#MarketTiming $SPY – Buy now, resell later…

Gotta be a bounce if only because it can’t go down forever.

CNN Money’s Fear and Greed Index is at one. One. It can’t go below zero.

Forty-nine of my nifty-50 stock list are on sells with forty-eight of them oversold. I can’t remember 48 oversold all at once before.

The VIX is at 75. That is virtually a bear market momentum number.

The VIX leveraged ETFs, TVIX and UVXY, have been the stars of this market plunge. See the charts below. Since the NYSI downturn 13 trading days ago UVXY is up 40% and TVIX is up 72%

TVIX was at 40 when I posted this advance notice in January – $TVIX – Just a heads up… – and closed today at 399. Absolutely f-ing spectacular if I was so myself.

So what now?

This is a only a guess because I have no actual upturns anywhere – not in the NYMO, let alone the NYSI, not in price, not in volatility, definitely not in fear and greed but this exercise band is stretched so far, the market ether has to crash tomorrow or snap back.

I’m guessing the shorts cover only because they have made so much profit this week and it would be prudent to take some before the weekend.

Could be wrong.

President Incompetent could try to “reassure” the market again, or claim everything is hunky-dory again, or blame Obama again or blame the Fed yet again. (Hell, the Fed fought the NYSI mid-day today and lost that battle big time by the close.) Yes, yes he claims he knows a lot about the stock market but knows nothing so he slam the market down another thousand points or more…again

But if he shuts the tweet up…

My guess is it’s a buy now – not for the long term – and a resell later.

Regardless – tight stops.

(click on the charts for a larger view)

Divergences don’t matter…until they do…

Over and over again, especially in bull markets, prices keep going higher despite divergences on internal indicators, but when a tumble comes, a “pull back”, even a crash and one looks back at its beginning there is usually a divergence there.

Or a cluster of divergences.

So as of today, we have one in CNN Money’s “Fear And Greed” Index. That index has been wildly over bought as prices have surged on most major indexes (in the SPY ETF surrogate for the S&P 500). It is back off, risen again and as of today put in its divergence by making a lower low while SPY has hugged its high (see the chart below). It is not infallible but if history do tell, it is a reliable context (not the red lines on the chart and subsequent market drops).

And wonder of wonders, the FINRA Margin Debt reading for October came out today (see the second chart below). It is a monthly and always a month behind so there’s always some guess work to be done in real time, but this reading is, indeed, ominous.

Besides having risen way beyond the debt levels of both 2000 and 2007 before those bear markets arrived, it has now been carving out a ledge pattern on its chart (sometimes called a bear flag) for the past few months as the market keeps rising into thinner and thinner air.

Why ominous?

Note it’s the same pattern that was in place as the market was making highs last time and, when it finally fell apart, it was the precursor of the bear markets in both 2000, and 2008. Is it different this time? Is it ever different this time?

History, history, history.

This is to say nothing of the divergences on the McCellan Oscillator (the NYMO) with its Summation Index (the NYSI) declining for the past 10 days even as the market as advanced.

Does this mean we’re about enter a bear market?

Maybe not, divergence don’t always matter. But if a bear comes roaring now there is a good chance when we look back to this day this cluster of divergences will have mattered.



#MarketTiming – back to across-the-board buys…


Long-Term Breadth (NYSI): BUY DAY 6
Short-Term Breadth (NYMO): BUY DAY 1
Price: BUY DAY 1
Nifty-50-Stock-List: 18 BUYS, 5 NEW BUYS, 9 OVERBOUGHT; 32 SELLS, 1 NEW SELLS, 3 OVERSOLD.
CNN MONEY’S “Fear and Greed” Index: 39, RISING, FEAR LEVEL.
Bellwether Stocks: 10 UP, 10 DOWN.


The question in the last market-timing post here was the market due for a Stall or a Drop?.

With barely two days down in the indexes it appears it was merely a stall.

