$SPY – From Friday to Friday to “de ja vu all over again”

MARKET TIMING SIGNALS FOR 8/30/2019.

Long-Term Breadth (the NYSI): Buy DAY 2
Short-Term Breadth (the NYMO): Buy DAY 2
Price (the Nasdaq COMP): Buy DAY 2
Volatility (the VIX): Buy Day 2
Nifty-50-Stock-List: 39 BUYS, 15 NEW BUYS, 10 OVERBOUGHT; 11 SELLS, 0 NEW SELLS, 3 OVERSOLD.
CNN MONEY’S “Fear and Greed” Index: 28, Rising, FEAR LEVEL.
Bellwether Stocks: 11 UP, 4 DOWN.

WHAT?

The market, after yesterday’s buy signal on all indicators, actually followed through today with a strong upside move.

As a result of the last two up days, we are right back right back to where we were five trading days ago with the SPY trying again to break out of its consolidation box (see the grey box on the chart below). Since last Friday into Wednesday, we’ve had Trump rally-killing tweets and at least a hint that China may timing the market to compound what he does with Twitter. The market quieted down on Wednesday on light volume with solid up day.

WHAT NEXT?

The NYSI, NYMO, Nasdaq Comp, and the VIX are all on buy signals.

Trump tanked the market last Friday and maybe he can manage to blunder into doing it again but, based on the technical indicators, the market “should” have at least one more up day going into the holiday weekend.

That is about all that needs to be said except to note the Fear and Greed index is up on the day and still at a level that gives it a lot of room to move to the upside if the SPY overcomes resistance that top of its consolidation.

(click on the chart for a larger view)

$SPY up against a high wall and ready to rise

MARKET TIMING SIGNALS FOR 8/22/2019.

Long-Term Breadth (the NYSI): Buy DAY 1
Short-Term Breadth (the NYMO): Buy DAY 1
Price (the Nasdaq COMP): Buy DAY 1
Volatility (the VIX): Buy Day 1
Nifty-50-Stock-List: 38 BUYS, 5 NEW BUYS, 10 OVERBOUGHT; 12 SELLS, 2 NEW SELLS, 3 OVERSOLD.
CNN MONEY’S “Fear and Greed” Index: 25, rising, EXTREME FEAR LEVEL.
Bellwether Stocks: 12 UP, 3 DOWN.

WHAT?

After slamming up and down in a price consolidation for nine days (some might say twelve) it appears SPY, and the rest of the market is ready to rise.

After a one-day dip, short-term breadth (the NYMO) turned up today putting in a low above a low above the zero line (see the pattern on the chart below).

Just as highs below highs below the zero line are gift or the bears (see the most recent on the chart), today’s pattern should be a gift for the bulls.

In addition, both price action (TQQQ as well as SPY) and volatility (the VIX) gave buy signals on today’s close for tomorrow’s open.

The stocks in my nifty-50 stock list have been gradually making the turn in the midst of this consolidation on the indexes. At the bottom of the sell off in late July and early August there were as few as six on buys (8/5), and even just six trading days ago as few as sixteen, but now there are 38 on buys and only ten overbought.

But maybe the best case for expecting an upswing here and a bull run, is CNN Money’s “Fear and Greed” Index (see the second chart below with TQQQ). It has been at “fear” and “extreme fear” levels during this entire past twelve days and today the index put in a low above low pattern while still deep in the fear zone.

That may be a big clue as to what comes next.

WHAT’S NEXT?

If it can vault above the recent highs of the last few days, the market is going to rally strongly, maybe even explosively – and given how far “Fear and Greed” has to run to the upside, this rally could carry back to the highs and possibly beyond in the next few weeks…

It better.

I say “it better” because if it doesn’t off this setup it’s going to be as Trader Vic Sperandeo always says: “If the market doesn’t do what is expected, it will do the opposite twice as much.”

Overall, I must say I am long-term bearish. I think this became a bear market on the sell down last December when margin debt, which was at that point higher than both 2000 and 2007 started to come apart, and all this jerking around this entire year is so far the death throes (however spectacular) of a long-term bull. President Obama brought this out of the depth of despair and it has managed to keep going on the tax-cut buy backs and the deregulation under Trump, but it is a ten-year bubble now waiting for the prick to bring it down. No wonder Trump, with his trade war and farmers going broke all through the Midwest and layoffs creeping into the headlines, is screaming desperately at the Fed to cut rates.

But none of this is going to matter tomorrow.

