$TNA – up 26.3% on this swing…but…

Posted on by diogenes227

Twenty-six-point-one percent in little over a month since long-term breadth gave a buy signal a bit over a month ago.

And now it’s up four days in a row on this swing leg of the rally, wildly overbought, with CNN MONEY’S Fear and Greed Index lodged solidly in the “extreme greed” level, and short-term breadth clicking down a bit today, all signs that the market and the stocks are both ripe for a dip if not a sell off but…but it has to turn down first and it has not done that. Amazing how many times traders can look at something going straight up (or straight down) and convince themselves this move is going to end – right now! Maybe, but until is does there is nothing to do but tighten stops but still give it enough room to keep going.

Among the other leveraged index ETFs, like TNA, XIV is up 23.2%, UPRO up 9.7% and TQQQ, the Nasdaq 3x-Leveraged ETF, is the laggard up only 6.7%. In a four letters TQQQ’s trouble is AAPL, with the highest weighting in the index – down 4% on the same market signal in the same time period.

Among the leveraged sector ETFs, ERX (energy) is up 35.3% on the signal, LABU (biotech) is up 24.1%, SOXL (semiconductors) is up 24% and FAS (financials) is up 11.9%. Same market signal, same time period.

We’re talking a little over a month here so it has to be said yet again – this what swing trading is all about.

SWING TRADING SIGNALS:

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

CONTEXT:

SPY CLOSE – 250.35.
QQQ CLOSE – 144.41.
LONG-TERM BREADTH: Buy (Day 34).
CNN MONEY’S FEAR AND GREED INDEX: (79 rising, extreme greed level).
NIFTY-50 STOCK LIST: 33 Buys; 9 Overbought, 6 Oversold, 8 new buys today, 6 new sells.

(click on the chart for a larger view)

$SBGL – Divergences don’t matter until they do Part II

Posted on by diogenes227

It’s time to try wild and crazy SBGL again. Probably the entire sector of gold stocks for that matter…

Last time this stock traded it yielded a great gain. And now it has fallen all the way back to where the last rally began. Who says the trend is your friend? Not as much sometimes as the swing.

Divergences don’t matter until they do Part I

So what to do now?

It’s a buy now with a tight stop. Thurday’s low? Wednesday’s low? Depends on the individual trader. Last time was stopped out twice for small losses before grabbing the big gain.

In addition according to YAHOO FINANCE the stock is currently pay a whopping 8.9% dividend, which makes a candidate for a buy-and-hold if an initial swing can give enough of a profit cushion for a safe investment.

To see the divergence, check the lower graph on the chart below.

(click on the chart for a larger view)

$KC_F – Coffee futures looking to roast another 100%

Posted on by diogenes227

The current coffee swing, which is short, is up $2,568 per contract at today’s close. The margin requirement is $2,970 per contract.

Would like to see at least some additional weakness on tomorrow’s open to lock in another 100% gain the margin. If it doesn’t happen there is a good chance coffee will reverse to a long swing at tomorrow’s close. This is likely, at this point, on both counts so tomorrow’s a key day for coffee trades.

I last wrote about this here on September 13th:

Coffee Futures Find Their Swing Rhythm

The swing rhythm observed in that post has obviously continued (see the chart below).

(click on chart for a larger view)

#MarketTiming – as suggested yesterday, today the bounce…

Posted on by diogenes227

Wrote yesterday for a lot reasons the market was likely to bounce today and so it did.

Those reasons remain in place. All three of my swing signals are on buys as well as the ever important long-term breadth. Fourteen of the nifty-50 stock list gave buys today, and AAPL moved up as suggested yesterday. All in all, a good day across the board.

I going to note that my bellwether stock are still oversold or still close to oversold, with many buys today (see the green bars coming out of the oversold cyan color coding on the charts below). If they get moving tomorrow, the market, obviously, is going vault much higher.

SWING TRADING SIGNALS:

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

CONTEXT:

SPY CLOSE – 250.05.
QQQ CLOSE – 144.46.
LONG-TERM BREADTH: Buy (Day 33).
CNN MONEY’S FEAR AND GREED INDEX: (78 rising, extreme greed level).
NIFTY-50 STOCK LIST: 26 Buys; 83 Overbought, 12 Oversold, 14 new buys today, 2 new sells.

(click on the chart for a larger view)

#CoalStocks – thinking about shorting BTU, CLD…again.

Posted on by diogenes227

Just thinking about it. This is a heads up. Don’t quite have the triggers I’d be comfortable with yet.

But unless the stocks surprise further to the upside, the prospects for shorting them again are getting closer day by day.

These stocks have been rallying in recent months on the desperate hope President Trump will do something to revive the industry. There is no chance of that happening. He is paying lip service, but is hardly interested or able to do anything else. Remember these stocks, long term, have fallen faster than dead canaries. This is an industry slammed by cheaper cleaner natural gas and it is facing an inevitable death at the hands of renewable energy.

