#SwingTrading – “Buy when the market tells you…”

Kennedy Gammage, the late great market timer, used to say “Buy when the market tells you, sell when the stock tells you.”

He could just as easily said “buy when the market tells you AND when the stock tells you.”

That is what this story is about.

Mr. Gammage’s market tools were the McClellan Oscillator ($NYMO) and the McClellan Sumation Index ($NYSI). The NYMO is a short term market-breadth indicator based on the New York Stock Exchange Advance/Decline line, and the NYSI is its longer-term brother.

Taken together, they are the clearest indication of mass market psychology which is to say: market direction, up or down.

When the NYMO and NYSI rise, it is time to buy stocks, ETFs, calls, futures, whatever money-maker one likes best.

That is the market telling you to buy…simple as that, and do not argue.

Now throw in my nifty-50-stock list (see its own story below) as it moves, again and again, from oversold to overbought and back again.

Each time there are 40 or more of the 50 stocks on sells, it’s time to sit up and take notice since that is the number that most often signals either the bottom or the beginning of a bottom on each down swing.

Once 40 more sells have registered on the list, it is time to take note of the NYMO to get market direction to trigger the buy, or if longer-term breadth, measured by the NYSI, is rising when 40 or more sells register on the list that is to time as they say in the market to “buy the dip” in an on-going up trend.

This is what market timing and swing trading are all about and the returns can be both rapid and remarkable.

#MarketTiming the #ShortList

#MarketTiming swing bottoms with 40 plus sells on the #Nifty50StockList

Again and again, my nifty-50 stock list moves from oversold to overbought and back again to oversold like an ever spinning wheel within the market’s spinning wheel…

And each time there are 40 or more of the 50 stocks on sells, it’s time to sit up and take notice since that is the number that most often signals either the bottom or the beginning of a bottom on each down swing.

I first posted about this strategy in November of 2015, one of the first entries on this blog.

Nothing has changed.

Usually it just takes one day of 40 sells, sometimes two days, to set up the bottom of a swing. Should be noted if it goes more than two days that’s is a warning that something bigger may be in the offing (last time that happened was the start of the Covid-19 bear plunge this year).

This is just an FYI, but it is what market timing and swing trading are all about.

The results can be quite remarkable, in leveraged ETFs like TQQQ, TNA, leveraged sector ETFs like SOXL, FNGU, and, of course, hot individual stocks.

The buy signal is the open of the first day after the Nifty50StockList ceases to have 40 or more stocks on sells. Stops are at whatever price level on whatever is bought based on each trader’s risk tolerance.

On the chart below the 40-plus sells are marked with purple paint bars.

(click on the chart for a larger view)

#MarketTiming the #Nifty50StockList – Marking progress in $QDEL

Today, a look a back at the swing signal and upswing in QDEL, number 25 on the Nifty-50 stock list.

Up 27% since the swing signal in an oversold list since the buy on the open 9/09, 13 trading days ago.

#MarketTiming the #ShortList – Stocks UPDATED

The obvious stock sectors that are no-brainers for shorting largely because Covid-19 has put them either out of business for the immediate future or has severely hampered profit prospects for this year.

The most obvious are the cruise companies – NCLH, CCL, RCL – since it’s going to be a long time before they can pack a liner with either customers and crews. And now several of the key destinations have so enjoyed being tourist free there is talk they are not even going to allow the ships to dock and disgorge passengers like they were doing before the pandemic.

Next on the list movie theaters – AMC, CNK – since even if they open with social distancing they will at reduced audience capacity. Can they make profits on half a house or less?

It’s the same in the airline sector – AAL, UAL, DAL, LUV – less flights, less passengers, more trouble with the virus every hour of the day. Throw with BA too. No need to buy passenger planes when there are so few passengers and you have a fleet of excess airliners in storage.

Banks are on the short list too — JPM, GS, BAC, C, WFC – largely because they have lagged the rally from the March low for too long. That spells trouble not only for the sector but for the market as a whole. If the economy is going to tank and take the stock market with it (any day, week, or month now), it’ll probably, seriously, start the drop in the banks.

UPDATE: Am adding YELP and TRIP to the list. Without as much to review as they had before the pandemic, they have diminished prospects for the near term and maybe longer.

Coal stocks – BTU, ARCH, SXC, CNX – on the short list because the coal sector is always a short. It is not the fuel of the future and is becoming more and more not the fuel of the present. If ever there is a sector for swing traders to short every bounce this is it.

In the $BLNK of the an eye, 40% and 12.6%

On my last swing buy signal $BLNK, a company in the business of providing charging stations for electric vehicles. You know, things like those posts in parking garages and any where else something like a Tesla might pull in for a recharge.

I’m not one to get into fundamentals but it seems to me BLNK is a baby with a whole world and all of its life ahead of it.

If one is so inclined to peruse the fundamentals there is this at BARCHART.COM.

Anyway…

Since my last swing buy on stocks, ten trading days ago, BLNK is up 40% (see the chart at the bottom of this post below). Since I tweeted this on its run out a Darvas Box it is up 12.6% from the open three days ago.

As some market guru might say — “Sprightly.”


AT THE CLOSE TODAY (9/22):

(click on the chart for a larger view)

$UVXY – a slow walk to its next explosion…

The fuse has been lit all that’s left is for the blast to blast.

ON August 10 I gave another heads up to look over at UVXY before it takes off, maybe to the stratosphere…again.

See this link: $UVXY – lighting a fuse for its next explosion…

In the link it was pointed out that UVXY – like other VIX derivatives – had again worked itself into a falling-wedge pattern.

The last time that happened was in January. In February, after a slow walk out of the wedge it suddenly rose nearly to 140 from 11 – FROM ELEVEN TO NEARLY ONE HUNDRED AND FORTY! That explosion was fueled by the worldwide pandemic and, in the U.S. particularly, by the utter incompetence of Trump and his administration to deal with it.

I have no idea what is going to drive it now, although the Trump disaster continues unabated, but UVXY has again walked out of a falling wedge and is slowly walking toward whatever it is (see the chart below).

Maybe it will be reality setting in that an economy — that has been masked by a exuberant market rally fed by FED pumping and a few big tech stocks like AAPL, AMZN, MSFT, FB — more or less sucks.

Much, much more than less.

So many sectors – airlines, movies theaters, cruise ships, BANKS, now even fossil-fuel stocks like XOM, CVX, BP – after the initial bounce off the March lows have been going sideways for months and are now poised to drop off cliffs the market has built for them.

UVXY showed a hard run up off its low today. That could mean it’s done with slow walking. Or maybe not.

Regardless, it likely won’t be much longer until it explodes to the upside, and when it does, it will be fast and across the rest of the market it will take no prisoners.

(click on the chart for a larger view)

$UVXY – lighting a fuse for its next explosion…

File this under “history repeating slash history rhyming.”

The last time I posted a VIX ETF heads up was January 14TH ($TVIX – Just a heads up…), when TVIX was 40ish and UVXY was 10 something. Both, at the time of that post, were down eight days in a row in a falling wedge pattern, like UVXY is now (see the chart below).

I suggested at that time that whatever buy trigger came along it was going to come along soon and those leveraged ETFs were going to explode.

Three days later they popped nicely, not spectacularly but nicely, then backed off to retest the lows into early February. Then there was a another buy, triggered by a down turn in the NYSI, the longer-term breadth measure of the McClellan Oscillator, on February 19th.

And the VIX ETFs exploded.

UVXY went from under 11 to as high as 135. In two weeks. TVIX, which rocketed from 40 to a 1000, is no longer with us, having killed itself with success…well, extreme volatility.

The blast was driven by the onset of the Covid-19 pandemic in the United States. It started slow but with President Trump’s incompetence and his totally botching of this country’s response to the virus (calling it a “hoax”), it ran the major indexes down 36% in a few weeks.

The market has rallied back to the previous highs with Congress putting out a two-trillion-dollar stimulus that once again helped Wall Street but not much on Main Street, and with the Federal Reserve throwing money onto the market like gasoline on a bonfire.

Truly, it has been a market rally led by tech and irrational exuberance. Remarkably, the banks have been relative laggards in the rally, never a good sign for the market longer term.

So what now?

As yet, the market has not come to terms with how severely the economy has been damaged with double-digit unemployment, with a possible waves of evictions, with thirty/forty million people out of work, with relative consumer buying power in the shitter, with small businesses failing all over the place (YELP predicts sixty percent of restaurants will not recover). And now schools likely will not be able to fully open.

Even now the Trump Administration doesn’t have the slightest idea what to do, and Republican Senators are dickering with each other, holding up the Democratic rescue plan. Trump has returned to the coronavirus briefing podium to spout his lies and ignorance. Trump’s big botch goes on while the rest of the world has shown to varying degrees what should have been done.

Five million Americans have been infected and 170,000 have died (with both those numbers still rising fast). As the rest of the world continues to make progress against the pandemic (New Zealand has not had a new case now for 100 days), the United States, governed by not much more than an orangutan, continues to be a mind-boggling catastrophe.

What now? What now?!

This is just another heads up…like last time:

Watch UVXY. It will tell, and there will be money to be made there. It’s setting up another explosion. After these eight days down in a row it could come tomorrow or two weeks from now but it’s likely the fuse has been lit.

(click on the chart for a larger view)

#MarketTiming – Adding #Banks to the #ShortList

I have already outlined the obvious stock sectors that are no-brainers for shorting largely because Covid-19 has put them either out of business for the immediate future or has severely hampered profit prospects for this year.

The most obvious are the cruise companies – NCLH, CCL, RCL – since it’s going to be a long time before they can pack a liner with either customers and crews. And now several of the key destinations have so enjoyed being tourist free there is talk they are not even going to allow the ships to dock and disgorge passengers like they were doing before the pandemic.

Next on the list movie theaters – AMC, CNK – since even if they open with social distancing they will at reduced audience capacity. Can they make profits on half a house or less?

It’s the same in the airline sector – AAL, UAL, DAL, LUV – less flights, less passengers, more trouble with the virus every hour of the day. Throw with BA too. No need to buy passenger planes when there are so few passengers and you have a fleet of excess airliners in storage.

I always have coal stocks – BTU, ARCH, SXC, CNX – on the short list because the coal sector always a short. It is not the fuel of the future and is becoming more and more not the fuel of the present.

Now I’m going to add banks as short prospects — JPM, GS, BAC, C, WFC – largely because they have lagged the rally from the March low for too long. That spells trouble not only for the sector but for the market as a whole. If the economy is going to tank and take the stock market with it (any day, week, or month now), it’ll probably, seriously, start the drop in the banks.

I’ve included DB on the chart panel below bacause it is a bank but it’s a somewhat separate case. Its price action is news driven since it has been the primary conduit for the money laundering between the Russian Oligarchs and the Trump Organization. Whether it is or is not going to have to pay for those illegal activities bats its stock price around more than banking fundamental alone.

The market sell off may have begun today with the NYMO putting in a high below a high on short-term breadth and the all important NYSI turning down (my key triggers) but with the FED meeting tomorrow, the timing is still a bit of a crap shoot.

(click on the chart panel for a larger view)

#MarketTiming three tweets today from a yawn to the scream

THE YAWN TO THE SCREAM

END OF THE DAY

(CLICK ON THE CHARTS FOR A LARGER VIEW)