Taking profits on the bounce…

We had the market bounce suggested last Sunday in the blog entry below:

What goes down too far too fast bounces…

The market, after a Monday dip, firmed for the rest of the week and is now extended enough to expect a pause if not a quick pullback so, being a swing trader primarily, I’m going flat, taking profits on all trading positions for the weekend. Besides, the Nasdaq Comp, up 89 points on this run, did turn down today (by fifty cents…but could that be a whisper of the sell down to come?).

On the bounce, TQQQ closed up 3.7 percent from Monday’s open, UPRO up 4.7 percent, TNA 4.6 percent, SOXL 3.1 percent, BIB 3.9 percent.  Among the various stocks suggested as buys and in mentioned by name in this link, ORCL closed the week up 3 percent, AMGN up 10.3 percent (how about that!), GILD up 4.1 percent.

And AAPL… Hmm…

So long the leader or at least a significant participant on every swing, AAPL was down 1.4 percent for the week, down even with a rallying market on its side.  May have to take a closer look at it over the weekend.  The company will no doubt go on making billions but the heyday of AAPL’s stock may finally be over.

(Click on the chart for a larger view of the bouncing market on the Nasdaq Comp)

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Following the bouncing market: a progress report…

The market bounce suggested in this link — What goes down too far too fast bounces — two days ago, a market-timing buy signal for yesterday’s open is currently playing out profitably as the general market has continued up for the second day in a row.

The Nasqaq Comp has rallied 72 points since the bounce call two days ago.

So far the 3xLeveraged ETFs mentioned: TQQQ is up 2.1 percent, UPRO up 4 percent, TNA up 2.5 percent, the leader SOXL up 5.1 percent; and notably, a steady leader all this year, BIB is flat so far on this swing.

Among the top stocks ORCL is up 2.5 percent, AMGN up 3.2 percent, GILD up 2.8 percent; and notably, perennial leader, AAPL is not participating so far in the bounce and is flat.

For options plays: the QQQ August 110 in the money call is up 20.5 percent and the SPY August 207 in the money call is up 46 percent.

The time nears to tighten stops or take some profits on this bounce but the next question will be can it morph into a full-fledged rally?

Update (Day 4 of the bounce (Thursday’s close):

Fairly positive day in the market. The Nasdaq Comp is up 89 points on this run.  TQQQ is now up 4 percent on this swing, UPRO up 5.1 percent, TNA up 2.8 percent, SOXL up 6.8, and BIB up 2.1 percent. As for the stocks mentioned above ORCL dipped to 2.3 percent but AMGN moved up another 2.3 percent today and GILD, 2.1 percent. AAPL is still flat; if it doesn’t play catchup tomorrow, I have more on that later. Futures (NQs up 26pts) and call options again had a decent advance for the day.

Almost needless to say, this has been a good week for the bounce call above but it’s getting a bit extended. So again, as a swing trader, I am taking profits and tightening stops to lock gains for this swing but that’s just me.

(Click on the chart for a larger picture)

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$TQQQ, FEAR AND GREED — the market bounces and maybe rallies a lot

CNN Money’s “Fear and Greed” Index is at seven, which is a measure of not only extreme fear but of EXTREME FEAR!

In other words, it is at a level that usually stops a market sell-off and reverses to a rally, and given that the Nasdaq Comp is down five days in a row (another number that often produces an instant bounce), that is a rally that probably comes Tuesday.

Remember when there was a time when Tuesdays were called “Turnaround Tuesdays”? Very possible that time will come around again tomorrow.

Below is a chart of TQQQ, the 3xLeveraged ETF for the Nasdaq.

Take note, the last time the Fear and Greed Index turned up from this level TQQQ rallied from 103 to a high of 127, a twenty-three percent move in seven days.  That is what is meant by “a lot” in the headline above.

There’s not much more to say except to point out that fear has not yet abated (the index can go lower has yet to turn up) and from a trading point of view one would like to see lower on the open tomorrow to buy and take the gamble that it turns by the end of the day.  And it needs to be noted that with this quick a fall in the market there is likely to be a retest of the lows after an initial bounce before any rally gets going in earnest.

Regardless, this remains a play made at one’s own risk and like anything in the stock market there is no guarantee of anything.

(Click on chart for a larger view)

TQQQ

IN A NEGATIVE MARKET, more shorts…

As the market continued to decline into its fifth consecutive day (a bounce will come any minute…or day), shorts on today’s open have fallen with the market as expected.

Given signals to sell on Friday for today’s open included $ITCI, $MW, $AAPL, $ESPR (the best performer with a gain of 7.1% for the day), $HA, as well going long the Russell inverse 3x leverage ETF, $TZA.

