Daily Market Analysis

Daily Market Analysis for 12 Oct 2011 Close

Welcome to Objectively Defined Non-Ambiguous Market Timing Analysis.

Market Timing Direction: LONG since Oct 04 Close.

 Direction  Note
Market Breadth Pattern  Bullish Today we have 134 stocks considered accumulated, the largest since Oct 4. At the same time, the market has run up almost uninterruptedly heading into resistance level at 1,220. Our gain in buying SPY is approaching what we gained from shorting SPY since July 27. How the market acts in the next few days will be critical. As of now, we have not seen evidence of distribution yet.  

This system is at heart a trend following and exhaustion reversal system. Unless we see exhaustion to the upside or reversal to the downside, we maintain our bullish stance.

A bullish “OneBarReversal” pattern was observed on Oct 4. This pattern anticipates reversal of bearish trend. It does not wait until strong and repeated buying is observed. The sharp and broad-based buying on Oct 4 afternoon session showed that the buying was not a typical short-covering operation.

Our Market State monitor is currently in a Weak market state. This means we are already in confirmed bear market. A Weak market state will only change with the arrival of Strong market state.

Primary Breadth Trend  Bearish The primary market breadth is in bear market territory.
Monetary Conditions  Bullish Monetary base keeps being added into the system significantly. Similarly, short-term interest is still much lower than longer term interest rate. Thus, Interest Rate Pump factor continues to rise.

Note: Any change from previous day summary is highlighted in blue.

Below is the FORWARD-LOOKING market timing track record since the blog started. Next day opening price of SPY is used to calculate gain/loss so that we can take advantage of it in a realistic setting. SPY is used for reference only. You can use other instrument of your liking, e.g. TNA, options, futures. For historical back-testing results, please read the last section of Market Breadth Pattern guide.

Date Action SPY Next Day Open Gain/Loss In Percent
2011-Apr-20 BUY (Long) 133.79

2011-May-09 exit 135.17 1.38 1.03%
2011-May-11 SELL (Short) 135.67

2011-May-26 exit 133.00 2.67 1.97%
2011-May-31 BUY (Long) 134.51

2011-Jun-01 exit 131.96 -2.55 -1.90%
2011-Jun-01 SELL (Short) 131.96

2011-Jun-23 exit 128.27 3.69 2.80%
2011-Jun-23 BUY (Long) 128.27

2011-Jul-13 exit 132.09 3.82 2.98%
2011-Jul-21 BUY (Long) 134.52

2011-Jul-26 exit 132.59 -1.93 -1.43%
2011-Jul-27 SELL (Short) 130.60

2011-Aug-09 exit 115.26 15.34 11.75%
2011-Aug-18 SELL (Short) 112.96

2011-Oct-04 exit 112.62 0.34 0.30%
2011-Oct-04 BUY (Long) 112.62

2011-Oct-13 *Current 120.67 8.05 7.15%

Winning %
77.8% 77.8%

Win/Loss Ratio
2.3 2.4

Profit Factor
7.9 8.4

9 9

SPY Point Compounded Trade End

Return Max Drawdown
Market Timing
30.81 26.64% 1.90%
Corresponding SPY
-13.12 -9.81%

Click on the following links for information on Market Timing Analysis in general, guides on Market Breadth Pattern, Primary Market Breadth, and Monetary Conditions.

Market Breadth Patterns 

Click on the Chart itself to see the bigger version.

Primary Market Breadth

Click on the Chart itself to see the bigger version.

Monetary Conditions

Note: The following charts are updated once every other week. The chart was last updated on Sept 26, 2011.

Industry Rotation

Click on the Chart itself to see the bigger version.

Color legend:

  • BLUE: 1 year leader and 1 month leader,
  • LIGHT BLUE: 1 year leader,
  • LIGHT GREEN: 1 month leader,
  • RED: 1 year laggard and 1 month laggard,
  • MAGENTA: 1 year laggard,
  • ORANGE: 1 month laggard.


About timelysetup

Timely Setup Owner


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