#SwingTrading – a serious swing through the weed patch

Posted on by diogenes227

Marijuana stocks are the ruling weeds in the market garden on this upswing.


SWING TRADING TRIGGER – AUGUST 16TH

That was the technical trigger for the open three days ago.

The fundamental trigger came on the news Constellation Brands (STZ), U.S. distributor of Corona and Modelo beers, was investing $4 billion for 38% of CGC. All of a sudden, the Wall Street mob discovered it might be acceptable to pour money on the weed patch, particularly those springing up in Canadian gardens where marijuana has recently been made legal throughout the country.

As a result, of those traded in the U.S., CGC is up 26; a new IPO, TLRY, up33%; CRON, 27%. Even the most legitimate of the medical marijuana companies, the stalwart GWPH is up 3.6%. See the white flags on the lower right of each chart below which correspond to the cash and percent gained for each $100K invested.

Of particular note is MJ, up 10.7 percent, the sector ETF for the weed patch. MJ tracks the Prime Alternative Harvest Index, generally by holding many of these stocks and others traded on the Toronto Exchange.

(click on the chart panel for a larger view)

It’s been a great run for Ferrari but its $RACE is run

Posted on by diogenes227

Nothing like stair-steps in an uptrend.

See the chart below.

If this race was hill climb, RACE obviously finished in the money.

But, a couple of observations: 1) the stock has not had a breakdown from a boxed consolidation until recently; 2) there’s also a small head-and-shoulder top formation inside the box; 3) when leader flag it’s a warning for the general market too.

So what now? It’s a short the bounces until it makes a new high, and as long as it continues breaking to the downside.

And keep in mind this could be a warning in a possible transition from bull market to bear market.

(click on the chart for a larger view)

$AAPL – still rising in an ever thinning market

Posted on by diogenes227

AAPL continues to rise among my bellwether stocks.

The others to some degree or another have sold off in recent weeks (see chart panel below). That would indicate the market is being led higher by fewer and fewer leading stocks. Maybe just one since AAPL is in all three major indexes except the Russell.

However, the general market managed to follow through Friday on the short-term breadth signal and turned long-term breadth up. If all goes well for the bulls we should have a rally for a couple of weeks at least that moves more of the bellwether stocks to the upside.

(click on the charts for a larger view)

The $SPY $10K day trade for 26.7%

Posted on by diogenes227

Just a quick note on the $10K SPY options day trade for Thursday.

The long signal triggered just after the open and rose to a 97% peak (see the chart below) and closed the day up 26.7 percent, $2,670 for each $10K trade (see the white profit flag on the lower right). The is the day trade, start to finish.

Note, though, I consider a 100% gain a “trending day”, which are obviously the most important days to capture. Had this position passed above that threshold it could be locked in that profit level with a trailing stop. Just missed it today. Shucks!

However, it also should be noted that light blue candle after the peak on the chart was a chance to take at least some profits – the $10K was up 56.9% at the point. Short-circuiting the day-trade has not be more profitable over the long run this year than just letting it ride, but there at times when it just looks so obvious…

These trades are all day trades, either in the nearest in-the-money SPY calls or puts (in this case the 283 call, expiring Friday, and are closed at the close of each day. There was no signal for the puts today but on some days there are both calls and puts in play. My entry signal is proprietary, and should be tuned to any individual trader’s courage and risk tolerance.

Keep in mind, these posts are only for entertainment and educational purposes and should not in any way be construed as trading or investment advice.

#SwingTrading – Up, down, sideways, sideways sideways…

Posted on by diogenes227

It appears the market could go up tomorrow.

“Could go up”, I say that hesitantly because for end-of-the day swing traders like me, this has been a rather confounding week. On Monday, all of my swing signals (based on price, breadth, volatility) were on sells for Tuesday – Tuesday the intraday market went up. At the end of the day Tuesday all of the signals were on buys for Wednesday – Wednesday the intraday went down. At the close Wednesday, all of the signals were again on sells – today the market went up a lot.

Well, in SPY’s case it went back up into the Monday’s price range – in other words, sideways, sideways, sideways…

Although long-term breadth has not turned up, the low above a low in short-term breadth (see the circle on the upper portion of the chart below) usually will bring a bounce. That should happen tomorrow. And if long-term breadth turns up with it, the entire market could rally for a couple of weeks at least, which would be just fine and dandy.

If the market manages to put a final confounding candle on the cake tomorrow with a hard down day then…okay, I’ll say it, then we will have another indication a sizable bear may be stirring in its cave.

(click on the chart for a larger view)

UPDATE 8/22 – #GOLD stocks prove there is always a bear market somewhere

Posted on by diogenes227

This what a bear market and an outright crash looks like.

Gold and its sector stocks, after a long steady decline, went into free fall about four trading days ago and continued down virtually across the board today.

See the chart panel below for a random selection of the stocks.

Like all stocks, when the bear growls, these gold stocks can go down forever, but there were a couple of signs that the fall might be slowing in that two of the biggies – NEM and ABX — at least fell slower today (see the NEM chart below for an example).

A bounce may be due right about now for a quick scalp on the long side before any more decline. After drops like these this week, it will not surprise me if short-sellers want to log some profits for the weekend. Watch the open tomorrow for a trigger and keep a tight stop.

It must be said more downside will come with this much momentum in place. Shorting the bounce, if and whenever it comes, may be the better strategy for swing traders. The sector will be in its own bear market until it isn’t anymore and it’s going to have to base for sometime before it ever sees a bull again.

