#MarketTiming – What a RIOT!

The late great Kennedy Gammage of the Richland Report used to always say “buy when the market tells you, sell when the stock tells you.”

He was making allowance for stocks that defied the general market’s move or giving stock pickers something to do to impress their clients. What he did not tell was that most often when the market says sell, so does the stock.

As I’ve written here repeatedly, I keep a nifty-50 list of stocks, which I follow both as an indicator and for their individual abilities to move with the market. Every so often (roughly quarterly) I sort the list and add in new stocks to keep it current and vibrant.

On the last sort, the stock symbol RIOT vaulted to the very top of list virtually from out of nowhere. Here is its profile on Yahoo Finance:

Bioptix, Inc., through its subsidiary, BiOptix Diagnostics, Inc., develops enhanced surface plasmon resonance technology platform for the detection of molecular interactions. The company also focuses on animal healthcare and owns important intellectual property rights related to veterinary products. In addition, it has granted a license relating to single chain reproductive hormone technology for use in no-human mammals, which is under active development by the licensee bovine rFSH. The company was formerly known as Venaxis, Inc. and changed its name to Bioptix, Inc. in November 2016. Bioptix, Inc. was founded in 2000 and is based in Castle Rock, Colorado.

What?

Recently, it seems, Bioptix, Inc. changed its name to Riot Blockchain, Inc. and its stock went insane, rising from $8 to $23 in four trading days. Then quickly dropped back down as far as $13 in three days. Then wandered sideways while the Nasdaq pulled back and my three swing signals – market timing signals based on Price, Breadth and Volatility – remained on sells. When finally, the swing signals began to click in with buy signals (see the chart panel below), RIOT took off riotously again, rising 101% on the price signal, 92% on the breadth signal and 96% on the volatility signal in less than five days (again, see the chart panel below) – as Kennedy Gammage would say “buy when the market tells you.”

None of this makes any sense to me. I like to think this is three guys smoking weed in Castle Rock, Colorado, where it’s legal who get the brain stroke to go for a “blockchain” in their name because they sort of are one…and laughing at the idea. Wouldn’t that be a riot? What a stroke!

Well, Wednesday we may get a chance to see if “sell when the market tells you” is more telling than “sell when the stock tells you” since all of my short-term swing signal gave sells today for tomorrow’s open (see table below). Geez…going to have to take swing profits on these signal, somewhere around 90% to 100%. On a stock in three to five days.

What a riot!

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 – 266.78
QQQ CLOSE – 155.69
CNN MONEY’S FEAR AND GREED INDEX: (65, rising, greed level).
NIFTY-50 STOCK LIST: 27 Buys; 6 Overbought, 4 Oversold, 4 new buys today, 4 new sells.

(click on the chart panel for a larger view)

#MarketTiming – said bounce and so it came to pass

Yesterday, my nifty-50 stock suggested a bounce in the market today and so it came to pass.

In the process, the bounce turned long-term breadth up, to go along with the buys now on all of the swing signals (see panel below). With 15 individual buy signals on the nifty-50 list today, the list itself moved to middle ground from oversold which would suggest more to come to the upside.

All of the leveraged index ETFs – TQQQ, XIV, UPRO, TNA – are buys on the open tomorrow, as well as 9 out of the 12 bellwether stocks I follow (see chart panel below).

With all of those positives in the midst of a bull market, one has to assume this is once again going up. Until it doesn’t.

SWING TRADING SIGNALS:

LONG-TERM BREADTH: Buy (Day 1).

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

CONTEXT:

SPY CLOSE – 264.07
QQQ CLOSE – 154.02
CNN MONEY’S FEAR AND GREED INDEX: (60, stalled, greed level).
NIFTY-50 STOCK LIST: 24 Buys; 8 Overbought, 10 Oversold, 15 new buys today, 1 new sells.

(click on the chart for a larger view)

#STOCKS – Gonna huff and puff and blow your house down…

It’s never advisable to short a sector making a straight up move in a bull market. So let’s just call this a heads-up on a sector where sometime soon heads are going to roll.

Housing stocks and housing prices have gone crazy again. Just like in…uh, 2007. History repeats here and I suppose there are those out there in major cities bidding up asking prices on the belief that it’s different this time and even if is isn’t ten years or so from now they will break even on the house they overpay for today.

But it must be noted Toll Brothers (TOL), always the leading stock in the sector, took 6.4% hit today on its earning miss and gave a blow to the rest of the sector at the same time (see the chart panel below). From a charting point of view, today left a lot of uncertainty, if not downright fright, in the sector as measured by all those bearish candle patterns in the stocks. HOV, at less than $3 a share, always get weakest fastest, but consider the doji in the sector ETF, XHB, and in the builder,DHI…

Now is this a just shot across the bow or a direct hit on the housing sector ship?

Either way, heads up! Especially investors.

And P.S. if this sector starts to sink, put a spyglass on the banks.

(click on the chart panel for a larger view)

$TQQQ – a Nasdaq bloodbath too far too fast?

