Global Rate Cut is no help to market either

10/8/08

Dow closed down 189 points and it is the sixth down day in a row. I remembered the longest losing days for major indices are 9 days during the bear market run from year 2000-2002. Now, the investors has totally lost confidence at all to whatever our US government, Federal Bank, and Treasury do. Nothing could stop the market free fall. All support below current levels are just guesswork. We have to see one big gain day to stop this mud(mad) slide. Needless to say, let the market itself find its equilibrium. Even, all technical data suggest the market is deeply oversold but it does not make a buy suggestion. This is far worse drop ever since the market crash 1987 & Great depression 1929. Now, bear market is built in fear. As fear growth unstoppable, there is no bottom you could see. Well, it will stop somewhere when there is no more sellers. Tomorrow, the short-sell rule ban has ended and let see how market react then.

Nightmare is just beginning

10/7/08

Why I not post anything yesterday?! Today's market action has showed the evidence. There has never been follow through day after each possible reversal day. Anyway, the chart above will guide you we are really really close to bottom. Market will bounce any moment. We are already nine years into the first decade of the 21st century, and those first nine years are on pace to be the worst start to a decade since 1930s. Unless we get a major rally to close out the year ( 15%+)
However, I have other data to suggest the Nightmare is just started. The powerful correlation between margin debt usage by member firms of the NYSE and the trend of major indexes suggest further selling ahead in the main indices. The super large leverage accumulated during the last bull market is now forcefully being undone by a powerful combination of margin calls and acceleration market losses. Also, combine with credit crunch and decreasing house prices. We are soon surely into phase two of recession or depression. Now, it is very certain 100% US is getting into a very pro-long recession ( At least years to two ). I have been saying this and predict this months ago and give caution to my blog readers. Unlike Fed Chief now he finally accept that US is into recession. Do anyone notice the main stock indices are diving hard each time our Fed/Treasury did some sort of bold action/plan?! Big players are not buying it each time and so are we/me. We gonna fire Fed Chief, Treasury Chief, Bush....etc. They do not know how to fix our problem at all. They all have no clues. The market has showed us the $700 billion plan is not gonna help at all as I said before. Next support for Dow is 9000. Below that level is 7800-8000. Remember the last post I said " Fasten your seat belt ". That's my bold statement before Monday and today action. Now, I guess you all know why I have keep my extreme bearish from start of this year. It has proved me no wrong at all. Good luck!

What's next?!

10/5/08

Are we bottomed yet?! Technically, the stock markets are in very oversold and the market breadth is very very close to extreme bottom. Just keep watch the price reaction. It surely will rebound very soon. Beside to describe it from technical point of view, market may keep going down more. Why?! The big players are watching the credit market, they need to see if the condition has improved. Therefore, it may takes two to three days to confirm if there has any improvement. Well, will market crash from here?! Let see! Fasten your seatbelt. Really, I cannot precisely pinpoint if the bottom is in sight as lots of traders in Wall Street. But I surely know the market will sure have very nice bounce and will keep going down again afterward.

Dow is on the way to touch 10,000 mark

10/02/08

Although the Senate has approved the newly revived bailout plan for the financial system, stock traders are not convinced that the plan will be good enough to rescue the US economy. The US economy remains very weak and the crisis of confidence that has frozen the credit markets may not be solved by a plan that focuses on recapitalizing banks and not creating jobs. However, tomorrow we have very important economic number which is Non-farm payroll. The market is looking to fall by more than 100k. This would mark the ninth consecutive month of job losses. I believe that non-farm payrolls could fall as much as 120 to 150k. Now, I guess despite the House of Representative will approve or not, the market will not going anywhere bullishly. We surely are getting close to the most scary part of our economy. Let see how market react on the approval of the House tomorrow mixed with the Non-farm payroll number.

Major Accumulation Day

9/30/08

It is very great and surprise that we have a major accumulation day today followed a major distribution day yesterday. Technically, it is very oversold to have a bounce. So, we need to see follow through strong up day to confirm the bottom was yesterday. Look like Senate is going to vote the newly revised rescue plan tomorrow. Ayes would create another surge. But what if nope happen again?! Market would sell off right away more than 800 points? I am still seeing this as 50-50. I still against the current plan's form. At least, the credit market is still in dead water. I will try to post the update tomorrow once we know the answer from senate voting. Good luck.

Very useful info I repost here

9/29/08

Again, I repost this from my resource. I have no credit to write this.

The Warning from New Lows, and Institutional Selling ...

