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Market Recap: Red Week the Next Week?

  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: 20 unfilled gaps, the max was 20.
10/15 Market Recap: AAII bull ratio (4-week average) too bullish.
10/15 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.
10/15 Market Recap: Institutions are selling into strength.
10/19 Market Recap: AAPL is way too stretched.
10/15 Market Recap: Euro may retreat which may cause US$ carry trade unwind.
6.4.2c Extreme TICK Readings Watch: TICK too low, lower low or lower close ahead?
0.0.2 Combined Intermediate-term Trading Signals: CPCE trend line breakout, topped?
6.4.0 SPX and NYMO Divergence Watch: New high on negative NYMO readings, topped?
*4.1.0 S&P 500 Large Cap Index (Weekly): NYSI STO(5,3,3) sell signal.

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 *10/12 Low *Adjust stop loss.

SHORT-TERM: COULD SEE RED WEEK THE NEXT WEEK

We could see a red week the next week. The arguments are SPX and NDX weekly %B too high with negative divergence and WLSH up 8 weeks in row. Theyre not very solid reasons but considering the bearish seasonality the next week (see seasonality session below), so I think chances are good that well see a red week the next week.

S7P500

NASDAQ 100

Wilshire 5000 Index up 8 weeks in row, the chart below marked all the occurrences when it was up 7 or more consecutive weeks since the inception. The next week was all in red.

WLSH Weekly
Larger Image

0.0.2 Combined Intermediate-term Trading Signals, this is just a follow up, I consider the trend line held the breakout so the top signal is still valid.

CPCE daily
Larger Image

INTERMEDIATE-TERM: BEARISH BIASED, PIVOT DATE EITHER AROUND 10/22 OR 10/26 OR 11/04

Maintain the intermediate-term bearish view. Added another reason below: NYSI Weekly STO(5, 3,3) sell signal. Looks to me, choppy ahead at least.

S&P500
Larger Image

For the chart below, I just want your attention, its not a solid reason to be bearish. Again, a bearish expectation doesnt equal to a short position as you can see my positions in the table above. The risk reward ratio should always be considered which is beyond the scope of this report. Basically, as long as the market keeps having higher high, being a bear is a dangerous job, so beware.

4.0.7 Collection of Leading Indicators I, too much negative divergence, especially the efensive sectors XLV and XLP outperform the SPX which means risk aversion.

Baltic Dry Index

As for other reasons for an intermediate-term bearish view, see summary below. I have no intension to list all the charts again because they dont have much change. Among them, one chart Id like your attention though, its the Institutional Selling Action from stocktiming - Apparently institutions are selling into the strength.

Institutional Selling
Larger Image

Maintain the intermediate-term bearish view, the pivot date could be either around 10/22 or 10/26 or 11/04, see 10/15 Market Recap for more details. Below are summaries of all the arguments supporting my intermediate-term bearish view:

  1. As mentioned in 10/15 Market Recap, commercial (smart money) holds record high short positions against Nasdaq 100.
  2. As mentioned in 10/15 Market Recap, AAII bull ratio (4-week average) is way too bullish.
  3. As mentioned in 10/15 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, statistically VIX at 1 month low going into October was not a good sign.
  6. As mentioned in 10/15 Market Recap, US$ may rebound which is not good for the broad market.
  7. As mentioned in 10/19 Market Recap, AAPL MACD is now too stretched which could mean a top for QQQQ.

SEASONALITY: LAST TRADING WEEK AND LAST 2 TRADING DAYS OF EACH MONTH SINCE AUG 2009 WERE BEARISH

6.5.2c Week Seasonality Watch.

SPY

6.5.2b Month Day Seasonality Watch.

S&P500

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, watch potential weakness on commodity related ETFs like XLE, XLB and XIU.TO.
  3. Financials and home builders are lagging, so how far can IYR (realty) go?

 

  TREND COMMENT
QQQQ *UP  
NDX Weekly   NDX to SPX ratio too high. %B too high with negative divergence.
IWM *UP  
IWM Weekly   %B too high with negative divergence.
CHINA   Rejected by downtrend line, watch...
CHINA Weekly   Extremely high %B.
EEM *LA *Double black bar, pullback?
EEM Weekly   EEM to SPX ratio too high.
XIU.TO LA TOADV MA(10) too high.
XIU.TO Weekly   Fib 61.8% .
TLT *LA 1-2-3 trend change to be confirmed, TLT could start an intermediate-term downtrend.
TLT Weekly   *Rebounded from %B mid line.
FXE LA *Bearish reversal bar plus black bar, combining with weekly chart, so pullback?
FXE Weekly   Stalled at Fib confluences area, %B too high with negative divergence, too high above MA(40).
GLD DOWN  
GLD Weekly    
GDX *LA On support, BPGDM sell signal though.
GDX Weekly    
USO *UP  
WTIC Weekly    
XLE *UP Bearish reversal bar plus Spinning Top, combining with weekly chart, so pullback?
XLE Weekly   %B too high with negative divergence.
XLF LA  
XLF Weekly   Head and Shoulders Top in the forming?
IYR UP *Bearish reversal bar plus black bar, pullback?
IYR Weekly   Home builders are lagging.
XLB *LA  
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. Theres 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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