$LYFT gets no lift on first earning report since IPO

LYFT, the ride-share biggie, is a perfect example of not buying into the hype surrounding an IPO.

LYFT came public on 3/29 and dropped almost immediately in on its opening bar, then gaped down the next day (see the charts below). Eventually, it settle down to move sideways until…today. It’s earnings report was terrible, losing $9 a share, more than a billion dollars, despite an increase in revenue and market share. And it had to announce on a day when its drivers are on strike with its biggest competitor coming public Friday.

The stock dropped nearly 11%

If one is an investor, none of this should matter. As outlined in this link below, investors should not even be long the stock until all fundamental and technical finally shake out, if they ever do. (Keep all this in mind also for the upcoming UBER IPO.)


Buying IPOs For Dummies

These IPOs are difficult to short in the initial stages, but traders on biggies like LYFT have options to play with. LYFT’s options came to market five days after the stock’s IPO day (see the charts below). And there is where the downside can be played. The LYFT May monthly 75 puts bought on its own “IPO day”, using the same criteria outlined for the stock in the link above,is now up approximately 150%.

Now that is uplifting.

(click on the chart for a larger view)

#IPOs – when “dummies” should take the trade

And on the second day of trading an IPO, dummies discover why they should never buy on the first day of trading.

This is based on suggestion in this post:

Buying IPOs For Dummies

Don’t mean to use the term “dummies” in a derogatory fashion but sometimes it’s hard not to.

Over and over again, unless one is a real insider or being bribed for doing something else, or running some money-laundering scam that’s beyond me, anyone giving in to the hype surrounding an initial public stocks offering and buying before seeing which way it is going when its first day is done is plain and simple a dummy.

As said the link, this is one of the easiest trades in the market if one has persistence to follow an IPO and the discipline to wait for it reveal its direction before buying. Initially these stocks are difficult, if not impossible to short, so we’re talking only the long side here.

The keys to taking a position in a recent IPO are the high and the low in price on the first trading day (its “IPO day”). It is a buy on a close above the high of the IPO day. After the buy the high of that day becomes the stop loss level or the low of the IPO day becomes the stop-loss level depending on any individual trader’s or investor’s risk tolerance.

The trade is as simple as that.

See the chart panel below for examples. The top row of charts are recent successful IPO investments using this system. Each is set at a $10,000 investment to show both the money and percentage gains (the white flags on the lower right of each chart). As of today’s close, SWAV is up 46%, PINS up 11%, ZM .98% and SOLY up 133%.

In the bottom row are four IPOs from Friday which should not be in anyone’s portfolio…not yet at least – these second days are, as I said above, when dummies learn they never shoulda never bought any of these Friday.

Going forward, RRBI will be a buy above 58 and not before; SCPL above 18.75, ATIF above 5.10, and YJ above 18.20.

Simple as that.

(click on the chart panel for a larger view)

#MartketTiming – Swing Signals 4/10/19

THE SIGNALS AS OF 4/9/19.

Long-Term Breadth (NYSI): BUY FROM 4/10.
Short-Term Breadth (NYMO): BUY FROM 4/10.
Price: BUY FROM 4/10.
Nifty-50-Stock-List: 21 BUYS, 5 NEW BUYS, 11 OVERBOUGHT; 29 SELLS, 3 NEW SELLS, 3 OVERSOLD.
CNN MONEY’S “Fear and Greed” Index: 70, FLAT, GREED LEVEL.
Bellwether Stocks: 14 UP, 1 DOWN.

OF NOTE, $10K Swing Trades, SPY OPTIONS:

SPY CALLS, 287, 288, 289 STRIKES FOR WEEKLY 4/12 EXPIRATION OR MONTHLY 4/18 EXPIRATION.

OF NOTE, $10K Swing Trade Stocks:

BUY ON OPEN 10/11: GS, MSFT, AMZN, FSLR, NVDA, WYNN,TWLO, TSLA. STOCK OPTIONS.


WHAT’S NEXT?

As was suggested the post below in regards to yesterday’s drop in the market and pull back in short-term breadth: “Most likely it’s a mere dip to the zero line on the NYMO.

And so it was.

With today’s pop (not so much on the Dow but worthwhile pretty much everywhere else), the NYMO and NYSI are once again positive.

Kind of get tired of saying it over and over again but as long as the NYMO and/or NYSI remain positive overall the usual play is to be long, take profits when the stocks give sell signals, and buy coming out of dips but have to say it since it happens over and over again.

Fourteen out of 15 bellwether stocks were up, 40 of the 50 stocks on my nifty-50 stock list gained, all eight of the 3xLeverage ETFs I follow — TQQQ, TNA, UPRO, SOXL, FAS, ERX, LABU, FNGU, up, up, up…

And most notably the NYMO put in another low above a low (see the chart below) so until further notice expect follow through – this is broad market run to the upside.

