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Market Recap: Lower Low Ahead?

  TREND MOMENTUM COMMENT
Long-term 2 of 2 are BUY    
Intermediate 5 of 5 are SELL 5 of 5 are NEUTRAL SPY ST Model in SELL mode; Non-Stop in SELL mode.
Short-term   6 of 6 are NEUTRAL  
GANN DAY MOON:SOLAR CYCLE CONCLUSION
03/16-03/21 03/19 : 03/21   Next pivot date: 03/21

BULLISH 09/27 Market Recap: 9 POMO within 20 trading days means 14%+ up in 3 months.
02/23 Market Recap: Pullback could last 4 weeks, then 02/18 highs will be revisited.
03/11 Market Recap: Bullish in 3 to 6 months.
BEARISH 4.0.1 SPX Long-term Trading Signals: Weekly EMA(13) is way too high above weekly EMA(34).
03/04 Market Recap: OEX open interest ratio too high, could be choppy ahead.
03/18 Market Recap: Could see lower low ahead.
My Thoughts The pullback since 02/22 may last but the 02/18 high will be revisited in 69 calendar days on average.

SPY
SETUP
ENTRY
DATE
STOP
LOSS
INSTRUCTION: Mechanic signals, back test is HERE, signals are HERE.
TRADING PLATFORM: SSO/SDS, UPRO/SPXU
Non-Stop 02/24 S N/A Short is for aggressive traders only.
ST Model     Sell mode means downtrend. The model needs 2nd signal to open a short position.
Short-term DOWN 03/11 High I hold trapped short position over the weekend.

SHORT-TERM: COULD SEE LOWER LOW AHEAD

Four cents:

  1. Expect a lower low ahead, the 03/15 low might not be the final low.
  2. Just a wild guess, the rebound could over around 03/21.
  3. Concept only, the pullback price target could be the November 2010 highs and last until the beginning of April. For the intermediate-term, I still expect that 02/18 highs will be revisited.
  4. The trading strategy is till to sell bounce.

Why lower low ahead?

  • As mentioned in 03/16 Market Recap, a Visible Positive Divergence is needed. A rebound those days is just the very first step toward "Visible".

NYMO Positive Divergence Expected
Larger Image

  • As mentioned in 03/16 Market Recap, 2 Major Distribution Day within 5 days means rebound then resume the downtrend. Now the rebound has fulfilled, let's see whether it will resume on the downside as per the past pattern.

Two MDD Withinh 5-Days
Larger Image

  • The last week is unfortunately a red OE week, the chart below shows all the recent red OE weeks which as far as I can see, that 13 out of 16 (81%) cases, either a red the next week or at least a lower low the next week.

Expect a lower low next week

  • VIX rose 30%+ in 2 days from 03/14 to 03/15, the statistics below are from Bespoke and Schaeffer, both show that the next and the next next week are not very bull friendly. In addition, I've attached all the cases since 1990 below. Clearly you can see that the day when VIX rose 30% was mostly not the low, so the safest trade for bear should be to sell bounce then cover near 03/15 low.

30%+ 2-day gains in VIX

2010 VIX

2007 VIX

2005 VIX

2001 VIX

1997 VIX

1994 VIX

1990 VIX

Since as mentioned above chances for a lower low are higher so it's reasonable to guess that the rebound could be over soon. Then why 03/21? Because Full Moon (see table above), Solar Term Date (see table above), Gann Day and pivot date statistics since year 2000 are all pointing to the time window from 03/16 to 03/22 which should most likely be a turning point.

Gann Day

As for the pullback time and target, just a wild guess, no solid evidences, so the purpose is to give you some concept in advance.

Generally the pullback target is around the previous high which for our current case is the November highs.

Pullback Target
Larger Image

As for the time target, since there're lots of cycle due date at the beginning of the April so it could be a very important turning point which right now seems a cycle low.

Next Pivot date
Larger Image

INTERMEDIATE-TERM: BULLISH IN 3 TO 6 MONTHS

Combine the study mentioned in 02/23 Market Recap and 03/11 Market Recap, I still believe that 02/18 high will be revisited.

SEASONALITY: BEARISH THE NEXT WEEK

According to Stock Trader's Almanac:

  1. Week after Triple Witching, Dow down 15 of last 23, but rallied 4.9% in 2000, 3.1% in 2007 and 6.8% in 2009.
  2. March historically weak later in the month.

For March seasonality chart please refer to 03/01 Market Recap.

HIGHLIGHTS OF THE OTHER ETFS IN MY PUBLIC CHART LIST

  TREND COMMENT
QQQQ&Weekly *DOWN  
IWM & Weekly UP  
SSEC & Weekly UP  
EEM & Weekly DOWN  
XIU & Weekly UP  
TLT & Weekly UP  
FXE & Weekly UP  
GLD & Weekly UP  
GDX & Weekly 03/15 S  
USO & Weekly UP  
XLE & Weekly UP  
XLF & Weekly *DOWN  
IYR & Weekly UP  
XLB & Weekly DOWN  
DBA & Weekly DOWN  
  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. * = New update; Blue Text = Link to a chart in my public chart list.
  3. UP = Intermediate-term uptrend. Set when weekly buy signal is triggered.
  4. DOWN = Intermediate-term downtrend. Set when weekly sell signal is triggered.

 

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