#MarketTiming – What a “long” glorious week!

This is an update of this post in this link, made last weekend:

#MarketTiming – Time for a bounce…

Wow! The predicted “bounce” has turned out to have been an understatement to what happened in the market this week.

Remember the 1961 movie “The Absent-Minded Professor” with Fred MacMurray, which introduced the world to flubber? Well, this week was a FLUBBER OF A BOUNCE, and since today it turned long-term breadth positive it is a bounce that has likely turned into a rally.

If I had to guess, instead of just following along, I suspect the pause begins tomorrow. If it gaps up, the rest of the day will likely be flat as the monthly options expiration plays out. If it gaps down or opens flat, there’s a good chance it rises again to the close and starts the pause there.

Just guessing this stuff…

Regardless, it has been a truly glorious week for swing traders – among the leveraged index ETFs TQQQ is up 15.8%, TNA up 12.1%, UPRO up 10.7%, even SVXY in the blistered VIX complex is up 15.3%. The at-the-money monthly SPY 263 call from Monday’s open, expiring tomorrow, is up 179%. Among the bellwether stocks AAPL is up 9.2% (that is a heavy market-cap lift in an awfully short time), BIDU up 13%, NFLX up 11.2%. I’m going to update my bellwether stocks later but suffice it to say here all twelve as of the close today are in the black for the week.

Now for a few cautionary notes.

If there is any trouble with this, it is that it has been a straight up move since last Friday. All the major indexes and most of the sector ETFs are up five days in a row. Much of the market is wildly overbought on short-term basis. This up move has been crazy. It is easily three standard deviations of an average advance and done in five consecutive days! (See the histogram on the Nasdaq Composite chart below.) I can’t even remember the last time anything like that happened, and obviously not in the last six months of this huge bull market. Forty-seven of the stocks on my nifty-50 stock list are on buys with 31 overbought (see the swing trading signals below), and yet we are not at new highs. This is going to have to have a pause, some backing and filling, then a resumption of the upswing before one can be sure it is yet another bullish rally in the on-going bull market.

The trouble with rallies out of hard drops, like the one the market took before this bounce, is that by the time they are obvious, they are sometimes over.

In addition, if the fierce sell-off that has preceded this bounce was a shot across the bow of the bull market, it is possible the buying this week is the last leap into the market by those long-ago left behind — if so, and if this rally fizzles before new highs (or even at marginal new highs) then this could be an advance before a mighty, mighty big flop.

Whenever this ends, we are going to have one of the biggest bear markets in history. If you don’t think so, you must not know history or you think “it’s different this time.” History says it is never different this time.

Even flubber bounces had to come back to earth.



PRICE: Buy. (Day 5).
VOLATILITY: Buy, (Day 5).


SPY CLOSE – 273.03
QQQ CLOSE – 165.70
CNN MONEY’S FEAR AND GREED INDEX: 11, falling, extreme fear level).
NIFTY-50 STOCK LIST: 47 Buys; 31 Overbought, 0 Oversold, 1 new buys today, 1 new sells.

(click on the chart for a larger view)

$KC_F #Coffee futures – racks up 134% on the short side.

I closed this trade earlier (covered too soon) but coffee futures officially closed its current down swing with a profit of about 134%.

Needless to say again, Coffee has been a stellar performer on swing trades this year. Calculated on the continuous contract, it is up $16,500 on swing trades long and short (short being best in retrospect). Sneak a peak at the last line of text below for the current initial margin requirement to see what “stellar” means.

As for the current March contract, it is, according to TradeStation, up $12,600 per contract (see the white rectangle on lower right side of the chart below for closed trades). It is hard to calculate percentage gains since the margin has fluctuated.

Coffee has now reversed to a long. The initial margin requirement is now $2,310 per contract.

(click on the chart for a larger view)

$KC_F #Coffee #futures short nets 100%

Took off half of the position earlier on this futures swing trade. Second half up more than 100%, about $3150 on a $2970 margin requirement.


This move to the downside has probably gone about as far as one can expect and is threatening a turn to upside (see indicator on the chart below) and is down three days in a row so covered the second half of the trade on the close today.

