#MarketTiming – dancing but dancing near the door…

By my count this swing is 46 trading days old, was kind of ragged and hard to read in the middle, but the longer-term breadth has been rising and there is no divergence in shorter-term breadth and with price giving another choppy buy signal today it’s likely there is more upside to come.

Still, a lot of big names (see table below) are getting long in the tooth.

This is one of those times when one wants to stay at the dance but dance near the door…and nearer to the door every day.

(TSLA was the wall flower but got asked to dance today – in other words, when the laggards start to run…).

SWING TRADING SIGNALS:

PRICE: Positive. Long on tomorrow’s open (Trade Day 0).
SHORT-TERM BREADTH: Negative. Flat (Day 3).
VOLATILITY: a sell on tomorrow’s open, Flat (Day 1).

CONTEXT:

LONG-TERM BREADTH: Positive (Day 9).
CNN MONEY’S FEAR AND GREED INDEX: (72, falling still at greed level).
NIFTY-50 STOCK LIST: 23 Buys, falling; 14 Overbought, 4 Oversold, 12 new buys today, 4 new sells.

The swing-trading signals on the leveraged ETFs – TQQQ, XIV, TNA, UPRO – are flat with possible day-trading commencing tomorrow.

(click on the chart for a larger view)

StockTable_2017-07-24_1715.png

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$KC – the coffee futures swing trade is short…

…with a breakeven at 135.

For years coffee has been one of the best swing-trading plays, both long and short. Now after a severe draw down that wiped out profits for the year, the swings appear to be back on track. If this continues, it will again be a very profitable year for coffee speculators.

(click on the chart for a larger view)

COFFEE2017-07-13_1436

$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.)

$SPY and $QQQ – not good behavior…

Both SPY and QQQ gapped up today but both meandered all day pretty much below each’s respective open. That is not good behavior despite the gap gains.

And yet, as I said yesterday, the market will go up until it goes down. So QQQ and its leverage ETF TQQQ again registered another up day, the 10th in a row and SPY is overbought.

Any time now these two major ETFs, representing the NDX and and SPX, are going to have a sell-down (may have to say that again and again until I’m bluer in the face). However, I suspect tomorrow is that day.

There are signs. Less pronounced than before, but again…signs.

Short-term breadth gave a sell signal on the close. The buy signals on the individual stocks in my nifty-50 stock list rolled down from 29 to 26 on buys. The Fear and Greed Index is now in “extreme greed”, a contrarian indicator (although it sill has to turn down to give a sell). As I said, less pronounced.

Again, I need to state since long-term breadth is positive, there are no shorts here, just the possibility of a dip to take some profits, and then to look to buy back in hopefully at some lower level.

SWING TRADING SIGNALS:

PRICE: Positive. Long (Trade Day 9).
SHORT-TERM BREADTH: Negative. Flat (Day 2).
VOLATILITY: Positive, Long (Day 2).

CONTEXT:

LONG-TERM BREADTH: Positive (Day 7).
CNN MONEY’S FEAR AND GREED INDEX: (76, reaching extreme greed level).
NIFTY-50 STOCK LIST: 26 Buys, falling; 19 Overbought, 2 Oversold, 4 new buys today, 7 new sells.

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

TQQQ up 13.8 percent.
XIV up 14.8 percent.
UPRO up 5.8 percent.
TNA up 6.5 percent.

The net gain is now 10.2 percent as marked by the Price buy signal on the open of 7/10).

(click on the chart for a larger view)

fear_and_greed2017-07-17_1525

$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

#SwingTrading – taking profits…

The Nasdaq Composite is up seven days in a row. That is a true testament to the bullishness of this bull market.

My price only trading signal as a result is still positive (will be until it turns down) but seven in a row is rare so a pause in this rally can come any day, any minute. My volatility signal has risen six days in a row before triggering a sell for either today’s close or tomorrow’s open.

With both the short-term breadth and volatility signals on sells now taking some profits would be in order.

Should also be noted that the stock in the nifty-50 list have been rolling over from a high 0f 43 on buy signals four days ago to less than 50 percent on buys today at 21.

However, long-term breadth remains positive so any weakness here is not a short so much as a dip to buy. Often, with a strong 7-day run like this, dips are for only one day before the advance resumes.

SWING TRADING SIGNALS:

PRICE: Positive. Long on last Monday’s open (Day 7).
SHORT-TERM BREADTH: Negative. Flat on today’s close or tomorrow’s open (Day 1).
VOLATILITY: Negative on today’s close (Swing Trade Day 7).

CONTEXT:

LONG-TERM BREADTH: Positive (Day 4).
FEAR AND GREED INDEX: (67, rising into the greed level).
NIFTY-50 STOCK LIST: 21 Buys, falling; 17 Overbought,4 Oversold, 5 buys today, 14 sells.

The rally results so far (seven full days):

TQQQ up 9.3 percent.
XIV up 11.3 percent.
UPRO up 4.0 percent.
TNA up 4.2 percent.

The net gain for a basket of the above leveraged ETFs for the trade is 7.2 percent.

(Disclaimer: This blog entry and all others here are for entertainment purposes only and should not be construed as direct investment advice.)

CNN Money’s Fear and Greed Index:

(click on chart for a larger view)

fear_and_greed2017-07-17_1525

#MarketTiming – 5 consecutive days up…

The market moved higher again today. This is the fifth day up in a row, and the fourth day of the swing trade from Monday’s open.

A splendid week for the bulls.

Of the three main trade signals — Price, Breadth and Volatility — two remain on buys while short-term breadth turned down today. That’s a signal for swing traders to take some profits – a third off, or more. Breadth, especially after a strong run of five days and especially with significant profits on the table, is often (not always) the sign that an advance has lost its momentum.

In addition, my nifty-50 stock list moved from 43 stocks on buys yesterday to 33 on buys today as 11 of the 34 oversold stocks yesterday clicked down to 23 today.

In other words it will be no surprise if the market dips tomorrow.

This is will not be a time, however, to short but instead an opportunity to buy a dip for more to come going forward (until further notice).

TRADING SIGNALS:

PRICE: Positive. Long on Monday open (Trade Day 4).
SHORT-TERM BREADTH: Negative. A sell for Friday’s open (Trade Day 1).
VOLATILITY: Positive. Long on Monday Open (Trade Day 4).

CONTEXT:

LONG-TERM BREADTH: Positive (Day 2).
FEAR AND GREED INDEX: (54, rising in neutral).
NIFTY-50 STOCK LIST: 33 Buys, rising; 23 Overbought, 0 Oversold, no buys today, 11 sells.

The rally results so far (four full days):

TQQQ up 6.7 percent.
XIV up 6.5 percent.
UPRO up 3.0 percent.
TNA up 2.7 percent.

The net gain for a basket of the above leveraged ETFs for the trade is 4.7 percent.

In the midst of a four day trade it is probably worth taking a look at 10 familiar stocks on this swing:

(click on chart for a larger view)

10_stocks_2017-07-13_1418