#MarketTiming – Long-term breadth says sell the rally

MARKET TIMING SIGNALS FOR 7/18/2019.

Long-Term Breadth (NYSI): Sell DAY 1
Short-Term Breadth (NYMO): Sell DAY 3
Price: Sell DAY 2
Nifty-50-Stock-List: 13 BUYS, 1 NEW BUYS, 4 OVERBOUGHT; 37 SELLS, 11 NEW SELLS, 12 OVERSOLD.
CNN MONEY’S “Fear and Greed” Index: 46, falling, NEUTRAL LEVEL.
Bellwether Stocks: 6 UP, 9 DOWN.

WHAT?

The market took the tumble that been brewing for the past couple of days.

First short-term breadth turned down after a sequence of highs below highs, then price triggered a sell on today’s open, and now long-term breadth has given a sell signal for tomorrow’s open.

That last part is the most significant. Long-term breadth (the NYSI) is the primary context behind the entire market. If it is going up the bulls have the ball, if it is going down the market will tumble too. Maybe not right away — it can whipsaw like anything else, but if it keeps going down most stocks will follow.

Technically the sell signals are on tomorrow’s open but at today’s close this upswing, which began on the open of 6/28 (13 trading days ago), took TQQQ up 8.2%, UPRO up 5.1%, FNGU (the FANG ETF) up 12.4% and TNA remarkably was flat. Among notable stocks TSLA advanced 15.1%, SHOP 7.3%, TWLO 6.1%, WYNN 99%, FB 5.9% and AAPL lagged at up 2.3%.

The Nifty-50-stock-list was a mixed bag with as many stock down double digits as those up double digits. In retrospect that was probably a read on the raggedness of the rally.

However, INS, the number-one stock on the list coming into the upswing vaulted a spectacular 49.4%.

Interesting to note the divergence that registered on the overbought Fear-and-Greed Index, kept by CNN Money, called the exact top two days ago in SPY and in QQQ (see the chart below) and was telling across the board.

WHAT NEXT?

With the NYSI declining, one can only assume swing traders will be looking for short entries, options traders playing puts predominantly (see the post below), and long-term investors should tighten stops to their individual risk tolerance or just hold their breath and hope not to die.

Of note: NFLX after the bell reported earnings, a shortfall in expected subscriptions, and is getting clobbered in overnight trading. That may set a tone for trading tomorrow. Intriguing how often news comes along from somewhere to agree with the NYMO/NYSI breadth indicators.

Nothing much more to say. The market will go down until it doesn’t (and granted, that could be even as early as tomorrow).

(click on the Fear-and-Greed chart below for a larger view)

$SPY – trudging higher but watching for a reversal day

MARKET TIMING SIGNALS FOR 7/16/2019.

Long-Term Breadth (NYSI): BUY DAY 12
Short-Term Breadth (NYMO): Sell DAY 1
Price: BUY DAY 2
Nifty-50-Stock-List: 20 BUYS, 4 NEW BUYS, 13 OVERBOUGHT; 30 SELLS, 4 NEW SELLS, 11 OVERSOLD.
CNN MONEY’S “Fear and Greed” Index: 57, falling, GREED LEVEL.
Bellwether Stocks: 11 UP, 4 DOWN.

WHAT?

The market moved sluggishly higher today.

In the case of SPY it was five days in a row, and except for a minor blip in the middle of the advance, TQQQ would be the same. SPY, by my measure, has been overbought for three trading days, which is often all she wrote, but not always.

During this entire move up, my nifty-50 stock list has never had more than 25 stocks on buys. The last time I saw above thirty was two weeks ago (37 on 7/1). Those stocks are trudging through a muddle. That might or might now mean something. Notably TNA, the 3xLeveraged ETF for the Russell small caps has gone nowhere.

Still SPY has managed to make new all-time highs, which is either ragingly bullish, or it’s about to die on the first down day.

WHAT NEXT?

Let’s consider that first day down for a moment, especially since short-term breadth, which has been putting in highs below high (see chart below), turned down today with SPY overbought and up five days in a row (see this many times before a dip).

Trader Vic Sperandeo noted one time that any time a major index goes four or more days in one direction at the end of an intermediate advance or decline the first reversal day is the change of trend. Trouble is I don’t think he ever quite defined what constitutes an intermediate advance or decline. One can look at charts and see he has been right again and again and again but then there is that one time…and that one time can kill anyone who doesn’t play defense. This advance is essentially five weeks old with a minor drop in the middle, projected here in this post below :#MarketTiming – a black candles Thursday leading to….

