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Market Recap: A Low Could Already Be In or Very Close

  TREND INDICATOR MOMENTUM INDICATOR COMMENT (Click link to see chart)
Long-term 1 of 2 are BUY    
Intermediate 3 of 3 are SELL 3 of 5 are NEUTRAL Non-Stop Model is in SELL mode
Short-term 1 of 1 are SELL 5 of 5 are NEUTRAL SPY ST Model is in SELL mode
GANN DAY MOON/SOLAR CYCLE & TIME FIB CONCLUSION
07/07-07/11 07/11 / 07/07 07/31, 08/20-08/23 Next pivot date: 07/07-07/11

BULLISH 6.3.2c Major Distribution Day Watch: MDD > 35, bottomed?
*0.1.1 SPX Intermediate-term Trading Signals: NYADV MA(10) oversold.
*4.0.4 Dow Theory: Averages Must Confirm: NYA50R oversold.
BEARISH 4.1.0 S&P 500 Large Cap Index (Weekly): Head and Shoulders Top plus Bearish Engulfing, target 861.

SPY SETUP ENTRY DATE STOP LOSS INSTRUCTION: Mechanic signals, back test is HERE, signals are HERE
TRADING PLATFORM: SSO/SDS, UPRO/SPXU
ST Model 07/01 S 1.9xATR(10) May not be a good timing, so be careful.
Reversal Bar      
NYMO Sell      
Non-Stop(RSP) 06/30 S N/A Be sure to check 8.2.2a to 8.2.2g to understand the risks.
*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: JULY IS THE BEST PERFORMING DOW AND S&P MONTH OF THE 3RD QUARTER

The July Seasonality chart below is from Bespoke. Basically, July is the best performing month of the the 3rd quarter. The following Aug and Sep are not so bull friendly.

Average Monthly Change in the Dow


INTERMEDIATE-TERM: REBOUND (IF ANY) THEN MOST LIKELY THE 2ND LEG DOWN

Overall, the market is not bull friendly.

  1. As mentioned in 06/25 Market Recap, the weekly Bearish Engulfing means the next week (07/06) and the next next week are statistically bearish.
  2. As mentioned in 06/30 Market Recap, the Head and Shoulders Top in chart 4.1.0 S&P 500 Large Cap Index (Weekly) has the text book target around 861.
  3. As mentioned in 06/30 Market Recap, the correction could last until Oct the 2nd at least (or min min correction time is to Aug 02).
  4. As mentioned in 07/01 Market Recap, even we may see a short-term rebound, but after the rebound at least there's one more leg down.

Now let me from another angle to prove that after a rebound at least there's one more leg down.

According to the Elder Impulse System, so far now SPY has 9 Impulse Red bars which only happened once since year 2000. The statistics below shows buy at the 7th Impulse Red bar close, sell 1/2/3/4 days later at close since year 2000.

Performance

From the back test summary above we can see indeed the short-term looks promising. However on a little bit longer term, it's quite bearish, except 2 cases in 2005 and 2006 (even in both cases, at least the 7th Impulse Red bar low was retested soon), the rest 15 cases all had at least the 2nd leg down. Click the links below to see all the past cases.

  1. 8.2.5a SPY 7 or More Impulse Red Bars 2000 - 2001
  2. 8.2.5b SPY 7 or More Impulse Red Bars 2002 - 2003
  3. 8.2.5c SPY 7 or More Impulse Red Bars 2005 - 2006
  4. 8.2.5d SPY 7 or More Impulse Red Bars 2007 - 2009

SPX Impilse Moves


SHORT-TERM: A LOW COULD ALREADY BE IN OR VERY CLOSE

For the most recent short-term view, please refer to 07/01 Market Recap and the Friday's After Bell Quick Summary. Especially mentioned in the Friday's After Bell Quick Summary, buy at SPY's 5th down day close, hold until the first green day (please don't forget the max draw down could go as high as 4%, which is very scary), the winning rate was 100% (21 out of 21) since year 2000. So maintain the forecast for a rebound to 07/07 to 07/11. There's possibility that SPX may drop to 977 to 998 area as mentioned in 07/01 Market Recap, if so, then 07/07 to 07/11 could be the bottom, the rebound after that could last to 07/27 to 07/31.

For now I'm more inclined to believe the market could rebound to 07/07 to 07/11 (then down to 07/27 to 07/31), so a low could be in already or only one more down day left.

The reason, except the statistics mentioned in the Friday's After Bell Quick Summary about SPY down 5 day in a row, the 7th Impulse Red bar analysis mentioned in the intermediate-term session above also argues for a short-term rebound. And besides, there're 3 additional reasons:

VIX Leads SPX.

VIX Leads SPX

0.1.1 SPX Intermediate-term Trading Signals, see dashed green lines. NYADV MA(10) oversold worked great recently plus ChiOsc is a little bit too low.

SPX

0.2.1 10Y T-Bill Yield, Morning Star, looks bullish, therefore TNX could rebound which means SPX will rebound as we.

10 Year Treasury Note Yield

The chart below is for fun only. I found 2 interesting things:

  1. Uses March 2009 low as axis, the recent highs and lows are symmetrical (well, sort of) to those highs and lows in year 2007 and 2008. So if this kind of symmetry could go further, then 07/12 and 07/31 will be very important date. Especially 07/12, fits well with the 07/07 to 07/11 time window I mentioned above.
  2. 07/01 could be a pivot date because it happens to be the 358 calendar day cycle due date which from the time aspect also argues that a low could already be in.

SPX calendar Days From Top
Larger Image


HIGHLIGHTS OF THE OTHER ETFS IN MY PUBLIC CHART LIST

*DTFMS = Dual Time Frame Momentum Strategy. The signal is given when both weekly and daily STO have the same buy/sell signals. Use it as a filter, don't trade directly.

  TREND *DTFMS COMMENT - *New update. Click BLUE to see chart if link is not provided.
QQQQ DOWN   ChiOsc a little too low. *NAADV MA(10) oversold.
*4.1.1 Nasdaq 100 Index (Weekly): Bearish 1-2-3 formation, target 1565.
IWM DOWN SELL Ascending Broadening Wedge, target $54.97.
CHINA DOWN    
EMERGING UP    
EUROPEAN UP *BUY 4.1.7 Vanguard European VIPERs (VGK Weekly): Bearish 1-2-3 formation, target $35.45.
CANADA DOWN SELL *TOADV MA(10) oversold.
*4.1.5 iShares CDN S&P/TSX 60 Index Fund (XIU.TO Weekly): Bearish 1-2-3 formation, target $15.30.
BOND UP   ChiOsc is way too high. *Evening Star, bearish reversal 71% of the time.
EURO UP BUY  
GOLD UP SELL 4.3.0 Gold Trust Shares (GLD Weekly): Head and Shoulders Bottom, target $129.99. Be careful of the non-confirmation of SLV and GDX.
GDX UP SELL 4.3.1 Market Vectors Gold Miners (GDX Weekly): GDX:$SPX is too high.
OIL DOWN SELL  
ENERGY DOWN   *4.4.1 Energy Select Sector SPDR (XLE Weekly): Bearish 1-2-3 formation, target $43.14.
FINANCIALS DOWN   *4.4.2 Financials Select Sector SPDR (XLF Weekly): Sitting on very important support.
REITS UP SELL 4.4.3 Real Estate iShares (IYR Weekly): Pay attention to XHB weakness!
MATERIALS DOWN   *4.4.4 Materials Select Sector SPDR (XLB Weekly): Double Top, target $23.27.

 

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