$SPY – today the bounce, tomorrow the rally?

Had 44 sells on my nifty-fifty stock list Thursday. Forty plus sells usually marks, if not the bottom of a swing, the beginning of the bottom (see my simple chart below). Now couple that with the NYMO turning the NYSI up again, and the VIX plunging below the magic 15 level (again, after a fifth climactic day up in a row), and the indexes turning up from oversold, and today’s bounce was (short of nuclear war over weekend) almost inevitable.

Now the question is can the bounce continue? Probably, and if the next dip (tomorrow, or whenever) can’t take out what is staring us in the face, I SPY a rally to the top of the SPY range or higher by sell-in-May-and-stay-away time.

And if the next downturn does trip this setup (tomorrow, or whenever), well…that will be rather bearish.

(click on the chart for a larger view)

MASTER2017-04-17_1628

#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)

MAIN

#MarketTiming – whipsawing down…

TREND TRADE: Down from open, 1/30.

SWING TRADE: Down from open, 1/27.

DAY/SCALP TRADE: Selling the bounces with the trend trade

PRICE TREND: Nasdaq, whipsawing.

SETUP:

As noted in the last post here, the Trend Trade was possibly whipsawing and so it did.  The trend turned up on the open of 1/25 and turned down again today, giving another sell signal for tomorrow open.

Geez…whipsaws…

But in the context of this whipsaw behavior on the major market indexes, there was a possible stop loss issued by the swing trade which, after giving a buy on the open of 1/20, turned down on 1/26.  That was an alert to sell all or half of any long position (see the note on the short-term McClellan breadth below).

On the swing trade, before the turn down, the 3x-leveraged ETFs were up – XIV by 7.5%, UPRO by 3.8%, TQQQ by 6.0%, and TNA by 5.8%.  On the stop, UPRO and TQQQ gave back less than one percent; TNA gave back 2.3%; and XIV actually held 1 percent of its overall gain during the down turn.  The reason to use stop-losses is extremely evident at the moment with XIV down 2.1% on the Trend signal, TQQQ down 1.2%, UPRO down 2.2% and TNA down 6.8%, with the actual exit signal on tomorrow’s open (beware the gaps down).

Geez…whipsawing times.  Tricky to trade and never any fun.

And whipsaws may continue since today’s drop (shall we call it the Trump-Muslim drop?) caused 41 of the stocks on my nifty-50 stock list to go sells. That could be the beginning of a considerable sell off as noted here on the January 23rd post:

“One of the great things about the McClellan is that the two indicators give hints ahead of time as to what is likely to come next in the general market.  If there is another high below a high on the NYMO, especially below the zero line, it will likely be a gift to the bears.”

But more often in the current bull market 40+ sells has been the bottom or at least the beginning of a bottom for an upswing (see chart below for previous 40+ sell markers), even when the down side, like now, has hardly begun.

Geez…Tricky to trade again.

(right click on chart for a larger view)

trendswing_2016-12-12_0818

#MarketTiming – on the verge of a sell off…

TREND TRADE: Down from open, 1/20.

SWING TRADE: Neutral from open, 1/23.

DAY/SCALP TRADE: Selling the bounces with the trend trade

PRICE TREND: Nasdaq down 1 day, whipsawing.

SETUP:

Market breadth as measured by the McClellan Oscillator (NYMO) and Summation Index (NYSI) has turned negative with a falling NYSI and highs below highs on the NYMO (see first chart below).

One of the great things about the McClellan is that the two indicators give hints ahead of time as to what is likely to come next in the general market.  If there is another high below a high on the NYMO, especially below the zero line, it will likely be a gift to the bears.

The McClellan is not infallible but it almost is.

In addition (see second chart below) this post-election rally has been mirroring the post-Brexit rally almost perfectly.  If that continues, it is also saying a sell-off is right around the corner.

To state the obvious, the sell-off itself indicated above has not,  as yet, happened.

But maybe tomorrow.  An age-old “turn around Tuesday”? If not it likely to be soon.

(click on the charts for a larger view)

masterchart2017-01-23_2245

trendswing_2016-12-12_0818

#MarketTiming – the rally gets long…in the tooth

TREND TRADE: Long from open, 1/4.

SWING TRADE: Long from open, 1/4.

DAY/SCALP TRADE: Buying the dips…

PRICE TREND: Nasdaq up 6 days.

SETUP:

The rally, which began on the open of 1/4, is now five days old.  It can go higher.  In fact breadth is indicating it will, at least for one more day.

But…

Five days in a row put the Nasdaq on borrowed time.  Trader Vic Sperandeo used to say “if the market doesn’t do what it is expected to do, it will do the opposite twice as much.”  I still expect it to go up more, but I’m also on the alert to the “twice as much.”

On this rally, it has mostly been Nasdaq, Nasdaq and more Nasdaq so far.  TQQQ, the 3x-leveraged ETF I use for that index is up 7.2% in these five days, XIV is up 6.7% while UPRO, keyed to the S&P, is flat as is TNA, keyed to the Russell.

Among the leveraged sector ETFs, LABU (biotechs) is up 32%…32% in five days!

Notable Nasdaq stocks participating in the rally include AAPL up 2.8%, AMGN 4.4%, AMZN 4.8%, TSLA 6.9%, FB up 5.7%; the number-one stock in my nifty-fifty stock list, HIIQ is up 16.2% on this five-day run (one of these days I’m going to have to look that symbol up and see what that company is and what it does).

