#MarketTiming – hard to call a pause, let alone a pullback…

But if there is to be a pause, there’s a good chance it will be now.

All of my short-term signals — Price, Breadth, Volatility – turned down on this lackluster day (see table below), and CNN Money’s Fear and Greed Index turned down too. Twenty of the stocks in my nifty-50 stock list gave individual sell signals. That may be a bit deceptive since the stock list was sorted over the weekend and came into the day maybe too strongly bullish, and then again it may be a harbinger of a pause when even the strongest slow down.

So, if there’s a pause here, can it turn into a pull back?

This could be tricky since long-term breadth continues to climb (up for the fourth day). Given that, if short-term breadth turns up here in the next day or two (or bless a bottom dollar, three days), the market would get another bullish boost. If long-term breadth turns down, this could very easily become the hook that catches every bull off guard. Although the bull market has so far defied the signs over and over again, it is inevitable that one of these times, like today, when the signals signal a turn, the turn will come. Probably when the bears are worn out and the bulls don’t expect anything of on their blindside.

Maybe right now is day one. Maybe not.

SWING TRADING SIGNALS:

LONG-TERM BREADTH: Buy (Day 4).

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

CONTEXT:

SPY CLOSE – 260.23
QQQ CLOSE – 156.19
CNN MONEY’S FEAR AND GREED INDEX: (52, falling, neutral level).
NIFTY-50 STOCK LIST: 14 Buys; 10 Overbought, 0 Oversold, 2 new buys today, 20 new sells.

$SBGL – the little gold stock known to get bigger..

Back in a little into the little gold stock that can get bigger in a hurry.

As has been said before, divergences don’t mean anything until they do (see the chart below). SBGL made a lower low in the last two days but the channel commodity index did not, setting up, once again, a divergence that might be telling on the long side.

Last this setup took hold, SBGL rallied up 26% in a month at its high and stopped out at up 22% (see the first chart below for the history). Not bad, especially since its stock sector (measured by the ETFs GDX, NUGT, and JNUG) were mostly going lower during that entire advance (see the second chart below).

Closed today at 5.16. May add on tomorrow’s open. Stop at 4.98.

(click on the charts below for larger views)

#MarketTiming – Swing signals swing again…

Yesterday my swing signals for Price, Breadth and Volatility were all on sells. The market went up. Today the signals (see below) have swung again to buys. Across the board.

I’m assuming the market is going up tomorrow.

But the indexes are overbought and the internals are falling apart. Something has to give, sometime…

Sometime, needless to say, is an awfully vague term.

If this sounds like I have no confidence in these signals I don’t intend it to. They are reliable for swing trading. XIV, for instance, is up 67% year-to-date on the Price signal, up 55% on the breadth signal and 80% on the volatility signal (appropriately). See the chart panel below – from left to right Price, Breadth, Volatility.

It’s the market, at this point, going up and up and up relentlessly that bothers me. We’ve seen this before and it’s great while it lasts but it is not, in the end, going to be different this time.

SWING TRADING SIGNALS:

LONG-TERM BREADTH: Sell (Day 17).

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

CONTEXT:

SPY CLOSE – 259.11
QQQ CLOSE – 176.24
CNN MONEY’S FEAR AND GREED INDEX: (54, falling, neutral level).
NIFTY-50 STOCK LIST: 23 Buys; 11 Overbought, 6 Oversold, 5 new buys today, 7 new sells.

(click on the chart panel for a larger view)

$SPY – Can “Fear and Greed” bring on a tumble?

The market Tuesday opened up, ground down, firmed into the close. I hardly know what to say, another day of chop with an upward bias.

However, the grind down managed to turn all my swing signals negative which would indicate further downside but of late that has seldom happened in this bull market. It is almost as if the signals (reliable for years) work again, it will be a sea change, or at least a nasty little rogue wave sucking that the bull’s ankles.

Took a look at CNN Money’s Fear and Greed Index (see chart below). Talk about divergences with the ever rising S&P…that is an ugly, ugly chart, and the last time it got this ugly the general market took a bit of a tumble back in August. That, in retrospect was a tumble that reinvigorated the market for another bull run.

So here’s to tumbles?

SWING TRADING SIGNALS:

LONG-TERM BREADTH: Sell (Day 16).

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

CONTEXT:

SPY CLOSE – 258.67
QQQ CLOSE – 153.88
CNN MONEY’S FEAR AND GREED INDEX: (58, falling, greed level).
NIFTY-50 STOCK LIST: 24 Buys; 13 Overbought, 3 Oversold, 3 new buys today, 9 new sells.

