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$RACE – Ferrari racing up the Darvas stairs…

At the risk of oversimplification, the most effective ways to trade stocks is to keep it simple.

One of the best ever at this was Nicholas Darvas.

His method was to put a simple box around a stock’s price consolidation and buy it as the stock came out of the top of the box and either put a stop loss below his trade price (which would be a tight stop if the stock came back into the box) or below the bottom of the box (depending on anyone’s individual risk parameters).

Darvas said he never shorted a stock dropping below the bottom of a box only because he felt he was not psychologically suited to selling short. Still that would be, especially in a bear market, as simple of buying the top of one of his boxes in a bull market.

Darvas’ book “How I Made $2,000,000 In The Stock Market” (this was the 1950s) describes his “Box System”. It is a classic. And timeless – see the chart of RACE below.

I have said before the easiest way to buy or not buy an IPO is to put a box on the high and low of its first day of trading and buy above the top of the box and short below the box. While an IPO’s first day is itself a Darvas box (blue on the chart below) as one can see here there are others also very worthwhile for the trader as well as a longer-term investor.

(Click on chart for a larger view)

RACE2017-07-18_0928

$USD – the dollar historically speaking…

Historically speaking, the US dollar goes to hell under Republican administrations.  Does anyone actually expect it to be any different this time?

May take a while since Janet Yellen’s term has year or so to go and apparently the Federal Reserve is now determined to hike interest rates. But eventually, the businessmen now running government (who of course are totally unaware that the government is not a business) will want to debase the currency.

There is the belief that a weaker dollar enables American companies to more easily compete against competitors around the world.  Maybe so. But every time I look up while the dollar is down, it is the competitors buying US companies instead of buying their products.

Oh, well, this Bud’s for you.

(right click on the chart for a larger view)

us_dollar_2017-01-16_1053

#Stocks – if one wants to bottom fish…

The sector to bottom fish for the long term isn’t coal, isn’t oil, isn’t fossil fuel in general, it is solar and other renewables.

No matter how much the Trump administration is going to want to pay off his blow-hard coal supporters this is still an industry with one foot in the grave and the other slipping in its own dust.

I can hear some coal boys braying but, but, but BTU (Peabody Energy, the “biggest coal company in the world”) was up 22% today to $13. Yeah.  And it may go higher short term but there is a 15-to-1 reverse split in there so it’s not out of penny stock territory and Mr. Peabody biggest-coal-company-in-the-world is also in bankruptcy.  And a lot of these last of the coal stocks are up a lot hoping for Trump but the future is the future and they don’t have much of one with coal plants still shutting down domestically and internationally the rest of the world going on with the Paris climate-change accord no matter what the U.S. does.

Coal, once a necessary evil, remains an evil investment in the death of the planet.

So here we are once again on the cusp of tomorrow and beyond.

There will be volatility but if one can stand it, there will be rewards in renewable energy in the fullness of time. And today’s pop in the sector might be the start of something big given that’s it come on bad news for the sector in general.

(right click on the charts for a larger view)

solargains2016-12-07_1729

solar_2016-12-07_1723

 

 

 

 

 

This market could scream higher…

Call this a perspective on my Nifty-Fifty stock list.

Yesterday, there were 44 of the 50 stocks on sell signals.  That usually marks either the beginning of a bottom or the bottom itself.

On the up day today (however small) one has to lean to the idea this is the bottom itself.

Ask me, this is hard to believe since the market virtually has not gone down at all. So it seems this is a sideways move that will vault (scream) to new highs again soon. Maybe tomorrow.

Note on the chart below the past instances of 40 or more sells on the Nifty-Fifty.  Hard to believe but pretty plain to see.

(right click on the chart for a larger view)

NFTY50_2016-08-18_1435

#Greed top could lead to #SPY stumble

CNN Money’s “Fear and Greed Index”, a calculation of seven key market indicators in order to gauge the primary emotions underlying the stock market, appears to have put in a double top at an extreme greed level.

Historically, this pattern has led to significant sell-offs in the general market as investors’ and traders’ greed, fueled by the market’s recent rally, cycle down once again to a prevalent fear level.

There is really no way to tell how far the S&P 500 index (SPX, also the SPY ETF) will fall but the last time this down cycle took place the SPY fell from a high of 211 to a low of 185 (about 250 SPX points, a 10% or so correction). There is no guarantee it will stop there.

Regardless, this is an excellent shorting opportunity across the face of the stock market, just as it will eventually lead to an fine buying opportunity later on.

Market timing.  They say it can’t be done but a study of the chart below should make it rather obvious “they” don’t know what they are talking about.

(right click on the chart to view a larger image)

FEAR_AND_GREED_2016-04-11_1609

#NYSE Margin Debt

This may be too simplistic but every time I look at this Doug Short chart, I think at least 800 SPX points down before this finishes unraveling. It takes time, of course, but this time that would put the S&P 500 somewhere in the 1400s.

These numbers from the NYSE are a month old so the current record rally is not in them yet but I suspect when it is, it’ll look similar to that little blip up in 2008 just before the real tumble continued.

For Doug Short’s article GO HERE.

(click on chart for a larger view)

Nyse Margin Debt 2016-04-02_1114

 

#Banks – Someone said there’s a rally?

Since February 12th the stock market has been rallying strongly.

So what’s with these guys?

And to top it off, Bloomberg had an article this morning on CEO compensation at the biggest banks.  Now we know where all the QE went.

(click on image for a larger view)

Banks_2016-03-17_0844

 

I $SPY seven days of greed…

CNN Money’s Fear-and-Greed Index is, simply put, one of the most useful market-timing tools there is.

For example, the most recent rally, using the index as a trigger, bought the market on the open of February 16 (see the green vertical line on the chart below), a swing that has carried SPY, the SPX ETF, from 188 to 199 today, a gain of 5.3%, but more notably it has so far racked up gains for the 3x-leverage ETF of 17.4% in UPRO, 15.9% in the Nasdaq’s TQQQ, and a whopping 29.5% for TNA, the Russell fund.

That buy signal, now 18 trading days old, is still on and counting but …

But the Fear-and-Greed Index has now registered greed for seven days.  Call it lucky or unlucky depending on one’s bullish or bearish point-of-view but seven days of greed is often all she writes on an upside swing (see the chart) before a sudden sell-down.

As they say, it could be different this time but…

But it seldom ever is.

(right click on chart for larger view)

FG_2016-03-09_1451

When in doubt buy solar…

Said it before but bears repeating: when in doubt buy renewable energy…

Simple as that.  Solar stocks will fluctuate with the market and with fossil fuel stocks but one day on some market swing (maybe this one) they will leave the fossil fuels companies withering in the sun, so to speak.

Recently oversold, here are a selection of solar stocks today:

(right click on chart for a larger view)

solars_2016-02-16_1216