#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)

#MarketTiming – sideways to down…

Since the Federal Reserve meeting Wednesday, the general market has been in a sort of slow sideways to down move that could bounce any minute.

The most pronounced down has been the Nasdaq but that is because of the weakness in AAPL down 5 points and AAPL pretty much dominates or mutes any move in the Nasdaq indexes. But everything else has been mostly sideways in middle ground. Boring.

So what now?

Could either way Friday. An acceleration to the downside to get the market oversold and set up for a bounce next week, or a bounce to keep the boring going.

SWING TRADING SIGNALS:

PRICE: Sell. (Day 2).
SHORT-TERM BREADTH: Sell. (Day 4).
VOLATILITY: Buy, (Day 3).

CONTEXT:

LONG-TERM BREADTH: Buy (Day 19).
CNN MONEY’S FEAR AND GREED INDEX: (73 falling, greed level).
NIFTY-50 STOCK LIST: 22 Buys; 10 Overbought, 14 Oversold, 0 new buys today, 6 new sells.

#MarketTiming – $XIV leads the show…

Guessed yesterday there would be an up market today.

Linda Bradford Raschke once said: “Take all of the signals and once in a while you get lucky.”

Lucky today was XIV, following through on yesterday’s gain, for 10 percent on a two-day trade. With a gain that fast on the table it might be prudent to take some off or at least to tighten a stop loss to lock in profits at some level.

TQQQ, which I also favor on these market-timing signals, is 3.8 percent on the two day trade. UPRO, the leverage S&P ETF, is up 3 percent, TNA, the leveraged Russell ETF, up 3.3 percent. A notable leveraged sector ETF in biotech,  LABU, is up 8.7 percent.

We’re talking two days here.

But actually most of this wasn’t much of a guess — all of he signals lined up for a buy and lined up in deeply oversold territory. See the chart below for the kind of bounces that happen after the SPY histogram touches the lower green line marking a two standard deviation decline (no matter how fast). The red line with the red diamonds on the chart is the SPY itself.

And in bull market’s overall it is always “buy the dips”.  And today…obviously.

Must be noted that long-term breadth, although improving, is still in negative territory, which is to say, tighten the stops on the gains so far.

SWING TRADING SIGNALS:

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

CONTEXT:

LONG-TERM BREADTH: Sell (Day 15).
CNN MONEY’S FEAR AND GREED INDEX: (24 rising, extreme fear).
NIFTY-50 STOCK LIST: 32 Buys; 17 Overbought, 3 Oversold, 12 new buys today, 3 new sells.

(click on the charter for a larger view)

Disclaimer: Once again need to note all positing here are for entertainment purposes and should not be construed in any way as trading or investing advice.

$SPY – could go either way…as always…

As projected in the post below the market chopped on Friday.

If the price chop was just a digestion of Thursday’s sharp decline, there will be more downside this coming week.  If the chop was a stabilizing with a bull market, the market could rebound this week.  In other words, as worthless as they are, this could go either way.  How often is that the case?  Always?

My daily breadth and volatility signals turned up again within the context of a negative long-term breadth, giving buys signals for Monday’s open.  The price signal stayed down.

Long-term breadth is still negative so this remains a sell-the-bounce market until further notice.  Should be noted that SPY, although it has broken support, is picking up the increased volume that often leads to another bounce, if not more going forward.  See the box and volume spikes on the chart  below.

SWING TRADING SIGNALS:

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

CONTEXT:

LONG-TERM BREADTH: Sell (Day 13).
CNN MONEY’S FEAR AND GREED INDEX: (17, extreme fear).
NIFTY-50 STOCK LIST: 22 Buys; 1 Overbought, 15 Oversold, 3 new buys today, 8 new sells.

(right click on chart for a larger view)