Daily Market Analysis

Daily Market Analysis for 10 Dec 2011 Close

Welcome to Objectively Defined Non-Ambiguous Market Timing Analysis.

Market Timing Direction: LONG since Dec 5, 2011 Close. 

Analysis  Direction  Timely Note
Market Breadth Pattern  Bullish On Monday, market indexes were down significantly but breadth numbers were only barely negative. We now have tight small range near the top of bigger range. Such tight range near the top is usually associated with bullishness. We still maintain our Long exposure.

For the past two months, the market has been wildly volatile with sharp up swings and down swings with multiple huge opening gaps on  both side. This is not a sign of sustained accumulation or distribution on either side. The market has whipsawed trend followers, perhaps unless profit taking mechanism is put in place. 

The steady improvements in breadth triggered my “Up trend sweeper” and we switched to the Long side on Dec 5 close. The trend sweeper pattern is always relatively late in its entries and is more prone to whipsaws. However, it ensures our participation in major trend in either direction. Think of it as an options premium we are willing to pay to participate in large trend.

The market is still 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-Nov-30 exit 124.85 -0.06 -0.0%
2011-Dec-05 BUY (Long) 126.21

2011-Dec-13 last* 124.21 -2.00 -1.6%

Winning %
53.8% 53.8%

Win/Loss Ratio
2.2 2.2

Profit Factor
2.5 2.5

13 13

SPY Point Compounded Trade End

Return Max Drawdown
Market Timing since Apr 2011 20.98 18.74% 7.32%
Buy & Hold SPY since Apr 2011 -9.58 -7.16%

Market Breadth Pattern

Primary Market Breadth

Monetary Conditions

Note: The following charts are updated once every month. The chart was last updated on Nov 30, 2011.

Industry Rotation

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.

About timelysetup

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