$TSLA – #MarketTiming Stock of the day…

“Buy when the market tells you, sell when the stock tells you.”

That is a stock-market adage coined, I believe, by the late great Kennedy Gammage of the Richland Report.

The first part of that quote is always the timing trigger to enter any long in the market, having the breadth, the mass psychology of the general market, positive to reduce the initial risk of any trade and/or investment.

That is what market timing is all about.

The second part of the quote is about time.  If one is a trader, the decision might be to exit any trade when the market turns negative.  Even for one day.  If one is an investor, the decision would be to hold the stock until is reverses, or hits a stop loss level, or violates a trend line or violates a moving average, or any number of other indicators that could cause the stock to tell sell.  Each of those stock exits are up to the individual investor’s risk tolerance or profit motive.

Applying the adage is rather simple which is why Mr. Gammage was great.

The stock of TSLA (see the chart panels below) is a perfect example today of how this works.  My three swing trading signals were all on buy signals indicating a positive market for at least a day trade. TSLA finished the day yesterday on an intra-day buy signal of its own that would carry over to today’s open (see right chart panel below).  In addition, TSLA was oversold on the close yesterday (the cyan color coding in the panel on the left).

That was the set up for a buy on the open today – the result a 4 percent gain on the close.

So what now?  Today’s market environment has weakened as two end-of-the-day signals, price and volatility, have given sells.   While the short-term breadth signal continues to climb (for a dicey fourth day in a row), long-term breadth is still negative.  Long-term breadth is always the context for trend trading (or for counter-trend trading like TSLA today).  So going into tomorrow the trend is down with two out of three daily signals once again in agreement making the market play again to be flat or to be short.

SWING TRADING SIGNALS:

PRICE: Sell. (Day 1).
SHORT-TERM BREADTH: Buy. (Day 4).
VOLATILITY: Sell, (Day 2).

CONTEXT:

LONG-TERM BREADTH: Sell (Day 16).
CNN MONEY’S FEAR AND GREED INDEX: (19 falling, extreme fear).
NIFTY-50 STOCK LIST: 28 Buys falling; 17 Overbought, 4 Oversold, 4 new buys today, 9 new sells.

(click on the chart for a larger view)

#MarketTiming – $XIV leads the show…

Guessed yesterday there would be an up market today.

Linda Bradford Raschke once said: “Take all of the signals and once in a while you get lucky.”

Lucky today was XIV, following through on yesterday’s gain, for 10 percent on a two-day trade. With a gain that fast on the table it might be prudent to take some off or at least to tighten a stop loss to lock in profits at some level.

TQQQ, which I also favor on these market-timing signals, is 3.8 percent on the two day trade. UPRO, the leverage S&P ETF, is up 3 percent, TNA, the leveraged Russell ETF, up 3.3 percent. A notable leveraged sector ETF in biotech,  LABU, is up 8.7 percent.

We’re talking two days here.

But actually most of this wasn’t much of a guess — all of he signals lined up for a buy and lined up in deeply oversold territory. See the chart below for the kind of bounces that happen after the SPY histogram touches the lower green line marking a two standard deviation decline (no matter how fast). The red line with the red diamonds on the chart is the SPY itself.

And in bull market’s overall it is always “buy the dips”.  And today…obviously.

Must be noted that long-term breadth, although improving, is still in negative territory, which is to say, tighten the stops on the gains so far.

SWING TRADING SIGNALS:

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

CONTEXT:

LONG-TERM BREADTH: Sell (Day 15).
CNN MONEY’S FEAR AND GREED INDEX: (24 rising, extreme fear).
NIFTY-50 STOCK LIST: 32 Buys; 17 Overbought, 3 Oversold, 12 new buys today, 3 new sells.

(click on the charter for a larger view)

Disclaimer: Once again need to note all positing here are for entertainment purposes and should not be construed in any way as trading or investing advice.

$KC – Coffee’s splendid tumble…

Since a big reversal to the upside on June 23rd, Coffee prices had been chugging nicely up, a rally of some 20 points from 126 to 146.