However, for the longer term, gold has had value for centuries and will again. Those who like to bottom fish and hold forever, or at least until the metals shine bright again, might start to carefully and patiently bait their lines.

UPDATE FRIDAY:

Buy NUGT on the open Friday for a 5.8% gain for the day, 9.6% from the previous close, JNUG for 8.3% on the day. Called this a scalp so took profits on the day trade and will watch the bounce to short. Alternative play would be to take half the profit on the close, let the rest ride with a break-even stop.

UPDATE 8/22:
Taking off alternative play, bear market bounce: NUGT up 9.9%, JNUG 10.7&, four days up into a black candle (see second chart below).

(click on the chart panel for a larger view)

(click on the chart for a larger view)

#Bitcoin – Don’t follow this crypto mania much but…

Posted on by diogenes227

But I took a look today to see what’s going on lately.

Are you kidding me? There are people out there claiming this will replace the dollar? Replace gold?

Can’t anyone spell T-U-L-I-P-S?

I thought this would end when lap dancers in New Orleans started putting bar-code tattoos on their boobs to collect bitcoin tips.

Now that the drug dealers and money launderers have made a market a few notable institutions (like Microsoft for heavens sake!) had gotten sucked into, and computer nerds in bedrooms with potato chips are “mining” in their spare time, and even more than a few suburban crazies have gone crazy over, what is the real future for this crap? It is in market history (duh, the tulips), and it is not good.

Does anyone actually want to put their savings in this for a buy-and-hold overnight?

That this stuff is priced in U.S. Dollars should tell everyone everything that needs to be told.

(click to enlarge)

$BID And $TIF – What do the rich folk do?

Posted on by diogenes227

They buy stocks, and spend money on all sorts of luxuries – second, third, fourth houses, paintings, baubles, antiquities… Just about anything that can be had at auction or in blue boxes.

And when they quit… Let’s just say they pull the BID (see charts below).

As bellwethers of the future market action BID (Sotheby’s) and TIF (Tiffany’s) are always worth watching. The timing is not precise but when they are long and strong the bull market is strong also but when they fall they tend to fall ahead of time. BID particularly.

Just bringing this up since I happened to notice BID seems to have had quite a sell-off lately, and it appears TIF could follow with a lot of downside space to drop into.

Just a cautionary note to remind anyone used to bull-market stock moves that whatever goes up can also go down.

(click on the charts for a larger view)

$SPY options – can little losers be the prelude to a big winner?

Posted on by diogenes227

I came into today expecting a sell-off in the general market.

It didn’t happen, at least not right off the bat. At the end of the day, it sort of sold down in a way that may mean the market “plop” I suggest yesterday will come tomorrow.

For the past three days the market has been in a very tight range – for instance SPY opened Tuesday at 285.39, opened Wednesday again at 285.39 and today at 285.53, a total range of 14 cents in three days. This might be great if one is selling SPY options but I don’t even look at the short side naked because it takes too much margin. Instead in what I’ve been calling, tongue-in-cheek “the fool’s game,” these three days have been yuck. I mean PURE YUCK!

Today was a little loser again.

Because I’ve been posting winners, primarily to explore the potential of day trading SPY calls and puts on the long side (“the fool’s game”), I’ve been met on the internet as expected by a chorus of naysayers who believe what I’m saying is far “too good to be true.” So I’ve decided to post this loser to reassure that while it is good and it is true it is not every day.

Today’s loss came from trading $10K on each trade, first the 284 call, expiring tomorrow (see the the chart on the left below), then the 286 put on the day-trading reversal. The call lost 22.8% percent on the $10K trade, $2282. The put, which was deeply underwater most of the day (see the white profit histogram on the chart on the right below), managed to surge to a .9% profit on the SPY sell-down into the close, $958. Total loss for the day was $1324 for $10K traded, 13.2% for the day.

That 22% loss on the calls and the 13% loss overall is why money management is most important in trading anything, especially any strategy like this. It is intended to be traded small versus one’s overall portfolio and traded everyday.

The tight range of the past three days suggest SPY could go big either way tomorrow. My hope is it will be a trending day either up or down since the real money here is made on trending days, usually days of options expiration like Friday (in fact, YTD Friday’s have been the best days of the week), or like last Monday…

Monday’s SPY 283 call (see the pattern on the charts) trended all day. As a result, the profit for week remains at 57% despite the yuck, yuck chop of Tuesday, Wednesday and today.

As a great, wise film fool once said: “That’s…

(click on the chart for a larger view)

$SPY – chances are the market plops tomorrow

Posted on by diogenes227

I was going to write a detailed analysis of why I think the general market (SPY, QQQ) takes at least a dip Thursday but I’m kind of tired.

So suffice it to say, the Nasdaq Composite is up seven days in a row, and SPY, except for a brief pause a few days ago, the same. My Nifty-50 stocks have gone from 40 on sells at the beginning of the rally up to 41 on buys Monday and are now rolling over. A lot of the stocks have been sluggish since that peak three days ago.

CNN Money’s Fear and Greed Index is one click away from an extreme greed level.

Most importantly, long-term breadth has gone negative today (see the red line on the chart below).

Yup, there’s good chance a pull back begins tomorrow. Hopefully it is a down swing that lasts for a couple of trading days since this advance is now in thin air and can surprise to the downside any second.

Time to tighten stops or look to to exit the up swing.

(click on the chart for a larger view)