10/19/2011 Market Outlook (More Pullback?)

SHORT-TERM: COULD SEE MORE PULLBACK AHEAD

No solid evidences, just my wildest guess, could be more pullbacks ahead. Three reasons:

As mentioned in the yesterday's report, a Major Accumulation Day right after a Major Distribution Day usually means the yesterday’s low will be revisited soon.
Generally, the pullback during an up swing shall become larger and larger (as the up momentum inevitably weakening), so at least the size of pullback 3 should equal to the size of pullback 2. Forget about the “phantom bar”, we’re not there yet.

VIX higher high while no lower low on SPX, usually VIX told the truth, so cannot exclude the possibility that the top was in already.

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: BEARISH FRIDAY

According to Stock Trader’s Almanac, October expiration day, Dow down 5 straight and 6 of last 7.

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	3 of 5 BUY	5 of 5 NEUTRAL	Cobra Impulse in BUY mode; Non-Stop in BUY mode.
Short-term	*DOWN?	6 of 6 NEUTRAL

* = New update.

Chinese Transcript

SHORT-TERM: COULD SEE MORE PULLBACK AHEAD

没有什么铁证，仅仅是我猜，可能还没有跌完，理由有三：

昨天报告提到Major Accumulation Day right after Major Distribution Day多半意味着昨天的low附近会被revisit。
一般规律，上涨过程中的回调幅度会越来越大，因此至少至少pullback 3应该等于pullback 2。

VIX higher high，但是SPX却没有lower low，一般VIX leads，因此不能排除短期顶已经过了的可能性。

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: BEARISH FRIDAY

According to Stock Trader’s Almanac, October expiration day, Dow down 5 straight and 6 of last 7.

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	3 of 5 BUY	5 of 5 NEUTRAL	Cobra Impulse in BUY mode; Non-Stop in BUY mode.
Short-term	*DOWN?	6 of 6 NEUTRAL

* = New update.

21 Comments

Anonymous on October 19, 2011 at 8:07 pm

I like your VIX evidence very convincing that lower low is coming soon. Thanks Cobra

Graciela Cattarossi on October 19, 2011 at 8:11 pm

hey cobra this pullback looks tiny… the big picture the pull back is more to 115 ?
I can not find your report on that. I am pretty sure you put it out there…. just so I can re read it … please thank you

Cobra on October 19, 2011 at 9:29 pm

I didn’t say 115, could just be a direction only. I think you mean “Route A”, I didn’t have the target for route A.
- Graciela Cattarossi on October 19, 2011 at 10:41 pm
  
  yea yea I know you did not say 115 i was referring to a ” bigger pullback ” more like ” going to 115 around that level ” anyway you answered my question is ROUTE A . yes yes . I am trying to find the date on that report. please so I can print the chart
  I coincide ROUTE A is the way will go . this again cobra.
  - Cobra on October 19, 2011 at 11:11 pm
    
    Route A was originally mentioned here: http://www.cobrasmarketview.com/?p=2169

Anonymous on October 19, 2011 at 8:36 pm

Thanks!

Anonymous on October 19, 2011 at 9:06 pm

Thanks a lot.

Anonymous on October 19, 2011 at 9:07 pm

thx, ding

Anonymous on October 19, 2011 at 9:19 pm

thanks a lot

Anonymous on October 19, 2011 at 9:57 pm

For the NFLX trader… a very clean DeMark Weekly Combo Buy signal could trigger next week. A combo signal is more trustworthy than either a sequential signal or countdown signal alone. Ideally, we’d get a nice downdraft to 95ish level which fits well with support zones from mid-2010. NFLX report earnings after hours on Monday. It is a nice setup potentially given that we’ll already know the EU news regarding EFSF.

If the potential S&P downside plays out and drags NFLX with it, I will definitely consider a long trade in NFLX. A trade of a couple weeks maximum. I don’t have an exit price target yet. Since it is a weekly buy signal that could trigger, technically you wouldn’t take the position until the end of next week, which means waiting out earnings which as always can go either way.

Anonymous on October 19, 2011 at 10:05 pm

not sure which one of you pillow-biters uses ichmoku system…but we have had strong resistance on the Dow at the 11650 area which coincides with both the Span B area of the cloud and of course my favorite a PnF resistance area. So this is tough resistance. A pullback is likely back to the 11225 area in short order.

