#MarketTiming – moving up from fear…

“I will tell you the secret to getting rich on Wall Street. You try to be greedy when others are fearful. And you try to be fearful when others are greedy.”
― Warren Buffett

Started the week in fear on CNN Money’s “Fear and Greed Index” so I suppose it is appropriate to end the week with a look at how the market moved up from fear and racked up a lot of swing-trading profit in the process.

My post from last Sunday : http://www.thegodoftrading.com/uncategorized/spy-now-upward-bias-fear-greed/.

So where are we now?  See the chart below.  The blue-block line is the Nasdaq Composite.  The red-block line is the Fear-and-Greed Index.

In this market context, and as my daily price signals kicked in, the leveraged index ETFs: TQQQ closed today up 10.3%, XIV up 8.9%, TNA up 7.0% and $UPRO up 5.3%. Among the sector leverage ETFs LABU closed up 17.3%, and SOXL was up 12.7%.  The leader among my bellwether stocks, as of today’s close, was NFLX up 5.8%.

Me thinks it doesn’t take long staring at those percentages to recognize the value of market timing and swing trading.  Of course it is not always like this but when it is…well, it just is…

The 5-minute day-trading stocks for today – FB, NVDA, TSLA, AMZN, and NFLX – had four winners (NVDA, the leader) and one loser (NFLX) and finished up .60%.  Not all that much, but winners are winners and a profit is a profit.  Only NVDA of the ten bellwethers meets the criteria for a buy on tomorrow’s open.  That may be saying something, given there were four or five to buy on every other day in this bullish week.

Also, given that these index ETFs are up four or five days in a row, and TQQQ and the Nasdaq Composite are both overbought, close to two standard deviations of an average advance, and given that trading will likely slow going into the holiday weekend, I will not be surprised to see sideways-to-slightly down Friday.

All buy signals are in place and long-term breadth remains positive and is accelerating so this is still a bull market that is going to go up until it goes down.

SWING TRADING SIGNALS:

PRICE: Buy. (Day 4).
SHORT-TERM BREADTH: Buy. (Day 2).
VOLATILITY: Buy, (Day 2).

CONTEXT:

LONG-TERM BREADTH: Buy, (Day 5).
CNN MONEY’S FEAR AND GREED INDEX: (45 rising, at neutral level).
NIFTY-50 STOCK LIST: 39 Buys; 21 Overbought, 0 Oversold, 9 new buys today, 2 new sells.

(click on the chart for a larger view)

A $ZEAL for investors…

Investing in an IPO is actually one of the easiest decisions in stock trading but not on its first day.

But it is an IPO’s first day of trading that gives a clear look at when to buy the stock.  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 ZEAL below). The stock is a buy on a close above the high of the first day with a tight stop loss below the high of the first day.

With ZEAL that buy would have been at 18.95 on the open of August 28 (after its close above the high of the first day at on August 25).  The stop loss is on any close below 18.69, the high of the first day.  ZEAL backed off for a couple of days and retested its breakout above the IPO-day high but did not trigger its stop loss.  Today it is, at the moment, turning up again at 18.90 (UPDATED: 18.80 on the close), again with a stop below 18.69.

This is an an opportunity for investors to buy and hold.  This is not for traders.  With a good-till-cancel stop loss order in, with very little short-term risk, it is a buy it and forget it with the hope it will appreciate over time.

(click on the chart for a larger view)

 

$TQQQ – up 7.3% as bullish bias for the week continues…

The Nasdaq, after its strong reversal from it’s open yesterday, followed through today with a strong advance.

The bias has been bullish all week based the fact that CNN Money’s “Fear and Greed Index” registered “extreme fear” last week and turned up from there to signal this week’s bounce.  I wrote on Sunday: “So Monday the bounce?  Then a rally?” That is exactly how the week has played out.

TQQQ, the 3x-leveraged Nasdaq ETF, is up three days in a row, 7.3% (see chart below).  XIV, the leveraged volatility ETF, is up 6.4%.

The “Fear and Greed Index” continues to climb and all three of my daily signals (see highlight below) are now on buys.

