Today buying $SPY calls in the fool’s game

THE FOOL’S GAME

As the great market guru, Henry David Thoreau would say – “simplify, simplify, simlify”. In other word, if the market’s up, buy the calls.

Here’s what that looks like at the moment for a $10K buy in the in-the-money SPY weekly call for next week’s Friday expiration (the profit is in the white rectangle on the lower right of the chart):

#MarketTiming $SPY – Another day, another…

Had short-term sell signals across the board for Wednesday and the market went up. Marginally.

This bull is trending so hard, it hard to get even two down days in a rows, happens but it is hard. Especially when long-term breadth is rising. For the most part one want to be on the same side as long-term breadth.

For today, both Price and Short-term breadth (see the red circle on the chart below), have again given buy signal so the market should go up. “Should” is not a word that has been that predictable these days either on the long side or the short side although the long side has the edge.

Note: RIOT, the wild and crazy stock featured in yesterday’s timing post, did do what it was “supposed” to do, which was to go down — from 28 to 23.

SWING TRADING SIGNALS:

LONG-TERM BREADTH: Buy (Day 1).

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

CONTEXT:

SPY CLOSE – 266.75
QQQ CLOSE – 155.99
CNN MONEY’S FEAR AND GREED INDEX: (67, rising, greed level).
NIFTY-50 STOCK LIST: 27 Buys; 6 Overbought, 3 Oversold, 4 new buys today, 4 new sells.

(click on the chart for a larger view)

#MarketTiming – What a RIOT!

The late great Kennedy Gammage of the Richland Report used to always say “buy when the market tells you, sell when the stock tells you.”

He was making allowance for stocks that defied the general market’s move or giving stock pickers something to do to impress their clients. What he did not tell was that most often when the market says sell, so does the stock.

As I’ve written here repeatedly, I keep a nifty-50 list of stocks, which I follow both as an indicator and for their individual abilities to move with the market. Every so often (roughly quarterly) I sort the list and add in new stocks to keep it current and vibrant.

On the last sort, the stock symbol RIOT vaulted to the very top of list virtually from out of nowhere. Here is its profile on Yahoo Finance:

Bioptix, Inc., through its subsidiary, BiOptix Diagnostics, Inc., develops enhanced surface plasmon resonance technology platform for the detection of molecular interactions. The company also focuses on animal healthcare and owns important intellectual property rights related to veterinary products. In addition, it has granted a license relating to single chain reproductive hormone technology for use in no-human mammals, which is under active development by the licensee bovine rFSH. The company was formerly known as Venaxis, Inc. and changed its name to Bioptix, Inc. in November 2016. Bioptix, Inc. was founded in 2000 and is based in Castle Rock, Colorado.

What?

Recently, it seems, Bioptix, Inc. changed its name to Riot Blockchain, Inc. and its stock went insane, rising from $8 to $23 in four trading days. Then quickly dropped back down as far as $13 in three days. Then wandered sideways while the Nasdaq pulled back and my three swing signals – market timing signals based on Price, Breadth and Volatility – remained on sells. When finally, the swing signals began to click in with buy signals (see the chart panel below), RIOT took off riotously again, rising 101% on the price signal, 92% on the breadth signal and 96% on the volatility signal in less than five days (again, see the chart panel below) – as Kennedy Gammage would say “buy when the market tells you.”

None of this makes any sense to me. I like to think this is three guys smoking weed in Castle Rock, Colorado, where it’s legal who get the brain stroke to go for a “blockchain” in their name because they sort of are one…and laughing at the idea. Wouldn’t that be a riot? What a stroke!

Well, Wednesday we may get a chance to see if “sell when the market tells you” is more telling than “sell when the stock tells you” since all of my short-term swing signal gave sells today for tomorrow’s open (see table below). Geez…going to have to take swing profits on these signal, somewhere around 90% to 100%. On a stock in three to five days.

What a riot!

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 – 266.78
QQQ CLOSE – 155.69
CNN MONEY’S FEAR AND GREED INDEX: (65, rising, greed level).
NIFTY-50 STOCK LIST: 27 Buys; 6 Overbought, 4 Oversold, 4 new buys today, 4 new sells.