In addition SPY ended the day in a black candle. The black candle makes today’s high (301.13) and today low (300.19) key numbers, above the former there more rally to come, below the latter a dip to the downside, a easy read of price action. Those highs below highs on the NYMO (again see the chart below) are a warning. There is a divergence in CNN Money’s Fear and Greed Index not confirming the new highs. There’s the Russell stall so far… These things are beginning to pile up.

Five weeks of solid gains may not be the end of the upswing but it is worth guarding against Trader Vic’s “first reversal day.”

All that aside. until long-term breadth turns down, the long side will remain the side to play. Dips are to be bought in the indexes, the ETFs, stocks. Eleven of my bellwether stocks were up today with decent gains, see AAPL, TSLA, SHOP, BABA as examples. So there is still strong buying in big names, which is probably the place to focus most trades.

It always sounds stupid with one says it but it is the one simple, absolute truth — the market will go up until is doesn’t.

(click on the chart for a larger view)

#MarketTiming – a black candles Thursday leading to…

MARKET TIMING SIGNALS FOR 6/21/2019.

Long-Term Breadth (NYSI): BUY DAY 11
Short-Term Breadth (NYMO): BUY DAY 4
Price: BUY DAY 3
Nifty-50-Stock-List: 36 BUYS, 9 NEW BUYS, 28 OVERBOUGHT; 14 SELLS, 6 NEW SELLS, 0 OVERSOLD.
CNN MONEY’S “Fear and Greed” Index: 473, rising, NEUTRAL LEVEL.
Bellwether Stocks: 13 UP, 2 DOWN.

WHAT?

The market gaped higher again Thursday and for the most part finished higher but…

But most indexes, ETFs, stocks closed below their opens creating black candles on their charts (see the charts below). Black candles are obvious times of indecision springing up oftentimes at the end of up swings.

The three major leveraged ETFs – TQQQ, UPRO, TNA – ended the day black. Seventeen of the stocks, more than a third, of the nifty-50 stock list ended in black candles. Thirteen of the 15 bellwether stocks — AAPL, FB, NFLX, GS, AMZN, SHOP, etc. – were up on the day but fourteen of them ended in black candles.

WHAT NEXT?

As noted before black candles create an easy read for traders as the obvious indecisiveness resolves itself- above the high of the candle, the rally resumes, below the low, it falls back. It’s that simple.

With this much indecision going around, and with the current swing up thirteen days old, and with 28 of the nifty-50 stocks overbought, and with all but three of the bellwether stocks overbought (and the other three already on sells), almost needless to say, it could be time for at least a dip, if not a solid drop.

(click on the chart panel for a larger view)

#MarketTiming – Stall or drop?

Been on vacation so haven’t been able to keep this blog as timely as I would like.

And besides, being in places where there was not even cell-phone coverage, I see I’ve missed a pretty sprightly rally. That’s the way it goes sometimes.

Anyway, TQQQ, my favorite leveraged ETF, is up 21% on the short-term breadth signal (the NYMO), six trading days ago. That signal triggering from double-bottom territory on the NYMO set the stage for the rest of the signals. Consequently, TQQQ is up 12% on its price signal and 8.3% on the long-term breath signal (the NYSI).

See the charts below — from left to right, short-term breadth, price, long-term breadth.

Since the rally’s start on the open of 6/4, other leveraged ETFs of note were SOXL (semiconductors) up 23.7%, FAS (financials) up 11.6% and FNGU (fang stocks) up 25.8%.

Gains among my be “bellwether stocks” were led by TSLA up 20%, coming from deeply oversold, AAPL up 11%, WYNN up 12.4%, SHOP (newly added to my list) up 14.4%, AMD up 14.5% and even a biggie like MSFT was up 9%.

Did I mention that we’re talking just six trading days, from Tuesday last week to Tuesday today? I guess I did. Six days, needless to say, that is what swing trading is all about.

So what now?

Both short-term breadth and price gave sell signals today with much of the market still wildly overbought. Likely we get a pullback starting tomorrow. Or at least a sideways stall to work off the overbought conditions. Note the big black candle of indecision today on the chart to the right. Below the low of that candle it’s a drop, above the high a resumption of the bounce.