I expect more of the same for Thursday (although some slowing is likely).  Both UPRO and TNA, the leveraged ETFs based on the SPX and the Russell, are up 4 days in a row.

This has once again become a market that is going up until it goes down.

DAY TRADING BELLWETHER STOCKS:

The five-minute day trading stocks for today – FLSR, GS, TSLA, NVDA — were basically flat (up .11%) with three stopped out for small losses and GS up .8% to save the day.  Day trading bellwether stocks for Thursday’s open are TSLA, NVDA, NFLX, FB and AMZN.

SWING TRADING SIGNALS:

PRICE: Buy. (Day 3).
SHORT-TERM BREADTH: Buy. (Day 1).
VOLATILITY: Buy, (Day 1).

CONTEXT:

LONG-TERM BREADTH: Buy, (Day 4).
CNN MONEY’S FEAR AND GREED INDEX: (29 rising, at fear level).
NIFTY-50 STOCK LIST: 30 Buys; 17 Overbought, 3 Oversold, 8 new buys today, 1 new sells.

(click on the chart for a larger view)

#DayTrading 5 minutes of risk on the open…

Today was a great example of the overwhelming importance of the open in day trading.

The market gapped down on the after-the-close news Monday that North Korea fired a missile over Japan.  And once again, as has so often happened in this bull market, the dip was met with buyers and the market started up almost immediately to close the day near its highs again. It hasn’t really gone anywhere in the last week or so but it’s moved up and down a lot, a perfect intraday environment for day traders.

At the end of the day Monday, two of my daily signal were on sells — short-term breadth and volatility — but the price signal was giving a buy for today’s open and long-term breadth, the most important indicator for the overall mass psychology of the market, was also positive.  Long-term breadth also — not always, but usually — makes overnight news irrelevant.  Going into the day, it wasn’t as if one could expect a home run but a single or a double might be possible.

So let’s go back to the open.

This day, as it turned out, was also great because it provided four of my bellwether stocks on individual buys for the open coming into the day — AAPL, FB, NFLX and NVDA.  The criteria for those buy signals was that each stock ended Monday above its Monday open and above a short 3-5 bar average on a 5-minute chart.  That simple.  Now this is when day-trader must have faith and believe to put in market orders to buy at the open no matter what is happening in the overnight.

How did that turn out?  Great day.

See the chart panel below.  Not one of those four stocks threatened a loss from the open to the close with AAPL up 1.68% on the trade (on the charts, the number in the white rectangle on lower right is the return per $100K), FB was up 1.39%, NFLX was up 1.92% and NVDA was up 1.26%.

When I say “threatened a loss” I mean not one of those four stocks went back through its open at any time during the day.  A close below the open is the stop loss.  The trade is initially at risk for a stop loss five minutes into the day.  That’s all.  After that the trade, if not stopped, is in profits, and can then be managed on an whole set of additional criteria – break-evens stops, trailing points or percentages stops, technical indicators like the short term average, whatever…or just letting it play out to the end of the day (like today).

It needs to be noted getting stopped after five minutes happens. Quite a lot in some markets.  There are only four things that can happen on any trade – a little loser, a little winner, a big loser, a big winner.  Can’t do anything about the little losers and little winners but one must be able to eliminate the big losers in order to get the big winners.  These first five minutes generally do that.

FYI, four more of the bellwether stocks meet the criteria for at-the-market buys on tomorrow’s open — FSLR, GS, TSLA, NVDA.

REMINDER: This information is for entertainment purposes only and should not be construed as investment or trading advice.

As for the today’s end-of-day:

SWING TRADING SIGNALS:

PRICE: Buy. (Day 2).
SHORT-TERM BREADTH: Sell. (Day 2).
VOLATILITY: Sell, (Day 2).

CONTEXT:

LONG-TERM BREADTH: Buy, (Day 3).
CNN MONEY’S FEAR AND GREED INDEX: (29 rising, at fear level).
NIFTY-50 STOCK LIST: 22 Buys; 6 Overbought, 8 Oversold, 6 new buys today, 5 new sells.