(click on the chart for a larger view)

$SPY – Up, up, up…

After muddling around for nearly two weeks in a sideways-to-down consolidation, SPY and the rest of market appears now to want to go up, up, up.

Friday, the most important triggers all lined up as buy signals – short-term breadth, long-term breadth, and price. In addition, the VIX also is in line, and happens to be below 15 which is bull-market territory.

These are signals that repeat again and again in the market.

First, a low above a low pattern on the short-term breadth, measured by the McClellan Oscillator (the NYMO, see the green circles on the chart below), then an upturn in long-term breadth, measured by the McClellan Summation index (the NYSI, see the green vertical line on the chart for Friday), followed by a a follow-through in price (which appears to happening in the futures for Monday).

And oftentimes, when all of these bullish signals are in play, they result in a 10-to-14 week upswing in the market from the bottom on the NYMO (three weeks ago). If so, this rally could easily go to what they say — “sell in May and go away…”. And that could challenge the all-the highs.

I still think this is a major bear-market rally but in the meantime it’s buy and hold the swing and buy the dips when and if they come, until further notice.

(click on the chart for a larger view)

#Coal – waving good-bye to Cloud Peak Energy $CLD

Haven’t done much in this sector for a couple of years since Trump started promising to bail out the companies with taxpayer subsidies, but in recognition how much time and how many times I spent shorting these stocks in the past I’d like to wave good-bye to CLD, Cloud Peak Energy, the latest in a long line of stocks in this dying sector flushing sharehold equity down the shaft — Patriot Coal, Walter, Energy, Peabody Coal (bankrupt and reorganized), Arch Coal (bankrupt and reorganized), Westmoreland Coal.

This company, CLD, actually planned at one time to ship coal to China through my backyard but the environmentalists in the neighborhood took care of that.

Good riddance to the Cloud Peak’s stock!

CLOUD PEAK ENERGY ANNOUNCES SUSPENSION OF TRADING

P.S. This news forced me to take a look at the sector. I should have been paying attention. Almost every stock’s chart looks like BTU (see the chart below CLDP). They all feel apart at the same time, in June. Something must of happened. Maybe investors realized someone was not necessarily true to his word. Duh.

(click on the chartS for a larger view)

#Stocks – Recent IPOs for the long term

This is a reminder that this is the easiest trade in the market and a followup to recent IPOs bought for the long term as per this strategy:

Buying IPOs For Dummies

The high and low of the stock’s price on its first day of trading creates the levels at which to buy and sell. The basic strategy is to buy on a close above the high of its IPO day, using either that price or the low of the first day as the stop loss to protect capital.

Presumably, investors in IPOs want to buy and hold for the long term.

Below, are the charts of a selection of IPOs since February — GOSS, SOLY, TCRR, FHL, SWAV — that have signaled buys and continue to advance or at least hold firm. As a group, they happen to be up 18% in less than two months, led by SOLY up 59% and GOSS 19% individually.

Every time an IPO is launched, like the much anticipated upcoming ones for Lyft and Uber, it’s just a matter of paying attention to the first day’s price levels to make the trade. There is a lot of hype around each launch but one must have the discipline to wait for the stock to reveal its likely long-term direction. Some of these stocks go straight down from day one (a lot actually) but the stock of every major company in market history eventually made a move above the high of its IPO day and many of those never looked back.

With persistence, experience and discipline, it is the easiest and safest way to invest for the long term in the market.

(click on the chart panel for a larger view)

#MarketTiming – from bearish to bullish to bearish again…

On Monday, this blog posted that this stock market at this juncture is —

TRICKY, TRICKY, TRICKY.

No kidding.

At that point, for Monday, the market, according to many technical indicators, was poised to sell off, ending the splendid rally from December. But then it didn’t sell off.

Instead, yesterday, it gave a tentative, but likely, indication it was going to continue to go up into a typical bull-market cycle advance, and today on the opening gap and with its pre-lunch follow-through from the open, it appeared the snorting gods were in their heaven and all was right with bull world.

Then, during the day a quick slide took everything negative. Not by much, hardly enough to notice on daily charts at the end of the day, but it was enough to turn long-term breadth negative again (see the dots on the chart below), which makes being long the market dangerous and while short-term breadth did peek above the zero line for a day a look back looks pretty bearish (the yellow line on the chart below) with highs below highs generally all the way back to the beginning of the rally.

Tricky.

I’ve long said this is the rally to make everyone believe a bear market did not begin in September of last year, that the bull market from as far back as Obama’s first term was resuming and continuing and it may still be (it sure looked like it yesterday), but it will not surprise me if a benign dip like today turns into a raging grizzly while the buy-and-holders sitting at The Palm or at Smith & Wollensky are wondering why the steaks are taking so long.

