#MarketTiming – a black candles Thursday leading to…

MARKET TIMING SIGNALS FOR 6/21/2019.

Long-Term Breadth (NYSI): BUY DAY 11
Short-Term Breadth (NYMO): BUY DAY 4
Price: BUY DAY 3
Nifty-50-Stock-List: 36 BUYS, 9 NEW BUYS, 28 OVERBOUGHT; 14 SELLS, 6 NEW SELLS, 0 OVERSOLD.
CNN MONEY’S “Fear and Greed” Index: 473, rising, NEUTRAL LEVEL.
Bellwether Stocks: 13 UP, 2 DOWN.

WHAT?

The market gaped higher again Thursday and for the most part finished higher but…

But most indexes, ETFs, stocks closed below their opens creating black candles on their charts (see the charts below). Black candles are obvious times of indecision springing up oftentimes at the end of up swings.

The three major leveraged ETFs – TQQQ, UPRO, TNA – ended the day black. Seventeen of the stocks, more than a third, of the nifty-50 stock list ended in black candles. Thirteen of the 15 bellwether stocks — AAPL, FB, NFLX, GS, AMZN, SHOP, etc. – were up on the day but fourteen of them ended in black candles.

WHAT NEXT?

As noted before black candles create an easy read for traders as the obvious indecisiveness resolves itself- above the high of the candle, the rally resumes, below the low, it falls back. It’s that simple.

With this much indecision going around, and with the current swing up thirteen days old, and with 28 of the nifty-50 stocks overbought, and with all but three of the bellwether stocks overbought (and the other three already on sells), almost needless to say, it could be time for at least a dip, if not a solid drop.

(click on the chart panel for a larger view)

$SPY – market tries to reverse Trump tariff sell-off

MARKET TIMING SIGNALS FOR 5/6/2019.

Long-Term Breadth (NYSI): SELL FROM 5/6.
Short-Term Breadth (NYMO): SELL FROM 5/6.
Price: SELL FROM 5/6.
Nifty-50-Stock-List: 27 BUYS, 4 NEW BUYS, 13 OVERBOUGHT; 23 SELLS, 11 NEW SELLS, 5 OVERSOLD.
CNN MONEY’S “Fear and Greed” Index: 56, FALLING, GREED LEVEL.
Bellwether Stocks: 1 UP, 14 DOWN.

OF NOTE SPY OPTIONS DAY TRADES:

SPY CALLS, 5/6 288 UP 71%, 290 UP 120%, 291 up 190%. No put trades.

OF NOTE
:
Fourteen of the bellwether stocks (AAPL, TSLA, NFLX, TWLO, AMD, NVDA, QCOM, GS, GOOGL, BABA, MSFT, FB, FSLR, AMZN) were up from the open although down on the day; and one (WYNN) was both down for the day and down more from its open.

WHAT:

The futures market sold off hard overnight on the news Trump threatened new tariffs on Chinese imports, then rebounded immediately at the open on the news that the Chinese negotiators planned to come to the U.S. to talk as planned anyway. The market was poised to go higher, prior to Trump’s announcement but the news cut short the buy signals across the board on Friday’s gains.

Can’t do anything about news, either positive or negative, except to go with the flow as it unfolds – in this case for day and swing traders it was a buy on today’s open and turned out to be quite a remarkable bounce back. Fourteen of the bellwether stocks were up from the open despite remaining down for the day. The $10K day trading system, had today’s 290 calls (in the money, ten minutes into the market) up 120% or the day, and just out of the money 291 call up 190%.

WHAT’S NEXT?

All technical signals I follow gave sell signals today for tomorrow open as the one-day blip up in long-term breadth ($NYSI) Friday retreated today on the tumble in short-term breadth ($NYMO); the price buy for today’s open, which racked up 4.5% on TQQQ and 3.7% on UPRO on the close, will be a sell on tomorrow’s open. In addition, CNN’s Fear and Greed Index dipped today while still at a greed level, and volatility surged (VIX), both negatives for the market.