CLD, once the stock dropped below $5 a share, could easily fade to dead money around $1, and maybe even go off the board like so many others in this sector – Patriot Coal, Walter Energy… BTU has already been through a bankruptcy, taking out decades of shareholder equity, and now has restructured and emerged to try to do it again.

I’m not one for fundamentals but this industry blow happened just yesterday:

LAST COAL PORT PROPOSAL ON THE WEST COAST DIES

Businessmen, especially coal executives, always complain that environmentalists never let them do anything. That is not true. Environmentalists don’t let them do stupid things. All of coal, once an evil necessity, is now a stupid thing.

So, trading-wise, I’m looking for more signs of weakness, negative candles, breaking supports, indicator divergences before sealing the shafts (see the charts below). Call it waiting for the bloom to come off the black Trump rose.

(click on each chart for a larger view)

All information, presentations and discussions on this site are no more than a journal of my personal stock market thinking and trading. This site is for entertainment purposes alone, and nothing here is to be construed in any way as direct investment advice.

#MarketTiming – Time for a bounce?

Posted on by diogenes227

Last time posted here I said “sideways to down.” Got the sideways (SPY) and got the down (QQQ) on the two main index ETFs I follow.

In the process both SPY and QQQ managed to get over sold (see the cyan color coding on the charts below). SPY came off oversold today despite no more than an small uptick and QQQ also ticked up while remaining oversold. In the nifty-50 stock list only 16 stocks are on buys and 22 are oversold. The question, as always, is once anything is in oversold territory how long can it stay there? In this bull market that has not been long.

So what now?

Given that all three of my swing signals – based on price, breadth and volatility – registered buys today for tomorrow’s open, and long-term breadth remains on a buy and continues to rise, I am suggesting a bounce Wednesday. How high, how long, and whether or not it can hold at all is anyone’s guess. I will buy with a tight stop. For the sake of the stop loss, I pretty much want this to go my way right away so I will be watching on a five-minute bar chart to make the trade stays above its open from the open of the market.

Although none actually met my intraday criteria today for a buy on the open tomorrow, if I had to pick one stock to buy from the ten in my bellwether stock list it would be AAPL, which slid to oversold and stayed there for four days before its bounce today. I would bet it will follow through on today’s bounce tomorrow. Not a bad stock to gamble on in this context for a day trade, and maybe a swing trade if the market bounces with it.

SWING TRADING SIGNALS:

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

CONTEXT:

SPY CLOSE – 249.07.
QQQ CLOSE – 143.17
LONG-TERM BREADTH: Buy (Day 22).
CNN MONEY’S FEAR AND GREED INDEX: (67 rising, greed level).
NIFTY-50 STOCK LIST: 16 Buys; 3 Overbought, 22 Oversold, 7 new buys today, 5 new sells.

(click on the chart for a larger view)

#MarketTiming – sideways to down…

Posted on by diogenes227

Since the Federal Reserve meeting Wednesday, the general market has been in a sort of slow sideways to down move that could bounce any minute.

The most pronounced down has been the Nasdaq but that is because of the weakness in AAPL down 5 points and AAPL pretty much dominates or mutes any move in the Nasdaq indexes. But everything else has been mostly sideways in middle ground. Boring.

So what now?

Could either way Friday. An acceleration to the downside to get the market oversold and set up for a bounce next week, or a bounce to keep the boring going.

SWING TRADING SIGNALS:

PRICE: Sell. (Day 2).
SHORT-TERM BREADTH: Sell. (Day 4).
VOLATILITY: Buy, (Day 3).

CONTEXT:

LONG-TERM BREADTH: Buy (Day 19).
CNN MONEY’S FEAR AND GREED INDEX: (73 falling, greed level).
NIFTY-50 STOCK LIST: 22 Buys; 10 Overbought, 14 Oversold, 0 new buys today, 6 new sells.

#MarketPerspective – waiting for the Fed…

Posted on by diogenes227

Given how strong the trend is at the moment, the only thing that could kill this stock market rally is the Federal Reserve… Oh, yeah, Wednesday is the “Fed Day.”

So is the Fed going to kill it? It would take a drastic rate increase maybe, or a statement that the sky is falling. And even then, given how this Bull has shucked off every lance it takes, even a drastic something or other might not do it.

I suspect once the Fed suspense is over, either in the aftermath of the meeting announcement Wednesday or Thursday, QQQ is going to vault past its two weeks of resistance at about 146.59 (see chart below) and run like a bull enraged. Needless to say, if that happens, it will take everything in the market with it. SPY has already limped on up.

What I’ve just said is the old market adage: “the trend is your friend.”

Now what if is isn’t, or we are at the end of it?

