#BullMarket – so many buy signals…

…it is almost scary.

But it is what it is.  I guess the Fed came to save the day…with higher interest rates no less.

With a low above a low on the NYMO after five weeks of highs below highs, it appears bears have one more day (tomorrow) to make their presence felt but after that, if the NYSI up, it will be rocket time again. In other words, new highs across the board someday soon (tomorrow, Friday, next week) and probably then some more…

Also, a nice little divergence there on my nifty-50 stock list from 42 sells in February to 38 four days ago (there are 39 on buys now).  Last time had a similar divergence was at the bottom in November.

(right click on chart for a larger view)

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Mirror, mirror, what’s the fairest rally?

This is a follow-up to the entry below entitled “To Brexit Or To Exit”.

It was suggested the current rally would continue to mirror the immediate post-Brexit, rally as it has been doing week-by-week since the election.  That continued today as the market put another spike up right on time (see the bars in the red ovals on the right and the left).

If the mirroring is to continue the market should put in two more up days this week before beginning a long chop-chop, likely for the rest of the year.

And it was suggested the rally would likely resume today into the end the week.  That is still likely unless the Fed kills it with news tomorrow.

(click on the chart for a larger view)

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$SPY – anticipating new highs

Following the green…

SPY, the ETF for S&P 500 index,  after being trapped in a box (see chart below) for 37 trading days, nearly four weeks of frustrating sideways chop, has a good chance it will resolve itself to the upside and into new high ground tomorrow.

And take the entire stock market with it.

The trouble is as it comes to the top of the box again, 45 of the stocks on my nifty-fifty stock list are on buys.  That’s a lot, so much that the last two times (8/15 and 8/23) there were 40 or more, the market took a sharp drop the next trading day.

The difference this time is market breadth has turned up after 27 days of decline.  It is as if the bears, having tried but failed to take the market down, have run out of time.

Note the follow through on SPY each time breadth turned up in the immediate past (the green lines on the chart).  If the market follows the green again this time there is no where else to go but to new highs.

But since anticipation is only anticipation, needless to say, one has to be nimble at this juncture either way, and protective stops are a must, long or short.

(right click on the chart for a larger view)

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$COMPQ – chop, chop, finally plop!

December’s Nasdaq composite ($COMPQ $COMPX) closed lower than November on higher volume.

In the past that was as simple and elegant a longer-term sell signal for the general market as there was (see red vertical lines on the chart below).

In the past two years, however, it gave way to chopping up and down with alternating buy signals (closing higher on higher monthly volume, the green lines on the chart below)…it seemed almost monthly.  Not quite sure, but I suspect that was because of the Fed Reserve QE efforts in the market making it hard to get any traditional bull-market correction against cheap credit constantly infusing the market (also suspect we may be paying dearly for that Fed manipulation now).

But it appears the simplicity and elegance of the sell is back, and compelling.  If so, the market’s general indexes  (DOW. SPX, NDX, RUT) are going down until further notice, a bear-market trading and investing environment of “sell the bounces” (one is coming up soon) instead of the bull-market dictum to “buy the dips.”

P.S. I first learned the value of this from a poster named “SemiBizz” on Traders-Talk.Com. when he ended up calling the top prior to the 2008 bear market (see the blue oval in the middle of the chart).  He deserves all the credit for his contribution to that most difficult of market tasks — calling tops.

(right click on the chart for a larger image)

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$USD, $SPX $WTIC $GOLD Prespectives — a chart worth a trillion dollars or so

The U.S. dollar in relation to the S&P 500 index, oil, gold …and three Presidential administrations.

(click on chart for a larger image)

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A Tale Of Three Biotechs – $SRPT $INSY $RTRX

11/4/2015

A pure technical play for day and swing traders.

Serepta Therapeutic (SRPT), Insys Therapeutics (INSY) and Retrophin, Inc. (RTRX) are three of the many biotech stocks to have had substantial tumbles since the bloom went off this leading sector with the advent of fall.

Each stock is in a down trend with with SRPT up 23.6 percent on its latest longer-term short signal, INSY up 22.7 percent short, and RTRX up 38.6 percent short, all of this in the midst of a screaming market rally.

It the market wavers (and it looks as if it is beginning to), it is likely these three stocks are about to take another step down and give traders a chance to scalp profits or to have another opportunity to get on the overall down trend..

All three of these health-care equities managed to move no more than sideways during the latest market rally becoming short-term overbought.  Each have now have given individual sell signals.

These are shorts on tomorrow’s open with initial stops at yesterdays highs.

If the market, which is wildly overextended, comes down on top of them, I’m looking for all three to challenge if not break their recent lows.  For SRPT that’s around 24, for INSY approximately 22, and for RTRX 17.20.

(click on chart for a larger view)

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$TAN – Solar stocks ready to rise and shine again

About a month ago I wrote in this blog:

Always a good sector to buy with any market rally, solar may be the best chance to rack up a 50% gain in the next couple of months.  Longer-term, no matter how volatile, it is a growth sector and preferable in the future to investing in fossil fuel stocks of any kind, particularly better than coal.

There will likely be a couple of more dips (which is worth noting) before this rise gets really going but historically it will, like the sun itself, rise again.