Not going long until I get a swing signal to buy.

(click on chart for a larger view)

$KC_F Coffee futures, five days short, up 70%

The char below says it all, short from 128.50 in the March18 contract and up now $2100 per contract on this down swing, a 70% gain on the margin requirement.

Oversold now. Down four days in a row, a marker oftentimes for a bounce.

Taking half off but letting the rest ride in case of a crash.

(click on chart for a larger view)

UPDATED: $KC_F #Coffee futures up 73% in five trading days

A QUICK UPDATE: Coffee futures sold off today (probably hexed it with this post) and finished its upswing with a 31% profit. In this swing system it is now a short.

Coffee futures, which gave a buy signal at 123.85, closed today at 129.65, up 73% on the margin requirement.


That is a net so far of $2,175 on a margin of $2,970. Five trading days from the close six days ago.

In addition it broke out of the box around its most recent consolidation so it is likely to have more room to run (see the chart below). A possible target would be the high at 132.70 back on October 10th (marked by a white dot on the chart).

A great trading vehicle, coffee futures are up 430% year to date on swing trades year to date, long a short, not counting the current gain.

(click on chart for a larger view)

$KC_F (TRADE UPDATE) – Coffee futures up 21% in 3 days.

Coffee futures, started on the close of 11/21, three trading days ago, at 123.85 at now up 21% on margin.


And they are up a magic four days in a row (see the white dots on the chart below), so moving the stop to 125.50 to lock in half the profits and putting a breakeven stop on the second half. In other words, this upswing needs to keep rallying right away or at least half of the position will be closed.

(click on the chart for a larger view)

$KC_F – stopped out of coffee futures long, now short…

Lost a bit more than $400 per contract.

Three losers in a row after the big winners. Should be a winner coming up.

Back on the short side where most of the gains have been made this year in these swing trades. If the price can drop through the bottom on the box on the chart below, there could be a substantial new swing down as everyone in the recent price consolidation find themselves trapped at a higher level.

(click on the chart for a larger view)

$KC_F – Coffee trade up 50% on three-day bounce…UPDATE

Up 50% on margin so took half off, and moved the stop on the rest to breakeven.


Coffee futures retraced 38% of the recent decline for those who like to pay attention to Fibonacci levels (see chart below). What I don’t like is a doji and there one is in today’s price action. In addition, the trade ran up into a certain moving average right at that Fibonacci line. Add all that up and taking some off seems prudent at this point.

Will let the rest of the trade run until the breakeven stop is hit or until the end of the long signal.

(click on the chart for a larger view)

$KC_F – Coffee futures looking to roast another 100%

The current coffee swing, which is short, is up $2,568 per contract at today’s close. The margin requirement is $2,970 per contract.

Would like to see at least some additional weakness on tomorrow’s open to lock in another 100% gain the margin. If it doesn’t happen there is a good chance coffee will reverse to a long swing at tomorrow’s close. This is likely, at this point, on both counts so tomorrow’s a key day for coffee trades.

I last wrote about this here on September 13th:

Coffee Futures Find Their Swing Rhythm

The swing rhythm observed in that post has obviously continued (see the chart below).

(click on chart for a larger view)

$KC Coffee future find its swing rhythm for 300%

After wobbling around all year with little winners and little losers and coming out flat, coffee futures in the past couple of month have found the swing rhythm that has characterized the commodity for the last few years.

I last posted on this when it finally had a single 100-plus percent move on margin.  That post is here:


That was a short and it was just as the reliable back-and-forth swings in the commodity were getting going.  On June 23, Coffee was flat for the year on swing trades, and since june 23, the futures are now up nearly 300% (on its margin requirement) with both bulls and bears making money on the long and short swings.

It is currently overbought (up more than 100% on margin), just as in the last post it was oversold.  So the time has come for bulls to lock in the profit with a tight stop on at least part of a position, or if one chooses one can wait, looking for more upside while being alert for the reversal to the downside.

(click on the chart to see a larger view)