#MarketTiming weekly $SPY options in the “fool’s game”

If anyone wants to take a peek (or another peek) into the link below from Thursday, or look down at the entry immediately below this one, they’ll see it was said: “In other words, I expect the market to shoot up on Friday”.

SPY – CAN THE BOUNCE BECOME A RALLY?

The great trader and “Market Wizard” Linda Raschke once put it very simply: “When you see what you are looking for, jump all over it.”

Well, Friday was a day to look for a rally after the market slid sideways to down all week, and rally it did with the Dow up 343 points, the SPX up 43, and the Nasdaq Composite up 127. TQQQ jumped 4% from its Friday open, UPRO did 3.2% from its open.

Needless to say that is better than money in a bank.

But what about THE FOOL’S GAME I’ve been writing about recently, buying weekly SPY calls and puts as day trades?

Friday that system was up 141% with a combination of trades in the weekly 273 put and the 271 call, both expiring that day. The 273 puts lost $1254 per $10K in the trade while the 271 in-the-money calls gained $14,482 per each $10K trade (there were two) for a total gain for the day of 131%.

The Friday expiration makes for the best day trades in the weeklies. Has been that way all year with this Friday as, obviously, no exception. Its 131% net brought the total gain for the week to 226% — $22,600 for no more than $10,000 in any day trade during the week.

I have not much more to say except to remind that everything said here is for entertainment and educational purposes only, and for my own personal trading journal, and should not in any way be construed as investment or trading advice.

#MarketTiming – Can the bounce become a rally?

The pause in the market suggested for this week in last Friday’s post has played out with not a lot of fanfare. It’s been a more sideways than down (see the SPX chart below).

(click on the chart for a larger view)

That is a 7-day 10-minute chart that ends each day with a volume spike on a fast drop into the close. Overall that is not good. But it could be argued that it is still a digestion of the rapid rise that preceded this week and was one of the quickest bounces off a hard decline in this bull market.

If so, time may still be on the bull side.

The Nasdaq Composite had less of a pull back than the SPX but still marked at today’s close four days down in a row. Four days down is often the time for another surge up, and often times during this bull market it is the time the bounce become a rally with an attempt at new highs. In addition, short-term breadth turned up again, taking long-term breadth with it, both very positive signs and they have a lot of room to move up (see the SPY/Market chart below).

In other words, I’m expecting the market to shoot up Friday.

But…as Trader Vic Sperandeo has fondly said: “If the market doesn’t do what it’s expected to do, it will do the opposite twice as much.” So day traders be nimble, swing traders tighten stops, and investors watch your asses — this is not a spot you want to be blindly holding if expectations go awry.

SWING TRADING SIGNALS:

LONG-TERM BREADTH: Buy (Day 1).

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

CONTEXT:

SPY CLOSE – 270.40
QQQ CLOSE – 164.80
CNN MONEY’S FEAR AND GREED INDEX: 15, falling, extreme fear level).
NIFTY-50 STOCK LIST: 16 Buys; 6 Overbought, 3 Oversold, 3 new buys today, 12 new sells.

(click on the chart for a larger view)

$Stocks – Bellwethers “sure to bounce”…bounced.

As this week draws to a close, thought I’d take a look back at the bellwether stocks I suggested were oversold and sure to bounce with the market.

Note this link from February 11:

Bellwethers stocks sure to bounce…

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

Been two weeks since it was suggested the bellwether bounce would be sure to happen with the general market’s current up swing and the group has been led by BIDU up 13.5%, NFLX up 10.4%, TSLA up 9.6%, and both AMZN and FSLR north of 8%. The laggards have been TWTR, BID, and FB.

All twelve of the stocks in the basket are in the black on this swing trade.

For an easy comparison between the then and the now see the charts below. The white flags on the lower right of each chart show the cash (and percentage) gains per $100K committed to each trade for the past two weeks.

If the market continues up after this week’s sideways slide, mounting a further rally, these stocks are sure to go higher again with it, probably with the laggards playing some catch-up.

(click on the charts for a larger view)
BELLWETHER STOCKS TODAY’S CLOSE:

BELLWETHER STOCKS FEBRUARY 11 POST:

The SEC spies a $RIOT

I look at stock of Riot Blockchain (symbol: RIOT) everyday since it somehow sorted itself into the number-one spot on my nifty-50 stock list. In the entry from December below I was mystified:

MY LAST COMMENT ON RIOT IN DECEMBER

This is the company that was in veterinary products until it changed its name from Bioptix to Riot Blockchain, not only to accidentally vault to number one on my list but also to grab onto the latest cryptocurrency/blockchain craze for itself. On the name change alone it went from from $4 to $40 in no time at all. Since then it has done nothing but decline, decline, decline. Needless to say, everything here was dicey from the start.

So it is no surprise that it was announced today that the SEC is picking up the dice and taking a look. The stock, once the leader in this shenanigan sector, is down 37% today.

In the meantime the other stocks in the sector, although following the same pattern as RIOT from the beginning, don’t seem to have noticed RIOT’s drop today (see charts below). Maybe the story is different with each of them (OSTK, formerly Overstock.Com, recently picked up an investment from none other than George Soros), or maybe they just have not focused on the implications of the SEC opening their barn doors.

Good luck, fellows. Cash in your bitcoins…if you can.

(click on the chart for a larger view)

#MarketTiming – What a “long” glorious week!

This is an update of this post in this link, made last weekend:

#MarketTiming – Time for a bounce…

Wow! The predicted “bounce” has turned out to have been an understatement to what happened in the market this week.

