Daily Market Analysis

Daily Market Analysis for 14 Oct 2011 Close

Welcome to Objectively Defined Non-Ambiguous Market Timing Analysis.

Market Timing Direction: LONG since Oct 04 Close. 

Analysis  Direction  Note
Market Breadth Pattern  Bullish A relatively strong day today with 74 range-bound stocks considered accumulated and only 5 considered distributed. For a more subtle change, we started to see accumulation even on up-trending stocks (32). We are still far from having a clear-cut Strong market state, but we are getting there. Our bullish stance doesn’t change. 

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 still in bear market territory.
Monetary Conditions  Bullish Monetary base started to decline. However, short-term interest is still much lower than longer term interest rate. Thus, Interest Rate Pump factor continues to rise. Monetary policy is still extra easy.

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-16 *Current 122.56 9.94 8.83%

Winning %
77.8% 77.8%

Win/Loss Ratio
2.4 2.5

Profit Factor
8.3 8.9

9 9

SPY Point Compounded Trade End

Return Max Drawdown
Market Timing
32.70 28.62% 1.90%
Corresponding SPY
-11.23 -8.39%

Market Breadth Pattern

Click on the Chart itself to see the bigger version.

Primary Market Breadth

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Monetary Conditions

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

Industry Rotation

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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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