#MartketTiming – Swing Signals 4/10/19

THE SIGNALS AS OF 4/9/19.

Long-Term Breadth (NYSI): BUY FROM 4/10.
Short-Term Breadth (NYMO): BUY FROM 4/10.
Price: BUY FROM 4/10.
Nifty-50-Stock-List: 21 BUYS, 5 NEW BUYS, 11 OVERBOUGHT; 29 SELLS, 3 NEW SELLS, 3 OVERSOLD.
CNN MONEY’S “Fear and Greed” Index: 70, FLAT, GREED LEVEL.
Bellwether Stocks: 14 UP, 1 DOWN.

OF NOTE, $10K Swing Trades, SPY OPTIONS:

SPY CALLS, 287, 288, 289 STRIKES FOR WEEKLY 4/12 EXPIRATION OR MONTHLY 4/18 EXPIRATION.

OF NOTE, $10K Swing Trade Stocks:

BUY ON OPEN 10/11: GS, MSFT, AMZN, FSLR, NVDA, WYNN,TWLO, TSLA. STOCK OPTIONS.


WHAT’S NEXT?

As was suggested the post below in regards to yesterday’s drop in the market and pull back in short-term breadth: “Most likely it’s a mere dip to the zero line on the NYMO.

And so it was.

With today’s pop (not so much on the Dow but worthwhile pretty much everywhere else), the NYMO and NYSI are once again positive.

Kind of get tired of saying it over and over again but as long as the NYMO and/or NYSI remain positive overall the usual play is to be long, take profits when the stocks give sell signals, and buy coming out of dips but have to say it since it happens over and over again.

Fourteen out of 15 bellwether stocks were up, 40 of the 50 stocks on my nifty-50 stock list gained, all eight of the 3xLeverage ETFs I follow — TQQQ, TNA, UPRO, SOXL, FAS, ERX, LABU, FNGU, up, up, up…

And most notably the NYMO put in another low above a low (see the chart below) so until further notice expect follow through – this is broad market run to the upside.

(click on the chart for a larger view)

#MarketTiming Signals – 4/9/19

THE SIGNALS AS OF 4/9/19.
Long-Term Breadth (NYSI): SELL FROM 4/9.
Short-Term Breadth (NYMO): SELL FROM 4/8.
Price: TQQQ SELL 4/9 UP 5.0%; UPRO SELL 4/9 UP 5.0%.3%; TNA SELL 2.7%
Nifty-50-Stock-List: 20 BUYS, 6 NEW BUY, 8 OVERBOUGHT; 30 SELLS, 6 NEW SELLS, 4 OVERSOLD.
CNN MONEY’S “Fear and Greed” Index: 71, DOWN, GREED LEVEL.
Bellwether Stocks: 4 UP, 11 DOWN.

OF NOTE, $10K Swing Trades, SPY OPTIONS:

SPY CLOSE – 287.33.
SOLD ON CLOSE – 282 APRIL IN-THE-MONEY UP 25.7%, 284 APRIL AT-THE-MONEY CALL UP 22.8%.
BUY ON OPEN – 288 APRIL IN-THE-MONEY PUT, 287 AT-THE-MONEY PUT.

OF NOTE, $10K Swing Trade Stocks:
SOLD ON CLOSE – WYNN, 17.6%; FSLR, up 6.6%; GS, UP 4.1%; NVDA UP 5.2%; AMZN UP 2.4%.
BUY ON OPEN – NFLX.

WHAT’S NEXT?
As noted in yesterday’s post, with the SPY is up eight days in a row and the NYMO turning down a profit-taking dip was coming “any day, any hour, any minute.”

Got that dip today causing profits to be taken on five bellwether stocks and SPY options (see table above). With the dip, however, the NYSI turned down – a bit of a surprise. Consequently, this pull back could get carried away to down side. Don’t really expect it after seeing so much momentum on the last bullish surge. Most likely it’s a mere dip to the zero line on the NYMO.

As said in the post below, as long as the NYMO and/or NYSI remain positive overall the usual play is to be long, take profits when the stocks give sell signals, and buy coming out of dips.

Trouble is, as of today, neither of them are positive so we’ll have to wait and see, or be ready to be nimble, playing offense with SPY puts on tomorrow’s open and playing defense immediately thereafter.

CNN MONEY’S “fear and Greed” pulled back, still at a “greed” level,” but it tends to be early at the top of swings. (Actually, the more I consider this, the more I’m beginning to think this dip COULD turn into a decent decline.) See the chart below.

AAPL finally had a reversal day and remains five days, by my measure, in overbought territory. If the market’s going to get carried away to the downside, the market-cap craziness of AAPL is a likely to be an easy down-and-dirty put play, maybe the 200 put for either Friday’s or the 4/18 expiration. The AAPL 190 April at-the-money call on this market rally is up a whopping 144% and has not, as yet, given an actual sell signal.

The banking stocks did today, a day late, what was suggested in this link – $XLF – Fighting an urge to short the bank stocks – so those short scalps are in play.

