$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

$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)

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#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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$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)

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The #StockMarket – it rhymes…

It is said history may not repeat so much as it rhymes.

Repeats, rhymes, whatever.  This time looks more like a repeat.

The chart below featuring the Nasdaq Comp (the heavy green line with the diamond) shows the market action pre-election and the reaction since in comparison to the Brexit sell-off in June (the plunge on the left). Note the one-day dips (most recently last Thursday) before the next big run in both instances (the darker green circles), which is to say the market is above to keep going higher, maybe all the way to Christmas.

Yeah, at least a rhyme.

(right click on chart for a larger view)

it_rhymes

 

$SPY – testing an important level

SPY, the monster S&P 500 ETF, took a look at 212.5 again today and held that support in late day trading. A couple of weeks ago it was doing that repeatedly.

My guess it will bounce a bit from here but the question is how high and what after that?

If it does not run right back up to the top of the recent range there is a likelihood that the steep decline market bears have so long been waiting for will be at hand.

The confounding thing about the general market in the past three months has been how many fundamental and technical indications have dropped into place that bear similarities to the market tops in 2000 and 2007 but the price drop has not gotten going in earnest.

For instance, monthly NYSE margin debt has clicked down again in a massive divergence to the market’s high level sideways move. Breadth in general has been declining despite price index defiance. It could be only the Fed, with an eye on the election, is holding the market up.

Whatever.

If today’s rip to the downside, on the other hand, is the shot that cripples the lumbering ship, 208 on SPY could be seen in a hurry, and 200 eventually would not be out of the question.

This is one of those times when long-term investors better sit up and take notice.  Decide how much of the current gain one is willing to lose and stick to it.  If there is a sell-off (for the rest of year?),  the signs it is, once again, not different this time have been obvious for some time.

(right click on the chart for a larger view)

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$SPY – so what happens next?

UPDATE MONDAY 9/12:

SPY October ATM calls…

Following the red…

Friday’s drop in the stock market was the biggest since Friday June 24th.  On Monday June27, there was more downside but then the market bottomed.  Starting June 28th SPY rallied for four consecutive days, paused, and finally continued up into July and August and rallying all the way virtually to Friday.

On Twitter, I called this a possible “deja vu all over again.”  See the chart below.

So here we are again.  I’m short and watching for the turn, but trying to be aware of more to come since the market rhymes more often than it repeats.

(click on the chart for a larger view)

spy_red_2016-08-09_0957

 

$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)

spy_green_2016-08-10_0615

This market could scream higher…

Call this a perspective on my Nifty-Fifty stock list.

Yesterday, there were 44 of the 50 stocks on sell signals.  That usually marks either the beginning of a bottom or the bottom itself.

On the up day today (however small) one has to lean to the idea this is the bottom itself.

Ask me, this is hard to believe since the market virtually has not gone down at all. So it seems this is a sideways move that will vault (scream) to new highs again soon. Maybe tomorrow.

Note on the chart below the past instances of 40 or more sells on the Nifty-Fifty.  Hard to believe but pretty plain to see.

(right click on the chart for a larger view)

NFTY50_2016-08-18_1435

$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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