(click on the chart for a larger view)

 

 

 

 

Pulling the $BID – when bear markets can be born

Forecasting tops in the market, the kind of tops that lead to substantial declines, even to bear markets, is no easy thing to do.

Virtually impossible, no matter how many so-called market gurus claim they have.  Most often top callers get chopped to death before they get their sell-offs, and those that appear to have succeeded in calling a top never say how painful it was trying along the way.

I am not calling a top here but I am calling attention to the fact $BID (Sothebys) may be the most important bellwether stock there is.

I don’t know if it’s because the rich quit buying expensive art, jewelry, wine and other luxury items at auction or what?  But on a simple, purely technical-analysis approach it is obvious over and over again that the stock leads when it comes to sell-offs.  There’s always a bid and ask in trading and investing and BID clearly shows when someone pulls the bid.

See the charts below. The first is a daily chart showing while the general market (SPY) has lumber up in recent days, BID has been selling off with conviction.  The second is a monthly chart showing the history of BID in relation to the market on the longer time span (that is when Bear Market can be born).  If history and the stock is to be believed this market advance is on truly dangerous ground.

Any day, any minute now the market may follow BID down.

(click on the charts for a larger view)

 

$AAPL trying for a new high, holds up the market

Talk about a mixed market.  Should say a mixed day.  The general indexes were up on the day and down from the open.

So I guess the story is AAPL.  How many times has that been the case in this bull market?  Every day?  AAPL closed at 161.47 just a point off its all-time high of 162.51.  The high today was 162 even. It is overbought.  See the daily chart below.

The question arises “Can AAPL hold up the market all by itself?”  Probably, at least for a while. But if it comes apart, the market is likely to flush like crazy. It has an $834-million market-cap which is a number that absolutely defies history so when it falls it could (and likely will) fall very hard.

In the general market, I had end-of-the-day sells on my Breadth signal (as was expected after six days up) and the Volatility signal.  The turn-down in breadth was not enough to damage the longer-term breadth.  The price signal remains on a buy.  Like I said, a mixed day.  The market could go either way tomorrow.

I don’t have much more to say.

Hmm…that reminds me, the great trader Linda Bradford Raschke once said (if I may paraphrase) she loved it when nothing much happened in the market because the next big thing usually is a REALLY BIG THING.

SWING TRADING SIGNALS:

PRICE: Buy. (Day 2).
SHORT-TERM BREADTH: Sell. (Day 1).
VOLATILITY: Sell, (Day 1).

CONTEXT:

LONG-TERM BREADTH: Buy(Day 2).
CNN MONEY’S FEAR AND GREED INDEX: (29 rising, fear).
NIFTY-50 STOCK LIST: 21 Buys; 6 Overbought, 8 Oversold, 1 new buys today, 1 new sells.

(click on the charter for a larger view)

 

 

 

$TSLA – Is it the best long-term investment since $AAPL?

I am not much for Peter Lynch type anecdotal evidence as a basis for either fundamental analysis or technical analysis in the stock selection but one of my sons, who is 28 years old, recently gave me a lecture on the future of Tesla (TSLA) that actually made sense.

He believes TSLA will one day be the biggest market-cap stock in the market because it is the Apple (AAPL) of the car market.  His reasoning, at the risk of oversimplification, is that Apple’s iPhone took the world by storm for one reason beyond its intrinsic quality and usefulness – it dominates because it happened to be introduced to the market at the exact moment that his millennial generation was able to afford to buy the iPhone.  Now the TSLA is introducing its Model  3 at a price and a moment when the same millennial generation is reaching the point in their lives when they can want and afford one.

Simply put, he tells me, everyone he knows is on the Tesla waiting list for the Model 3.

According to reports, reservations for the car are now averaging 1800 per day and have far surpassed the 500,000 mark – http://money.cnn.com/2017/08/02/technology/business/tesla-earnings/index.html.

And if the reviews are any indications, that number is only going to increase as Tesla gets closer to delivering the vehicle – https://www.cnet.com/roadshow/auto/2018-tesla-model-3-review/.