(click on the chart for a larger view)

#MarketTiming – as breadth goes so goes…

The long-term breadth indicator I use, which is the McClellan Summation Index, turned down last on 10/17 giving a sell signal for the open of 10/18. Utilizing the New York Stock Exchange advance/decline stock line, one of the broadest measure of market movement there is, it has been, and continues to be, one of the best reads on market direction. Maybe the best.

It defines the market’s longer-term trend.

So what has happened to stocks since the market’s sell signal (or short signal)?

Just some examples (see the chart panel below) – of the 10 stocks on my bellwether stock list, as of today’s close, nine are down, led by TSLA with a 9.1% short profit and BABA with a 5.1% profit. Nine stocks down. In seven trading days.

(click on chart for a larger view)

#MarketTiming – is October turning into October after all?

If the general market keeps rising while long-term breadth keeps falling, more often than not, the market is running on empty.

This bull market has been trending so relentlessly up that it has been defying that notion and may again but today it did not.

The all-important long-term breadth signal I use has been falling for seven days and the Dow and S&P have continued to advance, getting to a point yesterday when it looked like once again this bull market would defy even its own narrowing internals. Heard a lot of “bullish forever” talk yesterday. Today’s pull-back is not that much but, given that any drop lately has been surprising, one must once again say this may be the one that drops the market of the sky like a clay pigeon.

My swing trading signals (see below) are all again on sells in sync with long term breadth. CNN Money’s Fear and Greed Index put in a lower high, setting up a divergence with SPY, and downtrend pattern of its own. If these continue, and one can only assume they will until they don’t, the market may finally have a real correction, five percent or more.

Wouldn’t it be ironic if everyone thinking bullish forever yesterday looked back to this week says “Wouldn’t you know it – again October turned out to be October after all.”

The Nasdaq (and the Russell for that matter) stopped advancing on the long-term breadth signal this week (see red-circle signal arrow on QQQ on the left chart in the chart panel below). And as the Nasdaq faltered so did many of its key stocks – see FB, BABA, and TSLA on the chart panel, all shorts.

SWING TRADING SIGNALS:

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

CONTEXT:

SPY CLOSE – 255.29
QQQ CLOSE –147.43
LONG-TERM BREADTH: Sell (Day 7).
CNN MONEY’S FEAR AND GREED INDEX: (75 falling, greed level).
NIFTY-50 STOCK LIST: 13 Buys; 3 Overbought, 17 Oversold, 2 new buys today, 11 new sells.

(click on the chart for a larger view)

#MarketTiming – will this be the one?

Another warning for a market pullback to come.

Again, all three of my swing signals on price, breadth and volatility have given sells. This is a whipsaw. Monday down on the signals, Tuesday up, Today down… Assuming there is no hard gap down tomorrow’s open when the latest swing up from Tuesday closes, some profits may be captured – XIV finished today up 2.5% for the three days, TQQQ up .45%.

So what now?

Short-term breadth (see chart below) turned down again, still in positive territory, but getting weaker with each rally. Long-term breadth continues to rise but these degrading short-term highs below highs have historically been a warning that should be heeded. There have been others recently noted here:

Warnings, warnings, warning…but…

Being a strong bull, this market has defied most of these warnings across the board but sooner or later something like August (see the chart), at least, is coming. Maybe it began today, maybe this is the one that triggers the dip, drop, the whatever…

In the meantime this is still a rally until it isn’t anymore.

SWING TRADING SIGNALS:

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

CONTEXT:

SPY CLOSE – 254.64
QQQ CLOSE – 147.77
LONG-TERM BREADTH: Buy (Day 3).
CNN MONEY’S FEAR AND GREED INDEX: (76 falling, extreme greed level).
NIFTY-50 STOCK LIST: 22 Buys; 14 Overbought, 5 Oversold, 7 new buys today, 7 new sells.

(click on the chart for a larger view)

$TQQQ $XIV – up, up, up…UH…

All three of my end-of-day swing signals are on buys.

Friday nearly everything was up, the leveraged index ETFs — UPRO, TNA, XIV, led by TQQQ up 2.05% for the day; the leveraged sector ETFs – FAS, SOXL, ERX, led by LABU (biotechs) up 2.53% for the day; eight of the 10 bellwethers stocks up; 35 of the nifty-fifty stock list up.

And since every goes up in the stock market until it goes down, one can only assume Monday will be more of the same.