The nifty-50 stock list worked off its overbought condition during the week from 41 stocks on buys Monday (28 overbought) to 15 on buys yesterday. Buy signals in the list clicked up today to 18 on buys with only 9 stocks overbought.


Since long term breadth continues to climb, assume there will be more upside with an up day likely again Friday.

Of particular note: CNN’s “Fear and Greed” Index put in a low above a low today (see its chart below with the Nasdaq Composite) as it works its way higher. It is still at a “fear” level so there is more room to move up.

(click on the chart for a larger view)

$TQQQ $XIV – up, up, up…UH…

All three of my end-of-day swing signals are on buys.

Friday nearly everything was up, the leveraged index ETFs — UPRO, TNA, XIV, led by TQQQ up 2.05% for the day; the leveraged sector ETFs – FAS, SOXL, ERX, led by LABU (biotechs) up 2.53% for the day; eight of the 10 bellwethers stocks up; 35 of the nifty-fifty stock list up.

And since every goes up in the stock market until it goes down, one can only assume Monday will be more of the same.

But what about the “UH”?

Well, uh, CNN Money’s Fear and Greed Index rose to 85 at an “extreme greed” level (see Nasdaq Composite chart below). Really an extreme greed level! It can hold or keep going up but it is signaling that the market is truly on borrowed time before a pull-back, maybe one or two days before a drop (see the chart for the last two times the index climbed above 80).

So, uh…we will see how it goes this week but Monday, for a swing trader, would not be a bad day to sell at least some into any more strength, and tighten stops on anything left.


PRICE: Buy. (Day 4).
VOLATILITY: Buy, (Day 4).


SPY CLOSE – 251.23.
QQQ CLOSE – 145.45.
CNN MONEY’S FEAR AND GREED INDEX: (85 rising, extreme greed level).
NIFTY-50 STOCK LIST: 36 Buys; 12 Overbought, 2 Oversold, 6 new buys today, 4 new sells.

(click on the chart for a larger view)

#MarketPerspective – waiting for the Fed…

Given how strong the trend is at the moment, the only thing that could kill this stock market rally is the Federal Reserve… Oh, yeah, Wednesday is the “Fed Day.”

So is the Fed going to kill it? It would take a drastic rate increase maybe, or a statement that the sky is falling. And even then, given how this Bull has shucked off every lance it takes, even a drastic something or other might not do it.

I suspect once the Fed suspense is over, either in the aftermath of the meeting announcement Wednesday or Thursday, QQQ is going to vault past its two weeks of resistance at about 146.59 (see chart below) and run like a bull enraged. Needless to say, if that happens, it will take everything in the market with it. SPY has already limped on up.

What I’ve just said is the old market adage: “the trend is your friend.”

Now what if is isn’t, or we are at the end of it?

It is as if the market has been chopping sideways for a couple of weeks just waiting. My nifty-fifty stock list has just registered 25 buys and 25 sells for two days in a row as if completely confused as to which way to go. Going into the Wednesday’s Fed Day, two of my three swing signals are on sells – short-term breath and volatility – but swing price and the most important long-term breadth buys are still in place. Beyond the technical signals, there are many signs that this bull is vulnerable – NYSE margin debt alone at its astronomical level beyond 2000 and 2007 should be making everyone’s hair fall out. CNN Money’s Fear and Greed Index is at an extreme greed level and could turn at any time. Margin debt and fear can feed on themselves and when then do nothing can stop them.

And I’ve just saw a sentiment survey that says retail investors have never been so bullish. In the rhyming of market history that is not good, they always get screwed in the end.

Geez, it’s still a bull market but like all bull markets it doesn’t make it easy. It’s not like anyone want it all left up to the Fed.


PRICE: Buy. (Day 3).
VOLATILITY: Sell, (Day 1).


CNN MONEY’S FEAR AND GREED INDEX: (81 rising, extreme greed level).
NIFTY-50 STOCK LIST: 25 Buys; 13 Overbought, 7 Oversold, 4 new buys today, 3 new sells.

