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.
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.
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)