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Market Recap: The Rebound Could be Over or Very Close

  TREND MOMENTUM COMMENT
Long-term 1 of 2 are SELL    
Intermediate 2 of 3 are BUY 5 of 5 are NEUTRAL SPY ST Model in BUY mode; Non-Stop in BUY mode
Short-term Model is SELL 5 of 5 are NEUTRAL Trend is down but I hold no short over the weekend.
GANN DAY MOON/SOLAR CYCLE CONCLUSION
8/6,8/11,8/26 08/09 / 08/08 8/2,8/9,8/11,8/23 Next pivot date: 08/09 - 08/11, 08/23 - 08/26

BULLISH 0.2.1 10Y T-Bill Yield: ROC(30) < -9, so market bottomed?
BEARISH 0.0.2 Combined Intermediate-term Trading Signals: Trend line broken, so market topped?

SPY
SETUP
ENTRY
DATE
STOP
LOSS
INSTRUCTION: Mechanic signals, back test is HERE, signals are HERE
TRADING PLATFORM: SSO/SDS, UPRO/SPXU
Non-Stop 07/15 L N/A Be sure to check 8.2.2a to 8.2.2g to understand the risks.
ST Model 07/20 L Breakeven  
*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 FIRST NINE TRADING DAYS OF AUGUST ARE HISTORICALLY WEAK

According to the Stock Trader's Almanac:

  1. First trading day in August, Dow down 9 of last 12.
  2. First nine trading days of August are historically weak.

The chart below is from Bespoke.

Average Monthly Percent Change for the DJIA

The chart below is from sentimentrader.

Index Seasonality - August


INTERMEDIATE-TERM: THE CORRECTION SINCE 04/26 ISN'T OVER, THE REBOUND SINCE 07/01 IS OVER OR CLOSE

The bottom line:

  1. The correction since 04/26 is not over.
  2. The rebound since 07/01 could be over or very close to be over. The thing I'm not sure is whether there still will be a new recovery high (higher than 07/01 high) ahead.

Why isn't the correction since 04/26 over?

Firstly, the correction time is not enough. See chart below. I mentioned that the mini mini correction time is Fib 23.6% from 03/06/2009 low to 04/26/2010 high which is on 08/02. However, now chances are pretty low that the 08/02 low is lower than the 07/01 low or at least equal, so apparently the 08/02 is not the low. While if the 07/01 low is the low, then the correction time is way too short. So if the Fib 23.6% on 08/02 is not the low then the next Fib 38.2% at 10/02 should be the only logic time when the correction could be over. Right?

Gann dates
Larger Image

Secondly, the rebound since 07/01 is much much weaker comparing with the last year. It doesn't look like that a new bull has kicked in. The chart below should be self explanatory enough.

SPX
Larger Image

Why could the rebound since 07/01 be over? The chart below should also be self explanatory enough. It's a little bit complicated to do the back test, so I did a visual back test. It looks to me, since year 2000, if SPX made a higher high then had a very first 3 down days in a row, 70% to 80% chances it led to a little little bit bigger correction. Besides, don't forget the August seasonality is not very bull friendly especially the very first 9 trading days.

SPX - Chart 2
Larger Image

If indeed we have a little little bit bigger correction ahead, will it test the 07/01 low? Well, I don't know yet.

By the way, in the time analysis chart above, I also listed lots of potential pivot dates, such as 08/02, 08/06, 08/09, 08/11, 08/16, 08/23, 08/26. They all have multiple sources from different angles to back them as important dates. For now I have no clue yet on how the market will react to those pivot dates. Just listed here for your early references. Personally, I think the 08/09 to 08/11 and 08/23 to 08/26 are the 2 most important time windows.


SHORT-TERM: MIXED SINGALS FOR THE NEXT MONDAY, I'M A LITTLE BIT BEARISH BIASED THOUGH

In the Friday's After Bell Quick Summary, I mentioned that chances are good we'll see a green Monday. However from the 2 new evidences below, looks like bears may have a little little little little bit better chances:

Long up shadow in 60 min chart doesn't look good.

Russell 2000 iShares
Larger Image

SPY fell only 2 cents on Friday but TNX dropped more 3%, as you all know that TNX generally leads SPX so this could hardly be a good news. Short at Friday's close then cover at Monday close since year 2000, you have 72% chances.

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HIGHLIGHTS OF THE OTHER ETFS IN MY PUBLIC CHART LIST

  TREND COMMENT - *New update. Click BLUE to see chart if link is not provided.
QQQQ UP 4.1.1 Nasdaq 100 Index (Weekly): Bearish 1-2-3 formation, target 1565.
IWM UP  
CHINA UP  
EMERGING UP 4.1.6 iShares MSCI Emerging Markets (EEM Weekly): Bear Flag?; EEM:$SPX too high.
EUROPEAN UP 4.1.7 Vanguard European VIPERs (VGK Weekly): Bearish 1-2-3 formation, target $35.45; Bear Flag?
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  
EURO UP  
GOLD DOWN  
GDX DOWN  
OIL UP 4.4.0 United States Oil Fund, LP (USO Weekly): Bear Flag?
ENERGY UP 4.4.1 Energy Select Sector SPDR (XLE Weekly): Bearish 1-2-3 formation, target $43.14.
FINANCIALS DOWN  
REITS UP  
MATERIALS UP  

 

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