Daily Market Analysis

Daily Market Analysis for 30 Nov 2011 Close

Welcome to Objectively Defined Non-Ambiguous Market Timing Analysis.

Market Timing Direction: NEUTRAL since Nov 30 Close. 

Analysis  Direction  Timely Note
Market Breadth Pattern  Neutral On Wednesday, the market indexes and breadth numbers were extremely positive. The system was stopped out of its Short exposure.

The concerted effort by central banks to interfere with normal market forces might have prevented a possible meltdown due to bank runs and “sovereign debt issuance runs”, at least for now.

These kind of unanticipated government actions pose a risks to our market timing system because the actions usually are counter-trend in nature and not reflected in prior buying and selling actions in the market. On a period like now, if we have the skills, day trading result should reduce the drawdown experienced by our longer term trading strategy.

At this moment, it is not prudent to remain Short because Short covering rally might have some legs to go. But going Long is not prudent either until more signs of strengths appear. The fact that central banks need to intervene says a lot about the dire situation we are in. All of these problem cannot be solved overnight.

The market is currently in a Weak market state. 

We must be cognizant to the fact that we are now in a market heavily influenced by government action or inaction. This system will not work well when there are truly unexpected actions by government agencies. I suggest anyone following this system to reduce your exposure.

Primary Breadth Trend  Bearish The primary market breadth has turned bearish.
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 1.0%
2011-May-11 SELL (Short) 135.67

2011-May-26 exit 133.00 2.67 2.0%
2011-May-31 BUY (Long) 134.51

2011-Jun-01 exit 131.96 -2.55 -1.9%
2011-Jun-01 SELL (Short) 131.96

2011-Jun-23 exit 128.27 3.69 2.8%
2011-Jun-23 BUY (Long) 128.27

2011-Jul-13 exit 132.09 3.82 3.0%
2011-Jul-21 BUY (Long) 134.52

2011-Jul-26 exit 132.59 -1.93 -1.4%
2011-Jul-27 SELL (Short) 130.60

2011-Aug-09 exit 115.26 15.34 11.7%
2011-Aug-18 SELL (Short) 112.96

2011-Oct-04 exit 112.62 0.34 0.3%
2011-Oct-04 BUY (Long) 112.62

2011-Oct-17 exit 120.14 7.52 6.7%
2011-Oct-17 SELL (Short) 120.14

2011-Oct-21 exit 124.17 -4.03 -3.4%
2011-Oct-27 BUY (Long) 128.00

2011-Nov-09 exit 124.79 -3.21 -2.5%
2011-Nov-09 SELL (Short) 124.79

2011-Dec-01 last* 124.99 -0.20 -0.2%






Winning %
58.3% 58.3%

Win/Loss Ratio
2.1 2.1

Profit Factor
2.9 2.9

Count
12 12







SPY Point Compounded Trade End



Return Max Drawdown
Market Timing since Apr 2011 22.84 18.61% 5.93%
Buy & Hold SPY since Apr 2011 -8.80 -6.58%

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 month. The chart was last updated on Oct 21, 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.

Earnings Cycle

Click on the Chart itself to see the bigger version.


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About timelysetup

Timely Setup Owner

Discussion

3 thoughts on “Daily Market Analysis for 30 Nov 2011 Close

  1. I find it absolutely disgusting that markets are so rigged! People like us do our research, study and take positions in a market that is supposed to be efficient and reward our efforts. A non manipulated market is supposed to fall when it is supposed to fall. Not this one!!! I’m starting to think that we should NOT take short positions ever again. If we get a signal to short we should just ignore it because we WILL NOT be allowed to see the fruits of that trade. We should just wait for long signals and buy! How sad!!! This reminds me of summer of 2010 when the markets were ready to roll over and I was short but then the fed stepped in with QE killing my position. Well here we are again!!! I’m sick and tired of it!!!! This is not a fair market this is anything but fair as the game is rigged to the upside. Shorts will NEVER see the fruits of their labor.

    Posted by Andre | December 1, 2011, 6:21 am
    • Hi Andre, I can sympathize with your frustration. However, this is a reality which we have to live with. The Fed might have its own reasoning on why they do certain things.

      Governments can only fight market forces for limited amount of time and the intervention comes with unintended consequences.

      Posted by timelysetup | December 1, 2011, 8:27 am
    • For the short-side, another approach which we can do is to take profit when it is available, say take-off the table partially every 5% gain. Just an idea.

      Posted by timelysetup | December 2, 2011, 1:19 am

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