Stocks meeting the criteria for a 5-minute on the open Wednesday: only FB.

(click on the chart for a larger view)

#MarketTiming – buy, buy, buy…

I have to laugh.

Yesterday it was “sell, sell, sell” on all three of the daily swing trading signals for today’s open.  Took tidy profits from the open last Monday, a five-day trade.  And of course, every signal reversed on today’s close to a buy for tomorrow’s open.  What a bull!

So what now?

I am looking for follow-through tomorrow and Friday (maybe longer) that should take SPY and QQQ, if not into new high ground, then close to it.  My play will be TQQQ and XIV but one think about LABU and SOXL which were very strong on the most recent upswing.  Then, of course, there are options, futures, stocks…everything is on a buy depending on individual risk tolerances.

On another positive note, long-term breadth continues to rise and the CNN “Fear and Greed Index” resumed its advance again today (see chart below) with a higher low no less.  So it would appear there is room to move up once again.

However, the sell-down in SPY, QQQ, and IWM in the last half-hour of trading today does not particularly bode well for the follow-through I’m looking for so if the day starts to slog or tumble on news or on the general American political malaise or another whispered economic jolt or on just being tired of going up, I may use the open as a stop (see other posts for an explanation of how that goes) to avoid being trapped in the current index consolidations on a down swing (even intraday).


PRICE: Buy. (Day 1).
VOLATILITY: Buy, (Day 1).


CNN MONEY’S FEAR AND GREED INDEX: (41 rising, still at a fear level).
NIFTY-50 STOCK LIST: 20 Buys; 13 Overbought, 6 Oversold, 4 new buy, 3 new sells.

(click on the chart for a larger view)

#MarketTiming – moving up from fear…

“I will tell you the secret to getting rich on Wall Street. You try to be greedy when others are fearful. And you try to be fearful when others are greedy.”
― Warren Buffett

Started the week in fear on CNN Money’s “Fear and Greed Index” so I suppose it is appropriate to end the week with a look at how the market moved up from fear and racked up a lot of swing-trading profit in the process.

My post from last Sunday : http://www.thegodoftrading.com/uncategorized/spy-now-upward-bias-fear-greed/.

So where are we now?  See the chart below.  The blue-block line is the Nasdaq Composite.  The red-block line is the Fear-and-Greed Index.

In this market context, and as my daily price signals kicked in, the leveraged index ETFs: TQQQ closed today up 10.3%, XIV up 8.9%, TNA up 7.0% and $UPRO up 5.3%. Among the sector leverage ETFs LABU closed up 17.3%, and SOXL was up 12.7%.  The leader among my bellwether stocks, as of today’s close, was NFLX up 5.8%.

Me thinks it doesn’t take long staring at those percentages to recognize the value of market timing and swing trading.  Of course it is not always like this but when it is…well, it just is…

The 5-minute day-trading stocks for today – FB, NVDA, TSLA, AMZN, and NFLX – had four winners (NVDA, the leader) and one loser (NFLX) and finished up .60%.  Not all that much, but winners are winners and a profit is a profit.  Only NVDA of the ten bellwethers meets the criteria for a buy on tomorrow’s open.  That may be saying something, given there were four or five to buy on every other day in this bullish week.

Also, given that these index ETFs are up four or five days in a row, and TQQQ and the Nasdaq Composite are both overbought, close to two standard deviations of an average advance, and given that trading will likely slow going into the holiday weekend, I will not be surprised to see sideways-to-slightly down Friday.

All buy signals are in place and long-term breadth remains positive and is accelerating so this is still a bull market that is going to go up until it goes down.


PRICE: Buy. (Day 4).
VOLATILITY: Buy, (Day 2).


CNN MONEY’S FEAR AND GREED INDEX: (45 rising, at neutral level).
NIFTY-50 STOCK LIST: 39 Buys; 21 Overbought, 0 Oversold, 9 new buys today, 2 new sells.