(click on the charts for a larger view)

#MarketTiming Signals

THE SIGNALS AS OF 4/8/19.
Long-Term Breadth (NYSI): BUY FROM 4/1.
Short-Term Breadth (NYMO): SELL FROM 4/8.
Price: BUY TQQQ FROM 4/1 UP 6.2%; UPRO FROM 4/1 UP 4.3%; TNA FROM 4/1 UP 5.4%
Nifty-50-Stock-List: 20 BUYS, 1 NEW BUY, 10 OVERBOUGHT; 30 SELLS, 7 NEW SELLS, 8 OVERSOLD.
CNN “Fear and Greed” Index: 74, GREED LEVEL.
Bellwether Stocks: 9 UP, 8 DOWN.

OF NOTE:
$10K Swing Trade SPY options: 282 APRIL IN-THE-MONEY CALL UP 59.2%; 284 APRIL AT-THE-MONEY CALL UP 75.2%.

See charts below.

$10K Swing Trade Stocks: WYNN is up 22.4% from 3/29; FSLR is up 8.4% from its price buy signal 3/29; AMD was a sell on today’s close up 8.2% from its price buy 4/1.

WHAT’S NEXT?
The SPY is up eight days in a row and the NYMO turned down today. Seen that many times before. There is a profit-taking dip coming…any day, any hour, any minute. But as long as the NYMO and/or NYSI remain positive overall the play is to be long, take profits when the stocks give sell signals, and buy coming out of dips.

However, for now, AAPL is up nine days in a row, which is reminiscent of previous runs in the bull market in which AAPL almost single-handed dragged the market indexes higher. It closed today at 200 and has a market-cap again approaching $1 trillion. The company has lots of cash and is no doubt buying back its stock again. That’s great for those who buy and hold but one day the buy-backs will end. A trillion dollar market-cap is not a jumping-in point to go much higher. On the last swoon, the stock dropped into the 140s, a great place to get back in after either taking profits shorting the stock above $200. For swing traders, doesn’t it seem obvious the selling or shorting opportunity knocks again?

(click on the charts for a larger view)

$SPY – six days up into a black candle

Does the market pause here, pull back, or continue to rally?

My bias going into Friday is a pause, possibly going into a pull back.

But, thanks to SPY rising six days in a row, putting a black candle on the price chart and an inside day today (see the chart below), it’s going to be easy to see the next move, either up or down. Every black candle, which I simply define as a day in which the close is higher than the day before and lower than its open, is a clear sign of indecision in the market and an inside day is a further indication of indecision. The indecision obviously is resolved above the high or below the low of the black candle day. It’s that simple.

At the moment, the key numbers on SPY are 287.76 at the high and 285.75 at the low.

Of course it takes a down day to start a decline and SPY, at six days up, has not had one but the Nasdaq Comp, after five days up in a row, was down slightly today and there were eighteen sell signals today on my nifty-50 stock list, CNN’s Fear and Greed Index is overbought in the greed zone… All of which contribute to my bias.

On the other hand, long-term breadth (NYSI) continues to rise, short-term breadth (NYMO) also is positive so it’s likely, when and if it comes, the dip will be more of a pause than a deep pullback.

In the meantime, it might be time for swing traders to tighten stops to lock in profits. It’s been a good upside run this week with TQQQ up 3.8%, TNA, up 3.1% and UPRO up 2.5% at today’s close.

Among the bellwether stocks FB is up 4.9 %, FSLR up 3.9%; AAPL lagging but up 2.1% (watching for a short soon); remarkably WYNN is up 13.1% and AMD up 10.4% and GS up 4.2% and BAC up 4.5% at today’s close. All of these are four day trades from the market-timing buy signal on the open Monday.

(click on the chart for larger view)

$SPY – Up, up, up…

After muddling around for nearly two weeks in a sideways-to-down consolidation, SPY and the rest of market appears now to want to go up, up, up.

Friday, the most important triggers all lined up as buy signals – short-term breadth, long-term breadth, and price. In addition, the VIX also is in line, and happens to be below 15 which is bull-market territory.

These are signals that repeat again and again in the market.

First, a low above a low pattern on the short-term breadth, measured by the McClellan Oscillator (the NYMO, see the green circles on the chart below), then an upturn in long-term breadth, measured by the McClellan Summation index (the NYSI, see the green vertical line on the chart for Friday), followed by a a follow-through in price (which appears to happening in the futures for Monday).

And oftentimes, when all of these bullish signals are in play, they result in a 10-to-14 week upswing in the market from the bottom on the NYMO (three weeks ago). If so, this rally could easily go to what they say — “sell in May and go away…”. And that could challenge the all-the highs.

I still think this is a major bear-market rally but in the meantime it’s buy and hold the swing and buy the dips when and if they come, until further notice.

(click on the chart for a larger view)

$NFLX drives stock options to a 66.9% daily gain

NFLX’s weekly in-the-money 360 call today rose 213% on its buy signal near the open.

As a result it drove the four stocks in a day-trading basket tracked here – AAPL FB, NFLX, TSLA – to an overall gain of 66.9% for the day.

