$SPY – chances are the market plops tomorrow

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)

$SPY options – another freaky Friday?

Last Friday, the calls in what I’ve ironically labeled for myself the “Fool’s Game” exploded 250%.

In my post in this link below I noted that going into that Friday, my game was looking at its first losing week this year and there had been no trending day during the week also for the first time this year. I define a trending day as any day either the weekly SPY calls or the puts close with a 100% or more gain.

TRENDING DAYS IN THE FOOL’S GAME

So what’s this week look like? Pretty much the same as last week.

As of today’s close, this day-trading system, buying SPY calls and/or puts, expiring either Wednesday or Friday, is losing money, a jarring 81% for each $10K traded (it was losing 152% at last Thursday’s close). Obviously, one does not trade this with any more than a small portion of any account. In addition, this week again there has been no trending day.

Can last Friday be happening again this week? I’m going to suggest — yes!

SPY is down this week four days in a row (not much) which tends to be a magical number for a turn-around in my experience with swing trading, especially in this bull market. The Nasdaq Comp is down three consecutive days. CNN Finance’s “Fear and Greed” Index is down four days to 21, an “extreme fear” level, a neighborhood in which one should consider going long. Yesterday, 40 of the stocks in my nifty-50 stock list were on sells (that is usually the bottom or the beginning of the bottom in any downswing, however small). Today those stocks clicked up to just 38 on sells. The VIX gave a swing buy signal to go long on tomorrow’s open.

And tomorrow is Friday. There have been twelve trending days by my definition so far this year and seven of them have come on Friday. Freaky.

Added all up, tomorrow looks like a run to the upside again and the calls could go crazy, again, if its another trending day.

Or the market could have a monster fifth-day-down crash…but then that would also be a trending day, only in the puts instead.

$SPY – Can “Fear and Greed” bring on a tumble?

The market Tuesday opened up, ground down, firmed into the close. I hardly know what to say, another day of chop with an upward bias.

However, the grind down managed to turn all my swing signals negative which would indicate further downside but of late that has seldom happened in this bull market. It is almost as if the signals (reliable for years) work again, it will be a sea change, or at least a nasty little rogue wave sucking that the bull’s ankles.

Took a look at CNN Money’s Fear and Greed Index (see chart below). Talk about divergences with the ever rising S&P…that is an ugly, ugly chart, and the last time it got this ugly the general market took a bit of a tumble back in August. That, in retrospect was a tumble that reinvigorated the market for another bull run.

So here’s to tumbles?

SWING TRADING SIGNALS:

LONG-TERM BREADTH: Sell (Day 16).

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

CONTEXT:

SPY CLOSE – 258.67
QQQ CLOSE – 153.88
CNN MONEY’S FEAR AND GREED INDEX: (58, falling, greed level).
NIFTY-50 STOCK LIST: 24 Buys; 13 Overbought, 3 Oversold, 3 new buys today, 9 new sells.

(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)

$SPY #MarketTiming – warnings, warnings, but…

After eight consecutive days up, SPY turned down Friday. I have to laugh. The decline was twenty-three cents – on a $254 ETF. Hard to get even the least big bearish about that.

And the Nasdaq Composite eeked out another gain for its ninth day up in a row.

Bears must be pulling their hair out by now. Won’t this market ever go down?!

But I have a feeling that bulls are starting to feel the possibility that whenever this rocket trajectory ends, the booster will fall. At that point, the question will be can the payload stay and hold in high orbit after the rocket is gone?

I have signs that all is not well under the surface. Once again. This bull market has defied every one of these downswing attempts for quite some time now. In my swing signals, short-term breadth and volatility whipsawed again to a sell, leaving only price rising (based on the Naz Comp up 9 consecutive days!). Long-term breadth remains positive but short-term breadth is slowly losing momentum (see chart below), which is always a big warning sign. Maybe this time that high below a high in the upper portion of the chart will be THE WARNING of the tumble to come. Fear and Greed clicked down from 95 to 92. Both those numbers are too high and unsustainable. My nifty-fifty stock list has been slowly rolling over from 39 on buys Tuesday, to 38 on Wednesday, to 37 on Thursday, to a bit bigger slip to 28 on Friday, and also registered 14 new sells on Friday.