TQQQ, the 3x-leverage ETF based on the Nasdaq 100 stocks (NDX), was down 5.4% today, a bloodbath that affected many of the bellwether Nasdaq stocks in the index.

See the table below:

(click on the image for a larger view)

NVDA down 14 points, NFLX down 11, and so on. Pretty ugly in the momentum bellwethers.

There was a fake-out nudge to the upside Tuesday, but can’t say today’s slam down was unexpected. Posted this two days ago:

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.

If today’s sell off continues, that will be relevant, but there are signs this is done already.

Nearly every time TQQQ falls through the standard deviation lines (the blocks on the green lines on the chart below), the Nasdaq bounces the next day or two days out (the red vertical lines on the chart). It is as if any fall this far is too far too fast. And oftentimes in this bull market, the bounce becomes another rally (see the diamonds on the chart are TQQQ). In fact, a look-black on the chart shows this last great upswing in the Nasdaq, which began in late September, started with a touch down on the green lines just like today.

So I’m looking for the bounce, and looking to ride a rally if it develops here (Santa time?), and if it doesn’t then the suggestion in the quote above might indeed be a sea change in the market.

SWING TRADING SIGNALS:

LONG-TERM BREADTH: Buy (Day 6).

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

CONTEXT:

SPY CLOSE – 262.31
QQQ CLOSE – 153.89
CNN MONEY’S FEAR AND GREED INDEX: (67, rising, greed level).
NIFTY-50 STOCK LIST: 14 Buys; 11 Overbought, 8 Oversold, 6 new buys today, 3 new sells.

(click on the chart for a larger view)

#STOCKS – the nifty-50 stock list revised and sorted…

Just scanned the market to add to and sort my nifty-50 stock list.

These, by my measure, are the stocks that have performed best with the market swing signals since the last sort three months ago. That does not mean they will be best going forward but it is my experience they will be strong vibrant participants on market swings to come.

In addition, the list itself serves also as a market-timing indicator.

For instance, historically, whenever 40 or more of the stocks on the list are on sells by my measure, the general market (no doubt in a pullback at that point) is within a day or three of a significant swing bottom. This, like so many indicators in the stock market’s forever bull trend, does not do as well marking swing tops. Too many on buys, 40 or more, does often trigger a pause in the advance. That’s just the way it is.

The stocks are: RIOT, KURA, XNET, ESIO, BPMC, QNST, AXGN, VRS, ACLS, DLB, KBR, ORBK, LGIH, SRPT, OLED, DLTR, MU, YY, TAL, DHI, ARNA, CGNX, JEC, COLL, MRVL, DK, HRTG, AWI, KRO, GTLS, PNK, CAVM, BECN, BURL, RNG, SGMS, CTRL, GLOG, ADMS, RH, EBS, ESPR, MLNX, CRAY, MTCH, YINN, PRTK, AXTI, GBT, HIMX.

The top 12 stocks are in the chart panel below.

(click on the charts for a larger view)

#DayTrading $AAPL calls…

CONTEXT FOR THE TRADE

From the link below:

And, of course, if the market rallies it is also likely AAPL will again participate (always good for a bounce, a scalp, or an option-play).

The weekly, expiring Friday, in-the-money 170 calls for a day trade. Currently up 70%, from 2.00 to 3.26. $3100 on a $5K position, 25 contracts.

Will update later:

END OF THE DAY UPDATE – up 62%

#MarketTiming – Swing signals positive for stock buys

All of the swing signals – based on Price, Breadth and Volatility – are on buys and even the all important long-term breadth is threatening to go positive.

It would appear we are entering a seasonally positive time.

On a stock trading note: four of the 10 stocks in my bellwether stock list have a good chance, if the market rallies as is likely Tuesday, of following the market:
NFLX
NVDA
BID
FSLR

See the positive candles today on each of those stocks on the chart panel below. Like the stock market itself, expect stocks that are up to follow-through and go up until they don’t. And, of course, if the market rallies it is also likely AAPL will again participate (always good for a bounce, a scalp, or an option-play).

SWING TRADING SIGNALS:

LONG-TERM BREADTH: Sell (Day 20).

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

CONTEXT:

SPY CLOSE – 258.30
QQQ CLOSE – 153.87
CNN MONEY’S FEAR AND GREED INDEX: (50, rising, neutral level).
NIFTY-50 STOCK LIST: 35 Buys; 16 Overbought, 6 Oversold, 1 new buys today, 6 new sells.

(click on the chart for a larger view)

Stocks on a bounce around Tuesday…

Today’s climb out of the pit at the open may foretell more upside Tuesday, but, like it seems everyday these days in the market, one has to instantly say “and maybe not.”

On my swing signals, price gave a buy today while breadth and volatility remain on sells, and the all important long-term breadth continues to decline. A price uptick of late, even without backup from the internals, seems to be all the bulls need to at least bounce to the indexes.

