$TQQQ – a Nasdaq bloodbath too far too fast?

TQQQ, the 3x-leverage ETF based on the Nasdaq 100 stocks (NDX), was down 5.4% today, a bloodbath that affected many of the bellwether Nasdaq stocks in the index.

See the table below:

(click on the image for a larger view)

NVDA down 14 points, NFLX down 11, and so on. Pretty ugly in the momentum bellwethers.

There was a fake-out nudge to the upside Tuesday, but can’t say today’s slam down was unexpected. Posted this two days ago:

This could be tricky since long-term breadth continues to climb (up for the fourth day). Given that, if short-term breadth turns up here in the next day or two (or bless a bottom dollar, three days), the market would get another bullish boost. If long-term breadth turns down, this could very easily become the hook that catches every bull off guard. Although the bull market has so far defied the signs over and over again, it is inevitable that one of these times, like today, when the signals signal a turn, the turn will come. Probably when the bears are worn out and the bulls don’t expect anything of on their blindside.

If today’s sell off continues, that will be relevant, but there are signs this is done already.

Nearly every time TQQQ falls through the standard deviation lines (the blocks on the green lines on the chart below), the Nasdaq bounces the next day or two days out (the red vertical lines on the chart). It is as if any fall this far is too far too fast. And oftentimes in this bull market, the bounce becomes another rally (see the diamonds on the chart are TQQQ). In fact, a look-black on the chart shows this last great upswing in the Nasdaq, which began in late September, started with a touch down on the green lines just like today.

So I’m looking for the bounce, and looking to ride a rally if it develops here (Santa time?), and if it doesn’t then the suggestion in the quote above might indeed be a sea change in the market.

SWING TRADING SIGNALS:

LONG-TERM BREADTH: Buy (Day 6).

PRICE: Sell. (Day 1).
SHORT-TERM BREADTH: Sell. (Day 1).
VOLATILITY: Sell, (Day 1).

CONTEXT:

SPY CLOSE – 262.31
QQQ CLOSE – 153.89
CNN MONEY’S FEAR AND GREED INDEX: (67, rising, greed level).
NIFTY-50 STOCK LIST: 14 Buys; 11 Overbought, 8 Oversold, 6 new buys today, 3 new sells.

(click on the chart for a larger view)

#MarketTiming – hard to call a pause, let alone a pullback…

But if there is to be a pause, there’s a good chance it will be now.

All of my short-term signals — Price, Breadth, Volatility – turned down on this lackluster day (see table below), and CNN Money’s Fear and Greed Index turned down too. Twenty of the stocks in my nifty-50 stock list gave individual sell signals. That may be a bit deceptive since the stock list was sorted over the weekend and came into the day maybe too strongly bullish, and then again it may be a harbinger of a pause when even the strongest slow down.

So, if there’s a pause here, can it turn into a pull back?

This could be tricky since long-term breadth continues to climb (up for the fourth day). Given that, if short-term breadth turns up here in the next day or two (or bless a bottom dollar, three days), the market would get another bullish boost. If long-term breadth turns down, this could very easily become the hook that catches every bull off guard. Although the bull market has so far defied the signs over and over again, it is inevitable that one of these times, like today, when the signals signal a turn, the turn will come. Probably when the bears are worn out and the bulls don’t expect anything of on their blindside.

Maybe right now is day one. Maybe not.

SWING TRADING SIGNALS:

LONG-TERM BREADTH: Buy (Day 4).

PRICE: Sell. (Day 1).
SHORT-TERM BREADTH: Sell. (Day 1).
VOLATILITY: Sell, (Day 1).

CONTEXT:

SPY CLOSE – 260.23
QQQ CLOSE – 156.19
CNN MONEY’S FEAR AND GREED INDEX: (52, falling, neutral level).
NIFTY-50 STOCK LIST: 14 Buys; 10 Overbought, 0 Oversold, 2 new buys today, 20 new sells.