(click on the chart for a larger view)

(click on the chart for a larger view)

$SPY – dead cat or not, the open always matters…

MARKET TIMING SIGNALS FOR 7/18/2019.

Long-Term Breadth (the NYSI): Sell DAY 2
Short-Term Breadth (the NYMO): Buy DAY 1
Price: Buy DAY 1
Nifty-50-Stock-List: 17 BUYS, 9 NEW BUYS, 8 OVERBOUGHT; 32 SELLS, 2 NEW SELLS, 8 OVERSOLD.
CNN MONEY’S “Fear and Greed” Index: 47, rising, NEUTRAL LEVEL.
Bellwether Stocks: 7 UP, 8 DOWN.

WHAT?

In yesterday’s post it was noted that:

“The market will go down until it doesn’t, and granted, that could be even as early as tomorrow. The VIX remains below 15, which is a bullish level indicating this is likely a pullback and not a serious correction.”

The is pretty much what happened with a gap down before recovering.

While all three of my end-of-the-day signals were on or went to sells on today’s open in options trading and day trading the open always matters.

See the charts below. Color-coding on the these TradeStation charts has been getting simpler and simpler.

Those trades were triggered by the open for each option. They are set for $10K in each trade (what I call the “10KDayTrade” on Twitter) only to make calculating the percentage gains and losses easier. So $10K in 296 call for Friday’s expiration made about $5,900 into the close on the black chart on the left and the brief trade in Friday’s 298 put on the blue chart to the right lost about $900 so the net today across both trades was about 50%.

WHAT NEXT?

Today’s recovery was enough to turn up the NYMO which is a cautious buy signal. I say “cautious” because long-term breadth is declining. Consequently, today’s turn could be a dead-cat bounce with the downward slide resuming in short order. It’s a trade worth taking with a tight, impatient stop — in other words for me it better go my way right away or I’m going away.

At same time, tomorrow’s open, like today’s, is going to matter in both options and day trading. As far as I’m concerned SPY options are always a day trade. Stocks are a different game. Based on today’s close, stocks on my bellwether list to watch for longs tomorrow are AAPL, FSLR, SHOP, TWLO, and NVDA while BABA, WYNN and QCOM may be shorts.

The open for each will tell the story.

(click on the charts below for a larger view)

$SPY – Federal Reserve gives the market a yawn

MARKET TIMING SIGNALS FOR 6/19/2019.

Long-Term Breadth (NYSI): BUY DAY 12
Short-Term Breadth (NYMO): BUY DAY 3
Price: BUY DAY 3
Nifty-50-Stock-List: 33 BUYS, 5 NEW BUYS, 26 OVERBOUGHT; 17 SELLS, 6 NEW SELLS, 2 OVERSOLD.
CNN MONEY’S “Fear and Greed” Index: 43, falling, FEAR LEVEL.
Bellwether Stocks: 13 UP, 2 DOWN.

WHAT?

All in all a pretty boring day in the market.

FED left interest rates unchanged, but suggested rates may be cut later in the year. Reportedly the vote, was eight to sit, eight to cut, one to raise.

Tweeted this early in the day and it pretty much held true all the way to the close:

WHAT NEXT?

As long as the NYSI keeps rising, the market context remains bullish.

Yawn.

#MarketTiming – Stall or drop?

Been on vacation so haven’t been able to keep this blog as timely as I would like.

And besides, being in places where there was not even cell-phone coverage, I see I’ve missed a pretty sprightly rally. That’s the way it goes sometimes.

Anyway, TQQQ, my favorite leveraged ETF, is up 21% on the short-term breadth signal (the NYMO), six trading days ago. That signal triggering from double-bottom territory on the NYMO set the stage for the rest of the signals. Consequently, TQQQ is up 12% on its price signal and 8.3% on the long-term breath signal (the NYSI).

See the charts below — from left to right, short-term breadth, price, long-term breadth.

Since the rally’s start on the open of 6/4, other leveraged ETFs of note were SOXL (semiconductors) up 23.7%, FAS (financials) up 11.6% and FNGU (fang stocks) up 25.8%.

Gains among my be “bellwether stocks” were led by TSLA up 20%, coming from deeply oversold, AAPL up 11%, WYNN up 12.4%, SHOP (newly added to my list) up 14.4%, AMD up 14.5% and even a biggie like MSFT was up 9%.

Did I mention that we’re talking just six trading days, from Tuesday last week to Tuesday today? I guess I did. Six days, needless to say, that is what swing trading is all about.

