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05/09/2020 Market Outlook - Example of a members only report

05/09/2020 Market Outlook - Example of a members only report

Postby Cobra » Sun May 10, 2020 12:47 pm

The Chinese version can be found HERE: http://www.hutong9.net/forum.php?mod=vi ... tid=431050


Still some up rooms in the short term, very likely will break above the Apr 29 high at $294.88, possibly at least touching the MA200, after which, SHOULD start another leg down to test the Mar 23 low.
TheForecast.png


Why "very likely will break above the Apr 29 high at $294.88"?

Two reasons:

    Very high NYADV usually means a higher high ahead. The record was made on Apr 29 at which time the SPY daily high was $294.88. NYADV is the NYSE advancing issues, generally on an up day the more the stronger the up momentum it is.
NYADVHigh.png

    SPY monthly was up in Apr which means 81% chances the May monthly bar will break above the Apr bar high which was at $294.88.
SPYMonthly.png


Why " possibly at least touching the MA200"?

Technical analysis is based on "history repeats itself", so let's take a look at where the rebounds usually went in a bear market (when SPY was way below the MA200). From the charts below, it's very clear that all the rebounds in a bear market ended near the MA200.
MA200Target2008.png

MA200Target2000.png

Now let's take a look at where SPY is now relative to its MA200. Close enough to be an obvious target, right? I know it's very late to mention the MA200 now but the report here is meant for a demo of how my daily report looks like. In the actual report, I mentioned the MA200 target way earlier. Why MA200 is so important? Because lots of trading programs use it as a trigger to buy (when pulls back to it after long time above it) or to sell (when rebounds to it after being way below it for awhile) which makes MA200 a typical self-fulfilled prophecy.
SPYNowToMA200.png

Now let's take a look at the S&P 500 index directly, MA200 happens to be around 3000. A round number naturally attracts medias therefore often serves as a magnet which is another example of a self-fulfilled prophecy: Both bulls and bears see the 3000 and therefore are waiting above it to sell so between now to then there's not much selling pressure, the price quickly moves to the number while as soon as the number is met, both parties start to sell which makes the number look like a good resistance.
SPX3000.png


Why "another leg down to test the Mar 23 low"? By the way a good report should always forecast at least 2 steps ahead. Why? If I just mention the target $294.88 and MA200, you might get the impression that I'm bullish. Now with this "next next step", you should have a totally different picture of the market, right?

Let's again, take a look at some of the bottoms after a sharp decline in the past. I put our nowadays chart on the top so you can clear see what we're missing. Basically the movement of the price also follows the rule of inertia, after a very sharp decline, it's very rare the very first rebound would recover all the losses, therefore a bottom, usually at least has to be a double bottom, the bigger the decline the "more number of bottoms" are required.
Why2ndLegDown.png

Yes, I know you probably would mention the 2018 V shaped reversal. You know technical analysis is all about odds. The idea is to always bet on the side that has higher odds, accept willingly the losses are inevitable due to the odds by natural is not 100% guaranteed. Kept thinking maybe this time is different therefore acts accordingly then all the statistics, all the past patterns have no meanings, then why bother to do technical analysis, why don't just "follow your heart"? Actually, say, a V shaped bottom happens around 1 out of the 10, and since it just happened in year 2018 therefore now should be even more unlikely we'll have a V shaped reversal again. I know it's mathematically not right, but, well, let's not argue about this, technical analysis is an art, not science after all, sometimes the Murphy's law or superstitious do work as again they're another example of you human self-fulfilled prophecy.
2018VBottom.png

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Re: 05/09/2020 Market Outlook - Example of a members only re

Postby JFR » Sun May 10, 2020 5:32 pm

Excellent stuff, Cobra. Thank you.
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Re: 05/09/2020 Market Outlook - Example of a members only re

Postby tsf » Sun May 10, 2020 5:47 pm

Great stuff. Thank you, Cobra.
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Re: 05/09/2020 Market Outlook - Example of a members only re

Postby Cobra » Mon May 18, 2020 12:16 pm

Higher high fulfilled, it took much longer time than I thought though.
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Re: 05/09/2020 Market Outlook - Example of a members only re

Postby Cobra » Tue May 26, 2020 9:53 am

SPX 3000 has been fulfilled.
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