Simply, the market will go up until it goes down.
The general market, measured by the Nasdaq, continued up today for the ninth day in a row. And the gains have been rather spectacular – a 9.8 percent gain for a basket of 3x-leveraged ETFs in eight full rally days from the open of 7/10.
This is starting to feel like some kind of blow-off.
Trader Vic Sperandeo, one of the great market wizards, once wrote: “After a long move of intermediate proportions, when you have a 4-day (or longer) sequence in the direction of the trend, the first day down in the opposite direction often signifies the top or the bottom and a change in trend.”
His read may be in play here for the end of this 9-day run in the Nasdaq when it comes. He would suggest an aggressive trading short at the end of the first day down with a stop above the previous high.
Should be noted that today’s action again triggered Breadth and Volatility buy signals to join the price signal still in place on its ninth day. So everything is again a buy, which seems to me kind of scary, but it is what it is.
SWING TRADING SIGNALS:
PRICE: Positive. Long (Day 8).
SHORT-TERM BREADTH: Positive. Long (Day 1).
VOLATILITY: Positive, Long (Day 2).
LONG-TERM BREADTH: Positive (Day 6).
FEAR AND GREED INDEX: (74, vaulting higher into the greed level).
NIFTY-50 STOCK LIST: 29 Buys, rising; 20 Overbought,2 Oversold, 20 buys today, 1 new sells.
The rally results so far (eight full days from the open of 7/10):
TQQQ up 13.4 percent.
XIV up 13.8 percent.
UPRO up 5.7 percent.
TNA up 6.3 percent.
The net gain is now 9.8 percent.