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Market Recap: A Top of Some Kind Within the Next 2 Weeks?

  TREND MOMENTUM COMMENT
Long-term 2 of 2 are BUY    
Intermediate 5 of 5 are BUY 4 of 5 are NEUTRAL SPY ST Model in BUY mode; Non-Stop in BUY mode.
Short-term   6 of 6 are NEUTRAL  
GANN DAY MOON:SOLAR CYCLE CONCLUSION
01/05-01/07 01/04 : 01/06   Next pivot date: 01/07

BULLISH 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.
BEARISH 1.0.6 SPY Unfilled Gaps: 23 unfilled gaps, the max was 24.
12/20 Market Recap: Smart/Dumb 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: Record high, top is close?
12/14 Market Recap: Too many Sentimentrader's indicators are at bearish extremes.
8.1.4 Normalized CPC: Too low, so topped?

0.2.3 NYSE McClellan Oscillator: Hindenburg Omen confirmed.
0.1.1 SPX Intermediate-term Trading Signals: CPC MA(10) too high, so topped?
6.2.3 VIX:VXV Trading Signals: Too low, so topped?
0.0.2 Combined Intermediate-term Trading Signals: Trend line broken, so topped?
*12/31 Market Recap: Lowest ATR(10) readings in 13 years, so 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 09/07 L N/A  
ST Model     Buy mode doesn't mean long, a 2nd buy signal is needed to enter long.
Short-term N/A N/A Trend is NOT CLEAR. I hold both long and short over the weekend.

MY STRATEGY: STOCK BOND EURO OIL GOLD
Long but I will be very careful here. Long   Long Long

SHORT-TERM: NO IDEA ABOUT THE NEXT WEEK, BUT A TOP OF SOME KIND COULD BE WITHIN THE NEXT 2 WEEKS

No idea about bear or bull the next week. However, my best guess is a top of some kind is within the next 2 weeks.

Three reasons:

  • Time analysis. See intermediate-term session below, maintain pivot date around 01/05 to 01/12.
  • See chart below for what happened with very low ATR readings (equivalent to very low volatility)? Now we have the lowest ATR(10) readings in 13 years (which means the volatility most likely can only go up and as all you have known an up volatility usually means a down price).

ATR and The Market Top
Larger Image

  • A huge up the next week would not only mean that SPX is then too far away from its MA(200), but also could trigger 2 short setup that had above 70% winning rate (see 11/08 Market Recap for those 2 setups). So in another word, at the most, the market could be up another week, the next next week would not be very pleasant.

SPX Weekly
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One thing I want your attention though. I'm not sure if it's because of my market recap, looks like the majority of people attending my forum are expecting a 5%+ pullback in January (The survey is in Chinese, but I happen to know some English, so I did a little translation, you'll need just read the annotation boxes). Does this mean that retailers are way too bullish, therefore there won't be any pullback? Well, we'll have to wait and see. Simply from AAII and II, retailers are very bullish, so whether the people in my forum are "no ordinary retailers" or not, we'll have to wait until the January ends. LOL. By the way, the past survey shows that those "no ordinary retailers" were mostly correct. I'm not sure about this time though, looks too bearish even to me. Or am I too bullish?

HT Sentiment Survey

AAII Bull Ratio

INTERMEDIATE-TERM: COULD BE WAVE 5 UP TO SPX 1300+, PIVOT TOP COULD BE AROUND 01/05 TO 01/12

In 12/17 Market Recap, I've tried to talk you into believing the next pivot date is around 01/05 to 01/12. I'd like to update all the reasons again here. The VIX reason is retired (VIX does up as expected but price not down) but I managed to find 2 other reasons.

Why 01/05?

  • Counting 28 trading days from the TED Spread top happens to be on 01/05. And are there any other factors that makes 01/05 so special? Well, remember the Magic Day 6? See Gann Day table below, since year 2000, there're at least 2 pivot dates around 01/05.

Gann Day
Larger Image

  • 01/07 is Non Farm Payroll day which according to the chart below is most likely a pivot day. The most recent example is 11/05.

NFP Day Watch
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Why 01/12?

  • The most important reason is from chart 8.2.9c QQQQ - 2002 to 8.2.9k QQQQ - 2010, check by yourself in my public chart list, starting from the 8th trading day in January (which is 01/12) until the end of the month, QQQQ has been bearish since year 2002 without exception.
  • From 08/27 bottom to 11/05 high, SPX up 49 trading day, so 49 * Fib 61.8% = 30, adding from 11/29 bottom, what we get then happens to be on 01/11.

 

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