$TSLA slams into an “outside day”

And it hit that wall on the day after its earnings report vaulted it into the airy realm of irrational exuberance.

All over stock market social media, Elon Musk fans and TSLA shareholders were ecstatic as the monster stock, in the midst of a world-wide pandemic and facing the prospect of a dire economic downturn, virtually doubled in no time at all. TSLA has boundless prospects long-term – long-long-term – but its recent rocket ride was crazy. Even Musk said so some time ago.

CRAZY!

So no surprise today as one of the oldest of Wall-Street adages strutted on stage yet again – “Buy the rumor, sell the news.”

The stock plummeted 163 point from its open today and 77 points lower than its close yesterday on higher than average volume, in other words the very definition of an outside day.

So what next?

Actually outside days are somewhat up in the air. In an up trend (and TSLA certainly is in one), it can be a mere bump in the road so to speak, but whenever violent action like that a happens, particularly on good earnings news, one has to see if anyone has been killed in the crash.

Today’s low, me thinks, is the line to live by. If TSLA rises above it, tomorrow, it’s a long with the today’s low as the stop loss. If it continues to drop, the low becomes the protective stop for the shorts.

(click on the chart for a larger view)

#MarketTiming – six days up and what now? – UPDATED

UPDATE: What now?

As suggested in the post below, I expected the market to move up this week, not as much as it did, but no matter.

Anytime one is on he right side of a six-day swing, either up or down, one cannot complain.

In this case, it’s six days up.

TQQQ, the 3x-leveraged and preferred trading ETF for the Nasdaq, gained 22% on the swing. Some major bellwether stocks have powered the six days, AAPL, MSFT, NVDA, AMZN FB, all up six days in a row; TWLO up six days and 73% on the move is by far the most spectacular example I follow.

Swing trading…what more can you say?

But what now?

This could stop right here. The NYMO was down today (see the chart below). How many times have we seen that mark the end, or at least a pause, after a four or more consecutive days up?

However, the all-important NYSI continues to rise so, unless this is going to drop right out of the sky, it’s probably a pause or a stall — it takes time to work off $2 trillion of Federal Reserve funny money spent in all the wrong places.

This has been a long spectacular rally since March, a fast up characteristic of bear-market rallies. If this is the end bullish traders and long-term investors who believe the bull market lives on will be in great danger.

If the market drops here and takes the NYSI negative, watch out…

An always remember there is no profit until you sell.

(click on the chart for a larger view)

#MarketTiming – one more hiccUP before the plunge?

The bear market rally isn’t quite over yet…

I’m not one for fundamentals but in the current market environment that doesn’t matter since there are none other than the FED throwing in a couple of trillion dollars to replace a bubble that burst with yet another bubble.

A couple of trillion dollars…and not even going to the small businesses and everyday people who need it most (and can spend it to fuel a recovery) as an incompetent businessman slash so called President goes on babbling about what a good job he’s done killing 70,000 Americans so far and sinking the entire economy while blaming everyone and everything else for his personal incompetence. Up until now Herbert Hoover was the biggest historical disaster of a President in the last 100 years, but Donny Trump who brags about being best at everything may be only best at this.

So if you’re long-term investor and you are not selling into this good-luck rally, all I can say for the longer term is “good luck.”

However, NYSI is still rising and the NYMO, which is so far pulling back, probably needs to hiccup to one more high below a high before this is done.

That hiccup appears to have begun as today’s general market price action climbed out of the today’s opening gap down to finish positive.

The tweet Friday:

#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)

#MarketTiming – looking for a swing leg up…

Nearly every night for past two weeks, the overnight index futures have been trying to mount another leg up for the market from the March 23rd bottom, and nearly every day the bears try to knock it back down.

Actually that’s typical – as J.P. is reputed to have said famously: “The market will fluctuate.”

As a day and swing trader I’m just sitting on the edge of my desk chair waiting to see which way to go.

Technically speaking, the SPY chart is showing an island reversal for the recent spectacular bounce off the market low.

That is bearish.

In addition the chart patterns I watch most closely — the NYSI and NYMO — are decidedly bearish. After getting wildly and rapidly overbought on the bounce, they have retreated with both highs below highs on the NYMO and a drop below the zero line on the NYSI. In bullish times it usually take three or four NYMO highs below highs to stop a rally. In bearish times it may take but one and several lows above lows to mount one. So far that has been true again (see the NYMO/NYSI line in the middle of the first chart below).

Long term investors, if they are in this market below current price levels, are losing time (at least a year, maybe as much as Trump’s entire term). If they are in at higher price levels they are truly trapped, losing time and losing money.

Regardless, I keep hearing both groups wishing and hoping — and pleading for — more bounce, either to cut paper losses or to get out.

So what’s next?

Having said all the bearish stuff, let’s take a look at the a couple short-term rally possibilities.

The NYMO, despite the current bearish pattern, just did something that is normal in bullish times and is at least a glimmer for a another leg up. It has dipped to the zero line three weeks (15 trading days) from its low. Three to four weeks into is normal for a twelve to fourteen week McClellan Oscillator cycle; it happens all the time in bull markets. Could this be a hint this is the week to try for more upside? A bit of relief, a surge of hope for the bulls? Maybe.

In addition, every day I tabulate all the stocks on my nifty-fifty stock list as to whether they are on buys, buys-overbought, sells, sells-oversold. Have been doing that for years, and it is a list that talks.

See the histogram on the second chart below for reference.

