#BellwetherStocks – ten bull flags still flying…

The general market took a hit today just when it appeared it could break out of its consolidation at recent lows.

All of this may be on news – Trump proposing a possible trade war with China, stewing over the Mueller investigation into everything from his campaign’s possible collusion with Russia, to the crimes arising from his hush-money payoffs to a porn star and Playboy playmate, to his sons’ threatening reprisals for any foreign government not doing their bidding, to allegations everywhere of corruption, self-dealing and maybe even money laundering; and now he’s rattling missiles at Syria (which is to say, at the Russian military).

Is there an Archduke Ferdinand anywhere in Syria?

There was a time when the one thing almost certain in the stock market was that the market did not like uncertainty.

Well, Trump has been the poster boy for uncertainty since the election and yet, remarkably, the market has ignored that, focusing instead on the Republican tax cut and the ripping away of every sane and insane regulation there is. But it’s beginning to look as if it is not quite ignoring his inconsistency and incompetence anymore. Last year it was hard to get the market to go down. Now it’s hard to get it to go up.

Okay, enough of that. What about right now?

This is an update of this POST ON APRIL 5TH.

The top in place in January may have ushered in a bear market (which is my overall bias) but right now the market is trying to bounce, and maybe even rally.

Today was a setback in that effort and every day seems precarious but I want to point to my twelve bellwether stocks. Despite last Friday’s bloodbath and today’s drop, they have all held firm. In fact, ten of the stocks have bull flags (see the chart panel below). My bellwether stocks are: TSLA, NFLX, AMZN, BID, TWTR, BIDU, AAPL, GS, FB, NVDA, FSLR, BABA. All twelve are in the black from the beginning of this bounce on open of April 4th.

TSLA is leading the bounce up 17.8% , followed by NFLX up 10.%, TWTR up 9.2% and now FB, with Mark Zuckerberg’s testimony to Congress, up 9.1%.

As bellwethers these stocks are, so far, saying this market is going to have another surge to the upside soon. Probably by Friday (unless the news gets in the way).

(click on the chart panel for a larger view)

#MarketTiming – Plunge to a climax low?

The general market seriously tanked today – Dow down 724 points, SPX down 68, the Nasdaq Composite down 178.

And it was an across-the-board slaughter as every one of the nine sector ETFs I follow slammed into sell signals, with eight of the nine now oversold on the close.

The all-important long-term breadth indicator – the McClellan Summation index — is on its fourth day down, making it obvious which side of the market to be on, but even more telling is that this is a wind down that began nearly two weeks ago on the first day down from the bounce top on March 12th (see the chart below).

There is a lot of stuff going on that could have led to this drop — Trump, Trump’s tariff plans, Trump’s saber rattling, Trump’s staff members bailing as fast as they can, the Trump chaos (we have a sitting President in litigation with a porn star and so far she and he lawyer are kicking his and his lawyer’s butt), uncertainties springing up everywhere; and the Fed is raising interest rates.

All that is taking a toll of course but this a market that has been moving up too far and too fast so the last two weeks were at some time inevitable.

Is this a bear market? Still hard to tell. The VIX, which measures volatility, is above 20, which is the territory for a correction in a bull market, but it is for the second time this year flirting with the 25-level (it closed at 23.34 today), and that is the door to a bear market. If the SPY (SPX) takes out February low either right now or after a bounce without a significant rally, a bear’s growl may, for sure, be heard.

The trouble with bear markets is by the time everyone feels enough pain to panic they are over. I suspect if this becomes a bear market that pain is going to last a lot longer than anyone believes.

But back to today. So was this drop enough downside to make a climax low. Probably not but it could lead to another quick bounce. Given that there are now pretty defined resistance trend lines in place (see the chart), this next bounce might be worth trading but it is not likely to do anything more than produce another selling for shorting opportunity.

Regardless, this is a market that after two weeks down is oversold everywhere. Four times in the last seven days, my nifty-50 stock list has had 40 or more stocks on sells, which usually indicates the bottom of a swing or the beginning of a bottom. CNN Finance’s “Fear and Greed” index is at an “extreme fear” level (at 9…it can’t go below zero), which longer-term is usually buy territory. As noted above all of the sector ETFs, as well as the index ETFs I follow like TQQQ, UPRO and TNA, are also oversold.