(click on the chart for a larger view)

$TAN – Solar stocks ready to rise and shine again

About a month ago I wrote in this blog:

Always a good sector to buy with any market rally, solar may be the best chance to rack up a 50% gain in the next couple of months.  Longer-term, no matter how volatile, it is a growth sector and preferable in the future to investing in fossil fuel stocks of any kind, particularly better than coal.

There will likely be a couple of more dips (which is worth noting) before this rise gets really going but historically it will, like the sun itself, rise again.

It appears the “couple of more dips” noted above may be done and it is time for the solar ETF to really get going.  Since I wrote that, CNN Money’s Fear and Greed Index as been reading fear but working its way higher, and TAN has now dropped to a level that may produce a double bottom for this swing (see the first chart below).

I say “may produce a double bottom” because it still has to turn up but it appears in pre-market action today that today is likely THE DAY.

This is a sector that has been sold off heavily on the CNN index’s swing from greed to fear. Consequently, the stocks in the sector like CSIQ, FSLR (which is showing strength premarket and is often a leader),  SUNE, JKS, SPWR, are deeply oversold (see the second chart below).

The oversold conditions make the stock buys all bottom picks.  This a play for a bounce initially (always with tight stops) that may very well turn into the 50% rally mentioned above.

(Click on the chart for a larger image)


(Click on the chart for a larger image)


$SOXL – Ready, set for profits again as the market shifts from fear to greed

CNN Money’s “Fear and Greed” Index oscillates from fear to greed and back again, and most market sectors fluctuate with its shift in sentiment. Today its inevitable shift appears to have begun as the CNN exited the fear zone.

As a result I’ve been looking for an oversold sector that has been known historically to run up hard and fast when the time comes.

In this example, it’s the semiconductor stocks and SOXL, the 3xLeveraged ETF for the sector.  The last time the market shifted from a state of fear to one of greed (see chart below), SOXL rallied from about $29 to as much as $40 a share, approximately a 37 percent advance in less than twenty days.

This what “swing trading” is all about.

Among the top holdings in the ETF are TXN, QCOM, INTC, and BRCM, but more vibrant semis include AMBA, NPTN, SWKS, FSL and AVGO,  and I suppose Apple-supplier NXPI if AAPL mounts rally with the market. Semiconductors (and there are a lot of them) tend to be all over the place so a diversified basket may be best — SMH, for an ETF without leverage, and SOXL for one with leverage.

Not recommending anyone do anything without one’s own due diligence, but as far as I’m concerned, this is a beaten-down sector with a lot of beaten-down stocks (I’m bottom-picking here) and it is likely going to be a sector worth trying to ride on the next rally.

(Click on chart for a larger image)


$TQQQ, FEAR AND GREED — the market bounces and maybe rallies a lot

CNN Money’s “Fear and Greed” Index is at seven, which is a measure of not only extreme fear but of EXTREME FEAR!

In other words, it is at a level that usually stops a market sell-off and reverses to a rally, and given that the Nasdaq Comp is down five days in a row (another number that often produces an instant bounce), that is a rally that probably comes Tuesday.

Remember when there was a time when Tuesdays were called “Turnaround Tuesdays”? Very possible that time will come around again tomorrow.

Below is a chart of TQQQ, the 3xLeveraged ETF for the Nasdaq.

Take note, the last time the Fear and Greed Index turned up from this level TQQQ rallied from 103 to a high of 127, a twenty-three percent move in seven days.  That is what is meant by “a lot” in the headline above.

There’s not much more to say except to point out that fear has not yet abated (the index can go lower has yet to turn up) and from a trading point of view one would like to see lower on the open tomorrow to buy and take the gamble that it turns by the end of the day.  And it needs to be noted that with this quick a fall in the market there is likely to be a retest of the lows after an initial bounce before any rally gets going in earnest.

Regardless, this remains a play made at one’s own risk and like anything in the stock market there is no guarantee of anything.

(Click on chart for a larger view)