$AMZN – a leader stumbles?

What if AMZN, after all the hoopla, only spends one day at a $1Trillion market cap?

As noted back on July 1, halfway through this year, in this link:

THE MARKET WALKS THE EDGE OF A LONG-TERM CLIFF

If a leading stock like AMZN stumbles…how mean will a reversion to the mean be? The stock’s 50-day moving average is nearly 150 points below today’s close (see chart below). Hard to believe in this the oldest of bull markets can end but a serious decline always begins with just one day down.

AMZN and AAPL have been the leaders. They both have had moves that resemble blow offs on this last upswing. Not often stocks as big as these run up 25% virtually out of nothing more than a buying panic. Now if AMZN follows today’s decline with more down to come, how long can AAPL alone hold up the market?

Just speculating here on a bit of market timing since it’s damn near impossible to call a market top, but more and more signs appear and one of these days one or the other of the signs will be telling.

Bear markets can come out of the blue. Out of the fog of complacency. Just when everyone believes the leading stocks and the bull itself can go up forever, they and it won’t.

(click on the chart for a larger view)

$SPY – Can Orange Become The New Black Swan?

Four days up in a row for SPY and TNA while the Nasdaq, long the leader, now lags…

At the close of the day forty-one of the stocks on my nifty-50 stock list ended in the buy column with fourteen overbought.

Short-term breadth was up again but is now in overbought territory. Usually it takes time to unwind that even when it turns down.

Long-term breadth has been rising now for just three days, giving worthwhile advances in most everything — 40 out of the 50 stock on my list advanced today, and 41 or the 50 are positive on this three-day upswing. It should be noted if long-term breadth turns down now it will put in a fairly serious divergence with the SPY new high (see chart below).

Which bring us to the news?

I don’t ever trade the news but just taking in some market perspective one wonders if something is going to come along and blindside the complacency of this bull advance? Like the odd VIX spike today. Like AAPL gone crazy and possibly running out of buyers besides AAPL itself. Like some sector gone so frothy so fast it signals irrational exuberance has crossed over into insane exuberance (see the pot stocks in the post below).

Or like two of those closest to the jabbering President of the United States suddenly going down coincidentally on the same day, one with a guilty plea and flip, and the other found guilty on 80 criminal counts that could get him 80 years in prison. Trump claims always to be the best, be the greatest, know more than anyone else, likes setting records…how boastful can he be when his administration racks up more convictions than any other, including the Nixon administration?

What’s it mean to the market? As I write this, I see futures are down, with the Dow futures reversing the day. This bull market has been able over and over again to erase the overnight falls in futures. What if this time it doesn’t?

I guess then we might be able one day to look back and say: “Whattaya know…Orange
was the new black…SWAN!”

(click on the chart for a larger view)

It’s been a great run for Ferrari but its $RACE is run

Nothing like stair-steps in an uptrend.

See the chart below.

If this race was hill climb, RACE obviously finished in the money.

But, a couple of observations: 1) the stock has not had a breakdown from a boxed consolidation until recently; 2) there’s also a small head-and-shoulder top formation inside the box; 3) when leader flag it’s a warning for the general market too.

So what now? It’s a short the bounces until it makes a new high, and as long as it continues breaking to the downside.

And keep in mind this could be a warning in a possible transition from bull market to bear market.

(click on the chart for a larger view)

#SwingTrading – Up, down, sideways, sideways sideways…

It appears the market could go up tomorrow.

“Could go up”, I say that hesitantly because for end-of-the day swing traders like me, this has been a rather confounding week. On Monday, all of my swing signals (based on price, breadth, volatility) were on sells for Tuesday – Tuesday the intraday market went up. At the end of the day Tuesday all of the signals were on buys for Wednesday – Wednesday the intraday went down. At the close Wednesday, all of the signals were again on sells – today the market went up a lot.

Well, in SPY’s case it went back up into the Monday’s price range – in other words, sideways, sideways, sideways…

Although long-term breadth has not turned up, the low above a low in short-term breadth (see the circle on the upper portion of the chart below) usually will bring a bounce. That should happen tomorrow. And if long-term breadth turns up with it, the entire market could rally for a couple of weeks at least, which would be just fine and dandy.

If the market manages to put a final confounding candle on the cake tomorrow with a hard down day then…okay, I’ll say it, then we will have another indication a sizable bear may be stirring in its cave.

(click on the chart for a larger view)

UPDATE 8/22 – #GOLD stocks prove there is always a bear market somewhere

This what a bear market and an outright crash looks like.

Gold and its sector stocks, after a long steady decline, went into free fall about four trading days ago and continued down virtually across the board today.

See the chart panel below for a random selection of the stocks.

Like all stocks, when the bear growls, these gold stocks can go down forever, but there were a couple of signs that the fall might be slowing in that two of the biggies – NEM and ABX — at least fell slower today (see the NEM chart below for an example).

