$USD – a vote on the country ever day…

Given that currency trading is a vote by the whole world on your country every day and now that President Blowhard believes the dollar’s recent rise was because of “confidence” in him instead of an overflow from the Obama Administration, the US dollar is likely to decline now.

Trump commented that yesterday that the dollar was too strong because of “confidence in me”, but the currency has been going sideways to down since his inauguration.  Confidence in him?  More likely a rising lack of confidence.

And of course, the US dollar always does decline in Republican Administrations.

That was never more pronounced in historical terms than the day George W. Bush made his “Axis of Evil” speech.  That moment was the precise top for the dollar in his term.  It was as the entire world heard that and thought that guy is crazy and ran for cover.  It declined 40 percent and has not completely recovered.  No analysts ever seem to want to talk about it, preferring to say a weaker dollar makes American multi-national companies more competitive, but think what a drop of 40 percent in net worth means to the biggest economy in the world.

Subsequently, from the day Obama locked up the Democratic Party’s nomination in 2008 the dollar bottomed.  It was as if dollar bulls knew he would be President and were, after the raging uncertainties of the Bush Administration, damn happy he would be.  There were some wild swings in the currency as Obama battled Congressional Republican obstruction (shutting down the government…) but once he was reelected, it was clear sailing to the upside until now.

So what now?

The new era of raging uncertainties is just beginning so, despite professed Fed Reserve tightening, it is probably best to be defensive, if not downright bearish, on the US dollar.

(right click on the chart for a larger view)

USD2017-04-12_1312

#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 – once again the bull runs…

TREND TRADE: Up from open, 1/25, possibly whipsawing.

SWING TRADE: Up from open, 1/20.

DAY/SCALP TRADE: Buying the dips with the trend trade

PRICE TREND: Nasdaq up 1 day, whipsawing.

SETUP:

After giving all the signs of an impending sell down, the market took off again to the upside.  This has happened a lot during the later stage of this bull market.

Each time breadth has turned up (which it did again yesterday), the market has had a run so at this point the past of least resistance is again up.  See how XIV, the leveraged inverse VIX ETF, has performed with the market behind it on the chart below (the green vertical lines marking each new surge like yesterday).

But the signs for a sell down remain, at least for now, so trading here is tricky and a buy and hold strategy downright scary.  Appears the market chop has an upward bias but that is the way it was Tuesday.  Today late may be another matter.

Stocks on my nifty-fifty stock list went from 19 on buy signals to 38 in a day.  Stocks coming off recent sell downs that might produce at least a swing bounce or scalp trade include the banks JPM, C, GS, BAC and a big cap on the list, DIS.

Should be noted I guess that airlines, ALK and HA, on the list remain oversold and could play catch up in the next couple of days if the market continues yesterday’s bounce.

(right click on the 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

$USD – the dollar historically speaking…

Historically speaking, the US dollar goes to hell under Republican administrations.  Does anyone actually expect it to be any different this time?

May take a while since Janet Yellen’s term has year or so to go and apparently the Federal Reserve is now determined to hike interest rates. But eventually, the businessmen now running government (who of course are totally unaware that the government is not a business) will want to debase the currency.

There is the belief that a weaker dollar enables American companies to more easily compete against competitors around the world.  Maybe so. But every time I look up while the dollar is down, it is the competitors buying US companies instead of buying their products.

Oh, well, this Bud’s for you.

(right click on the chart for a larger view)

us_dollar_2017-01-16_1053

$TSLA and market timing…(updated)

Not confirmed yet but if the market stays down it appears after 45 days of rally, the market may begin to take a tumble today.  And if today’s downside trigger follows through, there could be a full-blown correction in the making.

A couple of ifs in there but if they hold, it will be time to look around for stocks to sell if one currently holds them, or to short if one is an aggressive trader.

Case in point – TSLA.

TSLA, like to most stocks, tends to run with the market’s general direction, both up and down.

On the up, Tesla has had a great in run during this rally, roughly from 191 to (at the moment) 227, or 18.5% or so.  A profit well worth locking in since the stock can be volatile.

Now for the down.  Looking at the chart below, it appears the market may be turning negative (the green and red dots the middle of the chart) and so is Tesla’s stock.  When the market and the stock are in sync like this one needs to go with the market until the stock says otherwise.

In short, TSLA is a short.  That is if all the ifs above remain true at the end of this day.

UPDATE:

Market breadth did not stay negative on yesterday’s close (note the green dot instead of red on the indicator in the middle of the second chart below) so the short signal anticipated here never triggered and instead TSLA, on news (its charging station pricing) and modestly bullish day in the Nasdaq to back it up, had a nice rise today, 3.3% from today’s open. So it goes sometimes.

(right click on the chart for a larger view)

tsla2017-01-12_0729

(right click on UPDATED chart for a larger view)

tsla2017-01-12_0729

 

#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

 

#MarketTiming – early warning signs…

One of the great things about market breadth is that over and over again it warns when a rally is weakening.  It usually takes more than one warning before a pause becomes a fall but…

Actually, it usually it takes three and we are at two early warnings now.

See the red circles on the chart below, both past and present.  And note how often they are the precursors for sell-offs to come. Sometimes this trading and investing is simpler than most analysts and Wall-Street players would have to common man believe.  But one must take heed.

Not saying this rally is over.  In fact, it is just the kind of rally (like the Brexit rally last summer) that can go on confounding bears and confounding indicators as it rides waves of too easy money, a seasonal bullishness, and like all bull markets the tendency to go up until it stops going up..

But the warnings are here now and beginning to repeat so this is becoming a time to take some profits or to tighten stop-loss points to make sure not too much is lost when a serious tumble finally takes hold.

(click on the chart for larger view)

twitter_day2016-12-12_0842

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)

it_rhymes3