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Market Recap: The Next Pivot Date

  TREND MOMENTUM COMMENT
Long-term 2 of 2 are BUY    
Intermediate 3 of 3 are BUY 3 of 5 are NEUTRAL SPY ST Model in BUY mode; Non-Stop in BUY mode.
Short-term Model is BUY 6 of 6 are NEUTRAL The trend is up, I hold both long and short over the weekend.
GANN DAY MOON:SOLAR CYCLE CONCLUSION
10/26 10/22 : 10/23   Next pivot date: 10/21 - 10/22, 10/25 - 10/27, 11/04

BULLISH 0.1.1 SPX Intermediate-term Trading Signals: Head and Shoulders Bottom breakout, target 1242.
09/27 Market Recap: 9 POMO within 20 trading days means 14%+ up in 3 months.
10/01 Market Recap: Positive September plus mid-term election means 11%+ up to year end.
10/05 Market Recap: 16 more trading days upswing?
BEARISH 1.0.6 SPY Unfilled Gaps: 19 unfilled gaps, the max was 20.
10/08 Market Recap: AAII bull ratio (4-week average) too bullish.
10/08 Market Recap: Commercial (smart money) short Nasdaq 100 heavily according to COT Report.
10/08 Market Recap: Up off-season usually means down earning season.
10/08 Market Recap: Institutions are selling into strength.
6.2.3 VIX:VXV Trading Signals: Record low.
0.2.2 Extreme Put Call Ratio Watch: CPCI too high, topped?
6.2.2a VIX Trading Signals (BB): Short setup triggered on 10/13.
*10/13 Market Recap: % SPX stocks 1 std dev above MA(50) is too high.
*6.1.9a Extreme ISEE Index Readings Watch: SPX will close below 1176 within 2 days?
*10/15 Market Recap: ISEE Index is way too high.
*10/15 Market Recap: AAPL is way too stretched, it may rise after ER but would fall later.
*10/15 Market Recap: Euro may retreat which may cause US$ carry trade unwind.

SPY
SETUP
ENTRY
DATE
STOP
LOSS
INSTRUCTION: Mechanic signals, back test is HERE, signals are HERE.
TRADING PLATFORM: SSO/SDS, UPRO/SPXU
Non-Stop 09/07 L N/A Partial profits on 09/24.
ST Model 09/24 L Breakeven  

SHORT-TERM: EXPECT A PULLBACK SOON

I expect a pullback (could be either a short-term or an intermediate-term) soon, although we may still see some higher highs ahead, but generally, I don't think there's much room left on the upside.

I mentioned 2 reasons in the Friday's After Bell Quick Summary for expecting a red Monday, which I believe are very solid reasons, take a look if you haven't.

0.1.0 SPY Short-term Trading Signals, although YES WE CAN is capable of anything but three reversal like bars in a row still seems to have some bearish edges.

SPY

Highlighted in red is whenever ISEE Index > 172 which means retailers are way too bullish therefore at least choppy ahead.

SPX

Percent of SPX stocks 1 std dev above MA(50) still is too high, see highlighted in red, again choppy ahead.

SPX

INTERMEDIATE-TERM: PIVOT DATE AROUND 10/22, 10/26 OR 11/04?

Maintain the intermediate-term bearish view, except 5 major reasons I've been blah blah (will summarize those 5 reasons in the latter session), there's one additional reason: Euro could face some weakness ahead which will cause US$ carry trade unwind therefore is not good for the overall market.

Why will euro face some weakness? The chart below should explain all. Among them, by the way, the Daily Sentiment Index itself mentioned by Elliott Wave International charges $1895 for a year, well, I hope it's worth the money.

Sentiment
Larger Image

Remember, the so called intermediate-term bearish view is merely an expectation, before the price itself confirms such a view, it's absolutely not the reason to short the market. This is similar to, say, when a stock has risen 20 days in a row, we all know inevitably it will pullback, but the question is when and thus how to trade? To answer such a question involves lots of discussions about risk reward ratio which are far beyond the scope of this report.

However, as for when, I still can make a simple guess. My break point this time is AAPL. Why AAPL? Because it weights around 20% in QQQQ which make it the Wall Street's most important stock, probably ever. Now the problem is, see chart below, AAPL is way too stretched, see dashed red lines, clearly, such kind of stretch usually means THE TOP for QQQQ and since it's the most important ever stock, therefore the overall market.

Apple

OK, now we know that AAPL too stretched may mean THE TOP, so if only we know exactly when AAPL will start to pullback then we may as well know exactly when the overall market may turn down, correct?

So exactly when will AAPL pullback? AALP ER will be on 10/18 AH the next Monday. Let's find out how AAPL traded after its ER. From the chart below, AAPL usually fireworked after ER, pop high for a few days but eventually would fall back to the ground especially when AAPL was already 10% above its MA(50) before the ER. So logically and statistically, AAPL may be very close to a reversal while the reversal day could be the AAPL ER day plus a few days popup after the ER, correct?