I’ve said before any time 40 or more of those stocks are on sells that is either the bottom of a swing or the beginning of the bottom of the swing. On the chart below, that tallies as 30 or more (stocks on buys minus stocks on sells). The red box mark each time this has happened.

During bull markets, when the nifty-fifty start up again, they either lead or confirm the next up swing. But since February that has not been case. No need to guess why that is so. Whenever a reliable indicator has a change in behavior, it screams there is SOMETHING BIGGER GOING ON HERE! My stock list is one among several technical indicators that have just announced the bear is out of his cave (and he’s given the world a vicious virus besides).

But…like the glimmer on the NYMO, there is a glimmer here also. The stocks on sells has been under forty for three days (there is no four days on this chart), and for the past two of those days it’s been slowing slogging its way higher.

Monday will be important but I’m going guess… The market is going to pop and take a leg up for at least a couple days this week.

Needless to say, I could be totally wrong about this since I am arguing against the NYMO and NYSI at the moment, the two most important measures of market psychology there is.

If so…well…it will be a short…again.

(CLICK ON THE CHART FOR A LARGER VIEW)

(CLICK ON THE CHART FOR A LARGER VIEW)

#STOCKS — $BA and its birds of a feather…

This is what happens when the US taxpayers put up $50 or so billion dollars to buy your company and then don’t take it away from the shareholders.

BA (Boeing) is up 85 percent this week (in four days) thanks to the general market bounce and being a large part of a $50-billion taxpayer bailout in the stimulus bill.

It’s up 55 percentage points higher than the next nearest stocks in the DOW Industrial Average (CVS, UTX, HD).

All those percentage points this week for a company that was crying for a bailout even before the market selloff, and a company that last week shut down its operations in the Puget Sound area (laying off 7000 employees) even before the Washington State Governor ordered ALL essential business closed to fight the virus.

It turned out in the last couple of years, Boeing has become the poster child of all of American corporate malfeasance. Buying back stocks with tax breaks instead of attending to core businesses. Taking advantage of artificially low interest rates, courtesy of a loose Federal Reserve, to add debt and to hide diminishing earnings per share. Having wildly over paid chief executives. Those guys at Boeing a few years back moved their executive offices to Dennis Hastert’s district in Chicago when he was Speaker of the House – just before he was indicted and sent to prison. Having atrocious labor relations. They moved an entire manufacturing division to South Carolina to avoid the unions in Seattle and had to admit later they would never make up the multi-billion-dollar shortfall it took to train those yahoos to make airplaines. And finally, characteristically in the Trump era, the company got caught slipshod production values, but not before it killed a lot of passengers in two crashes. Simply said, it’s probably more known for the Max-737 and that fuck-up grounding of what? A third of the fleet?

Nevertheless Boeing, admittedly, is also so important to the US economy it is truly too big to die. It does not, however, need yet another corporate bailout by beleaguered US taxpayers.

It needs to be nationalized.

Instead, it’s pretty much leading the bounce and flying in the same thin bear-market air as the rest of the market.

And along with it, there are the rest of the birds feahtered in its bailout nest. AAL (American Airlines) up 45%, DAL (Delta) up 44%, UAL (United) up 39%, ALGT (Allegiant) up 39%. We all love these airlines, right? Love the service? Paying for extra bags? Getting stranded by canceled flights?

And the food, airline food, now that’s the best the world has to offer, right?

See the chart below. Big pop. And, of course, it better not come down with the next decline otherwise the big check from the taxpayers will be wasted.

(Click on the chart to get the picture)

$SVXY – Just a heads up…

If you haven’t been sitting on the edge of your SVXY already, now is the time.

Back in January I did the bookend to this post in this link: $TVIX – Just a heads up… and reiterated it when the explosion began in this link: $TVIX – From heads up to launch up….

TVIX was at 40 or so then and hit a high of 1000 yesterday, while its little sister in the land of leveraged VIX relatives, UVXY started its own spectacular launch from 12 or so and hit 134 yesterday.

There’s only a month of it but enough of this past history. Can anyone hear me laughing at how insane this rum has been? It is time to turn attention to opposite trade on the VIX.

See the charts below.

VIX already is going sideways at an extremely high level but until today TVIX and UVXY didn’t seem to notice. Both took new stabs the highs today and closed below both their respective opens and closes from yesterday. While they haven’t quite broken any trend lines or any reasonable moving average, they both have truly big ugly, ominous, candles.

If TVIX and UVXY didn’t know the VIX might be done with its move until today, it would appear their leveraged counterpart, SVXY, hasn’t quit notice it yet (see the chart). With all this volatility ripping back and forth, it finished up a relatively paltry 3.3% today and produced a perfectly reasonable little white candle.

SVXY goes up as the VIX goes down. If it gets moving it can hit 35 in a flash, and 50 in a quick explosion of its own.

So heads up – there’s a good chance SVXY runs up tomorrow. If not tomorrow, soon…

(click on the chart panel 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

On $AAPL — its broken parabolic updated…

AAPL keeps trying to bounce off the market’s gaps down, but as time goes by it is still working its way down to where its recent parabolic rise began.

This decline with take some time. There will be bounces to sell along the way but when a parabolic breaks it creates so much overhead supply (i.e. holders who want to get out) the stock’s decline is usually inevitable.

The target price for the stock is approximately $220 to $230.

This was first outlined in this link:

#STOCKS – on $AAPL gone parabolic

And reiterated in this link when its parabolic rise first broke:

ON $AAPL gone parabolic – with an updated chart…

(click on the chart for a larger view)