Sell signals are sell signals but what’s next is tricky given the velocity of today’s rebound (see the candle on the SPY chart below), but it did not quite reverse completely and it may have used up immediate buying power to get to where it got on the close. If so, chances are it reverses again to the downside tomorrow. The key will be play the open, preferably with either calls or puts, while looking to lock in profits on today’s gains on TQQQ and UPRO and any of the bellwether stocks.

(click on the chart for a larger view)

#MarketTiming Signals – 4/9/19

THE SIGNALS AS OF 4/9/19.
Long-Term Breadth (NYSI): SELL FROM 4/9.
Short-Term Breadth (NYMO): SELL FROM 4/8.
Price: TQQQ SELL 4/9 UP 5.0%; UPRO SELL 4/9 UP 5.0%.3%; TNA SELL 2.7%
Nifty-50-Stock-List: 20 BUYS, 6 NEW BUY, 8 OVERBOUGHT; 30 SELLS, 6 NEW SELLS, 4 OVERSOLD.
CNN MONEY’S “Fear and Greed” Index: 71, DOWN, GREED LEVEL.
Bellwether Stocks: 4 UP, 11 DOWN.

OF NOTE, $10K Swing Trades, SPY OPTIONS:

SPY CLOSE – 287.33.
SOLD ON CLOSE – 282 APRIL IN-THE-MONEY UP 25.7%, 284 APRIL AT-THE-MONEY CALL UP 22.8%.
BUY ON OPEN – 288 APRIL IN-THE-MONEY PUT, 287 AT-THE-MONEY PUT.

OF NOTE, $10K Swing Trade Stocks:
SOLD ON CLOSE – WYNN, 17.6%; FSLR, up 6.6%; GS, UP 4.1%; NVDA UP 5.2%; AMZN UP 2.4%.
BUY ON OPEN – NFLX.

WHAT’S NEXT?
As noted in yesterday’s post, with the SPY is up eight days in a row and the NYMO turning down a profit-taking dip was coming “any day, any hour, any minute.”

Got that dip today causing profits to be taken on five bellwether stocks and SPY options (see table above). With the dip, however, the NYSI turned down – a bit of a surprise. Consequently, this pull back could get carried away to down side. Don’t really expect it after seeing so much momentum on the last bullish surge. Most likely it’s a mere dip to the zero line on the NYMO.

As said in the post below, as long as the NYMO and/or NYSI remain positive overall the usual play is to be long, take profits when the stocks give sell signals, and buy coming out of dips.

Trouble is, as of today, neither of them are positive so we’ll have to wait and see, or be ready to be nimble, playing offense with SPY puts on tomorrow’s open and playing defense immediately thereafter.

CNN MONEY’S “fear and Greed” pulled back, still at a “greed” level,” but it tends to be early at the top of swings. (Actually, the more I consider this, the more I’m beginning to think this dip COULD turn into a decent decline.) See the chart below.

AAPL finally had a reversal day and remains five days, by my measure, in overbought territory. If the market’s going to get carried away to the downside, the market-cap craziness of AAPL is a likely to be an easy down-and-dirty put play, maybe the 200 put for either Friday’s or the 4/18 expiration. The AAPL 190 April at-the-money call on this market rally is up a whopping 144% and has not, as yet, given an actual sell signal.

The banking stocks did today, a day late, what was suggested in this link – $XLF – Fighting an urge to short the bank stocks – so those short scalps are in play.

(click on the charts for a larger view)

$SPY – Simple black candle tops…

Let’s call this a KISS moment as in “Keep It Simple, Stupid.”

Again and again, market upswings end in black candles – a hanging man, a shooting star, a dreaded doji, or just a sign after six days up and two blasts of nothing-much news the buyers get tired. Not always it’s a black candle ends the rally, but it happens often enough, me thinks, for swing traders to take notice.

On November 26th, it was suggested this market would rally in this post: If Santas’s rally is coming to town… and on the follow up in this post: Fast and furious the bear-market rally rises… it was suggested this swing has the speed of a bear-market rally and it was noted:

“If I had to guess, I’d pick the 281 neighborhood as a place where the SPY may settle this trip up (see the chart). Maybe even a bit higher. It may not take long or it may chop up until January. After that all indications are we have not seen the eventual lows of this bear.