And, more simply put from a long-term investment point of view, he points to AAPL”s current market cap north of $800 million and TSLA’s current market cap at $57 million and says “do the math.” TSLA has room to move up 14 times its price today.  Can this be true?  Well, when AAPL introduced iPhone in 2007 its stock was selling at a split-adjusted $11 per share.  It is now sells at close to $162 a share – 14 times its price at the iPhone’s introduction ten years ago (how about that?!).

So, as they say on Wall Street, what’s a price target on the upside for TSLA – $800 or so a share…

(click on the charts for a larger view)

 

 

 

 

 

 

Bellwether Trading Stocks – an introduction…

From Wikipedia:

“In the stock market, a bellwether (barometer stock in the UK) is a stock that is believed to be a leading indicator of the direction of a sector, industry or market as a whole. Bellwether stocks are often used to determine the direction in which an industry or market is headed in the short term.”

Decided to assemble a chart panel of ten bellwether stocks (see below).  While not, as defined above, necessarily leaders in the general market (although some obviously are), they are my choices for TRADING STOCKS that do move enough to be swing traded on the an daily basis, and move with enough velocity intraday to be day traded.  At the moment, the chart panel is static but could vary some in the future as market conditions dictate.

The stocks are AAPL, GS, AMZN, BID, FB, TSLA, BABA, FSLR, NFLX, and NVDA.

At this moment, the question among these stocks is can AAPL (upper left in the panel), trying to new all-time highs, hold up the entire market all by itself?

(click on the chart for a larger view – UPDATE 9/12)

A REMINDER: the information is from my personal stock-market journal and is presented here for entertainment purposes only and should not be construed at any time as direct investment advice.

$SPY- an upward bias from fear to greed?

CNN Money”s “FEAR AND GREED INDEX” – http://money.cnn.com/data/fear-and-greed/?iid=HP_LN – turned up Friday , moving from an extreme fear reading to a mere fear reading.

That may seem like some kind of market joke but it is often an indication that market is at a turn at the bottom of a sell-off.  If so, the uncertain sideways move this last week (up solidly Tuesday, down near as solidly Thursday) likely will resolve to the upside this week.  The past recent history of the index in relation to moves on the S&P 500 ETF SPY is below.  The blue diamond line is SPY.  The Red is the Fear and Greed Index. Note when Fear-andGreed touches or dips below the 25 level then turns up what follows.

In addition, two of my main daily signals (breadth and volatility) are on buys while the third (the Nasdaq Composite price) is down three days in a row.  In this bull market, three consecutive down days in the Nasdaq price has been all that can be had before a bounce.

Also, the breadth has moved up steadily this last week despite the market’s sideways price action, moved up enough to turn long-term breadth positive.  However with short-term breadth has been up six days so a quick could come, but if it is not enough to turn down the long-term breadth, we could have a rally deep into September.

So Monday the bounce?  Then a rally?  That is my bias until it isn’t anymore (which could be as early as Tuesday).

SWING TRADING SIGNALS:

PRICE: Sell. (Day 3).
SHORT-TERM BREADTH: Buy. (Day 6).
VOLATILITY: Buy, (Day 2).

CONTEXT:

LONG-TERM BREADTH: Buy(Day 1).
CNN MONEY’S FEAR AND GREED INDEX: (27 rising, fear).
NIFTY-50 STOCK LIST: 22 Buys; 6 Overbought, 3 Oversold, 5 new buys today, 8 new sells.

(click on the charter for a larger view)

 

$SBGL – divergences don’t matter until they do…

After being stopped out in late June, finally the Commodity Chanel Index (CCI) divergence on July 11th mattered — a buy at $4.70.

The stock has been slogging higher ever since, riding its short-term exponential moving average (see chart below).

It is challenging its down gap now.  If it can get into the gap with some conviction, the run-up could accelerate.

Original discussion posted here:

http://www.traders-talk.com/mb2/index.php?/topic/167061-the-wild-and-crazy-sbgl/?p=765640

(click on the chart for a larger view – updated 8/29)