So what now?

Both short-term breadth and price gave sell signals today with much of the market still wildly overbought. Likely we get a pullback starting tomorrow. Or at least a sideways stall to work off the overbought conditions. Note the big black candle of indecision today on the chart to the right. Below the low of that candle it’s a drop, above the high a resumption of the bounce.

If, by chance, this upswing was just more of the thrust from December to make everyone believe the bearish growl last fall was nothing to listen too, I suppose this rally could drop right out of the sky.

Either way, as long as the long-term breadth (the NYSI) is rising, the path of least resistance is up.

(click on the charts for a larger view)

#MarketTiming – tracks of the bear?

Sometimes, as they say, it’s not a stock market, it’s a market of stocks:

(Click on the chart to see the full twitter thread)

(Click on the chart to see the full twitter thread)

(Click on the chart to see the full twitter thread)

(Click on the chart to see the full twitter thread)

(Click on the chart to see the full twitter thread)

(Click on the chart to see the full twitter thread)

#MarketTiming – Oversold and very close to a bounce…

MARKET TIMING SIGNALS FOR 5/13/2019.

Long-Term Breadth (NYSI): SELL FROM 5/6.
Short-Term Breadth (NYMO): SELL FROM 5/13.
Price: SELL FROM 5/13.
Nifty-50-Stock-List: 9 BUYS, 0 NEW BUYS, 2 OVERBOUGHT; 41 SELLS, 14 NEW SELLS, 30 OVERSOLD.
CNN MONEY’S “Fear and Greed” Index: 32, FALLING, FEAR LEVEL.
Bellwether Stocks: 0 UP, 15 DOWN.

OF NOTE SPY OPTIONS:

In a very bearish trading environment, today was a put day (see post below) with the in-the-money at the open 284 put rocketing to a 144% gain at its peak and registering through a chop at the end of the day a 76% gain. That final gain is if one was not paying attention, but obviously there were profit taking points all during the day – as it gained 100%, coming off the top for 121%, selling on the first blue-bar sell signal for 90% (see the chart in the post below).

WHAT:

Today’s market action was again news driven as the US-China trade talks broke off Friday with Trump escalating the pressure with a jump in tariffs on many Chinese imports from 10% to 25%, then tweeting over the weekend several threats to make it worse.

Finally, China retaliated with $60B in tariffs on US products, most farm products in the heart of Trump’s voter support. Sixty billion is not that much on its face but in the scheme of things it was a sign China is not going to, as some Trump supporters were claiming, “bend a knee.”

With an all-out trade war getting closer and closer to a real possibility (don’t these guys ever read history?) it was inevitable the US market was going to take a big rip.

On a technical note, except for a one-day up blip on 5/3, the long-term breadth, as measured by the NYSI, has been been falling since 4/17 (see the red vertical line on the chart below). Since that time, the market managed to trudge higher but the indexes are all now below the level they were at when the NYSI turned down. In other words never bet against the NYSI. It sometimes takes a while but it most often wins in the end.

In a previous post on the this pullback, I said: “If the market focuses more and more on the Trump administration turmoil in Washington, it is likely to unstable for some time.” That still is the what’s what.

WHAT’S NEXT?

However, for now, it is time for a bounce. It may not come Tuesday (a “turnaround Tuesday”?) but it is very close by.

The market can go down as long as it wants but not forever.

At this point SPY is down seven of the past nine trading day, the nasdaq down eight of the last ten. Short-term breadth, the NYMO, is deeply oversold. VIX has moved from the “12s” to 20 in the same amount of time. It’s getting to be too far, too fast, which always leads to a quick bounce. Except for QCOM, all the bellwether stocks are sells and were flushed to oversold with big drops in the indexes today.

In addition, my nifty-50-stock-list has 41 stocks on sells and 30 individual stock on the list oversold. Forty or more on sells is oftentimes the beginning of the end, if not the end, of a downswing.

I’m not one for Fibonacci numbers because like all support and resistance indicators they are notable only as long as the market doesn’t slice right through them (which it often does), but they are sometimes fun to take a look at and right now it appears SPY is sitting on one on a retrace of the rally from December (see the chart below). Supposedly that’s as good a spot as any for a bounce to begin.

(click on the chart for a larger view)

$LYFT gets no lift on first earning report since IPO

LYFT, the ride-share biggie, is a perfect example of not buying into the hype surrounding an IPO.