It is as if the market has been chopping sideways for a couple of weeks just waiting. My nifty-fifty stock list has just registered 25 buys and 25 sells for two days in a row as if completely confused as to which way to go. Going into the Wednesday’s Fed Day, two of my three swing signals are on sells – short-term breath and volatility – but swing price and the most important long-term breadth buys are still in place. Beyond the technical signals, there are many signs that this bull is vulnerable – NYSE margin debt alone at its astronomical level beyond 2000 and 2007 should be making everyone’s hair fall out. CNN Money’s Fear and Greed Index is at an extreme greed level and could turn at any time. Margin debt and fear can feed on themselves and when then do nothing can stop them.

And I’ve just saw a sentiment survey that says retail investors have never been so bullish. In the rhyming of market history that is not good, they always get screwed in the end.

Geez, it’s still a bull market but like all bull markets it doesn’t make it easy. It’s not like anyone want it all left up to the Fed.

SWING TRADING SIGNALS:

PRICE: Buy. (Day 3).
SHORT-TERM BREADTH: Sell. (Day 2).
VOLATILITY: Sell, (Day 1).

CONTEXT:

LONG-TERM BREADTH: Buy (Day 17).
CNN MONEY’S FEAR AND GREED INDEX: (81 rising, extreme greed level).
NIFTY-50 STOCK LIST: 25 Buys; 13 Overbought, 7 Oversold, 4 new buys today, 3 new sells.

Stocks meeting the criteria for a 5-minute on the open Wednesday: only FB.

(click on the chart for a larger view)

$XIV $TQQQ – a strong rally from fear to extreme greed…

Posted on by diogenes227

CNN Money’s Fear and Greed Index climbed again to day.  It is at an “extreme greed” level for the second day but there is, as yet, no sign of a turn around.

But as Warren Buffet has said it is a time to be fearful.  This market could sell off on any day, at any hour, any minute.  Just because it hasn’t doesn’t mean it can’t.

Still…it hasn’t.

Since first calling attention to the index back in late August when it was registering extreme fear, the market has had a strong rally so that this point I’d tally up some of the returns – – those holding these for the “long term” better not fall in love with the long term but for now enjoy.

Among the leveraged ETFs for the general indexes, XIV is up 20.4 percent since the buy signal on August 29th, TQQQ up 9.3%, TNA 14.8%, UPRO 9.1%. Among the leveraged sector ETFs, ERX is up 22.4%, SOXL up 24.3%, LABU up 17.5% and FAS up 6.8%.

Stock in my bellwether stock list: BABA up 7.4%, NFLX up 9.8%, NVDA up 14.9% and TSLA up 9.1%. Remarkably AAPL is DOWN .8% (well, mostly flat).

SWING TRADING SIGNALS:

PRICE: Buy. (Day 2).
SHORT-TERM BREADTH: Sell. (Day 1).
VOLATILITY: Buy, (Day 6).

CONTEXT:

LONG-TERM BREADTH: Buy(Day 16).
CNN MONEY’S FEAR AND GREED INDEX: (79 rising, extreme greed level).
NIFTY-50 STOCK LIST: 25 Buys; 12 Overbought, 4 Oversold, 6 new buys today, 0 new sells.

Stocks meeting the criteria for a 5-minute on the open Tuesday: NFLX, BABA.

(click on the chart for a larger view)

#DayTrading – on managing the stock trade during the day…

Posted on by diogenes227

Each day, especially during this bull market, there are stocks that meet the criteria for a day trade on the open with minimal risk as outlined in this past post:

#DayTrading 5 minutes of risk on the open…

This is a simple system in which the stocks are selected the night before and bought at the market on the next day’s open.  They are monitored on a 5-minute chart with a stop-loss on any close below the open after the first five minutes and the day trade is over.  If a stock does not stop out right away, it will immediately be in profits.  If the stop does not violate its open any time during the day the profits can be taken on the close to end of day trade.

Those profits will often hold to the close of the day especially in a bull market, but what if they don’t?  What if there’s in intraday reversal in the stock? In the market? Needless to say, those kinds of intraday reversals happen almost as often as they don’t.

So what to do?  Today provided examples of how this works both using the 5-minute stop as well as when to consider closing the trade during the day to increase and maybe maximize profits.  There were three stocks from the ten stocks on my bellwether-stock list for the 5-minute buy on today’s open – FB, TSLA and NVDA.

FB, as example of the stop loss, was stopped out immediately for a .20% loss.  Had that stock been held to the close, it would have lost 1.12%.

TSLA was profitable for the day and closed with .47% gain, but had it been closed when the general market sold off during the day (see the vertical line on the chart below), it’s gain would have been 1.6%.  NVDA’s profits held for the day and it close with a 1.3% profit but, like TSLA, had it been closed when the general market sold off during the day (see the vertical line on the chart below), it’s gain would have been 2.1%. The difference today between the close on those two stocks and the intraday sell is obviously sizable.

In addition, they are prime example how stocks, no matter how strong individually during the day, most often follow the market (see the charts below).

Stocks used for this system are usually posted in my daily blog but I’ll mention them here for tomorrow’s open: NFLX and BABA.

(click on the charts for a larger view)