But with a market bounce imminent these are a day trades (to be closed on today’s close).

(Click on the chart for a larger image)

Moreshorts

What goes down too far too fast, BOUNCES…

My best indicator for a market bounce is in play (see the circles on the chart below for the historical perspective).  Not much more to say about it except the obvious — this downswing has one day, two at most left to go (unless it’s different this time or wants to crash).

This starts as a day trade and maybe morphs into a rally for more to the upside.  The trades are the usual set of long 3x leverage ETFs — TQQQ, UPRO, TNA, BIB, SOXL — and futures, and options — buying calls, selling puts — and going long various stocks. Follow at your own risk.

(The green line on the chart is the Nasdaq Composite measured on the right axis.)

(Click on the chart for a larger image)

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Selling Stocks Short On A Negative Market Signal

Market timing – negative (3 days old).

(Update: 07/24/15)

(Updated chart below. On a negative market day, all six stocks sold short on the open were in profits at the close, particularly BIIB up 8.2% for the day.)

As the market indexes continue to slide toward oversold territory, individual stocks giving sell-short signals for Friday’s open include ALR, BIIB, GWPH, as well as AXP and MRK in the Dow.

They have joined SUNE which was a short on today’s open. At six percent into profits on a single day, it now has a break-even stop in place.

Each stock is a short and hold until the red color coding on the chart below turns yellow again.

(Note: these trades are not recommended for anyone other than as a journal record for myself.)

(Click on the chart for a larger image)

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ELECTION REFLECTIONS – Bush, Obama, Gold, Oil and the US Dollar

The late great Ed Hart of the old Financial News Network used to say in the financial markets “we will know everything in the fullness of time.”  Well, the “fullness of time” has never been more pointed than looking back at inflection points in the U.S. Dollar as it correlates with Gold and Oil and conveniently with the administrations of Presidents..

Clearly, (on the chart below) the Bush administration was good for gold and oil (any surprise there?) and horrible for the US dollar (currency being a vote by the world on one’s country every day).

Bush’s 2002 State of Union “Axis of Evil” was to the day the exact last high for the dollar and the launch of the commodities as if the whole world heard those words and bolted the U.S. currency in alarm.

By contrast, the election of Barack Obama stopped the dollar’s decline. On a dime, so to speak… And ended the extreme uncertainties of the Mideast oil supplies, crashing the price from its Bush era $140 highs to around $50 a barrel now.

That chop-chop in the dollar during subsequent years likely was a result of the political conflicts between the U.S. President and an obstructionist Republican Congress (to the point of threatening a default on US debt), and its strength now reflects Obama’s ability to do what he wants (remarkably and ironically a benefit of being a lame duck).

One suspects the current oil drop, not only is a result of the strong Obama dollar but also is in anticipation of the the Iran nuclear deal.  With international sanctions being lifted, Iran’s oil will increase supply worldwide.

History, history – in other words, as Ed Hard would say, the fullness of time.

(click on chart for a larger image)

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$TAN – Solar ETF on the move up

$TAN – The solar energy ETF has begun again to move with CNN Money’s Fear and Greed Index.

Always a good sector to buy with any market rally, solar may be the best change to rack up a 50% gain in the next couple of months.  Longer-term, no matter now volatile, it is a growth sector and preferable in the future to investing in fossil fuel stock of any kind, particularly better than coal.

There will likely be a couple of more dips (which is worth noting) before this rise gets really going but historically it will, like the sun itself, rise again.

(Clink on chart for a larger image)

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$COMPQ – Calling a Top on monthly prices and volume

Back when SemiBizz, a trader on Traders-Talk.com rather precisely called the top in 2007 (blue circle in the middle of the chart below), he introduced the notion of a lower monthly price coming on higher volume being a clue to a sell off and possibly even a substantial top.

His was a pretty simple and clear signal (which I have subsequently marked with the red vertical lines on the chart). At the time I liked his monthly price/volume call a lot as a longer-term signal — clear and simple being, to my mind, the best adjectives for market signals.

Although the downside had trouble getting follow through all last year (see the multiple red lines and results on the chart), one had to keep in mind we were on red lines each time the signal triggered. That lack of follow through to the downside spoke volumes (so to speak) on how bullish the market was internally (and maybe still is).

Regardless of last year’s results one must still be on alert each time this signal triggers because just when one thinks something this simple and clear isn’t working, it will. On that note, it must be stressed we are again on a monthly red line in the Nasdaq Comp. .

(Click on chart for a larger image)

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