Anyway this is what market timing is all about.  I’m recording it her for my own amusement, and mine alone, but whenever anyone says it’s impossible to time the market I tell them to go back to school.

On the chart below that last green circle in the upper right indicates this rally may have more to go but again…”the twice as much” if not…

(right click on the chart for a larger view)

trendswing_2016-12-12_0818

 

#TrendTrading – Long but whipsawing?

TREND TRADE: Long from open, 1/4.

SWING TRADE: Long open, 1/4.

DAY/SCALP TRADE: Buying the dip…

PRICE TREND: Up 1 day.

SETUP:

Was expecting a price whipsaw Friday against a breadth downtrend.  Didn’t get it as the market went with the breadth indicator. Got the price pop today.

So what now?

Given that breadth and price are now in sync on today’s upside move would indicate an upswing is in motion, one that may turn into an outright rally for a while.

That is backed up by the SPY coming out of a nearly three-week pullback that managed to get it oversold (as noted in the post below), and once again 40 or more stocks were on sells in my nifty-fifty list for three days, no less.  Those three days have created a cluster almost always seen as swing lows and often at rally bottoms (see the chart below for previous 40-sell days and clusters).

Intraday price action was rather ragged today which should make one wary but it can probably be attributed to thin post-holiday trading.  All in all, except for the whipsaw in this post’s title, the upside now should have the least resistance.

The easy plays are as always the 3x-leverage index ETFs – TQQQ, TNA, XIV, UPRO — as sell as some sectors like SOXL, BIB, FAZ, and ERX.

Some notable stocks giving individual buy signals today for tomorrow open included GS, NAV, DIS, BAC.  One guess at a sudden jump might be NVDA, a screaming leader in the rally before the recent pullback and it is still in the oversold column.

Whatever…

(right click on the chart for a larger view)

trendswing_2016-12-12_0818

 

 

#TrendTrading – short but whipsawing?

UPDATE (12/31:

For the last day of the trading year, the market followed through on short breadth signal without a price whipsaw.  As a result, on the day trade, the 3x-leveraged inverse index ETFs, SQQQ, netted 3% from the open to close; TZA, 1.5%; SPXS, 1.53%; and UVXY, the big winner (as often is the case), 5.8% for the day.

As a side note, TNA gave an scalp buy on the open that was stopped out for a 1.1% loss.

TREND TRADE: Short (or flat) from open, 12/29.

SWING TRADE: Flat from open, 12/30.

DAY/SCALP TRADE: Selling the bounce…

PRICE TREND: Down 3 days.

SETUP:

Today’s market action was mostly flat after Wednesday’s hard reversal to the downside.

So what now?

Tricky territory.  Possible the chop today was digesting a drop that was too far too fast. a pause in a word before more the slide down resumes tomorrow but the recent rally was so fast to the upside there is a chance it’s going to take more than one-day’s hemorrhage to kill the bull.

Yesterday’s sudden slam turned the longer-term breadth trend negative but short-term breadth turned up today so there are cross currents in play.

As often happens at the end of a move, the recent up move in this case, by the time it is clear it could be reversing, there is much at is oversold and could easily bounce to confound the change of trend.  If I had to guess I would guess the market bounces before any more significant downside.

That is a guess based, most notably because SPY (the S&P500 ETF), which topped on 12/13 and has now managed to pull back for nearly two weeks into oversold territory. Also, more than 40 of the stocks on my nifty-fifty stock list have been on sells now for two days – that is almost always the bottom or the beginning of the bottom of a swing (I say almost because when it isn’t it is because the market has suddenly turned into a hard downtrend, like in 2008).

Market followed through on short breadth signal:

(right click on chart for a larger view)

trendswing_2016-12-12_0818

#MarketTiming – trigger for an up swing…

TREND TRADE: Long from open, 11/9.

SWING TRADE: Long from open, 12/27.

DAY/SCALP TRADE: Long…

PRICE TREND: Up 1 day.

SETUP:

Market breadth turned up Friday before the Christmas weekend giving a renewed timing buy signal for Tuesday’s open.

Easiest play would be the long index 3x-leveraged ETFs – TQQQ, TNA, XIV, UPRO.

The top eight stocks in my newly sorted nifty-fifty list are HIIQ, C, X, BRKS, ACM, JPM, KRO, APOG.  Watching for continued bullishness there and bank stocks also were strong across the board Friday.

Stocks from the list triggering new individuals buy signals were TPC, TBPH, SKYW, DV, MDP.

Expecting a run up for at least the day and likely a swing for much of the week.

But as Trader Vic Sperandeo once said if the market doesn’t do what is expected, it is likely to do the opposite twice a much so am using tight time and price stops for this swing.

#DayTrading – the simplicity of the market…

TREND TRADE: Long from open, 11/9.

SWING TRADE: Flat from open, 12/22.

DAY/SCALP TRADE: Long bias but short scalp possible..

PRICE TREND: Down 2 days.

SETUP:

Today was down across the board on follow-through from the breadth turn down 12/20.  Assume tomorrow with be more of the same.

Markets go down until they don’t anymore.  Been told that is as dumb a statement as can be made but it is in fact absolutely true and it is the very basis of simplicity so often unrecognized in market movements.  It is that simple, the market is either up or it is down.

Recognizing the simplicity is where the money is made in trading.

Again, aggressive traders might want to play the short side via short ETF’s — SQQQ (featured on the chart below), TZA, UVXY.  In fact note the previous bounce on SQQQ, not a bad scalp for some profits.  Could happen again.  Now.

(right click on the chart for a larger view)

day_trade2_2016-12-07_1311