Monday, September 29th. Charts and Analysis are below the Quick Summary

• This Institutional Buying/Selling pattern is becoming like last January's pattern (see the circled areas on Chart A). On Friday, the Buying dropped further while Institutional Selling had a slight up tick on a sideways move. If Institutional Buying/Selling continues to replicate the pattern, Institutional investors will put us in a volatile trading range like last February. The key will be the SPREAD distance between the two ... an expanding negative spread like June and July's would give us another leg down in the market ... see chart B.
• The combined mix could give us extraordinary VOLATILITY again today.
• Remain in cash on the short side ... this is a now a speculator's market.
  _____________________________________________
  
• Currently, at 8:15 AM this morning: the Dollar's RSI bounced back up and is moving in positive territory. That now tips the odds for the Dollar to retest the new resistance at 80. The Hybrid Accelerator is in a mixed condition with the medium trend down, and the short term green indicator about to go positive. If the Accelerator red/blue trend lines do not turn up, then we would expect the RSI to make a lower/high with the Dollar stalling after reaching the resistance.
• 10 Year Bond Yield. The 10 year yields have a triangular pattern that was definitely broken to the downside two weeks ago. The triangular pattern breakdown suggested a retest of the March lows which occurred on September 16th. ... after which it jumped back up from its spike down. Friday, the 10 year yields were testing the triangle's upper resistance level. It is a mixed set of conditions as to where we go from here. Many are expecting the Fed to cut interest rates which would drive down the yields. At the same time, I expect that the Treasury will have to offer higher yields for foreigners to buy our Gov. Bonds. I am really not sure how this will play out in the short term.
• 30 Year Yield: The positive divergence we have been pointing out took hold on September 19th., with a very large up move on the 30 year yields. We thought that the sharp down move was the washout last week and that was the case. We should get a lot of volatility right about here, with the yields ending up with a test of the upper resistance line slightly higher than 45.5 later. *** I expect some downside movement now which would then end with a higher bottom.
• The Shanghai will be closed all week for a Chinese Holiday.
  

_______________________________________________________________________________

A: "Institutional Buying and Selling":

(Note that Institutional Buying has been up trending while selling has been up trending at the same time. Also note that the two have remained close to equal amounts relative to each other. It means that Institutions have been "holding a controlled neutral-" market position ... the SPREAD RELATIONSHIP between how much Buying and Selling Institutions do on a given day is the "control factor" they have in what happens in the market AND on the VIX.)

Monday's comments: This is the Institutional Buying Selling Spread chart for last Friday. Note that the pattern is becoming like last January's pattern (see the circled areas). On Friday, the Buying dropped further while Institutional Selling had a slight up tick on a sideways move. See the circled areas. If Institutional Buying/Selling continues to replicate the pattern, Institutional investors will put us in a volatile trading range like last February. The key will be the SPREAD distance between the two ... an expanding negative spread like June and July's would give us another leg down in the market ... see chart B.

B: "Inflowing/Outflowing Liquidity":

Note that Liquidity had hit its lowest possible level in Contraction territory in the past few weeks ... hence the crisis that the gov. and Fed has to deal with.

On Friday, liquidity remained in Contraction with a small down tick. For the market to have the ability to have an upside rally, the liquidity will need to rise higher and start making higher/highs and higher/lows. If liquidity contracts back down to below the triangle's bottom, money will be flowing out of stocks causing another drop.

C: Our Multi-Indicator Model ...

Our Multi-Indicator Model is below. It is comprised of Institutional Selling, a MACD, a movement Accelerator, and a 9/30 RSI (Relative Strength). This model doesn't take risk factors into account.

*** Current Update ***: Our Multi-Indicator Model, which doesn't take risk factors into account, showed the following yesterday:
a. The Accelerator closed neutral, with the trend lines in negative territory and moving higher.
b. The Inverted NYSE Declining Volume is negative and trending higher. See the Green Arrow.
c. The RSI 9 is negative, and the RSI 30 remains negative.
d. The Inverse Institutional Selling graph is showing a selling trend could confirm a trend reversal of less day-over-day Institutional Selling if confirmed today.
e. The MACD-C has its indicators merged. This is an inflection point where it could move more positive or reverse back down. Market Pressure conditions remain Down with some improvement.

_______________ End of Special Studies _______________

Chart 1: This chart is worth a thousand words. Note the huge triangular formation on the NDX.

Comments during the past weeks: The big story is that the NDX is coming to the APEX and end of 9 year triangle. There will be a breakout before the apex and it will have HUGE consequences. If it is to the downside, we could see a melt down in the markets. If it is to the upside, there would be a very strong rally to the upside that no one expected. This apex breakout could occur anytime between now and the end of December the latest.

