#MarketTiming – Swing signals swing again…

Yesterday my swing signals for Price, Breadth and Volatility were all on sells. The market went up. Today the signals (see below) have swung again to buys. Across the board.

I’m assuming the market is going up tomorrow.

But the indexes are overbought and the internals are falling apart. Something has to give, sometime…

Sometime, needless to say, is an awfully vague term.

If this sounds like I have no confidence in these signals I don’t intend it to. They are reliable for swing trading. XIV, for instance, is up 67% year-to-date on the Price signal, up 55% on the breadth signal and 80% on the volatility signal (appropriately). See the chart panel below – from left to right Price, Breadth, Volatility.

It’s the market, at this point, going up and up and up relentlessly that bothers me. We’ve seen this before and it’s great while it lasts but it is not, in the end, going to be different this time.

SWING TRADING SIGNALS:

LONG-TERM BREADTH: Sell (Day 17).

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

CONTEXT:

SPY CLOSE – 259.11
QQQ CLOSE – 176.24
CNN MONEY’S FEAR AND GREED INDEX: (54, falling, neutral level).
NIFTY-50 STOCK LIST: 23 Buys; 11 Overbought, 6 Oversold, 5 new buys today, 7 new sells.

(click on the chart panel for a larger view)

#MarketPerspective – waiting for the Fed…

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)

#MarketTiming – chopping at highs…

Kind of a weird choppy day.

Dow up a lot, SPY and Russell touch new highs, Nasdaq not hardly up at all.

And yet two of my three end-of-the-day signals – price and short-term breadth – are on buys signals, the third – volatility – missed registering a buy today by a whisper so I guess we’ll see what tomorrow brings.

Long-term breadth remains positive so there is a good chance the market does move higher tomorrow.

This is a ragged and scary market now which is what bull markets do to traders while investors just blithely hold on until all hell breaks loose (as it always does eventually). The VIX particularly at the moment is making a low not since 2007 just before the last time hell came to visit.

SWING TRADING SIGNALS:

PRICE: Positive. Long (Trade Day 2).
SHORT-TERM BREADTH: Negative. Flat (Day 1).
VOLATILITY: a sell on tomorrow’s open, Flat (Day 2).

CONTEXT:

LONG-TERM BREADTH: Positive (Day 10).
CNN MONEY’S FEAR AND GREED INDEX: (81, rocketed to the extreme greed level).
NIFTY-50 STOCK LIST: 30 Buys, flying; 22 Overbought, 3 Oversold, 8 new buys today, 3 new sells.

(click on chart for a larger view)
MASTER2017-04-17_1628

$USD – a vote on the country ever day…

Given that currency trading is a vote by the whole world on your country every day and now that President Blowhard believes the dollar’s recent rise was because of “confidence” in him instead of an overflow from the Obama Administration, the US dollar is likely to decline now.

Trump commented that yesterday that the dollar was too strong because of “confidence in me”, but the currency has been going sideways to down since his inauguration.  Confidence in him?  More likely a rising lack of confidence.

And of course, the US dollar always does decline in Republican Administrations.

That was never more pronounced in historical terms than the day George W. Bush made his “Axis of Evil” speech.  That moment was the precise top for the dollar in his term.  It was as the entire world heard that and thought that guy is crazy and ran for cover.  It declined 40 percent and has not completely recovered.  No analysts ever seem to want to talk about it, preferring to say a weaker dollar makes American multi-national companies more competitive, but think what a drop of 40 percent in net worth means to the biggest economy in the world.

Subsequently, from the day Obama locked up the Democratic Party’s nomination in 2008 the dollar bottomed.  It was as if dollar bulls knew he would be President and were, after the raging uncertainties of the Bush Administration, damn happy he would be.  There were some wild swings in the currency as Obama battled Congressional Republican obstruction (shutting down the government…) but once he was reelected, it was clear sailing to the upside until now.

So what now?

The new era of raging uncertainties is just beginning so, despite professed Fed Reserve tightening, it is probably best to be defensive, if not downright bearish, on the US dollar.

(right click on the chart for a larger view)

USD2017-04-12_1312

Mirror, mirror, what’s the fairest rally?

This is a follow-up to the entry below entitled “To Brexit Or To Exit”.

It was suggested the current rally would continue to mirror the immediate post-Brexit, rally as it has been doing week-by-week since the election.  That continued today as the market put another spike up right on time (see the bars in the red ovals on the right and the left).

If the mirroring is to continue the market should put in two more up days this week before beginning a long chop-chop, likely for the rest of the year.