(click on the chart panel for a larger view)

#MarketTiming – said bounce and so it came to pass

Yesterday, my nifty-50 stock suggested a bounce in the market today and so it came to pass.

In the process, the bounce turned long-term breadth up, to go along with the buys now on all of the swing signals (see panel below). With 15 individual buy signals on the nifty-50 list today, the list itself moved to middle ground from oversold which would suggest more to come to the upside.

All of the leveraged index ETFs – TQQQ, XIV, UPRO, TNA – are buys on the open tomorrow, as well as 9 out of the 12 bellwether stocks I follow (see chart panel below).

With all of those positives in the midst of a bull market, one has to assume this is once again going up. Until it doesn’t.

SWING TRADING SIGNALS:

LONG-TERM BREADTH: Buy (Day 1).

PRICE: Buy. (Day 2).
SHORT-TERM BREADTH: Buy. (Day 1).
VOLATILITY: Buy, (Day 3).

CONTEXT:

SPY CLOSE – 264.07
QQQ CLOSE – 154.02
CNN MONEY’S FEAR AND GREED INDEX: (60, stalled, greed level).
NIFTY-50 STOCK LIST: 24 Buys; 8 Overbought, 10 Oversold, 15 new buys today, 1 new sells.

(click on the chart for a larger view)

$FSLR – When in doubt buy…

Said it before but bears repeating: when in doubt buy renewable energy…

Simple as that.

Solar stocks will fluctuate with the market and with fossil fuel stocks but one day on some market swing (maybe this one) they will leave the fossil fuels companies withering in the sun, so to speak.

Recently oversold, here are a selection of solar stocks today:

(click on image for a larger view)

(click on chart for a larger view)

#MarketTiming $QQQ – a bounce nearly guaranteed…

Thirty-nine of the stocks on my nifty-50 stock list are on sells. Nineteen of those are oversold. If that number was 40 sells or more, I’d take out the “nearly” in the title above. Forty is the magic number that brings a bounce in the market within a day or two.

But only 39…so only nearly guaranteed…

See the chart below to view the stretch of sells (the red boxes) on the stock list and what happens next in the Nasdaq.

In addition two of my three swing signals – Price and Volatility – switched to buys while short-term breadth remained on a sell for the fourth day in a row. Four days down on breadth tends to also lead to an upward pop.

With long-term breadth on a sell, the bounce, if it come today, might be a one-day event but we’ll see.

SWING TRADING SIGNALS:

LONG-TERM BREADTH: SEll (Day 2).

PRICE: Buy. (Day 1).
SHORT-TERM BREADTH: Sell. (Day 4).
VOLATILITY: Buy, (Day 1).

CONTEXT:

SPY CLOSE – 263.24
QQQ CLOSE – 153.50
CNN MONEY’S FEAR AND GREED INDEX: (61, falling, greed level).
NIFTY-50 STOCK LIST: 11 Buys; 3 Overbought, 19 Oversold, 3 new buys today, 8 new sells.

(click on the chart for a larger view)

#STOCKS – Gonna huff and puff and blow your house down…

It’s never advisable to short a sector making a straight up move in a bull market. So let’s just call this a heads-up on a sector where sometime soon heads are going to roll.

Housing stocks and housing prices have gone crazy again. Just like in…uh, 2007. History repeats here and I suppose there are those out there in major cities bidding up asking prices on the belief that it’s different this time and even if is isn’t ten years or so from now they will break even on the house they overpay for today.

But it must be noted Toll Brothers (TOL), always the leading stock in the sector, took 6.4% hit today on its earning miss and gave a blow to the rest of the sector at the same time (see the chart panel below). From a charting point of view, today left a lot of uncertainty, if not downright fright, in the sector as measured by all those bearish candle patterns in the stocks. HOV, at less than $3 a share, always get weakest fastest, but consider the doji in the sector ETF, XHB, and in the builder,DHI…

Now is this a just shot across the bow or a direct hit on the housing sector ship?

Either way, heads up! Especially investors.

And P.S. if this sector starts to sink, put a spyglass on the banks.

(click on the chart panel for a larger view)

$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)