Market Outlook: Rebound Maybe, But the Low Wasn't In Yet

By: Peter Pan | Thu, Sep 22, 2011
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SHORT-TERM: COULD SEE REBOUND AS EARLY AS TOMORROW BUT THE LOW WASN'T IN YET

Two cents:

  1. The low wasn't in yet.
  2. Could see huge rebound as early as tomorrow. Pay attention to "as early as", as I'm not sure exactly when.

So the conclusion is, if indeed a huge rebound starting from tomorrow, it should be a sell opportunity.

Let's follow up yesterday's Market Outlook first. Exactly as I said yesterday, the pullback well exceeded the yellow area and within much shorter time than the 2 previous pullbacks marked by yellow area. This again proves the selling is strengthening, so according to the "one side grows stronger as the other side becomes weaker" theory, most likely today's low is not the low because at least bulls need one stronger swing to prove that the rebound has further to go.

SPX Evil Plan
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So, what's the target for the current pullback then? Still the chart above, I forgot to mention specifically in text yesterday, but the annotation is clear on the chart. It says, pay attention to the breakdown as it could then be a Double Top or 1-2-3 Trend Change. Well, we had the breakdown today indeed, so the next target could be calculated via the Double Top text book target, see tinted area below. Such a target, according to the statistics provided by Bulkowski, has 73% chances to be met.

SPX

OK, so much for the chart analysis, now it's the time for the 3rd party evidences. Why wasn't the low in yet? Also, because most evidences I have today are arguing for a rebound then more down ahead, so I won't give another list to prove why we could see a huge rebound as early as tomorrow. Instead I'll (and have to) mix all the evidences together.

Lower Low Guaranteed
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2MDD Within 5 Days
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TICK MA 3
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SPX Daily Bar Below BB

NY Low
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There're 3 additional charts I'd like your attention:

Non Stop
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SPX Evil Plan
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INTERMEDIATE-TERM: SPX DOWNSIDE TARGET IS 1,000, THE CORRECTION COULD LAST 1 TO 2 MONTHS

See 08/19 Market Outlook for details.

SEASONALITY: BEARISH WEEK

According Stock Trader's Almanac, week after September Triple Witching, Dow down 16 of last 20, average loss since 1990, 1.1%.

See 09/02 Market Outlook for September seasonality.

SUMMARY OF SIGNALS FOR MY PUBLIC CHART LIST:

  TREND MOMENTUM COMMENT
Long-term 3 of 3 SELL    
Intermediate 3 of 5 SELL 5 of 5 NEUTRAL Cobra Impulse in BUY mode; Non-Stop in *SELL mode.
Short-term DOWN 5 of 6 NEUTRAL  

  TREND COMMENT
QQQ & Weekly UP  
IWM & Weekly DOWN  
SSEC & Weekly DOWN  
XIU & Weekly DOWN  
DAX & Weekly DOWN  
TLT & Weekly UP  
UUP & Weekly UP  
GLD & Weekly UP  
USO & Weekly DOWN  

 


 

Author: Peter Pan

Peter (Yong) Pan
Cobra's Market View

Peter is the author of www.cobrasmarketview.com and several none-English web sites.

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Source: The Contrarian Take http://blogs.forbes.com/michaelpollaro/
austrian-money-supply/