Market Outlook: Still It is 3 Push Up

By: Peter Pan | Sat, Oct 22, 2011
Print Email

SHORT-TERM: EXPECT PULLBACK SOON, HUGE UP MONDAY WOULD MAKE TUESDAY GOOD DAY TO BET PULLBACK

Two cents:

The chart below should help jogging your memory about the picture I see through my crystal ball. I see clearly 3 Push Down, so now should be 2 leg up. I've also via the signal called Selling Climax proved the possibilities are high that we'd see multi weeks rally in 10/14 Market Outlook. Except to shift the blue dashed lines (for illustrating directions) a little bit right to leave space for price bars, I didn't change anything in the chart below, so it's clear the rise of this week was expected. Well, more precisely, I didn't expect bulls to spend a whole week to reach the point I drew last week, I thought it'd be much sooner and we should've already rolled over this week. Anyway, the only plan changed here is it takes more time than I thought to unfold the pattern, so I still expect a little bigger pullback soon to mark the end of the 1st up leg.

3 Push Down
Larger Image

I believe the 1st up leg would end as early as the next week. In 10/20 Market Outlook, I said a top of some kind could be near, and the Friday's huge rally wasn't enough to change my view because from the chart below, still clearly it's 3 Push Up pattern. So here is my formal evil plan as illustrated by red dashed lines below.

SPY Evil Plan
Larger Image

Please be noted that in the chart above I didn't deny the possibility of a huge up the next week (well, it's typical of Cobra, always two sided, never certain on one direction) which would sure invalidate my evil plan based on 3 Push Up pattern. No, I cannot exclude such a possibility (you want to read someone always sure about what the next is, well, I'm not the one, there's absolutely no sure thing in the stock market, everything is about odds, if someone always sure and always right, he won't be blogging here, he'd pretty much the richest in the world), but I have enough evidences to prove that if indeed a huge up the next Monday, then it'd be all gone as early as the next Tuesday. So in some sense, a huge up Monday could be bears opportunity (for aggressive traders only of course, because it's against the trend). OK, now let me present my witnesses below, why up huge could be bears opportunity:

Up Big Not MAD
Larger Image

NYMO
Larger Image

T2122
Larger Image

The last but not the least, there're 3 things I'd like your attention:

Rydex traders (mostly retailers) are way too bullish, accumulated too large bullish assets. See red lines for what happened thereafter. That said, I don't mean the market would drop immediately, but certainly it's enough to raise a red flag.

Rydex Bull Fund Asset Flow

TNX ROC(30) >= 9 was used to be a fairly reliable top signal. You can check 8.2.1a Market top/bottom by ROC30 of 10Y T-Bill Yield 2001-2004 and8.2.1b Market top/bottom by ROC30 of 10Y T-Bill Yield 2005-2008 for the past accuracy, but because of nowadays Fed's unusual behaviours, I'm not sure if I could trust this signal anymore.

TNX
Larger Image

The chart below is to follow up the CPCE top signal I mentioned in 10/20 Market Outlook. It's not confirmed on Friday, so not valid anymore.

CPCE
Larger Image

INTERMEDIATE-TERM: WE COULD SEE MULTIPLE WEEKS RALLY BUT MAINTAIN SPX DOWNSIDE TARGET AT 1,000

For why we could see multiple weeks rally, please see 10/14 Market Outlook for details.

For why SPX downside target at 1,000, please see 08/19 Market Outlook and 09/30 Market Outlook for details.

SEASONALITY: NO UPDATE

See 09/30 Market Outlook for October day to day seasonality chart.

SUMMARY OF SIGNALS:

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

 


 

Author: Peter Pan

Peter (Yong) Pan
Cobra's Market View

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

The information contained on this website and from any communication related to the author's blog and chartbook is for information purposes only. The chart analysis and the market recap do not hold out as providing any financial, legal, investment, or other advice. In addition, no suggestion or advice is offered regarding the nature, profitability, suitability, sustainability of any particular trading practice or investment strategy. The materials on this website do not constitute offer or advice and you should not rely on the information here to make or refrain from making any decision or take or refrain from taking any action. It is up to the visitors to make their own decisions, or to consult with a registered professional financial advisor.

This websites provides third-party websites for your convenience but the author does not endorse, approve, or certify the information on other websites, nor does the author take responsibility for a part or all materials on the third-party websites which are not maintained by the author.

Copyright © 2010-2011 Peter (Yong) Pan

All Images, XHTML Renderings, and Source Code Copyright © Safehaven.com

SEARCH





TRUE MONEY SUPPLY

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