$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

$GS $JPM $BAC $DB – banks of a feather bounce together…

Update April 3, 2107:

After eight days down in a row on the Dow, today’s bounce was nearly inevitable.  Eight days in a row is a lot when four is most often the magic number to buy for a bounce.

And as inevitable, an oversold sector is likely to bounce with it.  In this case, the financials – that is, the banks — GS, leader to the downside, as well as JPM, BAC, and even the deadest dog of the bunch, DB, which has some serious fundamental problems all its own (besides being the last lender to loan to Donald Trump).

Most likely this bounce will continue in a rise to resistance, most likely to bottom of the boxes indicated on the chart below at the point the stocks fell through support going into this recent decline.

If they turn over again with lower highs sometime soon…say, next week…that will not be good for any bull market going forward.  In other words, head up the bull might actually be stumbling.

(right click on the chart for a clearer view)

BANKS2017-03-21_1036

$SNAP #FirstDayBox – Buying an IPO (or not) in one easy lesson…

When a hot IPO is launched, as was the case with Snapchat (SNAP) on March 2, the headlines are usually how much it leaped over it initial offer price.  That is a worthless commentary.  Unless one is on some broker’s favored clientele list, it is impossible to have the stock and to be able to sell it on that leap.

So what to do?

With IPOs this is actually one of the easiest decisions in stock trading.  Simply note the high price and the low price on day one of the IPO.  Those are the lines in the sand (see chart 0f SNAP below).

Buy on a close above the high of the first with a stop loss below the high of the first day. With SNAP that buy would have been at 27.09 on March 3 and it would have been stopped out the next trading at at 26.05, a loss of .3% (that’s the way it goes sometimes).  From there, SNAP declined to an all-time low of 18.90 so that stop loss would have saved a lot of money, to say nothing of the anxiety of being locked into a foolish IPO buy made on whatever day.

It would have been a short sell below 23.50 if the stock could have been borrowed (difficult if not impossible this early in the IPO’s life).  Regardless, today the stock is challenging its “First-Day Box” which would stop out any short sale.

So what to do now?

Basically nothing on the long side.  Until it shows it can trade through its first day, it is not a buy. On the short side (easier to do now) it will be a short on the first down day below the box with the stop loss in the box.

In stock trading there are no easier decision to make than playing off an IPO’s First-day box.

P.S. when a long buy goes well it can become long-term hold as in the case of ACRS, a buy at 12.50 (see the chart below).

(right click on the chart for a better view)

snap2017-03-27_0759

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#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

$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