$SPY #Options – day trading calls 10/15

The market context for these trades is outlined in this post – #MarketTiming – the NYMO low above a low. It is in place.

ENTRY:

FIRST HALF PROFITS:

CLOSE OF TRADE:

All Twitter time stamps are Pacific time.

PLEASE NOTE: None of the entries in this blog should ever be construed as investment advice or trading recommendations. They are presented solely for entertainment and educational purposes, and to record trading activities for my own personal trading journal.

#MarketTiming – $NYSI $10K stock trades

Long-term breadth (the NYSI) turned up Friday giving a buy signal for the open of the market today.

As suggested in this link #MarketTiming – the NYMO low above a low that was expected and would be necessary to have a chance for a rally. Today’s trading was sloppy sideways, probably just digesting last week’s gains, and although the NYSI did decline it stayed in positive territory.

If there is further weakness, there could be a whipsaw, but we’ll see when we see…

In the meantime, I expect more follow through to the upside.

In this link: #MarketTiming with $10,000 to trade I thought I’d sometimes address trading on limited capital — for the fun of it, for entertainment here and for anyone with limited capital.

The late great Kennedy Gammage of the Richland Report and for many years the keeper of the McClellan Oscillator flame, once wisely said: “Buy when the market tells you, sell when the stock tells you.” If I may, I would add to that “Also buy when the stock tells you.”

If one has but $10k, one needs to study up and pick stock favorites that have the ability to move with the market. Most stocks do move with the market but obviously some move better than others.

Today on Twitter I posted some Day-1 results selected by from my own bellwether stock list as examples of buying with the market as measured by the NYSI either turning up or turning down. Although, $10k readily computeS to a percentage gain or loss, I’m stating those gains in dollars gained or lost.

Clicking on the charts here will display larger chart details on Twitter.

THE WINNERS:

AND ONE LOSER TO SHOW NOTHING’S PERFECT:

$SPY #Options – Day trading calls – 10/10

INITIAL ENTRY:

FIRST HALF OFF:

CLOSE OF DAY TRADE

#ShortStrangles on Stocks 10/07 – 10/11

This week’s strangles:

Last week’s results:

(Percentage gains and losses reflect returns on cost of strangles, not margin needed for the trade.)

#Stocks – and out of the blue the brokerages fell…

Reportedly, this slam down in the brokerage stock is a result of Charles Schwab (SCHW) announcing a no-commission policy for online trade with presumably its competitors to follow.

And this is precipitated, according to reports, by the brokerage Robin Hood, which has been not charging for trades since its beginning. Robin Hood? Compared to these others, is that even a competitive trading house?

Regardless, SCHW, AMTD, ETFC, and IBKR are (at the moment) down either double-digit percentages or close to it in an out-of-the-blue across-the-board plummet. AMTD is down 23% (Holy cow!).

Whatever.

I would note the NYSI (long-term breadth) is falling. When it is, “accidents” like these often happen.

(click on the chart panel for a larger view)

#IPOs – a stealth bear market since summer

It appears while the main indexes have held near their highs this year, there’s seems to be a stealth bear market going on with many of this year’s prominent IPOs.

As has been written about here before (last visited in the link below), this is maybe the easiest trade there is in the the market — buy above the high of the opening day, using that high or the low of the first day (depending on one’s individual risk tolerance) and hang on for the long term:

#IPOs – A Great Year For “Dummies”

Well, it was a great year for the likes of SWAV, PINS, ZIM, BYND, SOLY, that is until summer. While none of these stocks have been stopped out (the high of the first day) they have not been going well since summer but as can been seen in the chart panel below there were opportunities to take profits to preserve profits, especially in crazy run ups in say SWAV or the famous IPO for BYND.

Sometimes when stocks just go silly even the most disciplined IPO investor needs to take notice and thank his or her lucky stocks.

In the larger market picture, this is the kind of weakness that can be seen in many sectors. It is just easy to see here.

P.S. Once again, the LYFT chart is included as a cautionary tale to not buy unless an IPO takes out the high of its IPO day.

(click on the chart panel for a larger view)

Margin Debt – setting up a S&P 50% plunge?

FINRA margin debt is a long-term indicator and always reported a month late.

So now we have the August numbers, down 6% month over month, as reported by Advisor Perspectives Monday (see the chart below). But it’s not the margin number that is concerning, it’s the chart pattern for the long term.

In the 1990s margin debt chugged along in a reasonable bullish fashion before finally going ballistic in 2000 just before the dot-com bubble burst. Then again, coming out of the 2003 bear market, it moved up gradually before going ballistic again in 2007 on a bubble in housing, fueled by excessively low interest rates for too long a time, and we had the financial crisis of 2008/2009. And now in 2018 margin debt has pushed higher than ever before on deregulation and tax breaks to corporations fueling stock buy backs, and some would say on a lot of hot air.

It the fall of last year it topped and has not gone higher this year. That is ominous for long-term investors.

Consider the pattern on the chart below.

Note that in both 2000 and 2007 the market made a new high after margin debt topped and fell. Each time on the chart, the debt numbers formed a plateau lower than the peak as the market made those new highs.

What comes next?

That is always the most important question in the stock market.

In 2000, the S&P plunged 50% (the Nasdaq, 78%), and in 2008 the S&P plunged again down 56%. Note the pattern in place on the chart now. Same old same old.

So is another 50% bear market imminent? It’s likely because although they always say it’s different this time it never is, even though it sometimes takes a long slow time to get it done.

This is a bit tricky at the moment because of the late reporting. One has to guess what is happening with margin debt behind the monthly market moves. Since the August drop in price is reflected in the margin debt drop (big professional players lightening up, maybe desperately lightening up), and since the market has rallied so far this month, one can guess margin debt may move up a bit here in September but not a enough to head off what is to come.

And since the market likes to fool everyone into complacency at the last possible moment, a new high here would probably be just enough to lock long-term investors in when they should be at least shuffling, if not running, to the exit.

If by chance it doesn’t move up, October could become an October of old, which is to say…uh, crash… crash… crash.

(click on the chart for a larger view)

$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)