But what about the “UH”?

Well, uh, CNN Money’s Fear and Greed Index rose to 85 at an “extreme greed” level (see Nasdaq Composite chart below). Really an extreme greed level! It can hold or keep going up but it is signaling that the market is truly on borrowed time before a pull-back, maybe one or two days before a drop (see the chart for the last two times the index climbed above 80).

So, uh…we will see how it goes this week but Monday, for a swing trader, would not be a bad day to sell at least some into any more strength, and tighten stops on anything left.

SWING TRADING SIGNALS:

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

CONTEXT:

SPY CLOSE – 251.23.
QQQ CLOSE – 145.45.
LONG-TERM BREADTH: Buy (Day 35).
CNN MONEY’S FEAR AND GREED INDEX: (85 rising, extreme greed level).
NIFTY-50 STOCK LIST: 36 Buys; 12 Overbought, 2 Oversold, 6 new buys today, 4 new sells.

(click on the chart for a larger view)

#MarketPerspective – waiting for the Fed…

Given how strong the trend is at the moment, the only thing that could kill this stock market rally is the Federal Reserve… Oh, yeah, Wednesday is the “Fed Day.”

So is the Fed going to kill it? It would take a drastic rate increase maybe, or a statement that the sky is falling. And even then, given how this Bull has shucked off every lance it takes, even a drastic something or other might not do it.

I suspect once the Fed suspense is over, either in the aftermath of the meeting announcement Wednesday or Thursday, QQQ is going to vault past its two weeks of resistance at about 146.59 (see chart below) and run like a bull enraged. Needless to say, if that happens, it will take everything in the market with it. SPY has already limped on up.

What I’ve just said is the old market adage: “the trend is your friend.”

Now what if is isn’t, or we are at the end of it?

It is as if the market has been chopping sideways for a couple of weeks just waiting. My nifty-fifty stock list has just registered 25 buys and 25 sells for two days in a row as if completely confused as to which way to go. Going into the Wednesday’s Fed Day, two of my three swing signals are on sells – short-term breath and volatility – but swing price and the most important long-term breadth buys are still in place. Beyond the technical signals, there are many signs that this bull is vulnerable – NYSE margin debt alone at its astronomical level beyond 2000 and 2007 should be making everyone’s hair fall out. CNN Money’s Fear and Greed Index is at an extreme greed level and could turn at any time. Margin debt and fear can feed on themselves and when then do nothing can stop them.

And I’ve just saw a sentiment survey that says retail investors have never been so bullish. In the rhyming of market history that is not good, they always get screwed in the end.

Geez, it’s still a bull market but like all bull markets it doesn’t make it easy. It’s not like anyone want it all left up to the Fed.

SWING TRADING SIGNALS:

PRICE: Buy. (Day 3).
SHORT-TERM BREADTH: Sell. (Day 2).
VOLATILITY: Sell, (Day 1).

CONTEXT:

LONG-TERM BREADTH: Buy (Day 17).
CNN MONEY’S FEAR AND GREED INDEX: (81 rising, extreme greed level).
NIFTY-50 STOCK LIST: 25 Buys; 13 Overbought, 7 Oversold, 4 new buys today, 3 new sells.

Stocks meeting the criteria for a 5-minute on the open Wednesday: only FB.

(click on the chart for a larger view)

Pulling the $BID – when bear markets can be born

Forecasting tops in the market, the kind of tops that lead to substantial declines, even to bear markets, is no easy thing to do.

Virtually impossible, no matter how many so-called market gurus claim they have.  Most often top callers get chopped to death before they get their sell-offs, and those that appear to have succeeded in calling a top never say how painful it was trying along the way.

I am not calling a top here but I am calling attention to the fact $BID (Sothebys) may be the most important bellwether stock there is.

I don’t know if it’s because the rich quit buying expensive art, jewelry, wine and other luxury items at auction or what?  But on a simple, purely technical-analysis approach it is obvious over and over again that the stock leads when it comes to sell-offs.  There’s always a bid and ask in trading and investing and BID clearly shows when someone pulls the bid.

See the charts below. The first is a daily chart showing while the general market (SPY) has lumber up in recent days, BID has been selling off with conviction.  The second is a monthly chart showing the history of BID in relation to the market on the longer time span (that is when Bear Market can be born).  If history and the stock is to be believed this market advance is on truly dangerous ground.

Any day, any minute now the market may follow BID down.

(click on the charts for a larger view)