Weekly signals - 1/19/2010

Weekly trends

OIL (neutral)
Buy 12/24/2009 USO 38.20 stop 35.22 - Stopped out.


Dollar Index (neutral)
Sell 1/15/2010 USD 77.36 stop 78.78 - Stopped out.

Gold (Buy) - Gold issued a buy signal this week.
Buy 1/19/2010 GLD 109.47 stop 102.28
Buy 1/8/2010 GLD 111.37 stop 105.30 - Stopped out

Bonds (buy)
10 year yields on a buy signal since 11/30

Disclaimer: All signals are experimental and for entertainment purposes only.

SPX - Remains on a buy signal

Weekly signals - 2/12/2010

Weekly trends

My system remains neutral on all the assets. Stay tuned for a fresh signals next week.

OIL (neutral)
Buy 12/24/2009 USO 38.20 stop 35.22 - Stopped out.


Dollar Index (neutral)
Sell 1/15/2010 USD 77.36 stop 78.78 - Stopped out.

Gold (neutral)
Buy 1/8/2010 GLD 111.37 stop 105.30 - Stopped out

Bonds (buy)
10 year yields on a buy signal since 11/30
It's now in a retracement in an uptrend

Disclaimer: All signals are experimental and for entertainment purposes only.


SPX

SPX issued a buy signal this week, with SPX 1056 as the key pivot. Above 1056, the market will remain in a bullish configuration. A break below 1056 will reverse the bias to bearish. Whether this is a countertrend rally or the beginning of a new upleg is unclear at this point. No projections for the rally yet. Enjoy it while it lasts...

Weekly Signals - 2/5/2009

Weekly trends

With that surge in dollar, all of those assets inversely correlated with dollar got stopped out. OIL was the last one to get stopped out this week. My system remains neutral on all these assets until the next buy signal gets generated (or a continuation sell as the case maybe).

OIL
Buy 12/24/2009 USO 38.20 stop 35.22 - Stopped out.


Dollar Index
Sell 1/15/2010 USD 77.36 stop 78.78 - Stopped out.

Gold
Buy 1/8/2010 GLD 111.37 stop 105.30 - Stopped out

Bonds
10 year yields on a buy signal since 11/30
It's now in a retracement in an uptrend

Disclaimer: All signals are experimental and for entertainment purposes only.


SPX

SPX remains in an intermediate term sell. Given the speed at which it came close to the SPX 1030 pivot, there are two possibilities for this 9 month cycle bottom due in March. Either we are going substantially lower than SPX 1030 or we are going to see some volatile bottoming action beween the SPX 1030 - 1105 area over the next 3 weeks. I guess it all depends on how the debt situation in the third world countries of Europe pans out. Trade the volatility until a bottom is carved out. Good luck !

9 month cycle thoughts

On Dec 23 i wrote,

Projection


The current e-wave structure displays a potential triple zig-zag, with two upside targets - SPX 1168 (c=a) and SPX 1215(c=1.618*a). The crest of this last 20-week cycle (of the current 9 month cycle) is due end of January 2010, which is where i expect this market to complete it's e-wave formation. After that, it gets bearish as we plunge into the 9 month cycle bottom sometime in mid-March 2010.

Well, we undershot the time target by a week and price target by about 18 points. As i posted here, break of SPX 1131 pivot was the get-out-of-longs signal. The next 9 month bottom is due mid-March. There should be cyclical pressure until that general timeframe. Of course we will zig-zag up and down into that March bottom. Currently i don't have a technical projection. We need a countertrend bounce after which targets can be arrived at. But an educated guess would be the key weekly pivot at SPX 1030.

The entire web is now buzz with the "End of bear market rally" theme. If the next 9 month cycle low comes above the July 2009 lows, which will maintain the bullish cyclical structure, then another high in the SPX is almost certain. It's too early to have an opinion on that. Will update it when the appropriate time comes.

Good luck !

Weekly signals - Jan 29, 2009

Weekly trends

OIL
Buy 12/24/2009
USO 38.20 stop 35.22

Pullback in a weekly uptrend. Buy signal remains on a slippery slope.


Dollar Index
Sell 1/15/2010 USD 77.36 stop 78.78 - Stopped out.

My system is neutral on dollar right now. It remains on a A-B-C countertrend rally with an uncompleted wave C.

Gold
Buy 1/8/2010 GLD 111.37 stop 105.30 - Stopped out

Bonds
10 year yields on a buy signal since 11/30
It's now in a retracement in an uptrend

Disclaimer: All signals are experimental and for entertainment purposes only.

