07/26/2010 Market Recap: Overbought

*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: THE LAST TRADING WEEK OF RECENT MONTH WAS GENERALLY BEARISH

See 07/23 Market Recap for more details.

INTERMEDIATE-TERM: KEY WEEK THIS WEEK

Key week this week, as multiple pivot dates are due until 08/03. The market may turn down on any of those pivot dates to at least test the 07/01 low. However if the market simply keeps rising during this time window, then most likely the same March 2010 mad cow is back. See 07/23 Market Recap for more details.

SHORT-TERM: EXPECT A PULLBACK AS EARLY AS TOMORROW

Market is overbought now. I know (as I’ve already seen some comments) some people will say overbought could be more overbought. Well, search all my past reports and take a look at what happened within a day or two when I use the word overbought as the title. Because the overbought signals I watch are not common signals, only under very very extreme conditions, will I use the word overbought as the title. And today is one of those very rare occurrences.

I mentioned the price and time target in the 07/23 Market Recap. Today both the initial price and time target are met.

Price pattern wise, I see clear Bearish Rising Wedge in chart 1.0.1 S&P 500 SPDRs (SPY 15 min).

So to summarize above, time, price, price pattern and unique signals I watch are all met today, so theoretically, at least a short-term pullback should be very likely. As for whether the pullback, if indeed, means the 2nd leg down I’ve been blah blah in recent reports? I think it may not be likely. However, let’s wait to see how the market pullbacks before discussing this topic further. Because I’d feel very embarrassed if I blah blah a lot today about the coming pullback while in reality the market has no pullback at all.

List below are all the overbought signals I mentioned above. Again, you can see they’re not at all traditional overbought/oversold indicators.

NYADV MA(5). This chart is actually the main reason I said above, if indeed there’s a pullback, it’ll most likely be short lived, a new recovery high should be expected after the pullback.

NYMO.

T2122.

Intraday Cumulative Tick from sentimentrader. This is the 13th WOW. Except the recent 12th WOW that hasn’t got enough time to show its muscle, for the previous 11 WOWs, the market all had big pullbacks thereafter. The previous 12 WOWs were in 07/22 Market Recap, 07/13 Market Recap, 06/30 Market Recap, 06/25 Market Recap, 06/02 Market Recap, 05/26 Market Recap, 05/18 Market Recap, 05/12 Market Recap, 05/03 Market Recap, 04/29 Market Recap, 04/20 Market Recap and 04/14 Market Recap.

T2112, NYSE stocks 2 std dev above MA(40). Not very extreme, but prior to the year 2009, today’s reading would be a record high. I think it’s worth watching in the following days.

HIGHLIGHTS OF THE OTHER ETFS IN MY PUBLIC CHART LIST