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*Please make sure you understand how to use the table above. The main purpose of this report is to provide information so contradictory signals are always presented.
SEASONALITY: NO UPDATE
CYCLE ANALYSIS: THE NEXT IMPORTANT DATE IS 04/20
From the Gann Day table below, looks like the next important date is 04/20 and the 05/06 is the next, because not only multiple historical Gann Days are clustered together but also they’re important date according to the solar term as per the Gann theory, market is likely to turn on those solar term date. The question is whether the market drops to 04/20 (+-) then rises to 05/06 (+-) or rises to 04/20 (+-) then drops to 05/06 (+-)? I have no idea for now although as mentioned in the Friday’s After Bell Quick Summary, the next Monday is more likely an up day therefore accordingly the market may rise to 04/20 (+-) first.
INTERMEDIATE-TERM: EXPECT ROLLER COASTER AHEAD
Maintain the forecast for Roller Coaster ahead for 3 reasons:
- According to the II Survey, too many people expected a correction, so the stock market should rise to a new high first before actually pulling back (See 03/19 Market Recap for more details). Since we’ve seen the new high so now it’s the pullback’s turn.
- Statistically when the market has been up, especially at a 52 week high, entering the earnings season, the average performance during earnings season is usually not good (See 04/09 Market Recap for more details).
- 6.1.0 Extreme CPCE Readings Watch, take a look at how the market behave when CPCE was extremely low. I expect no difference this time (choppy ahead like past) especially when there’re simply so many bearish extremes accumulated in the table above.
SHORT-TERM: MIXED SIGNALS WILL HAVE TO SEE HOW MARKET BEHAVES ON THE NEXT MONDAY
Since the Friday is a so called Major Distribution Day (NYSE Declining Volume to Advancing Volume ratio > 9), let’s take a look at what happened since the March 2009 rally when a Major Distribution Day was formed. From the chart below, looks to me, in most cases a Major Distribution Day meant a BOTTOM. The only exception was June 2009, the market kept selling off the day after the Major Distribution Day. So whether the Friday’s sell off is just an accident or a beginning of a little bigger pullback, will have to see how the market behaves on the next Monday. Monday green or small red, then very likely the 04/15 high will be tested while a big red Monday may mean more pullbacks ahead.
The bottom line, although as mentioned in the Friday’s After Bell Quick Summary, the next Monday is more likely a green Monday, however because there’re simply too many bearish extremes (see table above), so even the market could rebound to a new high, it eventually will have to pullback to fix all those bearish extremes, sooner or later. Take a look at 0.0.2 Combined Intermediate-term Trading Signals, the 3 points validated trend line was broken which is a very reliable top signal for the past few years.
STOCK SCREENER: For fun only, I may not actually trade the screeners. Since SPY ST Model is in BUY mode, only LONG candidates are listed. For back test details as well as how to confirm the entry and set stop loss please read HERE. Please make sure you understand the basic risk management HERE.
Looks like it’s too late to long stocks now as the market is way too overbought. Waiting for a better chance.