NOTE: The NASDAQ 100 has breached its 9 year triangular support.

See the next chart ...

Chart 2: This is a close up of the above NASDAQ chart.
NASDAQ Alert: The NASDAQ 100 is now -5.56% below the critical support level of a 9 year triangular formation. An approved and half-way sensible Bail Out Plan could give us an up move that tests the upper resistances. Longer term, that would not change the Institutional expectation that the economy will move to a zero or negative GDP in the next 12 months.

(Prior comments: The NASDAQ is approaching the apex of this 9 year formation where volatility will accelerate and could become extreme. The apex culminates on January 22nd. 2009. However, these patterns always break out prior to the apex. On a technical basis, the breakout occurred on September 5th. with the first end of day close below the support on September 9th. (Note that the resistance and support levels have been updated due to the convergence of the two over time movement.)

__________________________________________________________________________

Section 1. - Daily Index Charts

Chart 1-1: The Institutional Index of "core holdings"...

Overview: The Institutional Index of core holdings is one of the first charts we look at everyday because Institutions represent over half of the market's volume and they have a predominant influence on the market. As an index, Institutional movements track better technically than any of the other indexes. For instance, on October 11th. 2007, the Institutional "core holdings" index hit an EXACT 61.8% Fibonacci retracement while the other indexes did not. That day marked the EXACT top of the market. Note the previous up channel and the clear down channel that we are currently in.

Current commentary: The Institutional Index hit an exact 23.6% Fibonacci support Level on September 18th. The Index actually held on three support levels at that time, and Institutions continued selling while they increased buying.

Friday, the Institutional Index was above the April 2005 support. A retest of the August 13, 2004 low is very possible unless Congress acts fast and comes up with a plan that makes sense. A 700 billion dollar plan is only the beginning because it is an insufficient amount cover CDO/CDS/CMOs that will go into default in the next 12 to 18 months. ... see the next chart.

SEE THE NEXT CHART ...

Chart 2. The Banking Index ...

At the close, the Banking Index was at 73.86. The Banking Index remains in a major down trend and in a short term up trend.

There is still an unresolved 1996 gap that has not been closed at 44.09 on the downside.

_________________________________________________________________________________

Section 2. - The Super Accelerator Market Trend Model ... Super Accelerator CHARTS are only posted on the Standard Website when they have an Up or Buying condition. After a Sell Signal, the chart then is available on the Advanced Website subscription where we post it and discuss the risk levels and appropriateness for whether we should take a Short Position or not.

____________________________________________________________

The Super Accelerator for the SPY is now in a Mixed Trending condition with the S.T. Accelerator negative and the Super Accelerator slightly up. This is a mixed condition not conducive to shorting the SPY. No shorting is safe at this time.

________________________________________

** The NASDAQ 100 Super Accelerator ...

The Super Accelerator for the NASDAQ 100 is in a Down Trending condition with the S.T. Accelerator trying to tick to the upside. This is now in a Mixed Trending condition with the S.T. Accelerator having made two higher highs. This mixed condition not conducive to shorting. No shorting is safe at this time.

______________________

*** The Russell 2000 Super Accelerator ...

*** The Super Accelerator for the Russell is moving slightly down and the S.T. Accelerator is negative and volatile with a small up tick on Friday. This kind of whipsawing turmoil can be expected until we see an approved bail-out plan. This is a high risk/whipsawing condition, and this mixed condition not conducive to shorting.

Chart 2: Multi-Indicator Model...

Our Multi-Indicator Model is below. It is comprised of Institutional Selling, a MACD, a movement Accelerator, and a 9/30 RSI (Relative Strength). This model doesn't take risk factors into account.

*** Current Update ***: Our Multi-Indicator Model, which doesn't take risk factors into account, showed the following yesterday:
a. The Accelerator closed neutral, with the trend lines in negative territory and moving higher.
b. The Inverted NYSE Declining Volume is negative and trending higher. See the Green Arrow.
c. The RSI 9 is negative, and the RSI 30 remains negative.
d. The Inverse Institutional Selling graph is showing a selling trend could confirm a trend reversal of less day-over-day Institutional Selling if confirmed today.
e. The MACD-C has its indicators merged. This is an inflection point where it could move more positive or reverse back down. Market Pressure conditions remain Down with some improvement.

_________________________________________________________________________________

Section 3. - The following charts can be found below:
The U.S. Dollar, 10 Year Bond Yields, and 30 Year Bond Yields.