Remember the 1961 movie “The Absent-Minded Professor” with Fred MacMurray, which introduced the world to flubber? Well, this week was a FLUBBER OF A BOUNCE, and since today it turned long-term breadth positive it is a bounce that has likely turned into a rally.

If I had to guess, instead of just following along, I suspect the pause begins tomorrow. If it gaps up, the rest of the day will likely be flat as the monthly options expiration plays out. If it gaps down or opens flat, there’s a good chance it rises again to the close and starts the pause there.

Just guessing this stuff…

Regardless, it has been a truly glorious week for swing traders – among the leveraged index ETFs TQQQ is up 15.8%, TNA up 12.1%, UPRO up 10.7%, even SVXY in the blistered VIX complex is up 15.3%. The at-the-money monthly SPY 263 call from Monday’s open, expiring tomorrow, is up 179%. Among the bellwether stocks AAPL is up 9.2% (that is a heavy market-cap lift in an awfully short time), BIDU up 13%, NFLX up 11.2%. I’m going to update my bellwether stocks later but suffice it to say here all twelve as of the close today are in the black for the week.

Now for a few cautionary notes.

If there is any trouble with this, it is that it has been a straight up move since last Friday. All the major indexes and most of the sector ETFs are up five days in a row. Much of the market is wildly overbought on short-term basis. This up move has been crazy. It is easily three standard deviations of an average advance and done in five consecutive days! (See the histogram on the Nasdaq Composite chart below.) I can’t even remember the last time anything like that happened, and obviously not in the last six months of this huge bull market. Forty-seven of the stocks on my nifty-50 stock list are on buys with 31 overbought (see the swing trading signals below), and yet we are not at new highs. This is going to have to have a pause, some backing and filling, then a resumption of the upswing before one can be sure it is yet another bullish rally in the on-going bull market.

The trouble with rallies out of hard drops, like the one the market took before this bounce, is that by the time they are obvious, they are sometimes over.

In addition, if the fierce sell-off that has preceded this bounce was a shot across the bow of the bull market, it is possible the buying this week is the last leap into the market by those long-ago left behind — if so, and if this rally fizzles before new highs (or even at marginal new highs) then this could be an advance before a mighty, mighty big flop.

Whenever this ends, we are going to have one of the biggest bear markets in history. If you don’t think so, you must not know history or you think “it’s different this time.” History says it is never different this time.

Even flubber bounces had to come back to earth.

SWING TRADING SIGNALS:

LONG-TERM BREADTH: Buy (Day 1).

PRICE: Buy. (Day 5).
SHORT-TERM BREADTH: Buy. (Day 5).
VOLATILITY: Buy, (Day 5).

CONTEXT:

SPY CLOSE – 273.03
QQQ CLOSE – 165.70
CNN MONEY’S FEAR AND GREED INDEX: 11, falling, extreme fear level).
NIFTY-50 STOCK LIST: 47 Buys; 31 Overbought, 0 Oversold, 1 new buys today, 1 new sells.

(click on the chart for a larger view)

#Stocks – the bellwethers oversold, sure to bounce…

Took at look at bellwether stocks. With the exception of TWTR and NVDA, all are oversold on last week’s volatile market action to the downside.

With the market also oversold, it’s likely these market-leading stocks are going to jump this week. Good for a scalp at the least, and maybe even an upside swing if the market can manage a few positive days.

The bellwethers are AAPL, AMAZN, NVDA, TSLA, NFLX, GOOGL, BIDU, BABA, TWTR, FB, FSLR, BID, and GS (see the charts below).

(click on the chart for a larger view)

#MarketTiming – Time for a bounce…

Just spent a week in New Orleans watching Carnival parades, eating too much food and listening to lots of great music.

So what did I miss in the markets?

Just kidding. Saw all that too. Long time coming but again, just as everyone started to believe it was, it is NOT DIFFERENT THIS TIME.

The question to be answered is was that just a correction after a great bull run or is that the first plunge from a new bear born? Probably the bear is being born but we’ll have to see if it is so in the fullness of time.

For now, after Friday’s further plunged to another new low and reversal back into positive territory, it’s likely the market will bounce this week. How high and for how many days is anyone’s guess but a bounce is what to look for, and, as they say, if one sees what one is looking for, jump all over it.

An important note, the lows and tests of lows last week set up a divergence with short-breadth (see the green circle in the upper section of the chart below). That is an aggressive trader’s buy signal. Works like a charm in bull markets. Doesn’t work all the time in bears. What happens next on that indicator could tell a lot about what kind of market we’re going to have going forward.

All swing signals registered buys Friday but the long-term breadth remains negative indicating so far this bounce will only be a bounce.

SWING TRADING SIGNALS:

LONG-TERM BREADTH: Sell (Day 10).

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

CONTEXT:

SPY CLOSE – 261.50
QQQ CLOSE – 156.10
CNN MONEY’S FEAR AND GREED INDEX: 10, rising, extreme fear level).
NIFTY-50 STOCK LIST: 19 Buys; 2 Overbought, 29 Oversold, 9 new buys today, 6 new sells.

(click on the chart for a larger view)

#Stocks – the tails that wag the banking dogs

As I recall back in 2007 or so there was a moment when the banking stocks were making new highs while the housing stocks had long since died.

Needless to say the rest in 2008 became history.

So are we there again? Stuck that “history repeats” thing again? Or is it different this time?

At moment the answers are out. Home building stocks are down on the creep up in interest rates and the overheating in the retail housing markets and the current pullback in the general market but maybe not out yet since we are still in a bull market overall. The banks are so far holding near the highs.

I bring this up just as a heads up.

Watch the tail – it will tell if the dog will die.

(click on the charts for a larger view)