2008-10-03 Market Watch (Weekend)

This is the update to the last weekly analysis.

SPX daily:

Same chart, same outlook.  I expect the SPX go down a bit to 1070+ and then rise to ~1200.

SPX 60-min:

One more up and down, and then the rally will start soon.

XLF daily:

Last week, I said the turning point of SPX/XLF would be this Friday.  It seems it will be postponed to the beginning of the next week.

XLF 60-min:

Basic strategy: buy UYG on the dip, and short SKF if it goes too high.  At the moment, there is no significant difference between SKF and ^SKF-IV.

QQQQ daily:

The target was reached today.  I expect a rally very soon, which could be earlier than SPX.

QQQQ 60-min:

The target is downgraded to 41.5--42.

$RUT daily:

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No chart for SSCC/TAN/POT/EWZ.  STP looks bullish.

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Overview of mid-term indicators and major indices:

Credit rsk and SPX:

The risk is not at the historical level but it is very high.  It is unimaginable if it goes up any further up.

 Market glance:

$INDU is relatively strong.  $RUT is very weak.  Transportation hit a new low again.  Commodities sold off.  US dollar is very strong.

Sector glance:

Financial sector is the strongest.  XLP (Consumer Staples) is also very strong.

Bullish percent indices:

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Retail-Apparel looked good in the last week, now it doesn't.

Banks-Money Center is bullish:

Banks-Regional is bullish:

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SPX descending channel:

XLF ascending channel:

QQQQ channels:

2008-10-02 Market Watch

Every time Wall Street will act differently and give you surprise.  There is no doubt the $700B bailout will be passed by the House.  The question is, however, how the market will create a new order in a dramatically different time.  Will the people on the street feel confident about the economic condition and start to invest again? I doubt.  Will the money injected into the financial sector stimulate the economy on a sustainable basis?  I don't know.  I insist the previous outlook, which is bullish in the near term and bearish over the intermediate and long term.  After the bailout plan is passed, hopefully there is no new uncertainty on the horizon.

SPX 60-min:

XLF 60-min:

QQQQ 60-min:

In summary, we are going to see a new low in the near future.

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No chart for SSCC/TAN/POT/EWZ.  A few things to be noticed:

• while the broad market is no good, it is really tough to pick a "good" sector;
• solar might go up due to FA;
• commodities have entered into a bear market.  It might bounce back up, but that will be temporary;
• Although the oil price is dropping, the transportation sector plummets even more.  And the lowering oil price is no longer a positive news for the broad market.

2008-10-01 Market Watch

The pullback today is expected, and the broad market, especially the financial sector, is fairly strong.  Probably people were very positive to the passage of $700B bailout by both the senate and house.  Will the government intervention change the big picture?  Yes, the near-term outlook is certainly bullish as everyone believes, but the intermediate-term and long-term outlook depend on the economical fundamentals.  Let's see.

SPX 60-min:

I expect SPX rises steadily to 1180-1190.  After that what will happen?

XLF 60-min:

QQQQ 60-min:

Do not open long positions on QQQQ.

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No chart for SSCC/TAN/POT/EWZ, etc.  Wait until the market is stabilized.

2008-09-30 Market Watch

Today is the end of September, and we got the the complete monthly chart:

Compare with the previous bear market, the market may consolidate or bounce back up to form a while candle.  However, I don't expect the next few candles can go beyond the previous consolidation candle significantly.  There might be an exception, but it seems unlikely given the poor economy outlook, even the government is so desperate to hold the market from being crushed down further.

SPX 60-min:

XLF 60-min:

 

Just a side note: XLF is so far the strongest sector although the chart is ugly and full of manipulation.  Provided that no new low is formed, the long term up trend could be established.

QQQQ 60-min:

Once again, QQQQ is very weak.

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No chart for SSCC/TAN/POT/EWZ, etc.  Wait until the market is stabilized.

2008-09-29 Market Watch: crashed

The bailout plan was rejected -- it is unbelievable, and the Wall Street decided to sell everything to show how disappointed they were -- and the market crashed.

This was a life-time experience for me.  Too bad I just decided to close my short positions (SDS/SKF) yesterday night and couldn't watch the market today.  Technically speaking, the worse is yet to come:

• Neither the 1-month nor 3-month US treasury bill yield reaches the previous low, which means the credit risk is not deteriorated to a critical level that the government will act immediately.
• The volume of all major indices is heavier than previous few days but not as massive as previous low.
• FED didn't inject a penny into the banks or the market, which is dramatically different from previous few days.  Nor did they cut the rate.  This may mean they want to reserve the fund to an absolutely emergent occasion when the situation could be far worse.

The current economy and market condition, in my opinion, are once per tens of years.  I suspect more and more often we would say, "this time is indeed different!" ... "oversold can be even more oversold.".  It is tough to stay at either bulls side or bears side.  What is ultimately important is risk control.  My ideas are:

• Never to be fully loaded, not even to mention margin.
• Trust in the bear market.  No wishful thinking.
• If there is no long puts or ultrashort ETFs as a hedge, a tight stop must be in place; ...
• ...otherwise hold cash.

Every rally is SHORTABLE, DO NOT believe in a  uptrend ... it might be faked.  BE PATIENT.

Finally let's take a look at my SPX daily chart:

Here is creekmm's chart:

and Master Chuxue's:

Let's see how it plays out.

Last week most wave counters were screwed by the bailout plan and gave up the bearish counting (at least adopt an not-so-bearish or short term bullish counting) as far as I know.  Now it seems the power of nature is beyond the manipulation of human kinds.

A close up at SPX 5-min to see how bad the selling off was:

and the INDU which has the volume information:

Actually the Financial sector is relatively strong:

while the QID is probably the best performed bear market fund.  As I analyzed previously, QQQQ is indeed weak.  DO NOT LONG IT!

SKF is hopeless.  Maybe I was right to close it.  The last trade price was 114.30 which is way lower than it's indicative NAV 125.75.

Reference:

Temporary Open Market Operations for September 29, 2008, number of operations today: 0.

9/26 they pump a whole 6 bn, ...and then turned around and absorbed a whopping 4.5 Bn back.

$700B Rescue Plan Passed: bullish wave counting

... Just in case a bull market is indeed coming.

SPX daily:

bull market may last several months.

INDU daily: