#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 #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.

$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)

#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 – another day, another dollar or two

As market sold off it gaped-up gains Tuesday, the NYMO and NYSI did not turn down.

Today showed why traders always want to be on the same side as those two breadth indicators.

It’s been a great bounce and so far there’s not sign it’s done, except we’re running into a holiday in a bear market. I haven’t studied those occurrences but I would not be surprised if there’s a stall tomorrow.

No telling what more three days of news can bring during a world-wide pandemic.

Anyway, some highlights in this spectacular bounce suggested to start on on the open of March 23rd in this post: Reading history on the #MarginDebt chart. Since then UPRO, the SPX leveraged ETF, is up a whopping 60%, TQQQ is up 52%, TNA 45%; among the leveraged sector ETF’s I follow, ERX is up 82% and SOXL 74%.

Spectacular numbers.

So spectacular in fact that going into the weekend traders might want to move up to the edge of their seats to insure nothing goes wrong with the profits grabbed in this fierce bear-market rally. Investors can go on praying there’s more to come after the harrow plunge they’ve just seen. I hear a lot of happiness among those who did not buy and hold and bought sometime in the past two weeks and a lot of hoping from those blistered by what the hope is a “black swan” interruption of last year’s bull market.

I still believe this is a bounce to be slaughtered because of the unraveling of margin debt discussed in that link above but I guess we’ll see in the fullness of time.

In the meantime, this was my play for today, the SPY 267 in-the-money call expiring today, stopped out once but finished up 149% for the day trade.

Like I said above, another day, another dollar or two…in a spectacular week.

(click on the chart for a larger view)

$UAL $DAL $AA – time for buyouts instead of bailouts?

Bloomberg reported yesterday that the major American airlines used their free cash flow for buybacks and may be bankrupt by May.

See this CASH FLOW LINK and this BANKRUPTCY LINK.

Trump is already talking a taxpayer bailout.

How about buyouts instead?

Again and again, these industries (last time it was the banks) recklessly practice free-market capitalism and eventually a crisis comes and again they need a socialist intervention to go on with their business as usual.

Don’t these guys ever plan ahead? Don’t they ever realize all good times come to an end to one degree or another (all bad times too for that matter)?

Isn’t it time for this periodic sucking on the taxpayer tit stops? Maybe a lesson needs to be learned. If the taxpayer is going to have to subsidize and/or finally bail them out in the end, maybe it’s time the taxpayers take ownership.

Not that Trump would know what to do being on the opposite side of his own bankruptcy history but he won’t be President forever (at least I hope American voters have wised up enough to flush the con king).

Anyway, this is what these once high flying birdS look like crash landing together:

(click on the chart for a larger view)

#SectorTrading – when the bear bites everything bleeds

Got the bounce Friday in a frenzied last half hour as suggested Thursday in this post: #MarketTiming $SPY – Buy now, resell later….

No doubt it was primarily short covering but the rapidness of the run-up was bolstered by the announcement that the confused disingenuous Trump Administration is trying to catch up to the actual facts of the Covid-19 virus.

Trump and his team of appointed incompetents had no choice since the scientists within the CDC are coming to the fore and not putting up with the bullshit anymore, and Governors Jay Inslee of Washington State, who Trump called a “snake” (I guess because Inslee was teaching him leadership by example), Andrew Cuomo of New York and Gavin Newsom of Califonia, as well as hundreds of mayors across the country, who could not wait any longer on the dithering Feds, were moving aggressively to confront the virus in order to protect the citizens in each of their states and municipalities.

Regardless, this bounce, even if it becomes a rally is not going to last. As also noted in the post Thursday, the economic damage that’s begun hasn’t even begun to move through the market. Companies may begin warning this week of earning shortfalls.

There are going to be a lot of earnings shortfalls.

The S&P is down 16% for the year, even after Friday’s nine percent bounce. If is FINRA Margin Debt is unraveling (it’s reported a month late), and it probably is, and if history means anything, the S&P has another 30 or so percent to the downside to go over time. Margin calls feed on themselves as the calls bring more selling and more selling brings more margin calls.

The point is it is not buy-the-dips anymore, it’s sell the bounces. Friday’s was a big bounce. Did anyone sell or just started praying for more?

In the meantime, I thought I’d take a look at a few stock sectors I follow to see how bad it’s been even with Friday’s bounce in the numbers. Interesting among the biotechs: both REGN and GILD are up for the year so far, the only glimmers of green. Those are among the drug companies working on a vaccine for the virus. I will get to the tech stocks later. They have held up somewhat but the bear will bite them too before this is over. And the marijuana stocks…ah, the weeds, they are worthy of a blog post all their own.

The tables below are a year-to-date (less than three months). Take note of the percentage decline columns next to of the raging red bars:

BANKING STOCKS

HOUSING STOCKS

ENERGY STOCKS

COAL STOCKS

BIOTECH STOCKS

#MarketTiming – the Santa Claus Rally, a progress report

On December 6th, the all-important NYSI, measuring longer-term market breadth, turned up signalling an on-coming upswing in the market beginning the open of Monday, December 9th. It was an unusual turn in that it preceded the NYMO short-term breadth indicator.

That doesn’t usually happen unless there’s been a V-bottom in price on the most recent downswing. And, in this case there was, and the NYMO confirmed the rally on 12/11 giving its own buy signal for the open of 12/12 when I wrote this entry below:

#MarketTiming – with not much fanfare Santa slips into view

Since then most of the major indexes, and their 3x-leveraged ETFs, have been up a cumulative eight days. Needless to say, the market is overbought. CNN Money’s Fear and Greed index is at 90, an “Extreme Greed” level, a level which eventually leads to sells downs.

Consequently, the market could take a dip or a tumble anytime (although with Christmas yet to come everything remains bullish). With that in mind, me thinks it’s time for swing traders and anyone else who feels comfortable taking profits should either tighten stops under the advance or cash out some of the gains.

Among the major leveraged ETFs, TQQQ is 9.0% for the eight days, TNA up 6.3%, UPRO up 6.0%. In the leveraged sector ETFs, TECL is up 10.4%, ERX (remarkably) up 10.3% and SOXL is up a whopping 19.6%. Eight trading days.

Notable stocks in my bellwether group include TSLA up 19.5%, NVDA up 11.3%, SHOP up 7.5%, NFLX up 7.9%. AAPL usually gets the press coverage but it’s a laggard at up 3.6%. Still, it’s just eight trading days.

(click on the chart for a larger view)

#MarijuanaStocks – the wither in the weed patch…

At one point last year, the marijuana stock sector was the leading sector in the entire market.

Everywhere analysts were hailing it as the next great growth sector, especially after Canada joined several states in the U.S. to legalize weed, both medically and for recreational use. Made sense, and before anyone could say “don’t Bogart that joint” there were cannabis shops practically fighting Starbucks for retail space.

#MarijuanaStocks – gains are high in the weed patch

At one point, the founder and CEO of TLRY, because he owned so much stock in his heralded IPO, was something like the fourth richest man in the world…for a day. But now that day is done.

The chart panel below tells the rest of the story and there is not much more to say about that.

(click on the charts for a larger view)