Then wham!

My commodity system signaled a short (it goes both ways) and the futures just made more on a single trade than it has made 19 other long and short trades this year.  The short trade had a net of $5990 per contract on an initial margin of $2970, a profit of $3000 per contract, 101%.  On the chart below, the closed profits YTD are in the white rectangle on the lower left and the current trade in the white rectangle on the lower right.

I suppose after looking like a new bull market was being launched in the commodity some Elliott Waver might say it still is bullish setup with this just being an obvious two-wave decline, before a big bullish three wave.  but I don’t deal in wave theories.  Just simple upswings and downswings with a measure to gauge overbought and oversold.

(click on the chart for a larger view)

$SPY $QQQ- Are bears running out of time on this swing?

All three of my swing trading signals came into sync today as buy signals as price joined breadth and volatility for Tuesday’s open.

The Breadth and Volatility signals initiated buys on today’s open and XIV in an otherwise lackluster sideways day, it up 3.3 percent already on the day.  (That alone would make it a decent day trade).

Given how choppy and frustrating the market has been of late in ignoring technical signals both on the upside and the downside, this may now be just a guess, but I suspect, the market will bounce tomorrow and maybe swing higher for the rest of the week

If we can call it an educated guess it would be based — besides the price, breadth and volatility buy signals in sync — on the reversal day on SPY in deeply oversold territory (two standard deviations of an average decline) that took place today (see the signal chart panels below).

SWING TRADING SIGNALS:

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

CONTEXT:

LONG-TERM BREADTH: Sell (Day 14).
CNN MONEY’S FEAR AND GREED INDEX: (15, extreme fear).
NIFTY-50 STOCK LIST: 24 Buys; 14 Overbought, 9 Oversold, 6 new buys today, 3 new sells.

(right click on the chart for a larger view)

$SPY – could go either way…as always…

As projected in the post below the market chopped on Friday.

If the price chop was just a digestion of Thursday’s sharp decline, there will be more downside this coming week.  If the chop was a stabilizing with a bull market, the market could rebound this week.  In other words, as worthless as they are, this could go either way.  How often is that the case?  Always?

My daily breadth and volatility signals turned up again within the context of a negative long-term breadth, giving buys signals for Monday’s open.  The price signal stayed down.

Long-term breadth is still negative so this remains a sell-the-bounce market until further notice.  Should be noted that SPY, although it has broken support, is picking up the increased volume that often leads to another bounce, if not more going forward.  See the box and volume spikes on the chart  below.

SWING TRADING SIGNALS:

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

CONTEXT:

LONG-TERM BREADTH: Sell (Day 13).
CNN MONEY’S FEAR AND GREED INDEX: (17, extreme fear).
NIFTY-50 STOCK LIST: 22 Buys; 1 Overbought, 15 Oversold, 3 new buys today, 8 new sells.

(right click on chart for a larger view)

#MarketTiming – more downside to be done…

As I said the last post, this market is a bit confounding…

Yesterday expected the market to go down and when it didn’t I quoted Trader Vic Sperandeo’s notion that when the market doesn’t do what’s expected it does the opposite twice as much.  Based on my three daily signals being on buys for today I expected the market to go up and it did at first, off the open, and then it did way more than the “twice as much” to the downside. As a result, stopped out of the daily longs early (see tweet in post below).

Great day for the bears.  Is this a sea change?  Could be.  Been a long time since this bull pulled back to oversold and didn’t quite come roaring out of there.  Instead, it had one quick bounce and then began to trudge.  Today took care of the trudge in most stocks and ETFs and wiped out most of the bounce besides.

So what now?  Again, some possible confounding… The market is not quite oversold despite today’s plunge – the stocks are in middle ground with 25 on buys and 25 on sells (not the 40 or more on sells that signals the beginning of a bottom) — so it may have more to go.

Tomorrow is an options expiration so one suspects we will see choppy with not much either up or down to be the order of the day.  And that choppiness, if it comes, could be a prelude to a bounce into the close tomorrow or next week, and it could as easily be a digestion of today’s drop before continuing down hard next week.

