#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)

UPDATE (12/5): $QQQ and $SPY weekly options – a recurring plus 100% dream…

UPDATE (12/5): As suggested yesterday the day began with the Nasdaq (TQQQ) rallying, but unlike yesterday, which was perfect for a QQQ weekly option trade, today would have taken some nimble trading to secure any profits in the QQQ calls and the SPY calls. On a $5k buy close to the open, the QQQ in-the-money call for this week (152 strike) rallied up 56% at its peak, violated a trailing moving average at up 48% ($2400), before selling off all the way to breakeven. Two $5K buys on the SPY in the money calls first stopped out for a 1.2% loss, and on a reentry rallied up about 25% before collapsing again to breakeven.

However, the options day-trade play of the day came in the SPY in-the-money put (265 strike) which triggered later in the day and finished at the close up 66% ($3300 on $5K.

Not a terrible day, but a trading test at best.

Haven’t had a chance to update entries here since Wednesday (11/19). Given what happened in the market today, it is as if nothing has happened since. Today was almost an exact replay of last Wednesday with the Dow up, the SPX relatively firm and Nasdaq Composite slamming down 72points.

Take a look at the post below. My first sentence was:

The Nasdaq sold down hard right from the start today, and that is a day-traders dream in weekly options.



If there are recurring nightmares in life, can there be recurring dreams?

No doubt.

With the Nasdaq selling down hard right from the start today, the $5K day-trade in the weekly QQQ in-the-money put finished on its peak at the end of day up 120%, $6000 on a $5000 commitment to the trade. Even the SPY in-the-money weelky put cash in on the market’s the slide, netting 118%, $5900 on the $5000 play in the option. The key to this day-trading system for options (as I have written before) is having an entry a trader is comfortable with, likewise a comfortable protective stop, and on the days (like today) when the stop is not hit, the gain, obviously, can be substantial.

I’ll let the great trader and “market wizard” Linda Bradford Raschke sum it up: “Always take the trade,” she once said, “and sometimes you just get lucky.”

So what now? Once again TQQQ may have dropped too far too fast so I will not be surprise if that 3x-leveraged Nasdaq ETF bounces tomorrow like it did last Thursday and takes the rest of the market with it. Maybe for a couple of days…or more.

LONG-TERM BREADTH: Buy (Day 9).

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

CONTEXT:

SPY CLOSE – 264.14
QQQ CLOSE – 152.71
CNN MONEY’S FEAR AND GREED INDEX: (63, falling, greed level).
NIFTY-50 STOCK LIST: 20 Buys; 13 Overbought, 13 Oversold, 7 new buys today, 4 new sells.

Playing the Nasdaq drop in the weekly $QQQ puts…

The Nasdaq sold down hard right from the start today, and that is a day-traders dream in weekly options.

The system I’ve been developing a system for day-trading weekly options with a mere $5K in capital on each trade on the major ETFs SPY and QQQ has its main premise discussed here:

Buying options – is it a “fool’s game”?

Today, the QQQ puts put on the show. And an almost completely incredible show it was!

The drop in the Nasdaq (the composite would close down 87 points) began on the first five-minute bar (see charts below) and quickly became a bloodbath before leveling out in the usual mid-day to the close sideways chop. At the peak of the bloodbath, the gains in the weekly puts were astonishing and even with the leveling and sideways late in the day they remained spectacular.

My main trade was in the in-the-money 157 put, expiring Friday. It peaked at 330% and closed he day up 210%. Great, great as trades go, a definite home run, but on days like today, the in-the-money is the “conservative trade.” Out of the money has possibilities beyond home runs, beyond hitting it out of ball park itself…more like hitting it clear out of town.

See the charts below: the closest out-of-the money QQQ put, the 156, peaked at up approximately 395% and closed at up about 345%; the next strike, the 155, peaked at up 844% (about $42K on a $5k trade!) and was up about 585% ($29k on the $5k) at the end of the day trade. I don’t even want to talk about the 154, the next strike’s peak and return, in which on would have to buy nearly 500 contracts at around 12 cents each.

The “approximately” and all of the “abouts” in the above paragraph are because I didn’t trade those out-of-the-money positions. I just charted them to see the “entertaining” returns (see charts below). Out-of-the money options two days before expiration are really just wild-ass gambles while in-the-money can be methodical.

Remember all of this is just a journal for me alone and presented for no more than entertainment purposes here and should not be construed in any way as trading or investing advice.

(click on the charts for a larger view)

#MarketTiming — well…that was a big bounce…

My Nifty-50 stock list went from 39 stocks on sells with 30 oversold at the beginning of the day to 43 on buys and 11 overbought at the close. There were 34 new buy signals on the stocks today.

Thirty-four buys in one day. Can’t remember when last a one-day blast like today happened in the stocks.

I think the telling number going into today’s trading was that 30 oversold in addition to upthrust from the lower green line and arrow on the chart posted yesterday and updated today (below).

This feels like a buying panic that could I suppose carry to new highs especially on the Nasdaq.

On the S&P it seems more likely it goes up to the levels it was at when it sold off last week and stall (that would be about 247-248 on the SPY, which closed at 246.54 today). If so then we will likely see a retest of last week’s low levels, particularly because long-term breadth is still negative and there is no divergence in the short-term breadth numbers.

But for now this is an obvious bull market that is still going up until one day it is obviously going down.

SWING TRADING SIGNALS:

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

CONTEXT:

LONG-TERM BREADTH: Sell (Day 9).
CNN MONEY’S FEAR AND GREED INDEX: (39, but still at a greed level).
NIFTY-50 STOCK LIST: 43 Buys; 11 Overbought, 1 Oversold, 34 new buys today, 0 new sells.

Stocks in the Nifty-50 list on buy signals: too numerous to list but highlights from on the day include KEM up 7.5%, NVMI up 6.2%, PNK up 6.0% and MOMO up 5.5%.

(click on the chart for a larger view)

Niftyfifty2017-08-13_1806

$NDX – the top eight stocks

What a difference a day makes.

Yesterday, while the general market drifted higher, seven of the top eight weighted stocks in the Nasdaq 100 Index (NDX), were down and down solidly.  Only CMCSA was up.

That was odd but also a clear picture of what stocks were lagging the rally.  Today seven (at the moment) are up and only CMCSA is stalled (the irony).

I could be wrong but I expect today’s rally in these stocks to continue going forward.

(Click on the charts for a larger view)

ndx_8

 

 

$COMPQ – Calling a Top on monthly prices and volume

Back when SemiBizz, a trader on Traders-Talk.com rather precisely called the top in 2007 (blue circle in the middle of the chart below), he introduced the notion of a lower monthly price coming on higher volume being a clue to a sell off and possibly even a substantial top.

His was a pretty simple and clear signal (which I have subsequently marked with the red vertical lines on the chart). At the time I liked his monthly price/volume call a lot as a longer-term signal — clear and simple being, to my mind, the best adjectives for market signals.

Although the downside had trouble getting follow through all last year (see the multiple red lines and results on the chart), one had to keep in mind we were on red lines each time the signal triggered. That lack of follow through to the downside spoke volumes (so to speak) on how bullish the market was internally (and maybe still is).

Regardless of last year’s results one must still be on alert each time this signal triggers because just when one thinks something this simple and clear isn’t working, it will. On that note, it must be stressed we are again on a monthly red line in the Nasdaq Comp. .

(Click on chart for a larger image)

TWEET_MOTHLY_VOLUME_2015-07-05_1025