Believe it!

Anonymous on October 19, 2011 at 10:17 pm

NEAR TERM
———————
DeMark perfected DAILY sell setup triggered yesterday (good thru Monday)
EUR-USD DAILY sell setup nearly triggered (missed by one bar)
EUR-USD H&S pattern (see attached) suggests immediate downside to 1.36
Copper has rolled over, and is also in H&S chart pattern, looks ready to re-test lows (bearish long term sign)

Anonymous on October 19, 2011 at 11:01 pm

awesome charts ! Thank you.
uempel on October 20, 2011 at 2:24 am

Thanks, I tend to forget cu. I’m not into DeMark, traditional indicators show temporary market weakness for SPX/NYSE, but very interesting that my tools indicate that cu might tank to 2.37 (and if cu tanks to 2.37, how can SPX stay up at 1190/1200, as implied by P&F and BPs?). Here a closer look at cu. A break of 3.20 points to further decline.
- Anonymous on October 20, 2011 at 2:58 am
  
  Fortunately, DeMark correlates with the traditional indicators this time because it only shows temporary market weakness too, as a daily setup only applies for the following 4 days (ending Monday close).

Anonymous on October 19, 2011 at 11:01 pm

you forgot to translate one sentence (P-bar) to Chinese.
One question, why didn’t you tinted the NO.3 zone from HH (123.50) ?
thank you.

Cobra on October 19, 2011 at 11:08 pm

because it’s measured rule.
- Anonymous on October 19, 2011 at 11:45 pm
  
  sorry, still didn’t get it.

frank on October 19, 2011 at 11:42 pm

thanks

Anonymous on October 20, 2011 at 12:08 am

THX!!!

HighRev on October 20, 2011 at 3:35 am

Correlations don’t last forever and I think we’re going to see a decoupling of the commodity – equity correlation. In fact, I think we’re going to see an inverse correlation for the next few years based on my thesis that productive assets will perform much better than passive assets (the more dust something collects, the worse the performance, and the more productive something is, the better the annualized returns). This would suppose that stocks – with the blue chip consumer staples at the top of that list – would do best, and that commods will fall as rates rise. Copper and oil will do better relative to gold and silver since they are necessary for the productive process, etc., etc., but whereas copper was a lead these last couple of years, I’m not sure we can now trust it to give us good leading indications anymore for the foreseeable future.

Nice chart by spuderik last night pointing out the most recent stick sandwich at the top of the range and contrasting it to the stick sandwich at the bottom of the range (which also started the range). http://www.cobrasmarketview.com/?p=2508#comment-339488210

Something I posted last night over on Daneric’s blog: http://mediacdn.disqus.com/uploads/mediaembed/images/156/7433/original.jpg Notice that the top of the range basically coincides with Cobra’s huge S/R. http://www.cobrasmarketview.com/wp-content/uploads/10142_13700/SPXWeeklyMA.png

Anonymous on October 19, 2011 at 8:07 pm

I like your VIX evidence very convincing that lower low is coming soon. Thanks Cobra
Graciela Cattarossi on October 19, 2011 at 8:11 pm

hey cobra this pullback looks tiny… the big picture the pull back is more to 115 ?
I can not find your report on that. I am pretty sure you put it out there…. just so I can re read it … please thank you
- Cobra on October 19, 2011 at 9:29 pm
  
  I didn’t say 115, could just be a direction only. I think you mean “Route A”, I didn’t have the target for route A.
  - Graciela Cattarossi on October 19, 2011 at 10:41 pm
    
    yea yea I know you did not say 115 i was referring to a ” bigger pullback ” more like ” going to 115 around that level ” anyway you answered my question is ROUTE A . yes yes . I am trying to find the date on that report. please so I can print the chart
    I coincide ROUTE A is the way will go . this again cobra.
    - Cobra on October 19, 2011 at 11:11 pm
      
      Route A was originally mentioned here: http://www.cobrasmarketview.com/?p=2169
Anonymous on October 19, 2011 at 8:36 pm

Thanks!
Anonymous on October 19, 2011 at 9:06 pm

Thanks a lot.
Anonymous on October 19, 2011 at 9:07 pm

thx, ding
Anonymous on October 19, 2011 at 9:19 pm

thanks a lot
Anonymous on October 19, 2011 at 9:57 pm

For the NFLX trader… a very clean DeMark Weekly Combo Buy signal could trigger next week. A combo signal is more trustworthy than either a sequential signal or countdown signal alone. Ideally, we’d get a nice downdraft to 95ish level which fits well with support zones from mid-2010. NFLX report earnings after hours on Monday. It is a nice setup potentially given that we’ll already know the EU news regarding EFSF.