It appears the “couple of more dips” noted above may be done and it is time for the solar ETF to really get going.  Since I wrote that, CNN Money’s Fear and Greed Index as been reading fear but working its way higher, and TAN has now dropped to a level that may produce a double bottom for this swing (see the first chart below).

I say “may produce a double bottom” because it still has to turn up but it appears in pre-market action today that today is likely THE DAY.

This is a sector that has been sold off heavily on the CNN index’s swing from greed to fear. Consequently, the stocks in the sector like CSIQ, FSLR (which is showing strength premarket and is often a leader),  SUNE, JKS, SPWR, are deeply oversold (see the second chart below).

The oversold conditions make the stock buys all bottom picks.  This a play for a bounce initially (always with tight stops) that may very well turn into the 50% rally mentioned above.

(Click on the chart for a larger image)

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(Click on the chart for a larger image)

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$SOXL – Ready, set for profits again as the market shifts from fear to greed

CNN Money’s “Fear and Greed” Index oscillates from fear to greed and back again, and most market sectors fluctuate with its shift in sentiment. Today its inevitable shift appears to have begun as the CNN exited the fear zone.

As a result I’ve been looking for an oversold sector that has been known historically to run up hard and fast when the time comes.

In this example, it’s the semiconductor stocks and SOXL, the 3xLeveraged ETF for the sector.  The last time the market shifted from a state of fear to one of greed (see chart below), SOXL rallied from about $29 to as much as $40 a share, approximately a 37 percent advance in less than twenty days.

This what “swing trading” is all about.

Among the top holdings in the ETF are TXN, QCOM, INTC, and BRCM, but more vibrant semis include AMBA, NPTN, SWKS, FSL and AVGO,  and I suppose Apple-supplier NXPI if AAPL mounts rally with the market. Semiconductors (and there are a lot of them) tend to be all over the place so a diversified basket may be best — SMH, for an ETF without leverage, and SOXL for one with leverage.

Not recommending anyone do anything without one’s own due diligence, but as far as I’m concerned, this is a beaten-down sector with a lot of beaten-down stocks (I’m bottom-picking here) and it is likely going to be a sector worth trying to ride on the next rally.

(Click on chart for a larger image)

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Taking profits on the bounce…

We had the market bounce suggested last Sunday in the blog entry below:

What goes down too far too fast bounces…

The market, after a Monday dip, firmed for the rest of the week and is now extended enough to expect a pause if not a quick pullback so, being a swing trader primarily, I’m going flat, taking profits on all trading positions for the weekend. Besides, the Nasdaq Comp, up 89 points on this run, did turn down today (by fifty cents…but could that be a whisper of the sell down to come?).

On the bounce, TQQQ closed up 3.7 percent from Monday’s open, UPRO up 4.7 percent, TNA 4.6 percent, SOXL 3.1 percent, BIB 3.9 percent.  Among the various stocks suggested as buys and in mentioned by name in this link, ORCL closed the week up 3 percent, AMGN up 10.3 percent (how about that!), GILD up 4.1 percent.

And AAPL… Hmm…

So long the leader or at least a significant participant on every swing, AAPL was down 1.4 percent for the week, down even with a rallying market on its side.  May have to take a closer look at it over the weekend.  The company will no doubt go on making billions but the heyday of AAPL’s stock may finally be over.

(Click on the chart for a larger view of the bouncing market on the Nasdaq Comp)

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Following the bouncing market: a progress report…

The market bounce suggested in this link — What goes down too far too fast bounces — two days ago, a market-timing buy signal for yesterday’s open is currently playing out profitably as the general market has continued up for the second day in a row.

The Nasqaq Comp has rallied 72 points since the bounce call two days ago.

So far the 3xLeveraged ETFs mentioned: TQQQ is up 2.1 percent, UPRO up 4 percent, TNA up 2.5 percent, the leader SOXL up 5.1 percent; and notably, a steady leader all this year, BIB is flat so far on this swing.

Among the top stocks ORCL is up 2.5 percent, AMGN up 3.2 percent, GILD up 2.8 percent; and notably, perennial leader, AAPL is not participating so far in the bounce and is flat.

For options plays: the QQQ August 110 in the money call is up 20.5 percent and the SPY August 207 in the money call is up 46 percent.

The time nears to tighten stops or take some profits on this bounce but the next question will be can it morph into a full-fledged rally?

Update (Day 4 of the bounce (Thursday’s close):

Fairly positive day in the market. The Nasdaq Comp is up 89 points on this run.  TQQQ is now up 4 percent on this swing, UPRO up 5.1 percent, TNA up 2.8 percent, SOXL up 6.8, and BIB up 2.1 percent. As for the stocks mentioned above ORCL dipped to 2.3 percent but AMGN moved up another 2.3 percent today and GILD, 2.1 percent. AAPL is still flat; if it doesn’t play catchup tomorrow, I have more on that later. Futures (NQs up 26pts) and call options again had a decent advance for the day.

Almost needless to say, this has been a good week for the bounce call above but it’s getting a bit extended. So again, as a swing trader, I am taking profits and tightening stops to lock gains for this swing but that’s just me.

(Click on the chart for a larger picture)

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