If, by chance, this upswing was just more of the thrust from December to make everyone believe the bearish growl last fall was nothing to listen too, I suppose this rally could drop right out of the sky.

Either way, as long as the long-term breadth (the NYSI) is rising, the path of least resistance is up.

(click on the charts for a larger view)

#MarketTiming – tracks of the bear?

Sometimes, as they say, it’s not a stock market, it’s a market of stocks:

(Click on the chart to see the full twitter thread)

(Click on the chart to see the full twitter thread)

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(Click on the chart to see the full twitter thread)

(Click on the chart to see the full twitter thread)

(Click on the chart to see the full twitter thread)

#MarketTiming – Oversold and very close to a bounce…

MARKET TIMING SIGNALS FOR 5/13/2019.

Long-Term Breadth (NYSI): SELL FROM 5/6.
Short-Term Breadth (NYMO): SELL FROM 5/13.
Price: SELL FROM 5/13.
Nifty-50-Stock-List: 9 BUYS, 0 NEW BUYS, 2 OVERBOUGHT; 41 SELLS, 14 NEW SELLS, 30 OVERSOLD.
CNN MONEY’S “Fear and Greed” Index: 32, FALLING, FEAR LEVEL.
Bellwether Stocks: 0 UP, 15 DOWN.

OF NOTE SPY OPTIONS:

In a very bearish trading environment, today was a put day (see post below) with the in-the-money at the open 284 put rocketing to a 144% gain at its peak and registering through a chop at the end of the day a 76% gain. That final gain is if one was not paying attention, but obviously there were profit taking points all during the day – as it gained 100%, coming off the top for 121%, selling on the first blue-bar sell signal for 90% (see the chart in the post below).

WHAT:

Today’s market action was again news driven as the US-China trade talks broke off Friday with Trump escalating the pressure with a jump in tariffs on many Chinese imports from 10% to 25%, then tweeting over the weekend several threats to make it worse.

Finally, China retaliated with $60B in tariffs on US products, most farm products in the heart of Trump’s voter support. Sixty billion is not that much on its face but in the scheme of things it was a sign China is not going to, as some Trump supporters were claiming, “bend a knee.”

With an all-out trade war getting closer and closer to a real possibility (don’t these guys ever read history?) it was inevitable the US market was going to take a big rip.

On a technical note, except for a one-day up blip on 5/3, the long-term breadth, as measured by the NYSI, has been been falling since 4/17 (see the red vertical line on the chart below). Since that time, the market managed to trudge higher but the indexes are all now below the level they were at when the NYSI turned down. In other words never bet against the NYSI. It sometimes takes a while but it most often wins in the end.

In a previous post on the this pullback, I said: “If the market focuses more and more on the Trump administration turmoil in Washington, it is likely to unstable for some time.” That still is the what’s what.

WHAT’S NEXT?

However, for now, it is time for a bounce. It may not come Tuesday (a “turnaround Tuesday”?) but it is very close by.

The market can go down as long as it wants but not forever.

At this point SPY is down seven of the past nine trading day, the nasdaq down eight of the last ten. Short-term breadth, the NYMO, is deeply oversold. VIX has moved from the “12s” to 20 in the same amount of time. It’s getting to be too far, too fast, which always leads to a quick bounce. Except for QCOM, all the bellwether stocks are sells and were flushed to oversold with big drops in the indexes today.

In addition, my nifty-50-stock-list has 41 stocks on sells and 30 individual stock on the list oversold. Forty or more on sells is oftentimes the beginning of the end, if not the end, of a downswing.

I’m not one for Fibonacci numbers because like all support and resistance indicators they are notable only as long as the market doesn’t slice right through them (which it often does), but they are sometimes fun to take a look at and right now it appears SPY is sitting on one on a retrace of the rally from December (see the chart below). Supposedly that’s as good a spot as any for a bounce to begin.

(click on the chart for a larger view)

$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)

$SPY – the slide from the top continues…

MARKET TIMING SIGNALS FOR 5/8/2019.

Long-Term Breadth (NYSI): SELL FROM 5/6.
Short-Term Breadth (NYMO): SELL FROM 5/6.
Price: SELL FROM 5/6.
Nifty-50-Stock-List: 18 BUYS, 3 NEW BUYS, 7 OVERBOUGHT; 32 SELLS, 1 NEW SELLS, 16 OVERSOLD.
CNN MONEY’S “Fear and Greed” Index: 41, FALLING, FEAR LEVEL.
Bellwether Stocks: 5 UP, 10 DOWN.