#STOCKS – the nifty-50 stock list revised and sorted…

Just scanned the market to add to and sort my nifty-50 stock list.

These, by my measure, are the stocks that have performed best with the market swing signals since the last sort three months ago. That does not mean they will be best going forward but it is my experience they will be strong vibrant participants on market swings to come.

In addition, the list itself serves also as a market-timing indicator.

For instance, historically, whenever 40 or more of the stocks on the list are on sells by my measure, the general market (no doubt in a pullback at that point) is within a day or three of a significant swing bottom. This, like so many indicators in the stock market’s forever bull trend, does not do as well marking swing tops. Too many on buys, 40 or more, does often trigger a pause in the advance. That’s just the way it is.

The stocks are: RIOT, KURA, XNET, ESIO, BPMC, QNST, AXGN, VRS, ACLS, DLB, KBR, ORBK, LGIH, SRPT, OLED, DLTR, MU, YY, TAL, DHI, ARNA, CGNX, JEC, COLL, MRVL, DK, HRTG, AWI, KRO, GTLS, PNK, CAVM, BECN, BURL, RNG, SGMS, CTRL, GLOG, ADMS, RH, EBS, ESPR, MLNX, CRAY, MTCH, YINN, PRTK, AXTI, GBT, HIMX.

The top 12 stocks are in the chart panel below.

(click on the charts for a larger view)

$SPY options – A fine day in the “fool’s game”

As per:

THE FOOL’S GAME

Typical of this bull market, the opening gap down today got bought again almost immediately.

For buying the SPY calls this was a no-brainer.

SPY opened at 257.32 and closed up on its first five-minute bar bringing the weekly 257 call into play for the day, and giving a $5K buy signal for the open on the option’s second five-minute bar at 1.48 per contract. It never looked back, giving further $5K buy signals on entries at 1.54, 1.70, 1.79, and 1.80 per contract (see the chart below) for a total long of 149 call contracts long on the day.

At that point, the allocated capital was fully in the market. When five signals trigger, it is usually a sign of a trend, in this instance bullish, for the day, and so it was until a quick profit-taking sell-off at the close.

The first buy signal on $5,000 made approximately $1,300, or 26%.

On the total $25,000 commitment, at its peak the day trade was up 25%, but closed up an $3,500, about a 14.2% gain.

Still, a day trade, a fine day’s profit.

(click on the chart for a larger view)

Buying $Spy Options – not a “fool’s game”?

There are only three things that can happen if a trader BUYS an option – the option goes the trader’s way, the option goes against the trader, the option goes sideways losing on time decay.

Two out of the three are bad for the option buyer.

So is it a fool’s game?

Doesn’t have to be. Not for day traders.

Let’s take SPY options as an example — very liquid across multiple strikes, tight spreads, hardly any time decay on a trade for only a day, a stop-loss is close by and immediate, and the profits, if there is trend for the day, can be substantial, even rather astounding.

Take a look at the chart below. A key is an entry signal a day trade is comfortable with. In this case, have been taking signals off of SPY itself — the in-the-money weekly 257 calls, expiring today, $5k on each buy, five buys, $25k in total trades. The profit, at the moment I’m writing this, is $20k, 80% for the day (the white bar on the lower right of the chart).

(Needless to say, these trades are very fluid and by the time this is posted may be closed.)

(click on the chart for a larger view)

Sell, sell, sell and SELL!

Wonder of wonders.

All three of the swing signals I pay attention to – based on price, breadth and volatility — gave sell signals today for tomorrow’s open, and even long-term breadth turned down too.

I can’t remember the last time all these were in sync but I think it was back in early August, not long before the last decent dip this bull market had.

What I’d like to see now is this market take a drop like an airliner that runs out of fuel in mid-air, a slam down that falls hard and fast enough to scare the complacency out of every long-term passenger in the first-class and economy seats alike. Can’t say the C word since that would insure we get no pullback at all…but down hard and fast enough would, as they say, clear the air.

