Cobra's Market View

Jack, your call for SPX 1550 is a 8.4% rally from here - that's quite remarkable considering A) the technical picture: weekly momentum is waning and B) the fundamentals: earnings and forecasts are lower than predicted

Jack12 wrote:

ZimZeb wrote:

uempel wrote:If SPX drops down to 1417/1420 Monday and doesn't recover fast, the market will continue to slide through the green cloud, first target at 1400ish. My favorite scenario is more bullish. A quick dip down to 1420ish and than a strong recovery into the 1440 area

When I first started watching this analog, I was thinking along the lines of your first idea. If the comparison still has any basis, the strong rebound earlier last week might provide reason for agreement with your favorite scenario.

spx102012fa.png

spx102012fb.png

spx102012fc.png

Also consider that this was a failed head test of the H&S target then is 1380ish if its C and A=C target also 1380ish concern now should be at 1420 if it holds we should see 1550 shortly

uempel wrote:Jack, your call for SPX 1550 is a 8.4% rally from here - that's quite remarkable considering A) the technical picture: weekly momentum is waning and B) the fundamentals: earnings and forecasts are lower than predicted

Jack12 wrote:

ZimZeb wrote:

uempel wrote:If SPX drops down to 1417/1420 Monday and doesn't recover fast, the market will continue to slide through the green cloud, first target at 1400ish. My favorite scenario is more bullish. A quick dip down to 1420ish and than a strong recovery into the 1440 area

When I first started watching this analog, I was thinking along the lines of your first idea. If the comparison still has any basis, the strong rebound earlier last week might provide reason for agreement with your favorite scenario.

spx102012fa.png

spx102012fb.png

spx102012fc.png

Also consider that this was a failed head test of the H&S target then is 1380ish if its C and A=C target also 1380ish concern now should be at 1420 if it holds we should see 1550 shortly

Yes but only after the correction is over, the history seems to suggest the the bounce after a pullback is quite big, fib figures also support the 1500-1550 (my call would be exactly 1526) This would mean that the 1st bounce would be approx 45 points and then 1500+ is possible. The fact remains we must 1st trade the pullback and only then will the upside be contemplated

From a ratio and proportion point of view. we completed a near perfect 3 at 1474 (the next 2 waves did not satisfy the neads as a corrective of 3) the min target for R&P correction of 3 being wave 4 are 1418 and 1400 and in the extreme 1382. Below 1379 would invalidate this count. Now we have to try and understand how low will the bulls let it fall. I think they will wait until the fear has set in before turning it around( I must go and check what the norm has been for 4th wave correctives)

ZimZeb wrote:

KeiZai wrote:Russell

Nice counts & awesome charts KeiZai. Could you elaborate on why you foresee a triple three off the mid-Sept high in $RUT, or is the inlaid waveform on that chart just for the purposes of the first 2/3 of the pattern?

Thanks ZimZeb yes it is only as an illustration I expect double - then attemt for year end rally
Euro
uempel thx for book title!

Please note the CFD market low was 1421 and the SPX cash was only 1426

Bullish alternations are missing so here is something for balance

Dow bullish interpretation - bullish triangle CHFUSD EURO - until RSI line is holding euro is not bearish + weekly inverted hammers across the board

Weekend Reflection:

Institutional market looks to be in distribution but a controlled one.
Last week may have been a big pump and dump.
Work the futures to run buy stops and trigger buy signals; then distribute into OPEX.
Note that it was actually an up week for the SPX, which is hard to argue bearish.
I am thinking the operators managed to reduce exposure this week at higher prices while confusing everybody.
Note that VIX never broke 18 last week. Friday was an orderly sell not a panic.

The SKEW chart seems noteworthy. It's signal calling a high weekly close appears to be working but the SKEW closed the week up and above the moving average.
If you view SKEW as reflecting demand for crash insurance, generally the SKEW will go down on a steep market decline as folks collect on their insurance.
In spite of Friday's action, there was more buying of insurance than collecting on it.
So, the main event concerning institutions appears to lie ahead rather than behind.

Connecting the dots, looks like something bearish this way comes because institutions are distributing and buying exposure to potential outlier performance.
While Friday and the earnings announcements were bad, it does not seem like it was the main event (we'll know it when we see it).
Until that comes (maybe tomorrow but probably not), we will likely see two way trade I would think with highs being lower consistent with a downtrend.

Too many bears out there something must be wrong here btw risk currencies are not confirming the bearish move


someone must be lying either USDCAD or NZDUSD etc both looks bullish

Agree with Keizai. Currency picture is unclear showing both bull and bear flavors.