SPX

SPX violated the dubai panic lows of SPX 1083 which i mentioned last week, now putting it in a intermediate term sell. The next logical test would be the support at the weekly pivot of SPX 1030.

SPX is now in a weekly buy, daily sell and hourly sell. The key bull-bear pivot is now SPX 1100.22. All bounces below SPX 1100.22 should be used to sell short. The selloff will likely end in a selling climax in the coming week.

Good Luck !

Weekly trends - 1/22/2009

Weekly trends

OIL
Buy 12/24/2009
USO 38.20 stop 35.22

Pullback in a weekly uptrend. But, remains on a buy signal.


Dollar Index
Sell 1/15/2010 USD 77.36 stop 78.78 - Stopped out.

The sell signal on Dollar got violated this week by a break above 78.77. I still beleive this week's dollar surge was a wave c of an a-b-c correction, rather than a beginning of a major leg higher. My system is neutral on dollar right now.

Gold
Buy 1/8/2010
GLD 111.37 stop 105.30

No change from last week. But the buy signal is on a very slippery slope right now.

Bonds
10 year yields on a buy signal since 11/30
It's now in a retracement in an uptrend

Disclaimer: All signals are experimental and for entertainment purposes only.

SPX

The dollar surge last week unleashed some violence in many markets. SPX failed to acheive the measured move objective at SPX 1165. 1150 was all she wrote. Violation of SPX 1131 pivot was a close-all-longs signal. Since the SPX has broken the 1131 pivot, the selloff has been very steep without generating any continuation sell or even counter-trend buy signals on the hourly charts. The Key 20-week low pivot at 1085 held this week. If it holds and we generate a buy signal next week, then the ST selloff is over. If SPX 1085 cracks for any reason even by a tick, then the selloff will morph into an intermediate sell, with the next support coming at the weekly pivot at SPX 1030. The coming week should provide more clues....

Weekly trends - 1/15/2010

Weekly trends

OIL
Buy 12/24/2009
USO 38.20 stop 35.22

Last week i said that OIL hitting the weekly bollinger band is usually a place where ST traders typically take profits. But the profit taking was stronger than what i expected. It's now in a retracement in an uptrend, but on a weekly buy nevertheless.

Dollar Index
Sell 1/15/2010
USD 77.36 stop 78.78

Dollar index issued a sell signal this week.

Gold
Buy 1/8/2010
GLD 111.37 stop 105.30

No change from last week.

Bonds
10 year yields on a buy signal since 11/30
It's now in a retracement in an uptrend

Disclaimer: All signals are experimental and for entertainment purposes only.


SPX remains in a weekly and daily uptrend. The selloff after Intel earnings has put pressure on the hourly uptrend, but remains on a buy nevertheless. The SPX 1131 pivot continues to hold any selloffs. If the hourly flips into a sell, i will update here next week.

Weekly signals - Jan 8, 2009

OIL
Buy 12/24/2009
Long USO 38.20 stop 35.22

Oil remains on a buy signal. USO hit it's weekly BB bands which is usually a good spot to take profits. If this market is in a trending mode, we should see the bollinger bands flare up next week.

Dollar
Countertrend buy

Dollar marginally missed a sell signal this week. It remains on a countertrend buy.

Gold
Buy 1/8/2010
GLD 111.37 stop 105.30

Last week, i was looking for a buy on gold and we got a confirmation this week.


Bonds
10 year yields on a buy signal since 11/30
No change from last week

Disclaimer: All signals are experimental and for entertainment purposes only.

SPX remains in a daily and weekly uptrend. We are heading towards the SPX 1165 target with ever decreasing volatiltity. Before excpecting any meaningful correction, we should see the volatility pick-up. Until then all short attempts will be futile. No need to overanalyze here.

Weekly signals - Dec 31, 2009

OIL
Buy 12/24/2009
Long USO 38.20 stop 35.22
No change from last week

Dollar
Countertrend buy
No change from last week. Looking for a sell signal this week

Gold
Countertrend sell
No change from last week. Looking for a buy signal this week

Bonds
10 year yields on a buy signal since 11/30
No change from last week

Disclaimer: All signals are experimental and for entertainment purposes only.


One of the readers question was whether the entry is based on week ending price or opening price next week. For intermediate term positions, it's irrelavent, unless the next week opening happens to be a massive gap-up. But then, many a time, it also gaps-down offering better entry price. I tracks these signals based on end of week closing price basis. To be fair, i will try to post these signals 15 minutes before the closing, end of week, if time permits and does not interfere with my trading activity.