Apple Watch
Larger Image

Form the AAPL ER chart above we can see, the popup usually lasted 3 to 4 trading days, so in another word, the next pivot date (for the overall market not merely for AAPL as mentioned above) will be the AAPL ER day 10/18 plus 4 trading days which is 10/22.

Now let's from another angle to see if anything special for this 10/22 pivot date.

Below is my major chart for time analysis. There're 3 possible pivot windows as illustrated in the chart and 10/22 is fortunately among them. So considering the AAPL ER analysis above and 10/22 coincidently appears via another angle of time analysis, the chances are little bit better that 10/22 could be the pivot date.

  1. 10/21 to 10/22, statistically 21 and 22 of each month since year 2000 are the most likely pivot date and also see table above, Full Moon is on 10/22 while the next Solar Term date is on 10/23.
  2. 10/25 to 10/27, amazingly most pivot dates this year happened around day 25. Besides, I have a 3rd party document from another angle also claims that 10/25 is the next possible pivot data.
  3. 11/04 to 11/05, midterm election is on 11/02, FOMC is on 11/03 which is widely expected for Quantitative Easing II announcement.

Well, again, pivot date analysis is similar to resistance analysis, just it's in terms of time instead of price so like the resistance, it's for info only, need combine with other factors before taking actions. Trading purely based on time analysis is a very bad idea, so beware.

Time Analysis
Larger Image

Below are summaries of all the other arguments I've been blah blah recently:

  1. As mentioned in 10/08 Market Recap, commercial (smart money) holds record high short positions against Nasdaq 100.
  2. As mentioned in 10/08 Market Recap, AAII bull ratio (4-week average) is way too bullish.
  3. As mentioned in 10/08 Market Recap, institution selling keeps increasing.
  4. As mentioned in 10/08 Market Recap, statistically, a strong off-season could mean a weaker earning season.
  5. As mentioned in 10/11 Market Recap, VIX:VXV is too low and statistically VIX at 1 month low going into October was not a good sign.

All the most recent charts supporting the above arguments are listed below for your reference. Among them the the Institutional Selling Actions char is from stocktiming and the VIX statistics is from sentimentrader.

COT Commercial Hedgers

AAII Bull Ratio

Institutional Selling Action chart by the way also from another angle argues that the next pivot date could be just 3 trading days away.

Institutional Selling

VIX to VXV Ratio Watch
Larger Image

SEASONALITY: NO UPDATE

For October Seasonality chart please refer to 10/01 Market Recap.

HIGHLIGHTS OF THE OTHER ETFS IN MY PUBLIC CHART LIST

  1. The market appears a little stretched as lots of ETFs weekly %B are way too high.
  2. With possible Euro pullback next week, watch potential weakness on commodity related ETFs like XLE, XLB and XIU.TO.
  TREND COMMENT
QQQQ UP  
NDX Weekly   NDX to SPX ratio too high. %B too high. Neither had any edges though.
IWM *LA *Bearish Engulfing?
IWM Weekly   %B too high.
CHINA   Head and Shoulders Bottom breakout, target 3083.
CHINA Weekly   Extremely high %B.
EEM UP  
EEM Weekly   EEM to SPX ratio too high, %B too high. Neither had any edges though.
XIU.TO *LA TOADV MA(10) too high. Combining with weekly chart, pullback?
XIU.TO Weekly   Fib 61.8% plus %B too high with negative divergence.
TLT DOWN *1-2-3 trend change? So TLT could be in an intermediate-term downtrend. Be careful.
TLT Weekly    
FXE *LA *Bearish Engulfing, pullback? Combining with weekly chart, watch for possible trend reversal.
FXE Weekly   *Stalled at Fib confluences area, %B too high with negative divergence, too high above MA(40).
GLD UP  
GLD Weekly   %B too high.
GDX *DOWN  
GDX Weekly   GDX to SPX ratio too high, %B too high with negative divergence.
USO *DOWN *Could be a Bull Flag in the forming.
WTIC Weekly    
XLE UP *Hollow red bar plus filled black bar, pullback? Combining with weekly chart, pullback?
XLE Weekly   %B too high with negative divergence.
XLF DOWN  
XLF Weekly   Head and Shoulders Top in the forming?
IYR UP  
IYR Weekly   Home builders are lagging.
XLB UP *Black bar, pullback?
XLB Weekly   %B too high with negative divergence.
  1. Please make sure you understand how to use the table above. The purpose of this report is to provide info so contradictory signals are always presented.
  2. Position reported in short-term session of the table above is for short-term model only, I may or may not hold other positions which will not be disclosed.
  3. Conclusions can be confirmed endlessly, but trading wise, you have to take actions at certain risk level as soon as you feel the confirmation is enough. There's no way for me to adapt to different risk levels therefore offer no trading signals will be given in this report except the mechanical signals such as SPY ST Model.
  4. * = New update; Blue Text = Link to a chart in my public chart list; UP/DOWN = Short-term trend; L A = Lateral Trend

 

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