It is as if the market has noticed how unstable the American government is, but then it’s been unstable for a lot of the points to the upside.  Like I said, confounding.

What has not been so confounding is the fact long-term breadth has been going down for 12 trading days.  Eventually, as it continues, that takes its toll.  So as of now regardless of chop, regardless of bounces, that still is the context and it continues to be bearish.

SWING TRADING SIGNALS:

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

CONTEXT:

LONG-TERM BREADTH: Sell (Day 12).
CNN MONEY’S FEAR AND GREED INDEX: (19, extreme fear).
NIFTY-50 STOCK LIST: 25 Buys; 3 Overbought, 8 Oversold, 2 new buy today, 14 new sells.

#PriceBreadthVolatility – three signals for the swing trades

Update:

Expected this confounding bull market to take a tumble today.

But as Trader Vic Sperandeo, legendary trader and “market wizard,” once said:  “If the market doesn’t do what it is expected to do, it often does the exact opposite twice a much.”  So maybe tomorrow is the day of twice as much.

All three of my daily signals — based on Price, Breadth and Volatility (PBV) are now once again in sync and on buys for tomorrow’s open.  The Volatility signal, based on the VIX, has remained on a buy all week and goes into tomorrow on a four-day run from Monday’s open that has gained, as of today’s close, 6.1% on the 3x-leveraged ETF XIV.

In addition the short term breadth signal put in a low above low pattern, which in bull market, is often to prelude to a longer-term swing to the upside.  What is needed now is to have longer-term breadth, which remains negative, also go positive.  If that happens then it is likely we have seen the bottom of the current pullback.  If longer-term breadth does not turn up soon (like in a day or two), then there is a likelihood there will be more work to be done on the downside before there is any sustained rally.

XIV, mentioned above, has been the top performing ETF on daily swing signals all year (see chart panel below).  Going long only, it has gained 58% on the Price swings, 43% on the Breadth swings, and 64%, including both the close and currently open trade, on the Volatility signal.  The closed trade numbers per 100K are in the white boxes on the lower right of each chart panel while the numbers for any current trade at in the white boxes on the lower right.

SWING TRADING SIGNALS:

PRICE: Buy. (Day 1).
SHORT-TERM BREADTH: Buy. (Day 1).
VOLATILITY: Buy, (Day 4).

CONTEXT:

LONG-TERM BREADTH: Sell (Day 11).
CNN MONEY’S FEAR AND GREED INDEX: (34, still at a fear level).
NIFTY-50 STOCK LIST: 39 Buys; 11 Overbought, 1 Oversold, 1 new buy today, 4 new sells.

(click on the chart for a larger view)

 

#MarketTiming – beware the ides of August…

SPY gaped up today, hit yesterday’s suggested 247 resistance on the first five-minute bar, and turned down, down not so much but maybe enough given that that is a lower high since last week’s nuclear Tuesday reversal.

In addition my daily price and breadth indicators also gave sell signals with lower highs. Volatility remains on a buy but it is for the third day in a row which makes any more time tenuous. If it were to turn it would give a higher low in the VIX, a possible hint a change in trend.

Today’s turn down in short-term breadth (see red circle on the chart below) in context with the continued decline in long-term breadth is often a gift the the bears, which is to say the general market should plunge tomorrow.

These are all quiet signals after yesterday blast to the upside which may mean they mean nothing at all and today’s long sideways price action after the open was nothing but a consolidation of yesterday’s gain before proceeding higher.

But these quiet, disquieting, signals could also be like whispers in the night — “beware the ides of August, beware…”

How often has the market topped quietly in August and fallen all the say into October?

SWING TRADING SIGNALS:

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

CONTEXT:

LONG-TERM BREADTH: Sell (Day 10).
CNN MONEY’S FEAR AND GREED INDEX: (36, still at a fear level).
NIFTY-50 STOCK LIST: 42 Buys; 13 Overbought, 2 Oversold, 2 new buys today, 3 new sells.

(click on the chart for a larger view)

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