And we are still in “extreme greed” on CNN Money’s Fear and Greed Index (see chart below – SPY in blue, FGI in red) and it too has far to fall. Ideally, a three to five week pullback into “extreme fear” again would truly refuel and restart the engines.

Needless to say, as strong as this bull market has been (and probably still is) none of that is likely. So okay, I guess, a nice glide down for two or three days before a charge up to the highs again would be fine too.

Might not even get that in the wild blue yonder of this market.

SWING TRADING SIGNALS:

PRICE: Sell. (Day 1).
SHORT-TERM BREADTH: Sell. (Day 2).
VOLATILITY: Buy, (Day 23).

CONTEXT:

SPY CLOSE – 253.95.
QQQ CLOSE – 147.48.
LONG-TERM BREADTH: Sell (Day 1).
CNN MONEY’S FEAR AND GREED INDEX: (84 falling, extreme greed level).
NIFTY-50 STOCK LIST: 24 Buys; 18 Overbought, 5 Oversold, 5 new buys today, 7 new sells.

(Click on the chart for a larger view)

$XIV $TQQQ – a strong rally from fear to extreme greed…

CNN Money’s Fear and Greed Index climbed again to day.  It is at an “extreme greed” level for the second day but there is, as yet, no sign of a turn around.

But as Warren Buffet has said it is a time to be fearful.  This market could sell off on any day, at any hour, any minute.  Just because it hasn’t doesn’t mean it can’t.

Still…it hasn’t.

Since first calling attention to the index back in late August when it was registering extreme fear, the market has had a strong rally so that this point I’d tally up some of the returns – – those holding these for the “long term” better not fall in love with the long term but for now enjoy.

Among the leveraged ETFs for the general indexes, XIV is up 20.4 percent since the buy signal on August 29th, TQQQ up 9.3%, TNA 14.8%, UPRO 9.1%. Among the leveraged sector ETFs, ERX is up 22.4%, SOXL up 24.3%, LABU up 17.5% and FAS up 6.8%.

Stock in my bellwether stock list: BABA up 7.4%, NFLX up 9.8%, NVDA up 14.9% and TSLA up 9.1%. Remarkably AAPL is DOWN .8% (well, mostly flat).

SWING TRADING SIGNALS:

PRICE: Buy. (Day 2).
SHORT-TERM BREADTH: Sell. (Day 1).
VOLATILITY: Buy, (Day 6).

CONTEXT:

LONG-TERM BREADTH: Buy(Day 16).
CNN MONEY’S FEAR AND GREED INDEX: (79 rising, extreme greed level).
NIFTY-50 STOCK LIST: 25 Buys; 12 Overbought, 4 Oversold, 6 new buys today, 0 new sells.

Stocks meeting the criteria for a 5-minute on the open Tuesday: NFLX, BABA.

(click on the chart for a larger view)

$TQQQ – up 7.3% as bullish bias for the week continues…

The Nasdaq, after its strong reversal from it’s open yesterday, followed through today with a strong advance.

The bias has been bullish all week based the fact that CNN Money’s “Fear and Greed Index” registered “extreme fear” last week and turned up from there to signal this week’s bounce.  I wrote on Sunday: “So Monday the bounce?  Then a rally?” That is exactly how the week has played out.

TQQQ, the 3x-leveraged Nasdaq ETF, is up three days in a row, 7.3% (see chart below).  XIV, the leveraged volatility ETF, is up 6.4%.

The “Fear and Greed Index” continues to climb and all three of my daily signals (see highlight below) are now on buys.

I expect more of the same for Thursday (although some slowing is likely).  Both UPRO and TNA, the leveraged ETFs based on the SPX and the Russell, are up 4 days in a row.

This has once again become a market that is going up until it goes down.

DAY TRADING BELLWETHER STOCKS:

The five-minute day trading stocks for today – FLSR, GS, TSLA, NVDA — were basically flat (up .11%) with three stopped out for small losses and GS up .8% to save the day.  Day trading bellwether stocks for Thursday’s open are TSLA, NVDA, NFLX, FB and AMZN.