Warnings, warnings, warnings, but until SPY follows through with more downside and the Nasdaq composite joins it in a notable drop, one can only say the bull market rages on, delighting buy-and-hold investors and driving swing traders crazy.


SWING TRADING SIGNALS:

PRICE: Buy. (Day 8).
SHORT-TERM BREADTH: Sell. (Day 1).
VOLATILITY: Buy, (Day 1).

CONTEXT:

SPY CLOSE – 254.37.
QQQ CLOSE – 147.66.
LONG-TERM BREADTH: Buy (Day 30).
CNN MONEY’S FEAR AND GREED INDEX: (92 falling, extreme greed level).
NIFTY-50 STOCK LIST: 28 Buys; 18 Overbought, 3 Oversold, 3 new buys today, 14 new sells.

(click on the chart for a larger view)

#The10kDayTrade UPDATED – $BID, $NFLX, $FSLR, $SPY calls in play

MARKET TREND:
Long-term Breadth: Positive.
Short-term Breadth: Neutral.
Price: Positive.
Volatility: Neutral.

All possible trades are $10k longs on the open:

Bellwether stocks: BID, NFLX, FSLR.

UPDATE: BID loss $57; NFLX gain $437; FSLR gain $28; for a total gain of $408.

3x-leverage ETFs: XIV, TQQQ, LABU, SOXL.

UPDATE: XIV gain $252; TQQQ loss $640; LABU loss $41; SOXL loss $88; for a total loss of $117.

The options list: SPY calls, QQQ calls.

UPDATE: SPY weekly 252 call gain $7,900. SPY monthly 252 call gain $3,900.

NOTE: Market rally is overextended with SPY up now seven days in a row and most index ETFs overbought. Once again this is a difficult day-trading market that could pull-back any moment but hasn’t yet on the close. The stocks and being nimble with options are likely the better play.

$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.

SWING TRADING SIGNALS:

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

CONTEXT:

SPY CLOSE – 251.23.
QQQ CLOSE – 145.45.
LONG-TERM BREADTH: Buy (Day 35).
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.

SWING TRADING SIGNALS:

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

CONTEXT:

LONG-TERM BREADTH: Buy (Day 17).
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 – From fear to new highs…

After basically a week’s consolidation, the rally from fear to greed resumed Monday.

CNN Money’s Fear and Greed Index moved out of the fear zone and into neutral.  First posted here with this below:

http://www.thegodoftrading.com/uncategorized/spy-now-upward-bias-fear-greed/

And previously posted here:

http://www.thegodoftrading.com/market-timing-2/markettiming-moving-up-from-fear/

The buy signal on individual EFTs after that first post started with SPY at 243.06 (closed Monday at 249.21), QQQ at 141.18 (closed Monday at 145.87; the leveraged ETFs, TQQQ moved from 104.41 tgo 114.70 and XIV moved from 76.37 to 84.31.  That’s nine trading days including a week’s price consolidation.

That is the quality of market timing as measured by this CNN Money multiple-component index.

So what now?

Fear and Greed at neutral and the indexes already knocking the highs.  There is a good chance the market goes higher, dragging sentiment, as measured by this index, back into the greed zone (see the red line on the chart below) as the indexes register more new highs and stocks generally stay strong.

All three of the daily signals – price, breadth, volatility – are back on buys as long-term breadth entered its third positive week.

SWING TRADING SIGNALS:

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

CONTEXT:

LONG-TERM BREADTH: Buy(Day 11).
CNN MONEY’S FEAR AND GREED INDEX: (58 rising, neutral).
NIFTY-50 STOCK LIST: 34 Buys; 23 Overbought, 3 Oversold, 18 new buys today, 1 new sells.

Bellwether stocks meeting 5-minute day-trading criteria for a buy on the open:  TSLA, BABA, AAPL.

(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).

SWING TRADING SIGNALS:

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

CONTEXT:

LONG-TERM BREADTH: Buy, (Day 8).
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)