LYFT came public on 3/29 and dropped almost immediately in on its opening bar, then gaped down the next day (see the charts below). Eventually, it settle down to move sideways until…today. It’s earnings report was terrible, losing $9 a share, more than a billion dollars, despite an increase in revenue and market share. And it had to announce on a day when its drivers are on strike with its biggest competitor coming public Friday.

The stock dropped nearly 11%

If one is an investor, none of this should matter. As outlined in this link below, investors should not even be long the stock until all fundamental and technical finally shake out, if they ever do. (Keep all this in mind also for the upcoming UBER IPO.)


Buying IPOs For Dummies

These IPOs are difficult to short in the initial stages, but traders on biggies like LYFT have options to play with. LYFT’s options came to market five days after the stock’s IPO day (see the charts below). And there is where the downside can be played. The LYFT May monthly 75 puts bought on its own “IPO day”, using the same criteria outlined for the stock in the link above,is now up approximately 150%.

Now that is uplifting.

(click on the chart for a larger view)

$SPY – the slide from the top continues…

MARKET TIMING SIGNALS FOR 5/8/2019.

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: 18 BUYS, 3 NEW BUYS, 7 OVERBOUGHT; 32 SELLS, 1 NEW SELLS, 16 OVERSOLD.
CNN MONEY’S “Fear and Greed” Index: 41, FALLING, FEAR LEVEL.
Bellwether Stocks: 5 UP, 10 DOWN.

OF NOTE SPY OPTIONS:

SPY CALLS AND PUTS, BOTH, were down on the day as a tight sideways chop all day slammed premium for Friday’s expiration on both sides of the market. (See the charts below for how bad it was.)

The most nimble of options traders could make money, at great risk, buying the yellows And selling the blues on the charts below, but not much. The not-so-nimble could lose a lot.

WHAT:

It appears the market has been moving on Trump tweets. That is as absurd as it can get since he should not be tweeting about any of this and the market shouldn’t be paying any attention to any thing he tweets. The New York Times broke a story on ten years of his tax returns during a time he lost more than a billion dollars, all of the money his father gave him a lot more. Surely, one of the worst businessmen in history but a major-league con-man. His beloved Twitter has hung #BillionDollarLoser on him.

If the market focuses more and more on the Trump administration turmoil in Washington, it is likely to unstable for some time.

WHAT’S NEXT?

All sell signals remain in place – as usual this is a market can can go down as long as it wants and turn up any time. That sharp drop in the calls and the rise in the puts in the last twenty minutes of the day on the 10-minute charts below may hint there is more downside to come right away tomorrow but news, like a trade deal with China, can intervene.

This is a dangerous time for short-term traders. On the longer term, every bear market begins (or resumes) on a single down day and that day was six days ago to start this current slide.

(click on the chart for a larger view)

#IPOs – when “dummies” should take the trade

And on the second day of trading an IPO, dummies discover why they should never buy on the first day of trading.

This is based on suggestion in this post:

Buying IPOs For Dummies

Don’t mean to use the term “dummies” in a derogatory fashion but sometimes it’s hard not to.

Over and over again, unless one is a real insider or being bribed for doing something else, or running some money-laundering scam that’s beyond me, anyone giving in to the hype surrounding an initial public stocks offering and buying before seeing which way it is going when its first day is done is plain and simple a dummy.

As said the link, this is one of the easiest trades in the market if one has persistence to follow an IPO and the discipline to wait for it reveal its direction before buying. Initially these stocks are difficult, if not impossible to short, so we’re talking only the long side here.

The keys to taking a position in a recent IPO are the high and the low in price on the first trading day (its “IPO day”). It is a buy on a close above the high of the IPO day. After the buy the high of that day becomes the stop loss level or the low of the IPO day becomes the stop-loss level depending on any individual trader’s or investor’s risk tolerance.

The trade is as simple as that.

See the chart panel below for examples. The top row of charts are recent successful IPO investments using this system. Each is set at a $10,000 investment to show both the money and percentage gains (the white flags on the lower right of each chart). As of today’s close, SWAV is up 46%, PINS up 11%, ZM .98% and SOLY up 133%.

In the bottom row are four IPOs from Friday which should not be in anyone’s portfolio…not yet at least – these second days are, as I said above, when dummies learn they never shoulda never bought any of these Friday.

Going forward, RRBI will be a buy above 58 and not before; SCPL above 18.75, ATIF above 5.10, and YJ above 18.20.

Simple as that.

(click on the chart panel for a larger view)