All in all, time for another bounce…

Except this time, maybe a crash into a climax bottom tomorrow and Monday instead (an echo of 1987)…

SWING TRADING SIGNALS:

LONG-TERM BREADTH: Sell (Day 4).

PRICE: Sell. (Day 2).
SHORT-TERM BREADTH: Sell. (Day 1).
VOLATILITY: Sell, (Day 1).

CONTEXT:

SPY CLOSE – 263.67
QQQ CLOSE – 162.8
CNN MONEY’S FEAR AND GREED INDEX: 9, falling, extreme fear level).
NIFTY-50 STOCK LIST: 8 Buys; 3 Overbought, 24 Oversold, 1 new buys today, 13 new sells.

(click on the chart for a larger view)

$SPY options – another freaky Friday?

Last Friday, the calls in what I’ve ironically labeled for myself the “Fool’s Game” exploded 250%.

In my post in this link below I noted that going into that Friday, my game was looking at its first losing week this year and there had been no trending day during the week also for the first time this year. I define a trending day as any day either the weekly SPY calls or the puts close with a 100% or more gain.

TRENDING DAYS IN THE FOOL’S GAME

So what’s this week look like? Pretty much the same as last week.

As of today’s close, this day-trading system, buying SPY calls and/or puts, expiring either Wednesday or Friday, is losing money, a jarring 81% for each $10K traded (it was losing 152% at last Thursday’s close). Obviously, one does not trade this with any more than a small portion of any account. In addition, this week again there has been no trending day.

Can last Friday be happening again this week? I’m going to suggest — yes!

SPY is down this week four days in a row (not much) which tends to be a magical number for a turn-around in my experience with swing trading, especially in this bull market. The Nasdaq Comp is down three consecutive days. CNN Finance’s “Fear and Greed” Index is down four days to 21, an “extreme fear” level, a neighborhood in which one should consider going long. Yesterday, 40 of the stocks in my nifty-50 stock list were on sells (that is usually the bottom or the beginning of the bottom in any downswing, however small). Today those stocks clicked up to just 38 on sells. The VIX gave a swing buy signal to go long on tomorrow’s open.

And tomorrow is Friday. There have been twelve trending days by my definition so far this year and seven of them have come on Friday. Freaky.

Added all up, tomorrow looks like a run to the upside again and the calls could go crazy, again, if its another trending day.

Or the market could have a monster fifth-day-down crash…but then that would also be a trending day, only in the puts instead.

#MarketTiming – Can the bounce become a rally?

The pause in the market suggested for this week in last Friday’s post has played out with not a lot of fanfare. It’s been a more sideways than down (see the SPX chart below).

(click on the chart for a larger view)

That is a 7-day 10-minute chart that ends each day with a volume spike on a fast drop into the close. Overall that is not good. But it could be argued that it is still a digestion of the rapid rise that preceded this week and was one of the quickest bounces off a hard decline in this bull market.

If so, time may still be on the bull side.

The Nasdaq Composite had less of a pull back than the SPX but still marked at today’s close four days down in a row. Four days down is often the time for another surge up, and often times during this bull market it is the time the bounce become a rally with an attempt at new highs. In addition, short-term breadth turned up again, taking long-term breadth with it, both very positive signs and they have a lot of room to move up (see the SPY/Market chart below).

In other words, I’m expecting the market to shoot up Friday.

But…as Trader Vic Sperandeo has fondly said: “If the market doesn’t do what it’s expected to do, it will do the opposite twice as much.” So day traders be nimble, swing traders tighten stops, and investors watch your asses — this is not a spot you want to be blindly holding if expectations go awry.

SWING TRADING SIGNALS:

LONG-TERM BREADTH: Buy (Day 1).

PRICE: Sell. (Day 4).
SHORT-TERM BREADTH: Buy. (Day 1).
VOLATILITY: Buy, (Day 2).

CONTEXT:

SPY CLOSE – 270.40
QQQ CLOSE – 164.80
CNN MONEY’S FEAR AND GREED INDEX: 15, falling, extreme fear level).
NIFTY-50 STOCK LIST: 16 Buys; 6 Overbought, 3 Oversold, 3 new buys today, 12 new sells.