SWING TRADING SIGNALS:

PRICE: Buy. (Day 3).
SHORT-TERM BREADTH: Buy. (Day 1).
VOLATILITY: Buy, (Day 1).

CONTEXT:

LONG-TERM BREADTH: Buy, (Day 4).
CNN MONEY’S FEAR AND GREED INDEX: (29 rising, at fear level).
NIFTY-50 STOCK LIST: 30 Buys; 17 Overbought, 3 Oversold, 8 new buys today, 1 new sells.

(click on the chart for a larger view)

$SPY- an upward bias from fear to greed?

CNN Money”s “FEAR AND GREED INDEX” – http://money.cnn.com/data/fear-and-greed/?iid=HP_LN – turned up Friday , moving from an extreme fear reading to a mere fear reading.

That may seem like some kind of market joke but it is often an indication that market is at a turn at the bottom of a sell-off.  If so, the uncertain sideways move this last week (up solidly Tuesday, down near as solidly Thursday) likely will resolve to the upside this week.  The past recent history of the index in relation to moves on the S&P 500 ETF SPY is below.  The blue diamond line is SPY.  The Red is the Fear and Greed Index. Note when Fear-andGreed touches or dips below the 25 level then turns up what follows.

In addition, two of my main daily signals (breadth and volatility) are on buys while the third (the Nasdaq Composite price) is down three days in a row.  In this bull market, three consecutive down days in the Nasdaq price has been all that can be had before a bounce.

Also, the breadth has moved up steadily this last week despite the market’s sideways price action, moved up enough to turn long-term breadth positive.  However with short-term breadth has been up six days so a quick could come, but if it is not enough to turn down the long-term breadth, we could have a rally deep into September.

So Monday the bounce?  Then a rally?  That is my bias until it isn’t anymore (which could be as early as Tuesday).

SWING TRADING SIGNALS:

PRICE: Sell. (Day 3).
SHORT-TERM BREADTH: Buy. (Day 6).
VOLATILITY: Buy, (Day 2).

CONTEXT:

LONG-TERM BREADTH: Buy(Day 1).
CNN MONEY’S FEAR AND GREED INDEX: (27 rising, fear).
NIFTY-50 STOCK LIST: 22 Buys; 6 Overbought, 3 Oversold, 5 new buys today, 8 new sells.

(click on the charter for a larger view)

 

#MarketTiming – beware the ides of August…

SPY gaped up today, hit yesterday’s suggested 247 resistance on the first five-minute bar, and turned down, down not so much but maybe enough given that that is a lower high since last week’s nuclear Tuesday reversal.

In addition my daily price and breadth indicators also gave sell signals with lower highs. Volatility remains on a buy but it is for the third day in a row which makes any more time tenuous. If it were to turn it would give a higher low in the VIX, a possible hint a change in trend.

Today’s turn down in short-term breadth (see red circle on the chart below) in context with the continued decline in long-term breadth is often a gift the the bears, which is to say the general market should plunge tomorrow.

These are all quiet signals after yesterday blast to the upside which may mean they mean nothing at all and today’s long sideways price action after the open was nothing but a consolidation of yesterday’s gain before proceeding higher.

But these quiet, disquieting, signals could also be like whispers in the night — “beware the ides of August, beware…”

How often has the market topped quietly in August and fallen all the say into October?

SWING TRADING SIGNALS:

PRICE: Sell. Price (Day 1).
SHORT-TERM BREADTH: Sell. (Day 1).
VOLATILITY: Buy, (Day 3).

CONTEXT:

LONG-TERM BREADTH: Sell (Day 10).
CNN MONEY’S FEAR AND GREED INDEX: (36, still at a fear level).
NIFTY-50 STOCK LIST: 42 Buys; 13 Overbought, 2 Oversold, 2 new buys today, 3 new sells.

(click on the chart for a larger view)

SWINGTRADING2017-08-14_1524