AUD-JPY found resistance at declining tops line. Topped RSI suggests it could pull back some more (equity bearish) but it could also break up after some back and fill (equity bullish).
AUD-USD pulled back to a prior support line and appears to be in an uptrend. It could pull back some more, but without a sign of breakdown, have to assume trend continues (equity bullish).
USD-CAD looks interesting. Appears to be trending up, broke a long down trend and closed at 8 week high (2 pip squeeker). I view this as equity bearish if it continues.
EUR-USD is range trading but staying on top of rising bottoms line. Equity bullish unless it breaks down.

KeiZai and Mr. BachNut, let me be the 3rd one on this. DBV here, bullish here too. gtg.

Positioned a little short.

My trend signal whipsawed back to sell Friday.
My summation index signal went neutral Friday (from sell) but a negative NYMO on Monday will put it back into sell mode.

We had a bouncing ball bull trend from June 4 to Sept 14.
It appears we may now be in a bouncing ball bear trend.
This sort of thing tortures my trend signaling. Swing traders should be making hay.
At some point, the ball should have some more roll and less bounce.
Maybe this starts tomorrow and the decline accelerates, I don't know.
Until it clarifies, I'll expect the index to find some support, rally and squeeze before the next down move.
I do think the local high is in as of 9/14.
Thus, I plan to be working neutral and short in the days ahead, selling rips and covering on dips for the most part.
Unfortunately, I'll be traveling next three weeks. So, I won't get too clever with my positioning.
Particularly given that I will have limited availability to all the great analysis and insights of Cobra and all you other animals.
Trade well and take care.

Is options market preparing for a down turn?
May be.
Bottom 5 oscillators are derived from measures commonly used to gauge option trader’s sentiment and appetite for risk. The measures included are VIX, SKEW, Tail Hedge Index, and Equity put to call ratio. A positive value for the oscillator correlates with an up move in SPY and vice versa. Currently, all seems to be heading towards zero. Caution is warranted!
On a personal note a chart like this makes me wonder, are markets driven by some real economic forces or these are just products of mathematical models. You can learn more about SKEW and Tail Hedge Index here.
http://www.cboe.com/micro/skew/document ... an2011.pdf
http://www.cboe.com/micro/vxth/document ... epaper.pdf
Mr. Bachnut, thanks for inspiring me to include SKEW (first panel) in this analysis. Surprisingly, despite being different in its structure it behaved just like VIX in this analysis .

Thanks BB and Mr. BachNut (and everyone else) great charts and thoughts

uempel wrote:Kena, are you putting your money where your mouth is, are you quite comfortable with your shorts Most guys I know are very careful at the moment. And check out this poll by Bespoke which I copied 5 minutes ago: 50:50 ain't a good indicator

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KENA wrote:

uempel wrote:Funny, all of our comments are quite dubious Nobody knows Or does some reader know

HI Uempel..How about the Dow At 12000/12300 by the end of Nov and 11500 by the wnd of Dec.No Joke this could happen if now the next hi is a lower hi then the dn trend begins even though this is an election year..Time will tell so we wait and see how the pieces come together..Ps..Also the lower may have already been put in.

Hi Uempel..It may be to late for you to get this but yes I'm comfortable with my swing longs (not shorts)right now they are doing ok.I will change to short when the trend goes to dn(maybe even before to get positioned).The mkt may go sideways into elections in that case my longs may do even better.The charts I have show the change as I noted above,Its coming we just wait and see when.

Review for Sunday 21 Oct, 2012
http://screencast.com/t/NHz9eAJOK3

NTA
GLTA

Election logic for more up? http://www.telegraph.co.uk/finance/pers ... -rise.html

KENA wrote:

uempel wrote:Kena, are you putting your money where your mouth is, are you quite comfortable with your shorts Most guys I know are very careful at the moment. And check out this poll by Bespoke which I copied 5 minutes ago: 50:50 ain't a good indicator

56.png

KENA wrote:

uempel wrote:Funny, all of our comments are quite dubious Nobody knows Or does some reader know

HI Uempel..How about the Dow At 12000/12300 by the end of Nov and 11500 by the wnd of Dec.No Joke this could happen if now the next hi is a lower hi then the dn trend begins even though this is an election year..Time will tell so we wait and see how the pieces come together..Ps..Also the lower may have already been put in.

Hi Uempel..It may be to late for you to get this but yes I'm comfortable with my swing longs (not shorts)right now they are doing ok.I will change to short when the trend goes to dn(maybe even before to get positioned).The mkt may go sideways into elections in that case my longs may do even better.The charts I have show the change as I noted above,Its coming we just wait and see when.

Yeah Kena, longs make a wee bit more sense at the mom