These weekly signals will not be published for the SPX, as the stock market is an entirely different beast, which i will continue to anlalyze seperately. There is no change in SPX outlook. We remain in a daily uptrend from the Dubai lows, pullbacks on hourly charts aside.

Dammit, is it a buy, sell or hold ?

After reading newsletters for many many years, i finally threw up my arms in frustration in 2000, when i started developing my own systems.

A typical newsletter writer's recommendation goes like this "While the dollar index is in a major bottoming formation with overwhelming bearish sentiment, we should be on look out for a buy. But i don't rule out another low sometime next week. Although given the current configuration, a low may not be required and we could just bust out of the gates. A move here can be explosive, but the declining long term moving averages can put pressure on any upmove. The LT direction remains down and so does the ST, but the ST is on the verge of moving up. Caution is urged for shorts. Any move below xx.xx will mean the downtrend continues. Any sustained move above xx.xx would mean the trend has turned up"

My silent response has always been, "Dammit why don't you just tell me if the move is trend or countertrend, and is it a buy or sell. If it's a buy/sell where should be my stop ?". My system development efforts over the years have been focussed on these three things. Although my focus has always been on ST trading on S&P, i have been trying to develop some systems to trade the intermediate term moves on various sectors/commodities. I have posted some random signals on this blog over the years on Dollar, Gold and Bonds, but not on a consistent basis to track their long term performance. I have done some significant work this year, spending countless hours backtetsting them, which looks promising. But then, everything looks promising during the backtesting. The proof of the pudding lies in the real-time testing.

I will post all the signals from my system, during 2010 on Gold, Oil, Bonds and Dollar. All signals will be end-of-week basis. The signals will be based on weekly charts and for multi-month intermediate term moves. Countertrend moves will not be traded.


OIL
Buy 12/24/2009
Long USO 38.20 stop 35.22

Dollar
Countertrend buy

Gold
Countertrend sell

Bonds
10 year yields on a buy signal since 11/30

Disclaimer: All signals are experimental and for entertainment purposes only.

Potential e-wave structure

The current e-wave structure displays a potential triple zig-zag, with two upside targets - SPX 1168 (c=a) and SPX 1215(c=1.618*a). The crest of this last 20-week cycle (of the current 9 month cycle) is due end of January 2010, which is where i expect this market to complete it's e-wave formation. After that, it gets bearish as we plunge into the 9 month cycle bottom sometime in mid-March 2010.

Bears failed !

Bears certainly failed this week to exploit a setup that was presented to them. We had a whole basket of divergences from price momentum divergences to A/D line divergences. And there was the pesky 20-week low due end of November. Not only did the 20 week low turn out to be a non-event, but we also erased the A/D line divergences by breaking out above the Oct highs on the NYSE cumulative A/D line.



The Dubai scare was probably the 20-week low. Or one could also argue that the Nov lows at SPX 1029.38 was the 20 week lows. It's hard to say which one was it, until further price action. Any corrective action here breaking the Dubai lows would mean that the 20-week lows came early in November. Instead if we rally from here holding above Spx 1083.74, then Dubai event was the 20-week low. Either way now we have a bullish cyclical structure with the 9 month lows above the prior 9 month lows and the 20 week lows holding above the prior 9 month lows. Of course there can always be non-cyclical forces causing selloffs. But the key going forward is that the November 1029.38 lows should not be broken for any reason. As long as we continue to hold up above that, the bullish intermediate term rally will continue.

20 week cycle thoughts

Last week i wrote,

The 20-week low is still ahead of us, due end of November, as i mentioned in my last post. If the above mentioned negatives play out, we should see a severe decline starting next week. Where the decline stops, will determine the next phase of the bull or bear market, as the case maybe. If SPX 1030 cracks, then that is all she wrote for this mini-bull run....

Well, this whole Dubai news causing this worldwide selloff is a joke. When did Dubai become the economic center of the world? Since the bulls pushed the envelope to the far end of the 20 week cycle, there was little time left for an orderly decline to occur. Hence we are seeing this ugly 1-day mini-crash type of event occuring as we speak in the S&P futures. Given the nose bleed momentum, it's unlikely any bottom will occur on friday. The bottom should likely come on Monday, Nov 30, which should coincide with the 20 week lows.

Now if this 20 week lows happen to be a trend turning event, then we should see the SPX 1030 swing lows taken out, like a hot knife going thru butter. If not, this will have bullish implications. An important cycle low like the 20-week, occuring above the prior swing low and mainting the existing bullish trend structure, can only be bullish. I will reserve my opinion here until next week, to see where the 20 week cycle bottoms, before calling this an important top.