A bounce may be due right about now for a quick scalp on the long side before any more decline. After drops like these this week, it will not surprise me if short-sellers want to log some profits for the weekend. Watch the open tomorrow for a trigger and keep a tight stop.

It must be said more downside will come with this much momentum in place. Shorting the bounce, if and whenever it comes, may be the better strategy for swing traders. The sector will be in its own bear market until it isn’t anymore and it’s going to have to base for sometime before it ever sees a bull again.

However, for the longer term, gold has had value for centuries and will again. Those who like to bottom fish and hold forever, or at least until the metals shine bright again, might start to carefully and patiently bait their lines.

UPDATE FRIDAY:

Buy NUGT on the open Friday for a 5.8% gain for the day, 9.6% from the previous close, JNUG for 8.3% on the day. Called this a scalp so took profits on the day trade and will watch the bounce to short. Alternative play would be to take half the profit on the close, let the rest ride with a break-even stop.

UPDATE 8/22:
Taking off alternative play, bear market bounce: NUGT up 9.9%, JNUG 10.7&, four days up into a black candle (see second chart below).

(click on the chart panel for a larger view)

(click on the chart for a larger view)

#Bitcoin – Don’t follow this crypto mania much but…

But I took a look today to see what’s going on lately.

Are you kidding me? There are people out there claiming this will replace the dollar? Replace gold?

Can’t anyone spell T-U-L-I-P-S?

I thought this would end when lap dancers in New Orleans started putting bar-code tattoos on their boobs to collect bitcoin tips.

Now that the drug dealers and money launderers have made a market a few notable institutions (like Microsoft for heavens sake!) had gotten sucked into, and computer nerds in bedrooms with potato chips are “mining” in their spare time, and even more than a few suburban crazies have gone crazy over, what is the real future for this crap? It is in market history (duh, the tulips), and it is not good.

Does anyone actually want to put their savings in this for a buy-and-hold overnight?

That this stuff is priced in U.S. Dollars should tell everyone everything that needs to be told.

(click to enlarge)

$BID And $TIF – What do the rich folk do?

They buy stocks, and spend money on all sorts of luxuries – second, third, fourth houses, paintings, baubles, antiquities… Just about anything that can be had at auction or in blue boxes.

And when they quit… Let’s just say they pull the BID (see charts below).

As bellwethers of the future market action BID (Sotheby’s) and TIF (Tiffany’s) are always worth watching. The timing is not precise but when they are long and strong the bull market is strong also but when they fall they tend to fall ahead of time. BID particularly.

Just bringing this up since I happened to notice BID seems to have had quite a sell-off lately, and it appears TIF could follow with a lot of downside space to drop into.

Just a cautionary note to remind anyone used to bull-market stock moves that whatever goes up can also go down.

(click on the charts for a larger view)

Buying IPOs For Dummies

In the tradition of the “For Dummies” books, I give you the short and sweet on trading and/or investing in IPOs:

Buying into an IPOs is actually one of the easiest decisions in stock investing but never let a broker con you into doing it the day of the offering.

Instead, note the high price and the low price on the first IPO is traded. Those are the lines in the sand or the Darvas box around the first day of trading (see the charts below). The time to buy, invest, is on a close above the high of the first day with a stop loss below the high of the first day.

That is usually a low-risk trade since the real good news comes when the stock proves it can move up from all the hype surrounding the offering itself and if it falls back the stop to exit can close by and obvious – either below the high of the opening day or below the low of the opening day depending one’s own time parameters and risk tolerance.

Whatever the latest stock IPO, there is nothing more to say except maybe “Keep it simple, dummy!”

$SPX $SPY – walking the edge of the long-term cliff…

As we end another month and the first half of the year, I thought I’d take a quick look at a long-term monthly of chart of the SPX/SPY, the S&P 500 index and its primary ETF.

Someone (probably the great trader, Linda Raschke) once said if the short term is confusing in the stock market just back to a longer term view and all will become clear.

So what is clear in the here and now?

The bull market is still in progress (see chart below) although that progress has been stalled for this year to date.

The current upswing is completing a three-month rally so a sell-off could come any day now.

The technical indicators MACD and CCI are lagging, setting up as in the past (see the red rectangles on the chart) for a possible sell-off. But at the moment the pattern this time is not complete.

If the SPX had closed lower this month than it closed last month and its volume finished higher than its volume last month, I’d have to say the sell-off is likely right now. But that didn’t happen.

Obviously, the market in general is walking along a cliff (see the blue trend lines)… But until it falls off that doesn’t matter.

So is it going higher? I hate to but I have to shrug on that. Could be but with that cliff edge so close better to be be alert, and best to put in place some protections like trailing stops on any long-term investments.

Buying this? Okay, it remains a bull after all. But, me thinks, only for the short-term while standing every day next to the exit door. If the market charges higher, the short term will have you in, and if it goes screaming lower the short term will take you out.

(click on the chart for a larger view)