The U.S. Dollar ... Daily Chart

(2 months ago: As expected, the Dollar did bounce up from its extremely oversold Relative Strength indicator reading 2 months ago. At that time ... Our Hybrid Accelerator confirmed an up move from its oversold condition. The Relative Strength finally broke out of its consolidation and shot up.)

*** Currently, at 8:15 AM this morning: the Dollar's RSI bounced back up and is moving in positive territory. That now tips the odds for the Dollar to retest the new resistance at 80. The Hybrid Accelerator is in a mixed condition with the medium trend down, and the short term green indicator about to go positive. If the Accelerator red/blue trend lines do not turn up, then we would expect the RSI to make a lower/high with the Dollar stalling after reaching the resistance.

See the next chart ...

The U.S. Dollar ... Longer Term ...

This is the Dollar's longer term chart. You can see the declining channel for the Dollar going back to 2005.

The weekly Dollar chart shows the 3 year down trend of the Dollar that broke to the upside on August 14th. Note the 79.84 resistance was penetrated and the descending channel's support is still in play.

The 10 Year TNX Yields ...

On July 15th., before the open we said, "The 10 year yields are in consolidation ... we expect it to move higher after consolidation. With the Fed opening up the lending window to Freddie and Fannie, that will increase mortgage costs which should translate in the yields moving higher on the 10 year yields as well."

Today: 10 Year Yields: The 10 year yields have a triangular pattern that was definitely broken to the downside two weeks ago. The triangular pattern breakdown suggested a retest of the March lows which occurred on September 16th. ... after which it jumped back up from its spike down.

Friday, the 10 year yields were testing the triangle's upper resistance level. It is a mixed set of conditions as to where we go from here. Many are expecting the Fed to cut interest rates which would drive down the yields. At the same time, I expect that the Treasury will have to offer higher yields for foreigners to buy our Gov. Bonds. I am really not sure how this will play out in the short term.

This is a longer term daily chart of the TYX 30 year yields.

The 30 year yields had been in a down channel since last June. In April, the TYX established its inverted Head and Shoulder pattern with an upside target of 53.

30 Year Yield Alert: Previous comments:. NOTE the similar divergences at Label 1 and Label 2: We now have a positive Divergence condition again ... similar to the Nov. 07 to January 08 divergence that resulted in a sharp rise. The 30 year yields may have to fall lower to set up enough divergence to trigger this pattern to the upside. Note how it ended in January ... with a washout spike down in a climax move before the trend change to the upside on positive divergence ... it is very likely that we will get a similar down spike before the divergence can have an affect for an upside move. We still have an inverted Head & Shoulder formation that has a target of 53 for completion.

Friday: The positive divergence we have been pointing out took hold on September 19th., with a very large up move on the 30 year yields. We thought that the sharp down move was the washout last week and that was the case. We should get a lot of volatility right about here, with the yields ending up with a test of the upper resistance line slightly higher than 45.5 later. *** I expect some downside movement now which would then end with a higher bottom.

___________________________________________________________________________

Section 4. - The Shanghai Index ...

China's Shanghai Composite:

Last night, Shanghai moved down 0.16%. The Shanghai down movement is probably over with with the huge positive divergence now coming into play. The Shanghai up movement will be under duress pending what Congress does and how fast they act. Just a note ... China's stock market will be closed next week for their holiday period.

Just to keep the Shanghai Bubble's drop in perspective, this is the 10 year WEEKLY chart of the Shanghai Composite.

The Shanghai Holiday Schedule for 2008 is below.

_______________________________________________________________________________

Section 5. - Longer Term Stock Market Charts ...

Longer term charts in this section will now be updated only once per week on Monday morning.

Chart 1 as of **Monday, September 22nd. : The Long Term Bull/Bear picture for the S&P 500 ...

This is a monthly chart for S&P 500. The final reading for January was negative longer term. At the end of January we had the red/blue trend lines crossing over which says we have started a bear market condition.

*** Note the black bars and the red trend line during the 2001/2003 bear market period. You will see that there were 4 times that the S&P monthly bars went above the red trend line. These were pausing periods in the down trend. Each occurrence was essentially a sideways movement that failed and moved lower in the next wave.

**Monday, September 22nd. The S&P has its monthly bar below the red trend line and trending lower. The last bear market saw one period where the monthly bar prices tested the blue moving average and then pulled back. The pattern appears the same as previous bear market down moves. From this model, we have said that we started a bear market condition at the end of January. This Bear Market still has months to go before the possibility of giving us an upside reversal to a Bull Market.

.