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Market Sentiment At Its Lowest In 10 Months

Market Sentiment At Its Lowest In 10 Months

Stocks sold off last week…

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Market Recap: Bear's Last Chance the Next Week or Never

Long-term 2 of 2 are BUY    
Intermediate 3 of 5 are BUY 4 of 5 are NEUTRAL SPY ST Model in *BUY mode; Non-Stop in BUY mode.
Short-term Model is BUY 5 of 6 are NEUTRAL I hold partial long position over the weekend.
12/02,12/09,12/11 12/05 : 12/07 Week 11/26, 12/26 Next pivot date: 12/03 - 12/06, 12/09 - 12/11

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.
10/29 Market Recap: The last 2 months of year are bullish.
11/05 Market Recap: SPX daily bar completely out of BB may mean bulls are safe till the year end.
11/12 Market Recap: 77% chances the 11/05 high will be revisited in 3 weeks.
6.3.1a Major Accumulation Day Watch: 2 MAD within 5 days means a tradable bottom at least.
BEARISH 1.0.6 SPY Unfilled Gaps: 22 unfilled gaps, the max is 22.
10/29 Market Recap: Commercial (smart money) short Nasdaq 100 heavily according to COT Report.
11/12 Market Recap: Smart/Dump money confidence spread too high.
0.2.1 10Y T-Bill Yield: ROC(30) >= 9, topped? (Due to Quantitative Easing, I'm not sure if it still works)
1.2.0 INDU Leads Market: INDU had a lower low, so SPX might follow eventually.
8.2.7b Record High ISEE Equities Only Index Readings 2010: 2nd record high, top is close?

INSTRUCTION: Mechanic signals, back test is HERE, signals are HERE.
Non-Stop 09/07 L N/A  
ST Model 11/23 S 1.9*ATR(10) Stopped out on 12/02 with losses.
NYMO Sell 11/12 S 11/26 High Stopped out flat on 12/01. Reference only, not meant to be followed.


Two points:

  1. Probably a few more up days ahead, because even this is merely a short-term rebound, as all the recent short-term rebound had generally lasted 5 to 7 trading days, while till now the rebound has lasted 4 trading days at most, so should be a few more up days to go.
  2. The next week could be a key week, because there're 2 important pivot dates due in the next week, plus the bearish seasonality and the crazy ISEE Equities Only Index (see table above), so if bear wants a revenge, the next week could be the last chance of this year. The next next week is Triple Witching week which according to Stock Trader's Almanac, Dow up 22 of last 25; The next next next week is Christmas shortened week, unless something really bad happens, no bear would attack on such a low volume week as the sell cost would be much higher than a normal trading week; The next next next next week is Santa Rally. So again, if bear wants a revenge, either the next week or at least has to wait until the new year.

Time Analysis
Larger Image

December Seasonality Sentimentrader


I'll temporarily maintain a bullish view for intermediate-term, the target could be SPX 1300+ (see 12/01 Market Recap). Three reasons:

  1. Seasonality, see table above, blah blah.
  2. POMO, see table above, blah blah.
  3. The most important is 6.3.1a Major Accumulation Day Watch, 2 Major Accumulation Day within 5 days which confirmed all the intermediate-term bullish signals in the table above.

The reason I use "temporarily maintain" is because there're still 2 problems (see 12/01 Market Recap):

  1. SPX 1227 hasn't been decisively broken yet. Although, personally I don't think it's a problem. The key is "how it breaks", whether break on large green bar or large red bar would make huge differences.
  2. ISEE Equities Only Index hit a 2nd record high on 12/01 while the 04/26 top happened right after the index hit a record high.

So that explains why I put "To be assessed" in the subtitle above, although right now bull looks very promising.

Besides the above mentioned 2 points to pay attention if indeed SPX breakout above 1227 the next week, I'd pay close attention to 1.2.0 INDU Leads Market too. If you, like me, believe INDU leads, then since INDU had a lower low, which implies that SPX eventually would follow INDU to have a lower low, and if the next week, SPX breaks above 1227 while INUD still has no higher high, then I'll consider it as a double doom, which should be large enough to set an alarm bell.

INDU Leads Market
Larger Image


The chart below is from Bespoke:

December Seasonality Bespoke


QQQQ 12/02 L  
NDX Weekly UP *NASI STO(5,3,3) sell signal but oversold now.
IWM Weekly UP  
CHINA   *Could be a Bear Flag in the forming.
CHINA Weekly UP  
EEM Weekly UP  
XIU.TO 12/02 L  
XIU.TO Weekly UP  
TLT Weekly DOWN  
FXE Weekly DOWN  
GLD Weekly UP  
GDX 12/02 L  
GDX Weekly UP  
USO   *ChiOsc is a little too high.
WTIC Weekly UP  
XLE 06/15 L *ChiOsc is way too high.
XLE Weekly UP  
XLF 10/15 L  
XLF Weekly UP  
IYR   Could be a Bear Flag in the forming.
IYR Weekly UP Home builders are lagging.
XLB 12/01 L *ChiOsc is way too high.
XLB Weekly UP  
  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 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.
  5. Trading signals in OTHER ETFs table are mechanical signals. See HERE for back test results. 08/31 L, for example, means Long on 08/31.
  6. UP = Intermediate-term uptrend. Set when I see at least one higher high and higher low on weekly chart.
  7. DOWN = Intermediate-term downtrend. Set when I see at least one lower high and lower low on weekly chart.


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