken，在此之前，officially还是clear uptrend。
- 还没有跌完，多半SPX lower close ahead。注意，这次我说的是lower close，不是lower low哈。
- 四个交易日内就会有一个短期底（Tradable Bottom），至少。
下面的图解释了为什么11月1号的lows必须decisively broken，才可能是officially downtrend。Breakdown below 11月1号的low是1-2-3 Trend Change pattern不错，但是如果下破不多的话，就可以看作是A down = 2 down的ABC corrective down，因此不能排除这仅仅是个上升途中的回调，而只有跌破$120附近的虚线才可以消除这样的歧义，这样target会在$114左右。所以呢，今天的下跌还不足以说明熊来了，看明后两天吧。
下面的图解释了短期下跌的目标。两个100% Measured Move都指向11月1号的low，所以多半11月1号的low会被测试一下的。
我知道，单单一个Measured Move不能证明还没有跌完，所以呢，下面是除chart pattern以外的第三方证据，为什么说lower close ahead？其实都是一个道理，惯性，这么大的下跌动能，不可能一天就见底的。
- NYADV too low，这个是我说lower close ahead的依据。
- TRIN too high。
最后安慰一下牛牛，明天如果又暴跌，就忍一忍吧，因为最迟最迟下周二就要大反弹了。
INTERMEDIATE-TERM: WE COULD SEE MULTIPLE WEEKS RALLY, WILL NEED REASSESS SPX 1,000 DOWNSIDE TARGET
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. I’m not sure about this call anymore, will need more evidences to reassess.
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top notch . thanks
thx,ding
“Why lower close ahead? The very basic theory behind is simple, it’s the law of inertia, a huge down day like today means strong down momentum therefore rarely was today’s low the low”
Cobra: Thanks for reminding us of your wise words.
no matter down or not tomorrow, a tradable bottom is within 4 days.
I don’t know how long the rebound will last, need see chart.
No bottom until we drop 15%-20%! Believe it!
Thank you and good night
great report and presentation.
thank you once again.
Awesome post, Cobra. Thanks for all your insights. If I understand you correctly, a breakdown of the Nov 1 low at 121.6 means that we will probably see 114 in the next week. Would 114 therefore count as a tradeable low that you are predicting within 4 days?
I cannot say $114 will be the bottom at the current stage now.
Thanks Cobra, this ripping and dipping makes holding anything overnight seem a bit scary, and hence I’m not at the moment. I like your measured move analysis, did a little study with $SPX/high yield index etf:
Your 1000 target and lower than it are coming . Tom DeMark was right again: http://www.bloomberg.com/news/2011-10-25/demark-s-p-500-may-trap-bulls-after-rally.html
Lol, Demark predicted a top based on a 38.2% fib retracement from the may highs, he wasn’t correct on the exact high. Anyone can predict relative price resistance levels based on fib retracements, they happen often.
Time will tell.
I big buckeye booyaa Cramer!!! Look for a 20% haircut in a few weeks! Believe it freaks!!
BPNYA down 2.29%, BPCOMPQ down 1.45%, BPOEX down 1.27%, BPNDX down 5.55%, BPSPX down 3.46%, BPINDU flat.
BPSPX chart shows index at Fib 23.6% support (72.50), a level which held for a few weeks in March and for a few days in May 2011. Doesn’t look that it’s is going to hold now in November, support 68 and 61 look stronger.
As to SPX: A break of 1200/1220 would be extremely bearish, bulls will do everything to keep the index from breaking this support.
it could be a triangle if tomorrow bounce back. Now the 200MA in 60min chart is almost at the same level of Nov. 1st’s low.
Wow. past midnight futures were down below 1220, now at 5 am they are lingering at 1240. Here a chart I’m using as a guide.
Nice chart (as always) and nice trade on Tuesday’s close.
Thanks HighRev, but I closed far too early Wednesday, I was expecting a futile go for 1300 and not a break of 1250/60. My bias made me disregard all those k waiting to be picked up…
Lucas Papademos is named PM…
Wait, wasn’t this already announced on Monday? LOL
NO problem. Old headline is still good for 40 pips EUR/USD! lol
thanks cobra laoda
uempel – just want to let you know in advance that I appreciate your time. Since you seem to have a great grasp for the $bp% and the circle tool I have a question for you. This chart that I attached – to me is turning bearish. Is that how you see it? What happens if it price sells off hard this week and breaks out of the bottom of the circle. How would you view that? When using the circle tool are there bullish and bearish breakouts? If so what determines the difference. Thanks again and appreciate everyone on this site. I have learned so much.
Here’s my daily $BPSPX chart. Cobra interesting to know how you view these two charts as well. Again Uempel/Cobra thanks for sharing your knowledge.
I don’t use cycle. Only Uemple uses the cycle.