Market Summary

The GDP (Gross Domestic Product) is the the broadest measure of economic activity and reflects a measure of all goods and services produced in a country during a period of time. Quarterly GDP reports are broken down into three announcements: advance, preliminary, and final. The advance quarterly GDP report was released Thursday for Q3 and showed a 3.5% growth rate and an end to the recession according to the GDP. Prior results are as follows: Q2 GDP 2009 -0.7%, Q1 GDP 2009 -6.4%, Q4 GDP 2008 -5.4%, Q3 GDP 2008 -2.7%. The good news of the first positive results in the GDP in a year sent the markets up on Thursday only to see all those gains given up and then some on Friday with a strong sell off.

The image below is my current market timing model. It is a composite reflecting different time frames with the background color of the chart reflecting the trend in the respective time frame. As the background color, either pink or light green, shifts to the left of the image that trend, either up or down, is established. The gap open higher on Thursday, noted by the colored oval on the hour chart, was completely filled on Friday as prices continued their move to the downside. Sentiment is bearish on the short and intermediate term but bullish long term. Click on image to enlarge.


The chart below is of the monthly NASDAQ and shows October having the first monthly decline in prices on the NASDAQ since February. While the trend is still to the upside it must maintain prior support levels as indicated by prior months lows to keep moving to the upside. The market may be in the process of turning down and we will have to watch this closely. Click on chart to enlarge.

The table below shows the price performance of the followed ETFs over several time frames. As can be seen all markets were down for the week with EEM and $RUT leading to the downside. Click on table to enlarge.

Continued Selling

The markets have continued the selling from last week and now the intermediate term has become bearish with the break of the 20 day moving average. The XLF gave a two day Island Top formation on Oct.14-15 and the financials have sold off from there. The image below is of the SPY and is a composite of four time frames: Weekly, Daily, 4 Hours and 1 Hour. The trend is indicated by the color of the background in the respective time frame. Click on image to enlarge.

Market Summary

Tops in markets tend to be rounded because of investor psychology. Both tops and bottoms represent investor sentiment and tops grow and are maintained by HOPE while bottoms display the crowd at the exit fleeing due to FEAR. The bi-polar swing between hope(or complacence) and fear is what makes up the periodic waves we see. Bottoms tend to be sharp because the desire to give up fear is so strong. Tops tend to be rounded because the desire to keep hope is so strong. Every bear market starts as a correction. We have the beginning of a correction on the very short term time frame however we are well above the 20 period moving average on the daily chart and the weekly chart is showing it made a higher high and higher low than the previous week. Click on image to enlarge.


China continues to be the bullish leader this past week with the FXI up 2.76%, the most for the markets covered here. Click on table to enlarge.

Market Summary

Stock options expire on the 3rd Saturday of the month so that the 3rd Friday of the month is usually very volitile. As can be seen in the image below there was a sell off Friday which may be the beginning of a correction to the downside. The 4th panel in the image below is the hourly chart which is my very short-term view of the market and can be seen with a pink background indicating a downtrend in that time frame. All other time frames continue to remain bullish. Click on image to enlarge.

It was a strong up week for oil (USO up 8.85%) and gas (UGA up 11.06%). Basic Materials, up 4.4% for the week, continues to be the sector in the lead with the $CRB (Commodity Research Bureau Index) breaking out to the upside indicating inflationary pressures on commodities. Gold made a new high this week on Wednessday at 1070.70. Click on table to enlarge.

Market Summary

We are headed higher. All markets moved to the upside last week with FXI up the most at 8.55% which is alot by any standards. However, to balance the equation, we must remember that October is famous for black days: Black Thursday (Oct. 24, 1929), and Black Monday (Oct. 19, 1987). More recently, October 2008 yielded a nearly 17% drop in the S&P 500. Click on image to enlarge.

All of the markets covered were up for the week. Click table to enlarge.

The performance of the sectors for the past week shows Basic Materials and Financial taking the lead. Click on image to enlarge.

Long, Intermediate, and Short-term Bullish

We have turned back up once again and have the bullish background green in all time frames. Sentiment is bullish. Click on image to enlarge.

Short-term bullish rebound bars

While the image below does not represent a change in sentiment on my part it does accurately reflect the Top Stories headline Stocks Snap Losing Streak and clearly shows that the market has bounced off of its recent lows while still maintaining a short and intermediate term bearish bias. Short term bias would change to bullish above 104.68 and intermediate term bias becomes bullish at 105.25. Click on image to enlarge.

Looking at FXI (the iShares FTSE/Xinhua China 25 Index) with a similar chart layout shows it is close to a short-term breakout to the upside. I watch this one closely as it has proven to be a leader on breakouts and breakdowns. Which way it goes from here we will just have to wait and see. Click on chart to enlarge.

Market Summary

As can be seen in the image below the pink background to the series of charts in the image is moving to the left. Now the hourly, 240 minute, and daily chart have the pink background color that indicates a downtrend. If the daily trend continues to the downside the pink background will move to the left on the daily chart and eventually the weekly chart will get a pink background as well. The image represents a spectrum going from long term to short term and the background color represents the trend. We are short term going down with the beginning of the intermediate term also going down. I have placed a sentiment meter on my blog here called My Current Sentiment. It will be updated when the trend changes. Click on image to enlarge.

Only the commodity indexes of Gasoline, Gold, and Oil were up for the week. I have added the FXI index to allow following China. Click on table to enlarge.