If the potential S&P downside plays out and drags NFLX with it, I will definitely consider a long trade in NFLX. A trade of a couple weeks maximum. I don’t have an exit price target yet. Since it is a weekly buy signal that could trigger, technically you wouldn’t take the position until the end of next week, which means waiting out earnings which as always can go either way.
Anonymous on October 19, 2011 at 10:05 pm

not sure which one of you pillow-biters uses ichmoku system…but we have had strong resistance on the Dow at the 11650 area which coincides with both the Span B area of the cloud and of course my favorite a PnF resistance area. So this is tough resistance. A pullback is likely back to the 11225 area in short order.

Believe it!
Anonymous on October 19, 2011 at 10:17 pm

NEAR TERM
———————
DeMark perfected DAILY sell setup triggered yesterday (good thru Monday)
EUR-USD DAILY sell setup nearly triggered (missed by one bar)
EUR-USD H&S pattern (see attached) suggests immediate downside to 1.36
Copper has rolled over, and is also in H&S chart pattern, looks ready to re-test lows (bearish long term sign)
- Anonymous on October 19, 2011 at 11:01 pm
  
  awesome charts ! Thank you.
- uempel on October 20, 2011 at 2:24 am
  
  Thanks, I tend to forget cu. I’m not into DeMark, traditional indicators show temporary market weakness for SPX/NYSE, but very interesting that my tools indicate that cu might tank to 2.37 (and if cu tanks to 2.37, how can SPX stay up at 1190/1200, as implied by P&F and BPs?). Here a closer look at cu. A break of 3.20 points to further decline.
  - Anonymous on October 20, 2011 at 2:58 am
    
    Fortunately, DeMark correlates with the traditional indicators this time because it only shows temporary market weakness too, as a daily setup only applies for the following 4 days (ending Monday close).
Anonymous on October 19, 2011 at 11:01 pm

you forgot to translate one sentence (P-bar) to Chinese.
One question, why didn’t you tinted the NO.3 zone from HH (123.50) ?
thank you.
- Cobra on October 19, 2011 at 11:08 pm
  
  because it’s measured rule.
  - Anonymous on October 19, 2011 at 11:45 pm
    
    sorry, still didn’t get it.
frank on October 19, 2011 at 11:42 pm

thanks
Anonymous on October 20, 2011 at 12:08 am

THX!!!
HighRev on October 20, 2011 at 3:35 am

Correlations don’t last forever and I think we’re going to see a decoupling of the commodity – equity correlation. In fact, I think we’re going to see an inverse correlation for the next few years based on my thesis that productive assets will perform much better than passive assets (the more dust something collects, the worse the performance, and the more productive something is, the better the annualized returns). This would suppose that stocks – with the blue chip consumer staples at the top of that list – would do best, and that commods will fall as rates rise. Copper and oil will do better relative to gold and silver since they are necessary for the productive process, etc., etc., but whereas copper was a lead these last couple of years, I’m not sure we can now trust it to give us good leading indications anymore for the foreseeable future.

Nice chart by spuderik last night pointing out the most recent stick sandwich at the top of the range and contrasting it to the stick sandwich at the bottom of the range (which also started the range). http://www.cobrasmarketview.com/?p=2508#comment-339488210

Something I posted last night over on Daneric’s blog: http://mediacdn.disqus.com/uploads/mediaembed/images/156/7433/original.jpg Notice that the top of the range basically coincides with Cobra’s huge S/R. http://www.cobrasmarketview.com/wp-content/uploads/10142_13700/SPXWeeklyMA.png

10/19/2011 Market Outlook (More Pullback?)

Chinese Transcript

21 Comments

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