#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)

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#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)

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#DayTrading – signals…

TREND TRADE: Long from open, 11/9.

SWING TRADE: Buy from open, 12/14.

DAY/SCALP TRADE: Long.

PRICE TRENDS: TQQQ, up 1 day, TNA up 1 day, up down 1 day.

SETUP:

With short-term breadth once again turning up today within the long-term up trend, tomorrow’s open is again an opportunity to jump on this scary bullet train of a rally as it continues to whoosh by.

Stocks from my nifty-fifty stock list giving new individual buys today were FIVN, LSTR, TRMB, and TWI. Others of note giving individual buys signals for tomorrow included FB, CMCSA, AMZN (might be an option play) and NFLX (ditto the option play).

But virtually all index ETFs, even though overextended, are in play on the short-term breadth signal — TQQQ, TNA, UPRO — for day trades certainly, and possibly swing trades for more than a day.

Much of the prospect for success on this setup will depend on the Fed Reserve decision tomorrow and the market reaction to it.  Just saying…

UPDATE 12/14 close:

Yes, much depends on the market’s reaction the Federal Reserve’s rate hike.  And the reaction was down and as the market goes so go most stocks. Of the four stocks on buys today from the Nifty-fifty-list, one was up (barely) and three down for a loss of 1.2% on the entire basket. So it goes.

#Nifty50StockList – eleven new buys today

Big market rally day from deeply oversold.

SPY up 1.54%, QQQ up1.35%.

My Nifty50 Stock list shifted with today’s rally from 42 stocks on sells signals, 26 oversold, to eleven new buys making the total buys 19 with none as yet overbought.

New buy signals came on $HFC, $DO, $WFT, $FSLR, $TAN (the solar energy ETF), $ITCI, $CNQ, $APC $MSFT, $JKS and $NFLX.  On the selected charts below the signals are marked for today’s close but for the purposes of this blog these are all buys on tomorrow’s open with appropriate protective stops (no one should follow any of these suggestions any time without doing one’s own due diligence.)

(click on the charts for a larger image)

NEW_BUYS

 

$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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