Who are these happy-go-lucky buyers ?

MACD triple divergence. Volume non confirmation.




Summation H&S breakdown. Threatening to breakdown from the ledge and below the zero line.....




Summation H&S breakdown. Threatening to breakdown from the second ledge...




Add to this the big-kahuna divergence of the A/D line not confirming with the new price highs on SPX and emerging markets like India and China not making new recovery highs.

With all these technical negatives, it makes you wonder who are these happy-go-lucky buyers holding the market at new highs ?


The 20-week low is still ahead of us, due end of November, as i mentioned in my last post. If the above mentioned negatives play out, we should see a severe decline starting next week. Where the decline stops, will determine the next phase of the bull or bear market, as the case maybe. If SPX 1030 cracks, then that is all she wrote for this mini-bull run....

SPX and Dollar

Dollar index issued a weekly buy signal by closing above 76 this week. A multi-week rally in the Dollar has begun.

SPX has started it's descent into the 20-week cycle lows in mid-late Nov.

On of the comments i received was....

"You were clearly expecting a 9 month crest in March and it turned out to be a low".

My Reply

It's useless to deduce anything from the 9 month crests. It's the lows that tell you the story. 9 month cycle (40 week cycle) crests coincide with the 20 week cycle bottoms. So there's bound to be some kind of lows heading into the 20 week lows. And in a dontrending market, you are bound to get a lower low heading into the 20 week lows, which should not all be surspising to a cycle analyst. That's what happened in March. It was the 9 month crest and the 20 week lows.

Like i said, it's the 9 month lows which always tells you the story. I was expecting the 9 month lows into July-Aug 2009 to break the March lows, which did not happen. Instead we got a lower high in July 09, which was an indication that the trend had turned up.

9 month cycle thoughts

Back in Aug 08, i was calling for a 9 month cycle bottom in Sep-Oct 08 timeframe which turned out to be hugely sucessfull call, both in terms of time and price. The next cycle bottom, which i was looking for in July-Aug 09 came in the proper time window, but turned out be non-event in terms of price. I was looking for a break of March 09 lows for the cycle bottom during July. Far from it, it could not even touch the lower BB of the weekly which was around SPX 800 at that time. The strong rise out of the July bottom, made it clear that July was the 9 month cycle bottom, and the breakout above SPX 956 confirmed it. The next 9 month bottom is due in March-April 2010.

Now within the current 40 week cycle a.k.a the 9 month cycle, we have a 20 week cycle bottom due by the end of the November. How the price reacts into this time window will give us more clues as to the strength of the current uptrend. After the 20 week bottoms in November, the next rising 20 week cycle will be contending with the 9 month turning down from it's crest, which would mean a muted low volatile rise at best. The juicy part of the bull run maybe over.

For now, my LT indicator remains in the bull context, with the weekly, daily, hourly and every timeframe measurable trending up. I am on lookout for an opportunity to get short for the upcoming 20 week cyle lows.

LT update

In my last update, i posted my LT indicator along with a time-momentum model which was supposed to have expired after 24 weeks. Well, we topped out after 25 weeks (+/-1week tolerance). But the bad news for bears is my LT indicator turned above the zero line, switching us into a bull context.




Now what this indicator says is that we are in a bull context. So buy any weekly oversold condition going forward, as long as the indicator stays above zero.

Well, one could argue that the move above zero was a headfake. But the onus of proving that is now on the bears. So to get any bear case going here, we need to turn that indicator back below zero again. Unless the bulls can really build some strong momentum here, it does not take much to pull this indicator back below zero again. The Weekly RSI(10) turned down below 70 indicating ST to IT term weakness. If the weakness materializes into a big selloff, then odds are my LT indicator will turn below zero again.

So the million dollar question here is "Will my LT indicator stay above zero when the next weekly oversold condition materializes ?". I will be watching with interest.

LT Time-Momentum confluence

LT: Down

The context still remains a bear market as i explained in my last week's post. There's a lot of noise that a new bull market has begun. All we have done is a 38% retrace i.e a 350 point rally, after a 900 point drop. And the bull crowd is back in the town crowing their acheivements !. My last LT sell signal came on the break of 1380 and since then we remain in a bear market.


LT Sell in 2008


Now this market juncture reminds me of the June 2006 when most bears were convinced that the bull market was over. Then we began one of the most spectacular advance over the next 12 months. I think we are near the same juncture in this bear market where most bulls are convinced that the bear market is over. They were sending me hate mails on this blog calling me a perma bull then. Now they have started calling me a perma-bear. This is a funny business.

