#MarketTiming – beware the ides of August…

SPY gaped up today, hit yesterday’s suggested 247 resistance on the first five-minute bar, and turned down, down not so much but maybe enough given that that is a lower high since last week’s nuclear Tuesday reversal.

In addition my daily price and breadth indicators also gave sell signals with lower highs. Volatility remains on a buy but it is for the third day in a row which makes any more time tenuous. If it were to turn it would give a higher low in the VIX, a possible hint a change in trend.

Today’s turn down in short-term breadth (see red circle on the chart below) in context with the continued decline in long-term breadth is often a gift the the bears, which is to say the general market should plunge tomorrow.

These are all quiet signals after yesterday blast to the upside which may mean they mean nothing at all and today’s long sideways price action after the open was nothing but a consolidation of yesterday’s gain before proceeding higher.

But these quiet, disquieting, signals could also be like whispers in the night — “beware the ides of August, beware…”

How often has the market topped quietly in August and fallen all the say into October?

SWING TRADING SIGNALS:

PRICE: Sell. Price (Day 1).
SHORT-TERM BREADTH: Sell. (Day 1).
VOLATILITY: Buy, (Day 3).

CONTEXT:

LONG-TERM BREADTH: Sell (Day 10).
CNN MONEY’S FEAR AND GREED INDEX: (36, still at a fear level).
NIFTY-50 STOCK LIST: 42 Buys; 13 Overbought, 2 Oversold, 2 new buys today, 3 new sells.

(click on the chart for a larger view)

SWINGTRADING2017-08-14_1524

$UVXY – big swing but watch out this week…

Got the UVXY swing for 50-plus percent off the 11 consecutive days down.

See the July 23rd post below: “UVXY – what a week this could be…”

Note the red dots on the UVXY chart below and the reversal on the VIX Friday.

Likely some upside to continue from Friday’s bounce into this week before any retest of this last week’s decline.

(click on chart for a larger view)

uvxy-vix2017-08-13_1647

$KC – a textbook trend change in coffee…

Simply put, after a long choppy but steady down trend, coffee has changed course to an up trend, breaking it’s down sloping moving average, then retesting it perfectly before resuming its new trend to the upside.

Nothing more to say. The chart says it all.

(click on chart for a larger view)

COFFEE2017-07-13_1436

$QQQ – one-day dip or shot across the bow?

Mid-day today, the Nasdaq sold off – out of the blue and just when everyone was talking about Jeff Bezos of Amazon being the new richest man in the world supplanting Microsoft’s Bill Gates.

Amazon (AMZN) was up 30-some points at the time and finished down for the day, and is now down 55 points for the day in the aftermarket. It’s possible Bezos was the richest man for an hour or so but maybe he still is (someone else, like Forbes, will have to keep track of that).

The reversal ripped through the rest of the Nasdaq 100 (NDX) and the Nasdaq composite. And tore my nifty-50 stock list into 40 stocks on sells. That many sells or more, if not a bottom of a swing, is usually the beginning of a bottom.

In addition, the Dow and the SPX remained up so it is hard to tell the answer to the question in the title above.

Of course, tomorrow will tell.

All three of my end-of-the-day swing trade signals – price, breadth, volatility – are on sells and long-term breadth turned negative but just by a bit.

If the Nasdaq follows through to the downside and takes<the rest of the market with it, the price sell-off threatened over and over again in the internals (breadth and volatility) may finally be at hand.

SWING TRADING SIGNALS:

PRICE: Sell. Price (Day 1).
SHORT-TERM BREADTH: Sell. (Day 2).
VOLATILITY: Sell, (Day 4).

CONTEXT:

LONG-TERM BREADTH: Sell (Day 1).
CNN MONEY’S FEAR AND GREED INDEX: (73, greed level).
NIFTY-50 STOCK LIST: 10 Buys; 8 Overbought, 14 Oversold, 21 new buys today, 4 new sells.

(click on the chart for a larger view)

AMZN2017-07-27_2124

$UVXY – What a week this could be!

The most compelling thing I can say about the relentless rally going on for the past 11 days is it’s always hard to call a pause, let alone at top, in a bull market.

That said, the sometimes wild and crazy 3x-leveraged VIX ETF, UVXY, has declined 11 days in a row. What dose that matter? Doesn’t UVXY go down all the time? Pretty much, especially for the past five years. But this many days? Well…in the past five years UVXY has gone down 11 consecutive days only once before.

It has not gone down 12.

