• 338 days Will The ECB Continue To Hike Rates?
  • 339 days Forbes: Aramco Remains Largest Company In The Middle East
  • 340 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 740 days Could Crypto Overtake Traditional Investment?
  • 745 days Americans Still Quitting Jobs At Record Pace
  • 747 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 750 days Is The Dollar Too Strong?
  • 750 days Big Tech Disappoints Investors on Earnings Calls
  • 751 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 753 days China Is Quietly Trying To Distance Itself From Russia
  • 753 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 757 days Crypto Investors Won Big In 2021
  • 757 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 758 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 760 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 761 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 764 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 765 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 765 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 767 days Are NFTs About To Take Over Gaming?
Is The Bull Market On Its Last Legs?

Is The Bull Market On Its Last Legs?

This aging bull market may…

How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

Billionaires Are Pushing Art To New Limits

Billionaires Are Pushing Art To New Limits

Welcome to Art Basel: The…

  1. Home
  2. Markets
  3. Other

Market Recap: May See Pullback But Rebound Not Over Yet

  TREND INDICATOR MOMENTUM
INDICATOR
COMMENT (Click link to see chart)
Long-term 1 of 2 are BUY    
Intermediate 3 of 3 are SELL 5 of 5 are NEUTRAL SPY ST Model is in SELL mode
Short-term   3 of 5 are NEUTRAL Short-term model is in BUY mode
GANN DAY MOON/SOLAR CYCLE & TIME FIB CONCLUSION
07/11, *07/24-07/28 07/11 / *07/23 07/12, *07/16, 07/31, 08/20-08/23 Next pivot date: 07/12

BULLISH
BEARISH

SPY SETUP ENTRY
DATE
STOP
LOSS
INSTRUCTION: Mechanic signals, back test is HERE, signals are HERE
TRADING PLATFORM: SSO/SDS, UPRO/SPXU
Non-Stop 06/30 S N/A Be sure to check 8.2.2a to 8.2.2g to understand the risks.
ST Model     *No short on 07/09, the setup was invalidated.
*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: THE EARLY NEXT WEEK IS BULLISH, OE FRIDAY IS BEARISH

According to Stock Trader's Almanac:

  1. Monday before July expiration, 2008 broke Dow 5 year bull run.
  2. July expiration day, Dow down 6 of last 9.

From the July seasonality chart below we can see that the next Monday to Wednesday are very bullish.

Index Seasonality

INTERMEDIATE-TERM: REBOUND THEN MOST LIKELY THERE'LL BE A 2ND LEG DOWN

No change for the intermediate-term forecast. Still expect a 2nd leg down and the correction phase at least will last to Oct 2, 2010 (See 07/02 Market Recap for more details). However, since the retailers sentiment is now way too bearish so chances are very good that the rebound we're seeing now may go very far.

The charts below show how bearish the retailers sentiment is:

AAII Bull Ratio from sentimentrader.

Bull Ratio

Rydex Bear Fund Asset Flow from sentimentrader. The chart basically says that Rydex traders bought huge amount bear fund.

Rydex Bear Fund Asset Flow

SHORT-TERM: EXPECT PULLBACK AS EARLY AS THE NEXT MONDAY BUT MOST LIKELY THE REBOUND ISN'T OVER

See chart below, the min price and time target discussed in 07/07 Market Recap were fulfilled on Friday.

Mini Rebound Target Fulfilled

Also considering:

  1. The price volume negative divergence mentioned in Friday's After Bell Quick Summary, short on Friday close and cover on Monday close, it's almost 100% winning rate. (There's a description error in Friday's After Bell Quick Summary. Should be "cover short the next day", instead of "hold until the first profitable close")
  2. 1.0.1 S&P 500 SPDRs (SPY 15 min), Bearish Rising Wedge (or Ending Diagonal Triangle in Elliott Wave term).
  3. The next Monday, 07/12 is a potential turning date (See 07/02 Market Recap for more details).

SPY - Rising Bearish Wedge

When the time, the price and the pattern are all conform, chances are very good we may see a pullback the next Monday.

If indeed the pullback starts the next Monday, especially if it's a huge scary one, then the question inevitably would be: Is the rebound over? I believe most likely not. The argument is the up momentum this round is so far very strong. Hope you still remember what I discussed in the 05/21 Market Recap about "a forward accelerating car cannot be reversed backward without reducing the forward speed first". At that time, the market was missing NYMO positive divergence, therefore a new low was expected (and indeed). Now should be similar, see chart below, RSI shows no negative divergence yet, so a new recovery high is expected.

SPY - RSI
Larger Image

Based on the above assumption, the chart below shows the estimated price and time target:

  1. The mini price target is SPX 1099.97.
  2. The time target could be around 07/16, after that the market may pullback to around 07/31.
  3. Another possibility is to pullback from 07/12 to 07/16 then rise to around 07/31. (I'll explain why 07/31 is important later.)

SPY Cycle Top?

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   4.1.1 Nasdaq 100 Index (Weekly): Bearish 1-2-3 formation, target 1565.
6.4.6a QQQQ Black Bar Watch: Black may mean short-term top is very close.
IWM DOWN   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   4.1.5 iShares CDN S&P/TSX 60 Index Fund (XIU.TO Weekly): Bearish 1-2-3 formation, target $15.30.
BOND UP SELL *Testing support.
EURO UP    
GOLD UP   4.3.0 Gold Trust Shares (GLD Weekly): Head and Shoulders Bottom, target $129.99. Be careful of the non-confirmation of SLV and GDX.
GDX UP   4.3.1 Market Vectors Gold Miners (GDX Weekly): GDX:$SPX is too high.
OIL DOWN    
ENERGY DOWN   4.4.1 Energy Select Sector SPDR (XLE Weekly): Bearish 1-2-3 formation, target $43.14.
FINANCIALS DOWN    
REITS DOWN   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.

 

Back to homepage

Leave a comment

Leave a comment