(click on the chart for a larger view)

$Stocks – Bellwethers “sure to bounce”…bounced.

As this week draws to a close, thought I’d take a look back at the bellwether stocks I suggested were oversold and sure to bounce with the market.

Note this link from February 11:

Bellwethers stocks sure to bounce…

The bellwether stocks are AAPL, AMZN, NVDA, TSLA, NFLX, GOOGL, BIDU, BABA, TWTR, FB, FSLR, BID, and GS.

Been two weeks since it was suggested the bellwether bounce would be sure to happen with the general market’s current up swing and the group has been led by BIDU up 13.5%, NFLX up 10.4%, TSLA up 9.6%, and both AMZN and FSLR north of 8%. The laggards have been TWTR, BID, and FB.

All twelve of the stocks in the basket are in the black on this swing trade.

For an easy comparison between the then and the now see the charts below. The white flags on the lower right of each chart show the cash (and percentage) gains per $100K committed to each trade for the past two weeks.

If the market continues up after this week’s sideways slide, mounting a further rally, these stocks are sure to go higher again with it, probably with the laggards playing some catch-up.

(click on the charts for a larger view)
BELLWETHER STOCKS TODAY’S CLOSE:

BELLWETHER STOCKS FEBRUARY 11 POST:

#Stocks – the bellwethers oversold, sure to bounce…

Took at look at bellwether stocks. With the exception of TWTR and NVDA, all are oversold on last week’s volatile market action to the downside.

With the market also oversold, it’s likely these market-leading stocks are going to jump this week. Good for a scalp at the least, and maybe even an upside swing if the market can manage a few positive days.

The bellwethers are AAPL, AMAZN, NVDA, TSLA, NFLX, GOOGL, BIDU, BABA, TWTR, FB, FSLR, BID, and GS (see the charts below).

(click on the chart for a larger view)

#MarketTiming $QQQ – a bounce nearly guaranteed…

Thirty-nine of the stocks on my nifty-50 stock list are on sells. Nineteen of those are oversold. If that number was 40 sells or more, I’d take out the “nearly” in the title above. Forty is the magic number that brings a bounce in the market within a day or two.

But only 39…so only nearly guaranteed…

See the chart below to view the stretch of sells (the red boxes) on the stock list and what happens next in the Nasdaq.

In addition two of my three swing signals – Price and Volatility – switched to buys while short-term breadth remained on a sell for the fourth day in a row. Four days down on breadth tends to also lead to an upward pop.

With long-term breadth on a sell, the bounce, if it come today, might be a one-day event but we’ll see.

SWING TRADING SIGNALS:

LONG-TERM BREADTH: SEll (Day 2).

PRICE: Buy. (Day 1).
SHORT-TERM BREADTH: Sell. (Day 4).
VOLATILITY: Buy, (Day 1).

CONTEXT:

SPY CLOSE – 263.24
QQQ CLOSE – 153.50
CNN MONEY’S FEAR AND GREED INDEX: (61, falling, greed level).
NIFTY-50 STOCK LIST: 11 Buys; 3 Overbought, 19 Oversold, 3 new buys today, 8 new sells.

(click on the chart for a larger view)

#MarketTiming – as breadth goes, so goes…Part II

This time short-term breadth.

The market indexes today were mixed – the Dow up again, moving through its bubble, SPY up a little, IWM up a whisper, Nasdaq down a touch. Like a lot of days lately (actually nine out of last 15), it made its move on the open then chopped all day until in the end it has essentially flat-lined for the rest of the day. No big deal and kind of boring.

All four of my end-of-the-day signals came into the day on sells. So swing traders would be either short or in a bull market in cash, watching for the next upswing. This is obviously a bull market. Those swing signals, including the important long-term breadth, remained on sells today except for one.

Short-term breadth gave a buy signal on the close today.

How many times has the market made a move to oversold on short-term breadth and turned up by itself to signal a bounce? As a matter of fact, every time this year a bounce became a swing became a rally.