After 11 days down last time, it bounced 54% in the following 5 days. What a week this could be for the bears!

In the meantime, two of three of my end-of-the-day signals are on sells and flat. The third signal is volatility, still on a buy but after these 11 days stretched so thin it could snap any day, and minute…explosively.


SWING TRADING SIGNALS:

PRICE: Positive. Long (Trade Day 10).
SHORT-TERM BREADTH: Negative. Flat (Day 2).
VOLATILITY: Positive, Long (Day 3).

CONTEXT:

LONG-TERM BREADTH: Positive (Day 8).
CNN MONEY’S FEAR AND GREED INDEX: (73, falling still at greed level).
NIFTY-50 STOCK LIST: 14 Buys, falling; 7 Overbought, 5 Oversold, 0 new buys today, 13 new sells.

The rally results so far (10 full days from the open of 7/10):

TQQQ up 13.7 percent.
XIV up 15.8 percent.
UPRO up 5.6 percent.
TNA up 5.1 percent.

Three of the ETFs backed off a bit Friday, but the advance in XIV managed to move the net gain up from 10.2 percent to 10.4 percent as marked by the Price buy signal on the open of 7/10).

#OptionsTrading – with a dazzling 10 days up in the Nasdaq…

Just a side note on options with the Nasdaq up 10 days in a row (chronicled in the posts below) for the fun of it.

I have three signals that are triggered on the end of a trading day for the next mornings open. They are based on price, breadth and volatility. On July 7th all three registered buys. Since then on a swing trade basis, both breadth and volatility have fluctuated but the price signal has remarkably (and relentlessly) stayed the course for these past nine full days from the open of July 10th.

There are only three things that can happen buying options (in this case, calls) – they go your way, they go down with sideways time decay, or they go against you. Two of the three on the long side will lose money. But when they go your way for a long time, like now, like for 10 days in a row, the results can be dazzling.

All of the call options below were purchasable on the open of July 10th at the prices stated and will expire tomorrow:

TSLA in-the-money (ITM) calls opened at 10.65 and today closed at 19.61.

GOOGL ITM calls opened at 16 and closed today at 51.

AAPL ITM calls opened at 1.41 and closed today at 5.43.

FB ITM calls opened at 3.21 and closed today at 14.52.

AMZN ITM calls opened at 15.10 and closed today at 44.57.

NFLX ITM calls opened at 7.05 and closed today 33.20.

A more spectacular 10-day return one could not ask for – I’ll leave the calculation of each percentage gain to anyone who wants to bother.

(A disclaimer: the information provided here is for educational or entertainment purposes only, mostly my own entertainment, and is not to construed as direct investment or trading advice.)

$TQQQ and company – up 9.8%…

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).

CONTEXT:

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.

$QQQ – Ain’t got nothing but love, babe, eight days a week…

The Nasdaq Composite and its relevant ETFs – QQQ and the 3x-leveraged TQQQ – are now up eight days in a row.

Said in yesterday’s entry here that the momentum in an index that can rise seven consecutive days often only allows a one-day dip before resuming its rally. This time is appears the gap down on the open today, as small as it was, may have been all the dip allowed in this advance.

With long-term breadth positive, my guess is the market goes up another couple of days, and any dip, whenever, remains a dip to buy.

At the same time there are more and more signs that it is running on fumes.

This advance on TQQQ is up three standard deviations of an average advance. That is rare and not sustainable for long. The stocks in my nifty-fifty list continue to roll over. While the price buy signal remains in place, today’s up move could turn neither short-term breadth nor volatility back to buys.

Also, with long-term breadth positive there is no reason to short anything.

SWING TRADING SIGNALS:

PRICE: Positive. Long (Day 8).
SHORT-TERM BREADTH: Negative. Flat (Day 2).
VOLATILITY: Negative, Flat (Day 2).

CONTEXT:

LONG-TERM BREADTH: Positive (Day 5).
FEAR AND GREED INDEX: (62, pulling back but still at the greed level).
NIFTY-50 STOCK LIST: 16 Buys, falling; 10 Overbought,5 Oversold, 2 buys today, 8 new sells.

The rally results so far (seven full days):

TQQQ up 11.4 percent.
XIV up 12.5 percent.
UPRO up 4.2 percent.
TNA up 3.4 percent.

The net gain for a basket of the above leveraged ETFs for the trade is 7.8 percent.

Some notable stocks from my lists for the past week:

Notable_stocks2017-07-18_2327

$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