Well, it didn’t take long. SPY came within 60 cents of that 281 number today and sold off. Hence the black candle.

So is this swing done?

Could be but maybe not… If not the simplicity of this looks truly stupid, if so I suppose it looks…smart? The key to these singular candle moments is what always comes next. Looking back over the chart below, it appears, what comes next is the smart part but if it breaks that red line at 281 it will likely go considerably higher (more Santa gifts for bulls and those who want to jump out of the house from an upper-story window).

Must note that all of my bellwether stocks – NFLX, AMZN, NVDA MSFT, GS, BIDU, BABA, FB, TSLA, AAPL — were up today from yesterday’s close, and ALL OF THEM were down from today’s open. In other words, in one of the posts linked above it was suggested in a bear market there would be selling pressure nearly every day – today during the day it was obvious this was one of those days.

Tomorrow could another and it could bring more serious selling if the simple black candles have their way.

(click on the chart for larger view)

Bitcoin and its buddies on the blockchain

If ever there was a bubble that was obvious it was Bitcoin and its buddies – the other cryptocurrencies and finally the blockchain stock mania that lasted what…a week or so?

Every time someone would pump Bitcoin or whatever other Oreocoin someone dreamed up the night before last, I’d ask “Can you buy a snickers bar with that?” I suppose you can somewhere but I’ve yet to find anyone who has.

I thought this pseudo money would crash when it was reported that New Orleans lap dancers were having bar codes tattooed onto their breasts to be able to accept crypto-scans as tips.

Then along came the blockchain stocks (see the wild charts below), which is to say companies like Kodak (KODK) changing its name and tripling overnight, or Riot Blockchain (RIOT) which looked as if it was the brain child of two or three guys smoking weed in Colorado who became multi-millionaires almost as a drugged-out joke. Everyone tells me cryptos may go bye-bye but blockchain technology, stringing together each and every financial transaction, is here to stay. Of course, a million computers all over world grabbing and archiving when someone (say, in Latvia) finally gets to buy a snickers with a Bitcoin.

How much electricity goes into that single candy bar?

And of course, as history would have it (always), the obvious became utterly obvious when it all finally crashed.

These is just a nutty time, typical end-of-a-bull-market craziness. Keep that “end-of” in mind. It takes a while and it’s virtually impossible to pick a market top of significance but bit by bit the history of how it happens keeps showing up. AAPL hit a $1trillon market cap probably because the company has enough cash on hand to buy that prize for itself. Then AMZN hit $1trillion too – for one day.

One of these bellwether stocks — AAPL, AMZN, FB, good heavens GS –is going to take a tumble that matters and actually follow through to the downside while no one is really paying attention.

When that happens a bear will be here. Maybe tomorrow. Or maybe today.

(click on the chart panel for a larger view)

UPDATE – $SPY #Options trade on a “Turnaround Tuesday”

Pretty great day in the gone-long options world.

Bought the Wednesday 287 call based on the immediate post below speculating that today would be a turnaround day suggested by history and by David Bergstom’s analysis at the “See It Market” site.

Several notable stocks were also up more than 3% from the open: NFLX, AMZN, BABA, and AAPL almost at up 2.95%. TQQQ, the Nasdaq 3xLeveraged ETF, was up 3.8% from the open.

An $AMZN trade that was a coulda, shoulda, but not a woulda…

Shared the chart below of AMZN around the internet after the close last night with the suggestion that this was an obvious setup to buy puts or sell calls.

It was prompted by this post here yesterday:

$AMZN – a leader stumbles?

The idea was that the stock would continue its stumble today (and maybe for a week or so). See the blue boxes marking the spots on the chart when that has happened before as it comes off overbought (the yellow color coding on the chart).

Since long-term breadth had just turned down after a long run up and everything in the market was pretty much overbought, it was likely there would also be market pressure on the stock besides it being overextended on its own. Then there was that history thing in play again – the best indicator of all since it repeats or rhymes or whatever but it mostly whispers what’s going to happen next again and again.

