| Trend | Momentum | Comments - Sample for using the trend table. Warning: This is NOT a trading recommendation! | |
| Long-term | Down | Idea for trading intermediate-term under primary down trend. | |
| Intermediate | Up | Neutral to overbought* | Beware of $NYA50R which usually means a top |
| Short-term | Up | Neutral to overbought | Take profit especially if further up next tomorrow. |
| Report Focused On | Buyable dip or the market topped? |
| Today’s Summary | Expect a pullback tomorrow. Besides $NYA50R, pay attention to the negative divergence formed on NYADV and NYMO. Rydex fund bull/bear flow readings are extremely bullish. |
Briefly speaking, a short-term pullback is due. Over the intermediate term, it’s a little bit overbought. Besides NYA50R on 0.0.1 Market Top/Bottom Watch has reached an intermediate-term top level, one should also notice that the negative divergence on 2.4.2 NYSE- Issues Advancing and 2.4.4 NYSE McClellan Oscillator are early signs prior to the market top. Of course, divergence by itself is not a signal to act, it’s just a warning.
1.0.2 S&P 500 SPDRs (SPY 60 min). Bearish rising wedge plus several negative divergences, so the market should pull back over the short term.
2.8.0 CBOE Options Equity Put/Call Ratio. CPCE closed at merely 0.5, which is a new low since year 2008. On the chart one can see that whenever CPC drops down below 0.55 the next day is not pleasant. 7.0.4 Extreme CPC Readings Watch, CPC is only 0.67 today. Although the probability of closing in green on the next day is 65% if CPC is below 0.8, if it is below 0.7, however, only one out of five times the market closed in green on the next day. Therefore CPC favors a down day tomorrow as well.
7.0.7 SPX and VIX Divergence Watch. SPX and VIX went up at the same day, and it seems the next day is always down on the chart.
0.0.3 SPX Intermediate-term Trading Signals, 1.1.4 Nasdaq 100 Index Intermediate-term Trading Signals, overbought in the intermediate term.
Let’s see how people are rushing for Rydex Bull Fund, a multi-year new high. Almost buyers of Rydex Bear Fund are diminished (reversed on the chart), a multi-year new low. The bull market rally is accompanied with doubts – who says that? Don’t you see that the majority of the investors are riding the trend up? LOL
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