Throw in short-term breadth and volatility being down three days in a row and one begins to suspect a bigger bounce is near. If it can turn long-term breadth up from its deeply oversold level…well, maybe even a rally to new highs everywhere.

Looking around the market, there are some interesting stock moves. Like how healthy is this market when GE is in free fall? You’d think it was Kodak. Or RACE dropping twelve points off an all time high in seven trading days. Did Ferrari flat run out of gas? Actually I think RACE may be a winner the rest of this week.

My nifty-50 stock list continues to slop around in middle ground. A 40-plus overbought will probably not be a sell but a 40-plus oversold will be a big buy sign for a rally to wherever.

On the crazy plus side, TSLA bounces 15 points today after falling 80 from a double-top all-time high. The banks all had their hands up. Double-digit Reit stocks were up. Why no one buys those dividends on a steady basis is beyond me? And coal stocks, living on the never-ending hope Trump will dish the sector a truckload of taxpayer cash. I was going to say “undying hope” but switched to “never-ending” because the coal companies are dying no matter what.

Solar stocks, on the other hand, have again been leaders on this latest refusal of the market to go down hardly at all. See the chart of FSLR below, up 29% since rising up out of the tight Darvas box and soaring into the sky in little over a month (might be time to lock some profits there).

SWING TRADING SIGNALS:

LONG-TERM BREADTH: Sell (Day 20).

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

CONTEXT:

SPY CLOSE – 258.53
QQQ CLOSE – 173.97
CNN MONEY’S FEAR AND GREED INDEX: (59, rising, neutral level).
NIFTY-50 STOCK LIST: 22 Buys; 8 Overbought, 9 Oversold, 7 new buys today, 5 new sells.

(click on the chart for a larger view)

$SPY – Three days in the “fool’s game” for 100%

I have been posting these BUYING SPY options trades for three days now, Friday, Monday and Today, buying against the common wisdom that buying options is essentially a fool’s game.

FRIDAY – A “FOOL’S GAME”? NOT!

MONDAY – BUY CALLS FOR A RINSE AND REPEAT

Friday and Monday were “call” days, today was a put day. These are the weekly in-the-money options expiring each Friday. Each buy signal is a $5000 buy-in with up to five trades a day for no more in on any day than $25,000 at once (there were only four signals today). These are all day trades, which is the point.

As I proposed in the link: SPY options are ideal for day trading — very liquid across multiple strikes, tight spreads, hardly any time decay on a trade for only a day, a stop-loss is close by and immediate, and the profits, if there is trend for the day, can be substantial, even rather astounding.

I suppose “astounding” is a relative term and every person defines it differently but…

This is how I’m defining it today — these trades in these three days are now up a shade more than 100%.

That’s largely thanks to the “astounding” 80% move on last Friday’s expiring call. And I suppose the last two days for 12% each are more typical.

But there’s more to this if one takes a look inside the trade (without going crazy — easy to do…). For instance, today first three signals were up $8000 at their peak and there was a possible and reasonable sell at up $6000 as opposed to the mechanical close at $2450. There were moments like that every one of the days. Options after all as volatile trading products. Could have been much more than 100% on any one of them…and of course there buying out-of-the-money instead of in-the-money for more bang for the buck but this is when option trading begins to go insane so I’ll just quit talking about the might-have-beens. The what-is remains north of 100% in three days.

As I’ve said in the links above the key is any entry signal with which a trader is comfortable (see the chart below or those in the links above).

By the way, I’ve had discussions on a couple of forums in which it has been suggested that ES futures would be a more efficient and much better way to take these day trades, give the futures’ liquidity, tight spreads and lack of time decay. While that seems logical and even appears to be obvious, as far as day trading goes that is, so far, simply not true. ES futures have under-performed the weekly SPY options on these day trades. For one example the SPY Puts today netted 12% while the ES futures, at an equal level of commitment using day-trading margin, were flat on the same signals.

(click on the chart for a larger view)

A REMINDER: These posts are solely for entertainment purposes. They are a journal of my thoughts on the market and should not be construed in any way as direct or indirect investment or trading advice.

$SPY – beginning another hard up leg…

The general market continued higher again today.

Interesting one-day moves in the top five stocks on my Nifty-50 stock list: TAL up 5.2%, WTW up 10.2%, EDU up 7.9%, PODO up .58%, and FSLR up 3.2%. All in all, 36 of the stocks on the list advanced.

Long-term breadth is still declining but it often lags a market move as short-term breadth begins to give glimmers of a blast to the upside (see the green circles on the rising lows on the chart below).

This is a bull market that just keeps charging, and will apparently until it doesn’t anymore.

SWING TRADING SIGNALS:

LONG-TERM BREADTH: Sell (Day 15).

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

CONTEXT:

SPY CLOSE – 258.85
QQQ CLOSE – 153.79
CNN MONEY’S FEAR AND GREED INDEX: (69 rising, greed level).
NIFTY-50 STOCK LIST: 28 Buys; 12 Overbought, 7 Oversold, 12 new buys today, 5 new sells.

(click on the chart for a larger view)