#BellwetherStocks – ten bull flags still flying…

The general market took a hit today just when it appeared it could break out of its consolidation at recent lows.

All of this may be on news – Trump proposing a possible trade war with China, stewing over the Mueller investigation into everything from his campaign’s possible collusion with Russia, to the crimes arising from his hush-money payoffs to a porn star and Playboy playmate, to his sons’ threatening reprisals for any foreign government not doing their bidding, to allegations everywhere of corruption, self-dealing and maybe even money laundering; and now he’s rattling missiles at Syria (which is to say, at the Russian military).

Is there an Archduke Ferdinand anywhere in Syria?

There was a time when the one thing almost certain in the stock market was that the market did not like uncertainty.

Well, Trump has been the poster boy for uncertainty since the election and yet, remarkably, the market has ignored that, focusing instead on the Republican tax cut and the ripping away of every sane and insane regulation there is. But it’s beginning to look as if it is not quite ignoring his inconsistency and incompetence anymore. Last year it was hard to get the market to go down. Now it’s hard to get it to go up.

Okay, enough of that. What about right now?

This is an update of this POST ON APRIL 5TH.

The top in place in January may have ushered in a bear market (which is my overall bias) but right now the market is trying to bounce, and maybe even rally.

Today was a setback in that effort and every day seems precarious but I want to point to my twelve bellwether stocks. Despite last Friday’s bloodbath and today’s drop, they have all held firm. In fact, ten of the stocks have bull flags (see the chart panel below). My bellwether stocks are: TSLA, NFLX, AMZN, BID, TWTR, BIDU, AAPL, GS, FB, NVDA, FSLR, BABA. All twelve are in the black from the beginning of this bounce on open of April 4th.

TSLA is leading the bounce up 17.8% , followed by NFLX up 10.%, TWTR up 9.2% and now FB, with Mark Zuckerberg’s testimony to Congress, up 9.1%.

As bellwethers these stocks are, so far, saying this market is going to have another surge to the upside soon. Probably by Friday (unless the news gets in the way).

(click on the chart panel for a larger view)

#MarketTiming weekly $SPY options in the “fool’s game”

If anyone wants to take a peek (or another peek) into the link below from Thursday, or look down at the entry immediately below this one, they’ll see it was said: “In other words, I expect the market to shoot up on Friday”.

SPY – CAN THE BOUNCE BECOME A RALLY?

The great trader and “Market Wizard” Linda Raschke once put it very simply: “When you see what you are looking for, jump all over it.”

Well, Friday was a day to look for a rally after the market slid sideways to down all week, and rally it did with the Dow up 343 points, the SPX up 43, and the Nasdaq Composite up 127. TQQQ jumped 4% from its Friday open, UPRO did 3.2% from its open.

Needless to say that is better than money in a bank.

But what about THE FOOL’S GAME I’ve been writing about recently, buying weekly SPY calls and puts as day trades?

Friday that system was up 141% with a combination of trades in the weekly 273 put and the 271 call, both expiring that day. The 273 puts lost $1254 per $10K in the trade while the 271 in-the-money calls gained $14,482 per each $10K trade (there were two) for a total gain for the day of 131%.

The Friday expiration makes for the best day trades in the weeklies. Has been that way all year with this Friday as, obviously, no exception. Its 131% net brought the total gain for the week to 226% — $22,600 for no more than $10,000 in any day trade during the week.

I have not much more to say except to remind that everything said here is for entertainment and educational purposes only, and for my own personal trading journal, and should not in any way be construed as investment or trading advice.

$Stocks – Bellwethers “sure to bounce”…bounced.

As this week draws to a close, thought I’d take a look back at the bellwether stocks I suggested were oversold and sure to bounce with the market.

Note this link from February 11:

Bellwethers stocks sure to bounce…

The bellwether stocks are AAPL, AMZN, NVDA, TSLA, NFLX, GOOGL, BIDU, BABA, TWTR, FB, FSLR, BID, and GS.

Been two weeks since it was suggested the bellwether bounce would be sure to happen with the general market’s current up swing and the group has been led by BIDU up 13.5%, NFLX up 10.4%, TSLA up 9.6%, and both AMZN and FSLR north of 8%. The laggards have been TWTR, BID, and FB.

All twelve of the stocks in the basket are in the black on this swing trade.

For an easy comparison between the then and the now see the charts below. The white flags on the lower right of each chart show the cash (and percentage) gains per $100K committed to each trade for the past two weeks.

If the market continues up after this week’s sideways slide, mounting a further rally, these stocks are sure to go higher again with it, probably with the laggards playing some catch-up.

(click on the charts for a larger view)
BELLWETHER STOCKS TODAY’S CLOSE:

BELLWETHER STOCKS FEBRUARY 11 POST:

$SPY $QQQ – A December Rally to hate Part Two

A DECEMBER RALLY WORTH HATING PART ONE

The market was up to its current tricks again Tuesday. Came into the day with a signals blaring buys and the market sold off.

As noted in the link above this has been going on pretty much all month. One day a buy, the next day a sell…hasn’t mattered much except as a fade. But one can’t fade signals developed over years of experience in the market or the signals won’t matter anymore, nor will the years of experience. Finally, when a11 is in doubt, there is a moment of obvious follow through that may indicate all is back on track.

That may be today.

Yesterday, all my swing signals turned again to sells (see table below). Long-term breadth was still moving up for the third day in a row, but limping. Still, if all was right in stock-market world, today should go down on the short-term signals, even gap down. Instead, tricky as its been, it gaped up…

Then sold down fast. …Hmm, that may be the indication all is back on track. If so, it could be the passage of the Republican tax plan, as many have suspected, might be the hammer that breaks the bulls back – a classic sell-the-news event.

Hard to know that for sure, but the market has been too tricky lately — too tricky — and that too may mean something. Trader Vic Sperandeo once said if the market doesn’t do what it’s expected to do, it will do the opposite twice as much. Of late, there has been an awful lot of bullish belief out there. Sentiment turns slowly and often too late, often not until it’s obvious the market is not doing what it is supposed to do.

Is this the day? As with everything in the market, we will, as the great Ed Hart of the old Financial News Network used say, “know in the fullness of time.”

P.S. Didn’t get a chance to post this Tuesday because of other pressing matters, and wouldn’t you know it on a day like today I overslept (I live on the West Coast).

SWING TRADING SIGNALS:

LONG-TERM BREADTH: Buy (Day 3).

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

CONTEXT:

SPY CLOSE – 267.17
QQQ CLOSE – 157.7
CNN MONEY’S FEAR AND GREED INDEX: (73, falling, greed level).
NIFTY-50 STOCK LIST: 35 Buys; 22 Overbought, 3 Oversold, 1 new buys today, 6 new sells.

$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)