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The general market moved up again today. Fourth consecutive day up on the Nasdaq. It is the third day of the trade from Monday’s open. A four or more day move is where the money is made in swing trading, particularly with 3x-leveraged ETFs (see table below), or options, or futures.
At the same time, this market is getting wildly overbought. Forty-three of my Nifty-50 stocks are on buys, with 34 overbought. This is a lot.
The Nasdaq composite is more than two standard deviations of an average advance. That puts it on borrowed time for more upside. Needless to say, it can borrow more time. Markets go up until they go down. Simple as that, and this bull market has had an inclination to put on more gains just when one thinks it should stall.
It is time still to let profits run since all principal buy signals remain positive and long-term breadth just turned positive also, making this a market now to buy the dips, any dips.
PRICE: Positive. Long on Monday open (Trade Day 3).
SHORT-TERM BREADTH: Positive. Long on Monday open (Trade Day 3).
VOLATILITY: Positive. Long on Monday Open (Trade Day 3).
LONG-TERM BREADTH: Positive (Day 1).
FEAR AND GREED INDEX: (47, rising back into neutral).
NIFTY-50 STOCK LIST: 43 Buys, rising; 34 Overbought, 0 Oversold.
The rally results so far (three full days):
TQQQ up 6.0 percent.
XIV up 5.4 percent.
UPRO up 2.3 percent.
TNA up 2.8 percent.
The net gain for a basket of the above leverage ETF for the three days in the trade is 4.1 percent.
Following the green…
My newly sorted Nifty-Fifty stock list had buys signals triggered pre-holiday for Tuesday’s open: CARB, UBNT, BID, TRMB, TFX, and CYS (also a yield play).
Among the 3x-leveraged ETFs giving new buys signals: ERX, TNA, TQQQ, and UPRO.
Looking for follow through to the upside for a day trade tomorrow, and maybe a hold for a swing through the week. But if they violate the open on a five-minute chart, they can be stopped out, something that has been happening all too much lately in this choppy, nevertheless up-grinding market…
Of note, CYS (see sample chart below) is up 22 percent year today on these swing signals (long only) in addition to sporting a double-digit dividend yield.
(right click on chart to view a larger image)
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)
Following the red…
Had six stocks from my Nifty-Fifty list on individual buy signals for today’s open: UAL, SKY, FBHS, BRKS, HII, FIVN. At the moment, five, bought on the open, are down.
It is likely because most stocks trade with the general market, which it is always a warning flag, bullish or bearish, for initiating individual stock buys or sells, and in today’s case the bearish warning is so far the reality.
The market has been in an intraday downtrend since mid-day Monday, a trend that has so far continued today (the red cast on the chart below is the general-market trend), and its weakness is obviously weighing on stocks that otherwise might have rallied (and might still if the market firms into the close).
So, as the old saying goes, “the trend is your friend,” but on some days like today it is not (unless one’s a bear, of course).
UPDATE AFTER THE CLOSE: the stocks above finished down 1.4% as a basket (1 up, 5 down). Should be noted stops must be used at all time when playing this game (for example if bought on the open, the second bar on the chart below would be a possible stop).
(right click on this SAMPLE chart for a larger view)
Initiation buys from my Nifty-Fifty stock list: FBHS, UAL, FIVN, SKY, HII, BRKS.
Looking for a day trade? A swing trade? Maybe more…
(Suggestions are for entertainment purposes only.)
(right click on SAMPLE chart for a larger view)
Had 45 of the 50 stocks in my nifty-fifty stock list on sells yesterday (2/9/16). That doesn’t guarantee a rally but often signals a turn in the market for at least a bounce.
And after today’s overnight down and the run up during the market’s regular session, it appears a reversal may be in. Another hint that we may go up some from here came in the Dow stocks today – only four remained below their opens at the end of the day and two of those slip at the close.
My longer term swing signals have not entirely turned bullish yet so a rally long here remains iffy until further confirmation.
(right click on the chart for a larger view)
It’s Christmas rally time and the stock market could rally the rest of the week.
Nice turn in the market today off Friday’s nasty plunge with divergences all over the place.
For instance, my nifty-50 stock list, after registering an important 40 stocks on sells on the 12/14 drop, could manage 31 on sells on last week’s plunge.
As for other breadth indicators see the green circles on the chart below — plain and simple those often trigger bounces, and bounces can trigger rallies. In other words, it is likely the market bounces the rest of the week and could maybe rally the rest of the year (just maybe).
I’m looking to TQQQ, TNA and UPRO, the 3X-leveraged ETFs for the major indexes to play the bounce. Stocks in the nifty-50-list giving new buy signals for tomorrow’s open included EFUT, ZEN, HA, PCRX, AMAT, and WAL. Big caps giving individual buys signals: WMT, HD, INTC, MMM, SBUX. And there are always futures and options.
(Anything written here should not be construed as investment advice but instead no more than a personal log of my market timing.)
All in all in this traditionally bullish season, it appears one better not pout, and better not cry, because Santa Claus is coming to town.
(right click image for a larger view)
Again and again, my nifty-50 stock list moves from oversold to overbought and back again to oversold like an ever spinning wheel within the market’s spinning wheel…
And each time there are 40 or more of the 50 stocks on sells, it’s time to sit up and take notice since that is the number that most often signals either the bottom or the beginning of a bottom on each down swing.
This is just FYI, but it is what market timing and swing trading are all about, and the results can be quite remarkable. For instance, the last 40-plus sell day was November 13th for a buy on open of the 14th. On that buy signal, among the leveraged ETFs TQQQ is up 10.6% (tracking the Nasdaq), TNA up 6.6% tracking the Russell), and UPRO up 10.7% (tracking the S&P 500).
Leveraged sector ETFs include ERX up 12.1% in energy, BIB up 10.7% in biotech, and FAS up 8.6 tracking financials.
Notable stocks on the same signal – AAPL up 4.7%, BIDU up 6.3%, and NFLX up an amazing 15.8%.
This is all in just three trading days so far. Nuff said, I guess.
(click on the chart for a larger image)