06/01/2009 Market Recap: Breakout!

Summary:

Breakout plus several intermediate-term buy signals triggered today.

Expect a pullback tomorrow.

	Trend	Momentum	Comments - Sample for using the trend table.
Long-term	Down		Idea for trading intermediate-term under primary down trend.
Intermediate	Up*	Neutral	Some buy signals still need further confirmation.
Short-term	Up	Overbought*

Bulls won today, the one month range was broken on the upside with lots of intermediate-term BUY signals triggered. I don’t argue with signals, but as I still think it’s not a good sign to have a very high bond yield under the current economic conditions, so I personally will not heavily bet on the long side. Tomorrow, because very short-term is very overbought, so a pullback is expected.

0.0.1 Market Top/Bottom Watch, this is the overall signals I have in my chart book.

3.0.0 10Y T-Bill Yield, this is my biggest concern. It looks like a continuation pattern to me, so I suspect that the yield will keep rising.

OK, now let’s take a look at all my excuses for expecting a pullback tomorrow.

7.0.7 SPX and VIX Divergence Watch, when both SPX and VIX were up on the same day, a down day would be the next day. Also the most suspicious thing today was that both SPX and VIX were up big. VIX and More has an interesting post about it: Eerie Déjà Vu as VIX and SPX Both Jump More Than 2.5%.

1.0.2 S&P 500 SPDRs (SPY 60 min), RSI overbought is quite accurate on this chart, plus don’t forget there’re 7 unfilled gaps now. Yes, statistically gap is meant to be filled, just sometimes it takes a year to fill. But for 7 unfilled gaps, I don’t think it needs a year to fill at least 1 gap.