$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 – trudging higher but watching for a reversal day

MARKET TIMING SIGNALS FOR 7/16/2019.

Long-Term Breadth (NYSI): BUY DAY 12
Short-Term Breadth (NYMO): Sell DAY 1
Price: BUY DAY 2
Nifty-50-Stock-List: 20 BUYS, 4 NEW BUYS, 13 OVERBOUGHT; 30 SELLS, 4 NEW SELLS, 11 OVERSOLD.
CNN MONEY’S “Fear and Greed” Index: 57, falling, GREED LEVEL.
Bellwether Stocks: 11 UP, 4 DOWN.

WHAT?

The market moved sluggishly higher today.

In the case of SPY it was five days in a row, and except for a minor blip in the middle of the advance, TQQQ would be the same. SPY, by my measure, has been overbought for three trading days, which is often all she wrote, but not always.

During this entire move up, my nifty-50 stock list has never had more than 25 stocks on buys. The last time I saw above thirty was two weeks ago (37 on 7/1). Those stocks are trudging through a muddle. That might or might now mean something. Notably TNA, the 3xLeveraged ETF for the Russell small caps has gone nowhere.

Still SPY has managed to make new all-time highs, which is either ragingly bullish, or it’s about to die on the first down day.

WHAT NEXT?

Let’s consider that first day down for a moment, especially since short-term breadth, which has been putting in highs below high (see chart below), turned down today with SPY overbought and up five days in a row (see this many times before a dip).

Trader Vic Sperandeo noted one time that any time a major index goes four or more days in one direction at the end of an intermediate advance or decline the first reversal day is the change of trend. Trouble is I don’t think he ever quite defined what constitutes an intermediate advance or decline. One can look at charts and see he has been right again and again and again but then there is that one time…and that one time can kill anyone who doesn’t play defense. This advance is essentially five weeks old with a minor drop in the middle, projected here in this post below :#MarketTiming – a black candles Thursday leading to….

In addition SPY ended the day in a black candle. The black candle makes today’s high (301.13) and today low (300.19) key numbers, above the former there more rally to come, below the latter a dip to the downside, a easy read of price action. Those highs below highs on the NYMO (again see the chart below) are a warning. There is a divergence in CNN Money’s Fear and Greed Index not confirming the new highs. There’s the Russell stall so far… These things are beginning to pile up.

Five weeks of solid gains may not be the end of the upswing but it is worth guarding against Trader Vic’s “first reversal day.”

All that aside. until long-term breadth turns down, the long side will remain the side to play. Dips are to be bought in the indexes, the ETFs, stocks. Eleven of my bellwether stocks were up today with decent gains, see AAPL, TSLA, SHOP, BABA as examples. So there is still strong buying in big names, which is probably the place to focus most trades.

It always sounds stupid with one says it but it is the one simple, absolute truth — the market will go up until is doesn’t.

(click on the chart 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.

#IPOs – hanging in and moving on…

Updating the chart discussed in this link:

IPOS – A Great Year for “Dummies”

Particularly BYND (again) and PINS, rallying again over the high of its IPO day after being stopped out a couple of times at that high.

(CLICK ON THE CHART PANEL FOR A LARGER VIEW)

#IPOs – A Great Year For “Dummies”

In the fervor of an initial public offering — an IPO — investors can easily get carried away.

After all, they are being pummeled with positive publicity by underwriters and brokers that this is it – the chance finally to buy into a latest, hot new company! But, in fact, unless one is some kind of insider or maybe a politician being bribed the first day of trading – the stock’s IPO day – is a crap shoot.

Take CRWD (Crowd Strike Holdings), which went public yesterday, as an example. The stock opened at 63.50, rose to 67, dropped to a low of 56, and closed at 58. A gambler might have a strategy to buy in during the day but at what point in that nine point chop does an investor make a safe investment? At no point.

The key to investing in IPOs is the first day’s price range but the buy comes after the first day as suggested in this post here: Buying IPOs for Dummies.

Following a “buying IPOs for dummies” strategy, CRWD is a buy on a close above 67.00 and at no other time. That’s when the initial fervor is over and there may be a worthwhile chance to profit going forward. Otherwise, the stock could drop through the low like LYFT did this year and keep on falling. Everyone who bought LYFT on its first day is losing money but those who did not buy are not.

How has this strategy worked this year so far?

With several companies, just great! SOLY is up 217%, SWAV is up 90%, BYND is up 86%, ZM is up 45% (see the charts below).

PINS is included here as an example of how defense can be played by both the long-term investors and swing traders. PINS rose 29% before falling back below the high of its IPO day for a loss of .9%. Disappointing for the investor, yes, but not catastrophic. Along the way, a trader might pay closer attention – at the bottom of the first big down blue bar on the chart at the right of the chart panel below PINS still had a profit of 17.2%. That would have been a good spot to take some, if not all, off the table.

(click on chart panel 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)

#IPOs – no shares to ride for $UBER and $LYFT yet

Since BYND, with a big jump, is making noise again today, thought it’d be a good time to take a quick look at recent IPOs still in play as per this criteria:

Buying IPOs For Dummies

See the charts below. Each is set at a $10K investment to show the percentage as well as dollar gain for each stock in the white flag on the lower right of each chart — for example, SWAV is up 99% since its IPO buy, SOLY up 115%, and so on.

UBER and LYFT have not climbed above the hype on each of their first days of trading so they are not long investments. At best, LYFT particularly is a short.

Of note, if APLT holds its gain for today, it will be a buy either at the close today or on tomorrow’s open.

(click on the chart panel 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)

$SPY – engulfed by a bear in a grove of black candles

MARKET TIMING SIGNALS FOR 10/17/19.

Long-Term Breadth (NYSI): SELL FROM 4/17.
Short-Term Breadth (NYMO): SELL FROM 4/15.
Price: SELL FROM 4/17.
Nifty-50-Stock-List: 15 BUYS, 2 NEW BUYS, 7 OVERBOUGHT; 35 SELLS, 6 NEW SELLS, 23 OVERSOLD.
CNN MONEY’S “Fear and Greed” Index: 71, RISING, GREED LEVEL.
Bellwether Stocks: 8 UP, 7 DOWN.

OF NOTE, $10K Swing Trades, SPY OPTIONS:
SPY CALLS, 288, 289 STRIKES FOR MONTHLY 4/18 EXPIRATION, 292, 291 PUTS.

OF NOTE, $10K Swing Trade Stocks:

BLACK CANDLES OF INDECISION ON CLOSE: TAN, SOXL, FNGU, TNA, TQQQ.

WHAT’S NEXT?

The market pulls back based on:

Long-term breadth (NYSI) triggered a sell signal today as the McClellan Oscillator (NYMO) continued to slide and fell through its zero line.

All of the black candles coming at the end of the recent rallies (see the charts below) coupled with the bearish engulfing candle on the SPY (although that was not with a notable increase in volume off the top). Price action during the days this week tended to gap up in the over-night futures market and then sell down steadily during the day session – and that felt like a bearish istribution under the surface.

CNN Money’s Fear and Greed Index remains at a greed level that is unsustainable.

Not much more to say except watch for follow through on the open to the downside.

(click on charts for a larger view)