#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)

#StockTrading – $NIO and its #DarvasBox

The basis of everything in the stock market is simplicity.

That’s hard to tell when there are thousands of opinions and indicators and time frames and derivatives flying around all the time. There must be a thousand videos on YouTube giving lessons in stock and option trading and now there’s also cryptocurrency too. There are brokerage programs and financial advisors and television commentators and TV guests galore. The mind boggles with all the information available, with all the noise, with all the complications.

But it all comes down to one simple fact – whatever it is, it either goes up or it goes down.

Even then, the question arises when is going to do one or the other?

So let me reminisce moment. I had a Twitter exchange recently with the excellent market-timing advisor, Brian Shannon, in which I had the opportunity to recall a conversation I had years and years ago in the parking lot of Cal. State University Northridge with the great market wizard, Willian O’Neil. He was just getting Investors Business Daily off the ground (that’ll tell you how many years ago it was) and was promoting it everywhere. That day at the university as he was leaving his presentation it turned out his car was parked next to mine. We had a nice chat about how useful his paper was, about his CANSLIM method of stock picking, his approach to timing the market particularly, and, as Hemingway used to say, how the weather was.

I asked him as he was trying to slip into his car to leave, what books and people influenced him when he started out. He paused, then with a sly smile and a twinkle in his eye, said “the Darvas book is awfully good.” The Nicolas Darvas book is “How I Made $2,000,000 In The Stock Market.” He made the money in the 1950s and published the book in 1960.

The book is a classic.

Darvas was one half of a renowned dance act that toured constantly and often gave ballroom-dancing demonstrations on cruise ships. The market was a sideline and since he couldn’t pay all that much attention to it while he was away, he would study the stock tables in Barrons and the Wall Street Journal to find stocks in sideways consolidations. He would then draw a box around the consolidation and He would give his broker instructions to buy the stock if the price came out of the top of the box and use the bottom of the box as a stop-loss level.

His stock investing system is simplicity itself. So simple, I’m sure there are those who go “What? It can’t be that easy.” Yes, it can.

Darvas turned his $10,000 savings into $2,000,000 in an 18-month period. As Bill O’Neil said “the Davas book is awfully good.” After I first read it, I realized that the sly smile and twinkle O’Neil gave me that day was him giving away his own stock-market secret – his CANSLIM methodology has Darvas written all over it.

Enough with the reminiscence, enough with the history. Dravas wrote that book 60 years ago.

What about now?

Nothing, absolutely nothing, has changed.

Let’s take NIO, the Chinese electric-vehicle TSLA wanna-be. See the chart below with the Dravas Boxes on each price consolidation since this year’s March low. NIO first came out of a Darvas Box at $3.20, then another at 4.17, then another at 7,91, and finally today again, on high volume, at 17.84 with no Darvas stops hit during its entire climb. Simplicity itself.

Of course, all of these boxes in NIO’s uptrend are in retrospect unless one happened to be focused on the stock and were watching for it to make its moves. That’s the past but notice is hereby given – NIO popped out of its box again today to 17.87 on a significant rise in volume. That makes it a buy on the open tomorrow. A tight stop would be the top line it just crossed at 16.44, and the stop Darvas would use would be the bottom of the box at around 10.5.

Stops are always determined by each individual’s risk tolerance but if the stops don’t get hit, NIO is an investment for the long term from this moment on.

(Click on the chart for a larger view)

Oh, and by the way:

(Click on the chart for a larger view)

$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)