For today I’m posting my “Black Candle” chart. Black candles shows up when an index or ETF or stock or whatever one’s trading closes higher than the day before (usually on a gap) but lower than its open. There are candlestick names for these kind of chart patterns but just plain “black” is fine with me.

Today, notably, we had black candles on SPY (below) and TQQQ, and remarkably on FNGU (the leveraged ETF for the FANG stocks). They don’t always signal tops of swings, although I can’t think of anything else that comes as close (see examples on SPY below), but they are alerts. They do signal sudden indecision. And they are useful markers, pretty much as simple as it gets — go long above the high of the black candle, go short below the low of the black candle as the indecision gives way to a direction either up or down.

(click on the chart for a larger view)

#MarketTiming – Bulls doing what they needed to do

What they needed to do was to push the market up some more.

In the process, the all important long-term breadth (the NYSI) has turned positive to go along with the short-term breadth (the NYMO) and price indicators with SPY finally edging above its 280/282 resistance (see the charts below).

That would suggest more advance to come. The upturn in the NYSI is buy signal for tomorrow’s open

But maybe not without a dip first, a “turnaround Tuesday”?

There are shaky signs that remain in this tricky time in the market. It’s kind of scary to jump in now with the market already up essentially six days in a row, both the Russell and the Dow at at the moment lagging the Nasdaq and the SPX as if not all the generals are as yet on the battlefield. My nifty-50 stock list has 29 stocks on buys and has been declining since last week, even slipping again today from 31 on buys Friday. CNN’s Fear and Greed Index is at a “greed” level and still working on divergence trailing the market’s up move these last six days.

Still, at this point there is no choice other than to be long until further notice.

Given that the NYMO/NYSI is positive and also has a cycle that usually runs ten to fourteen weeks (the sell down ending six trading days ago was in the 10th week) breadth could launch the market into rally into say…May…and maybe making a new high along the way.

I’ve been asked to explain what’s on the the triptych of stock charts below. They are an illustration of what I talk about over and over again as I try over and over again to simplify, simplify, simplify.

The top part is whatever is being traded on the signals. In this case TQQQ. Could be AAPL, GE, NFLX, options, whatever. The middle part is NYMO and NYSI. The next lower part is obviously SPY. Also use the Nasdaq composite here on other charts. And finally the bottom part is the profit reading, set for $100,000 in order to easily see the percentage move. The white flag on the lower left is the booked profit percentage on the signal year to date. The white flag on the lower right is the current profits if the signal is in play.

The chart on the left is the short-term breadth signal for March, in the middle is a pure price signal for March, and on the right is the long-term breadth chart, YTD (it is set to go long again tomorrow).

Remember this is day trading and swing trading, no long-term buy and hold in my world (far too risky).

(click on the charts for a larger view)

#IPOs for “Dummies” – $GOSS $ALEC $HARP UPDATED

This an update of this post below: IPOs on buys.

As outline in that post, all three of these recent stock IPOs were crossing the highs of their first day of trading (the “IPO Day”).

Once in the trade, stops, at the individual trader’s discretion, can be on a close below the IPO-Day high (which is what I would use), or if one has the patience and risk tolerance as far down as the low of that day.

The numbers in the white flags on the charts below are the gains per $10K invested in each stock. The numbers, at 10K, also correspond to the percentage gains (for instance GOSS is on today’s close up 12%).

(click on the chart panel for a larger view)

#IPOs for “Dummies” – $GOSS, $ALEC, $HARP on buys

Took a look at some recent IPOs since this is one of the easiest trades any trader and investor can make.

I don’t mean being on the inside, or some investment house’s favorite client, or some politician on the take. This when to buy a newly-issue stock offering AFTER it come public.

The strategy is outlined in this post below:

Buying IPOs For Dummies

Don’t mean to insult all those guys who went to Harvard and Wharton and Stern, but simple is best and there is no simpler trade than this.

Note the range on the first day of the IPO’s trading. The buy signal is a close above the high. It is too difficult usually to short these stocks so let’s set that aside for now. The stop loss after the buy is up to the individual trader’s or investor’s risk tolerance. It a can be as close as the price coming back below the first day’s high or as far away as falling through the first’s low.

Below are the charts of the selected recent examples for the stock symbol GOSS, ALEX, and HARP. I have no idea what these companies do nor how qualified they were to sell stock to the public.

This purely a technical analysis entry signal. GOSS was a buy above $19 on today’s open is currently up 1.9%; ALEC was above 19.50 on today’s open is up 4.9%; and HARP was a buy on Friday’s open and is at the moment up 6.1%. The numbers in the white flags on the lower right of each chart is the dollar gain per $10K invested.

Needless to say, as indicated by those quick gains, the first-day high is an important line to play.

(click on the chart panel for a larger view)