OF NOTE SPY OPTIONS:

SPY CALLS AND PUTS, BOTH, were down on the day as a tight sideways chop all day slammed premium for Friday’s expiration on both sides of the market. (See the charts below for how bad it was.)

The most nimble of options traders could make money, at great risk, buying the yellows And selling the blues on the charts below, but not much. The not-so-nimble could lose a lot.

WHAT:

It appears the market has been moving on Trump tweets. That is as absurd as it can get since he should not be tweeting about any of this and the market shouldn’t be paying any attention to any thing he tweets. The New York Times broke a story on ten years of his tax returns during a time he lost more than a billion dollars, all of the money his father gave him a lot more. Surely, one of the worst businessmen in history but a major-league con-man. His beloved Twitter has hung #BillionDollarLoser on him.

If the market focuses more and more on the Trump administration turmoil in Washington, it is likely to unstable for some time.

WHAT’S NEXT?

All sell signals remain in place – as usual this is a market can can go down as long as it wants and turn up any time. That sharp drop in the calls and the rise in the puts in the last twenty minutes of the day on the 10-minute charts below may hint there is more downside to come right away tomorrow but news, like a trade deal with China, can intervene.

This is a dangerous time for short-term traders. On the longer term, every bear market begins (or resumes) on a single down day and that day was six days ago to start this current slide.

(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)

$SPY – market tries to reverse Trump tariff sell-off

MARKET TIMING SIGNALS FOR 5/6/2019.

Long-Term Breadth (NYSI): SELL FROM 5/6.
Short-Term Breadth (NYMO): SELL FROM 5/6.
Price: SELL FROM 5/6.
Nifty-50-Stock-List: 27 BUYS, 4 NEW BUYS, 13 OVERBOUGHT; 23 SELLS, 11 NEW SELLS, 5 OVERSOLD.
CNN MONEY’S “Fear and Greed” Index: 56, FALLING, GREED LEVEL.
Bellwether Stocks: 1 UP, 14 DOWN.

OF NOTE SPY OPTIONS DAY TRADES:

SPY CALLS, 5/6 288 UP 71%, 290 UP 120%, 291 up 190%. No put trades.

OF NOTE
:
Fourteen of the bellwether stocks (AAPL, TSLA, NFLX, TWLO, AMD, NVDA, QCOM, GS, GOOGL, BABA, MSFT, FB, FSLR, AMZN) were up from the open although down on the day; and one (WYNN) was both down for the day and down more from its open.

WHAT:

The futures market sold off hard overnight on the news Trump threatened new tariffs on Chinese imports, then rebounded immediately at the open on the news that the Chinese negotiators planned to come to the U.S. to talk as planned anyway. The market was poised to go higher, prior to Trump’s announcement but the news cut short the buy signals across the board on Friday’s gains.

Can’t do anything about news, either positive or negative, except to go with the flow as it unfolds – in this case for day and swing traders it was a buy on today’s open and turned out to be quite a remarkable bounce back. Fourteen of the bellwether stocks were up from the open despite remaining down for the day. The $10K day trading system, had today’s 290 calls (in the money, ten minutes into the market) up 120% or the day, and just out of the money 291 call up 190%.

WHAT’S NEXT?

All technical signals I follow gave sell signals today for tomorrow open as the one-day blip up in long-term breadth ($NYSI) Friday retreated today on the tumble in short-term breadth ($NYMO); the price buy for today’s open, which racked up 4.5% on TQQQ and 3.7% on UPRO on the close, will be a sell on tomorrow’s open. In addition, CNN’s Fear and Greed Index dipped today while still at a greed level, and volatility surged (VIX), both negatives for the market.

Sell signals are sell signals but what’s next is tricky given the velocity of today’s rebound (see the candle on the SPY chart below), but it did not quite reverse completely and it may have used up immediate buying power to get to where it got on the close. If so, chances are it reverses again to the downside tomorrow. The key will be play the open, preferably with either calls or puts, while looking to lock in profits on today’s gains on TQQQ and UPRO and any of the bellwether stocks.

(click on the chart for a larger view)