And once again a bounce is guaranteed tomorrow on earnings news as AMZN, GOOGLE, MSFT, INTC and FSLR (from my bellwether stock list) are surging in the overnight trading (see chart panel below). As can be seen in the QQQ chart (the chart in the upper left), and assuming no disaster strikes later tonight, the Nasdaq is going to gap up madly tomorrow, and probably take the rest of the market with it.

If it doesn’t turn up long-term breadth in a timely fashion, this bounce will be suspect (unlikely but it could sell off right from the open tomorrow). But for now a bounce is a bounce is a bounce…

SWING TRADING SIGNALS:

PRICE: SEll. (Day 2).
SHORT-TERM BREADTH: Buy. (Day 1).
VOLATILITY: Sell, (Day 4).

CONTEXT:

SPY CLOSE – 255.62
QQQ CLOSE – 146.96
LONG-TERM BREADTH: Sell (Day 8).
CNN MONEY’S FEAR AND GREED INDEX: (71 falling, greed level).
NIFTY-50 STOCK LIST: 18 Buys; 8 Overbought, 18 Oversold, 10 new buys today, 5 new sells.

(click on the chart panel for a larger view)

#MarketTiming – as suggested yesterday, today the bounce…

Wrote yesterday for a lot reasons the market was likely to bounce today and so it did.

Those reasons remain in place. All three of my swing signals are on buys as well as the ever important long-term breadth. Fourteen of the nifty-50 stock list gave buys today, and AAPL moved up as suggested yesterday. All in all, a good day across the board.

I going to note that my bellwether stock are still oversold or still close to oversold, with many buys today (see the green bars coming out of the oversold cyan color coding on the charts below). If they get moving tomorrow, the market, obviously, is going vault much higher.

SWING TRADING SIGNALS:

PRICE: Buy. (Day 2).
SHORT-TERM BREADTH: Buy. (Day 4).
VOLATILITY: Buy, (Day 2).

CONTEXT:

SPY CLOSE – 250.05.
QQQ CLOSE – 144.46.
LONG-TERM BREADTH: Buy (Day 33).
CNN MONEY’S FEAR AND GREED INDEX: (78 rising, extreme greed level).
NIFTY-50 STOCK LIST: 26 Buys; 83 Overbought, 12 Oversold, 14 new buys today, 2 new sells.

(click on the chart for a larger view)

#MarketTiming – Time for a bounce?

Last time posted here I said “sideways to down.” Got the sideways (SPY) and got the down (QQQ) on the two main index ETFs I follow.

In the process both SPY and QQQ managed to get over sold (see the cyan color coding on the charts below). SPY came off oversold today despite no more than an small uptick and QQQ also ticked up while remaining oversold. In the nifty-50 stock list only 16 stocks are on buys and 22 are oversold. The question, as always, is once anything is in oversold territory how long can it stay there? In this bull market that has not been long.

So what now?

Given that all three of my swing signals – based on price, breadth and volatility – registered buys today for tomorrow’s open, and long-term breadth remains on a buy and continues to rise, I am suggesting a bounce Wednesday. How high, how long, and whether or not it can hold at all is anyone’s guess. I will buy with a tight stop. For the sake of the stop loss, I pretty much want this to go my way right away so I will be watching on a five-minute bar chart to make the trade stays above its open from the open of the market.

Although none actually met my intraday criteria today for a buy on the open tomorrow, if I had to pick one stock to buy from the ten in my bellwether stock list it would be AAPL, which slid to oversold and stayed there for four days before its bounce today. I would bet it will follow through on today’s bounce tomorrow. Not a bad stock to gamble on in this context for a day trade, and maybe a swing trade if the market bounces with it.

SWING TRADING SIGNALS:

PRICE: Buy. (Day 1).
SHORT-TERM BREADTH: Buy. (Day 3).
VOLATILITY: Buy, (Day 1).

CONTEXT:

SPY CLOSE – 249.07.
QQQ CLOSE – 143.17
LONG-TERM BREADTH: Buy (Day 22).
CNN MONEY’S FEAR AND GREED INDEX: (67 rising, greed level).
NIFTY-50 STOCK LIST: 16 Buys; 3 Overbought, 22 Oversold, 7 new buys today, 5 new sells.

(click on the chart for a larger view)