LT projection to SPX 1620 in Sep 2006


While the jury is stil out on that, let's look at some intereting facts here. My time-momentum model expired this week i.e both time and momentum have reached a equilibrium here. The last CCI overbought peak in April 2008 to the oversold bottom in Oct 08 took 24 weeks. Then we double bottomed on March 2009 and we reached the overbought condition last week. This week marks the 24th week of the rally. So we have oscillator symmetry, time symmetry and a 38% fibonacci retrace of the rally.





The Oscillator at the bottom is close to the zero line i.e a bull-bear demarcation point. If we breakdown here for a few weeks, then we won't likely take out this top for a while and would confirm the next leg of the bear market. The sentiment here is ripe for the resumption of the next bear leg. Bullish arrogance is back in the town. Folks who had dissapeared for years, closed business, deleted their blogs in shame are now back on the message boards and the blogosphere, twittering the bull theme. Now whether we take out the zero line and start a new bull market, i have no idea. I will leave that to the prophets who can see it coming. Odds are we are ending a bear market rally here. I will give the market a +/- 1 week tolerance on that 24 weeks count. That means either we topped last we week or we should top by the end of next week. We shall see...

IT: Firmly Up and reaching an exhaustion.


VST: Down.

1018 is a VST swing peak. Until we remain below that level, i will keep shorting and covering. My VST hourly trades typically yield anywhere between 20 - 60 SPX points. My last 5 trades have all yielded below 10 points, which tells me that the market is not yet ready to go down in earnest. Sooner or later we are bound to see some real ugliness hitting the markets. We could see a gap up on Monday to SPX 1012-13 area, which would be another good shorting opportunity. Only a gap-up above 1018 on Monday will get me bullish VST.


Good luck trading !

Still a bear market

I am not arguing here. But just posting the same chart i have been posting for years. The indicator i have shown in the chart has called most bull/bear markets of last few decades. While pundits are arguing about the beginning of a new bull market, peppered with their usual caveats and equivocations, it always makes me wonder if these folks have the tools necessary to call bull/bear markets with conviction and objectivity !. Now why the anxiety ? If it's a bull market it's not going to end after a 5 month rally. It will last a few years. So i will wait patiently until my indicator crosses the zero line.

I need to see three things to happen before calling a new bull market.

1) My indicator crossing the zero line (has not yet happened). Ideally for strong odds this indicator need to start with divergences, although not strictly necessary.
2) Weekly uptrending (we are currently uptrending on the weekly)
3) Potentially completed wave pattern (optional)

We are pressing against the weekly BB on the SPX, which is usually the area where we get IT sells. As for the ST, the daily RSI is cautioning a sell approaching. We got close to a ST sell last week, but the setup got busted after the jobs report. We may get that ST selloff starting anytime next week. NDX not making a new recovery high with the SPX on friday was another warning shot. Not to mention that the emerging markets like India and China are already showing cracks. We may get a hourly/daily combo sell on the SPX sometime next week, with a possibility of that being a IT top as well. Stay tuned....

Primary degree wave A bottom confirmed

I was on vacation last week and could not post any updates. The breakout above SPX 956 last week got the weekly uptrending and has now confirmed that a primary degree wave A of this bear market ended in March 2009. We are now in a primary degree wave B of this bear market. Wave B should typically consume 1-2 times the time taken by wave A, which means we are looking at a market top to occur sometime in the fall of 2010. It's hard to project the top for this wave B until we get a large mullti-week correction, once the first leg of the wave B concludes. Preliminary guestimates would be in the range of SPX 1150-1200 for the ultimate wave B top.

Again guessing the wave B pattern is a futile affair as it can take many forms. But looking at how it evolves, some educated guesses can be made. If we move breathlessly to the 1150-1200 region without meaningful pullbacks on the weekly charts, then it is likely that the wave B would take the form of a triangle. In that event, since the price targets are met in a short amount of time, the rest of the time will be spent meandering sideways. On the other hand if we get a large sideways-to-down move from the SPX 1000-1050 area, then wave B should take the form of a FLAT correction. We'll cross the bridge when we come to it. I have marked both the speculative scenarios in the chart.






I think for the intermediate term bearish traders, it's going to be a frustrating market for a while. And for the investors, many of years of subpar returns. Given that the VIX is now in the 25 area, and lack of panic in the markets, it will be a purely technicals driven market. Great environment for ST trading - The boyz are back in the town !

Good luck trading !