It was a trade for today’s open. The most aggressive and least expensive entry would be an in-or-at-or-just-out-of-the-money put expiring Friday.

I coulda and probably shouda but I did not trade this. In general I don’t like stock options, don’t like the spreads, don’t like the lack of liquidity when it’s time to close it out, don’t like the complications (all those Greeks and spread strategies). I like my options trading plain and simple – it either goes up or it goes down, it is either a call or a put. I trade SPY options.

I threw this out there last night for entertainment purposes primarily, and, as it turned out, it turned out to be quite instructive for anyone who does like stock options. To each his or her own way to play these money games…

AMZN had a big move down (as history whispered it would). The 1995 Put, expiring Friday, from the open peaked during the day up 260% and ended the day up 161% (see the companion chart below). That’s somewhere between $26,000 and $16,000 on a small $$10K capital commitment. Not bad for a day trade? This could drop more tomorrow making that put even more profitable but come on…it’s a home run with no need to risk an overnight reversal.

And besides, moves like this happen again and again, nearly everyday, somewhere in the market.

I didn’t even notice TWTR. Market-timing, options-trading bears must have made some serious money there today.

(click on the charts for a larger view)

$AMZN – a leader stumbles?

What if AMZN, after all the hoopla, only spends one day at a $1Trillion market cap?

As noted back on July 1, halfway through this year, in this link:

THE MARKET WALKS THE EDGE OF A LONG-TERM CLIFF

If a leading stock like AMZN stumbles…how mean will a reversion to the mean be? The stock’s 50-day moving average is nearly 150 points below today’s close (see chart below). Hard to believe in this the oldest of bull markets can end but a serious decline always begins with just one day down.

AMZN and AAPL have been the leaders. They both have had moves that resemble blow offs on this last upswing. Not often stocks as big as these run up 25% virtually out of nothing more than a buying panic. Now if AMZN follows today’s decline with more down to come, how long can AAPL alone hold up the market?

Just speculating here on a bit of market timing since it’s damn near impossible to call a market top, but more and more signs appear and one of these days one or the other of the signs will be telling.

Bear markets can come out of the blue. Out of the fog of complacency. Just when everyone believes the leading stocks and the bull itself can go up forever, they and it won’t.

(click on the chart for a larger view)

#MarketTiming – Swing trading the bellwether stocks…

My swing signals, based on breadth, price and volatility, turned up in unison on April 3rd for a buy on the open of April 4th.

More importantly, short-term market breadth put in a divergent low in the midst of recent market thrusts to the downside. When that happens, the next step that usually confirms an upside swing is the upturn in long-term breadth. That confirmation came yesterday.

There was a previous discussion and chart of this yesterday HERE).

From stock trader’s or investor’s point of view, the purpose of market timing is tell when to buy. And once again, the bellwether stocks list proves that point.

My “bellwethers” are TSLA, NFLX, AMZN, BID, TWTR, BIDU, AAPL, GS, FB, NVDA, FSLR, BABA.

On the chart panel below, the white flag on the right axis is the current gain per $100k invested (also calculated for the percentage gain). At the moment, this upswing is lead by TSLA at 17%, followed by NFLX and AMZN, both up 6% plus. Remember when (three days ago) there was some dope speculating TSLA would go bankrupt and President Dumb-Ass was attacking AMZN like it actually owned the Washington Post? What a difference a day or two makes in swing trading.

(click on the chart panel for a larger view)

#BellwetherStocks – longer fangs for the new year?

Let’s put it this way:

NVDA UP 14%
NFLX UP 13%
AMZN UP 11.3%
TSLA UP 7.7%
BIDU UP 7.0%
GOOGL UP 6.8%
BABA UP 6.5%
TWTR UP 5.5%
AAPL UP 4.0%
FB UP .9%

The above are year-to-date returns – nine trading days – which is why they are the “bellwether stocks” for this melt-up bull market. They also happen to be the stocks in the NYFANG Index, up 8.4% year to date.

Also I would add FSLR, up 8.2%, as a bellwether for the future of energy.

(click on the chart panel for a larger view)