And it was suggested the rally would likely resume today into the end the week.  That is still likely unless the Fed kills it with news tomorrow.

(click on the chart for a larger view)

it_rhymes3

$CWX – What a difference a day makes

Corrections Corporation of American back in the growth business?

(right click on chart for a larger image)

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FIRST THEY CAME

First they came …” is a famous statement and provocative poem written by Pastor Martin Niemöller (1892–1984) about the cowardice of German intellectuals following the Nazis‘ rise to power and subsequent purging of their chosen targets, group after group. Many variations and adaptations in the spirit of the original have been published in the English language. It deals with themes of persecution, guilt and responsibility.

The best-known versions of the speech are the poems that began circulating by the 1950s.[1] The United States Holocaust Memorial Museum quotes the following text as one of the many poetic versions of the speech:[2]

First they came for the Socialists, and I did not speak out—
Because I was not a Socialist.Then they came for the Trade Unionists, and I did not speak out—
Because I was not a Trade Unionist.

Then they came for the Jews, and I did not speak out—
Because I was not a Jew.

Then they came for me—and there was no one left to speak for me.

 

 

 

$SPY – testing an important level

SPY, the monster S&P 500 ETF, took a look at 212.5 again today and held that support in late day trading. A couple of weeks ago it was doing that repeatedly.

My guess it will bounce a bit from here but the question is how high and what after that?

If it does not run right back up to the top of the recent range there is a likelihood that the steep decline market bears have so long been waiting for will be at hand.

The confounding thing about the general market in the past three months has been how many fundamental and technical indications have dropped into place that bear similarities to the market tops in 2000 and 2007 but the price drop has not gotten going in earnest.

For instance, monthly NYSE margin debt has clicked down again in a massive divergence to the market’s high level sideways move. Breadth in general has been declining despite price index defiance. It could be only the Fed, with an eye on the election, is holding the market up.

Whatever.

If today’s rip to the downside, on the other hand, is the shot that cripples the lumbering ship, 208 on SPY could be seen in a hurry, and 200 eventually would not be out of the question.

This is one of those times when long-term investors better sit up and take notice.  Decide how much of the current gain one is willing to lose and stick to it.  If there is a sell-off (for the rest of year?),  the signs it is, once again, not different this time have been obvious for some time.

(right click on the chart for a larger view)

spy2016-10-11_1808

Watching $BID for a market top

Sotheby’s Holding (BID) has so often been a market bellwether.

And at tops at that!  A rare thing in the world of calling market direction. Bottoms are easier to see and sometimes obvious but tops…”calling” tops has killed many a market prognosticator and killed many a bear.

So let me say right off I’m not calling a top here.  Just trying to pay attention…

And when BID quits rallying and/or diverges with general market, it is time to pay attention.  BID was down a bit on its monthly chart in September.  That is a lower high for the stock while the S&P 500 and Nasdaq drifted higher.

What’s it mean?  Maybe nothing.  Yet.  But take a look at the chart action showing BID with the SPX on the chart below in 2000 and 2007.  One might say, as BID goes so goes everything else.

And this time, so far, BID has not even crawled up to the top of its long-term price range, which is rather ominous going forward.

(click on the chart for a larger view)

bid_2016-10-03_0749

 

$UVXY – a look at a pure trending day

Following the red…

I guess the most surprising thing about today’s market sell-off is that it supposedly came out of the blue, a jet falling out of the sky.

But did it?  It’s September after all and September for bulls is historically the cruelest month.  Did everyone start thinking it would be different this time?  Again, yesterday?

Then there is the 40 day sideways move on the SPX…That could not go on forever. Typically when it breaks out of a tight range it breaks big one way or the other.

Now that’s a cloud hanging over the market that could be filled with thunder-and-lightning resistance on any snap back up to the breakdown line on the daily charts.

Technically speaking my follow-the-red indicator (the intraday trend) gave sell signals on the close yesterday on QQQ and SPY, but not on IWM.  It slid sideways into a buy signal on the VIX-based ETFs, in this cas the inverse 3x-leveraged UVXY (see chart below).  And UVXY, maybe the wildest and craziest ETF of all, put its volatility on display, up 32 percent on the day, 24 percent from the open.

Wow.

Can’t be totally bearish since this market has defied sell-offs like this before.  Downside trending days like today tend to use up all of initial selling power so Monday could easily be sideways to up.

Still, the bears are on the prowl so it is time for bulls and investors to use stops to keep from getting mauled.

(click on the chart for a larger view)

uvxy_2016-09-09_1306