This is a system that simply day trades the stocks’ weely calls and/or puts on the long side. As per this link:

#DayTrading Stock Options in the Fool’s Game

I’ve been setting the trades at a total of $10K per day — what I call the $10Kdaytrade on Twitter — allocating $2,500 to each of the four stocks. So today that was $6,690 for the $10K committed to the trade. Besides the spectacular NFLX move, the FB call was up 90% with $2,261 gain, the AAPL call was up $442, TSLA was up $415; there were also triggered trades in NFLX, AAPL and TSLA puts with small losses except for TSLA down $968.

I began applying the day-trading buy and sell triggers similar to those I use for day trades in SPY options on February 26th, about a month ago, trading the nearest weekly strike in the current week, and first introduced it here February 27th:


#Stock Options in the Fool’s Game

The system has been volatile (there were 20% and 30% losers on separate days last week) but so far so good overall. It is up 124% on $10K trades opened and closed each day.

So far this is just an experiment to see if day trading options on very liquid and popular stocks is viable. It is an attempt by going long on either the call or the put or sometimes both during the day to eliminate or at least mitigate the “greeks”, the complexity of fills on strategies like iron condors, and the margin requirements needed to short options. Obviously, this is not for those with their own trading rooms nor for hedgers, but for day traders with limited funds to trade, it suggests there are simpler ways to play the options game.

For an illustration of today’s movement in the calls in the stock basket discussed above see the charts below.

(click on the chart for a larger view_

#MarketTiming – from bearish to bullish to bearish again…

On Monday, this blog posted that this stock market at this juncture is —

TRICKY, TRICKY, TRICKY.

No kidding.

At that point, for Monday, the market, according to many technical indicators, was poised to sell off, ending the splendid rally from December. But then it didn’t sell off.

Instead, yesterday, it gave a tentative, but likely, indication it was going to continue to go up into a typical bull-market cycle advance, and today on the opening gap and with its pre-lunch follow-through from the open, it appeared the snorting gods were in their heaven and all was right with bull world.

Then, during the day a quick slide took everything negative. Not by much, hardly enough to notice on daily charts at the end of the day, but it was enough to turn long-term breadth negative again (see the dots on the chart below), which makes being long the market dangerous and while short-term breadth did peek above the zero line for a day a look back looks pretty bearish (the yellow line on the chart below) with highs below highs generally all the way back to the beginning of the rally.

Tricky.

I’ve long said this is the rally to make everyone believe a bear market did not begin in September of last year, that the bull market from as far back as Obama’s first term was resuming and continuing and it may still be (it sure looked like it yesterday), but it will not surprise me if a benign dip like today turns into a raging grizzly while the buy-and-holders sitting at The Palm or at Smith & Wollensky are wondering why the steaks are taking so long.

For today I’m posting my “Black Candle” chart. Black candles shows up when an index or ETF or stock or whatever one’s trading closes higher than the day before (usually on a gap) but lower than its open. There are candlestick names for these kind of chart patterns but just plain “black” is fine with me.

Today, notably, we had black candles on SPY (below) and TQQQ, and remarkably on FNGU (the leveraged ETF for the FANG stocks). They don’t always signal tops of swings, although I can’t think of anything else that comes as close (see examples on SPY below), but they are alerts. They do signal sudden indecision. And they are useful markers, pretty much as simple as it gets — go long above the high of the black candle, go short below the low of the black candle as the indecision gives way to a direction either up or down.

(click on the chart for a larger view)

#MarketTiming – Bulls doing what they needed to do

What they needed to do was to push the market up some more.

In the process, the all important long-term breadth (the NYSI) has turned positive to go along with the short-term breadth (the NYMO) and price indicators with SPY finally edging above its 280/282 resistance (see the charts below).

That would suggest more advance to come. The upturn in the NYSI is buy signal for tomorrow’s open

But maybe not without a dip first, a “turnaround Tuesday”?

There are shaky signs that remain in this tricky time in the market. It’s kind of scary to jump in now with the market already up essentially six days in a row, both the Russell and the Dow at at the moment lagging the Nasdaq and the SPX as if not all the generals are as yet on the battlefield. My nifty-50 stock list has 29 stocks on buys and has been declining since last week, even slipping again today from 31 on buys Friday. CNN’s Fear and Greed Index is at a “greed” level and still working on divergence trailing the market’s up move these last six days.

Still, at this point there is no choice other than to be long until further notice.

Given that the NYMO/NYSI is positive and also has a cycle that usually runs ten to fourteen weeks (the sell down ending six trading days ago was in the 10th week) breadth could launch the market into rally into say…May…and maybe making a new high along the way.

I’ve been asked to explain what’s on the the triptych of stock charts below. They are an illustration of what I talk about over and over again as I try over and over again to simplify, simplify, simplify.

The top part is whatever is being traded on the signals. In this case TQQQ. Could be AAPL, GE, NFLX, options, whatever. The middle part is NYMO and NYSI. The next lower part is obviously SPY. Also use the Nasdaq composite here on other charts. And finally the bottom part is the profit reading, set for $100,000 in order to easily see the percentage move. The white flag on the lower left is the booked profit percentage on the signal year to date. The white flag on the lower right is the current profits if the signal is in play.

The chart on the left is the short-term breadth signal for March, in the middle is a pure price signal for March, and on the right is the long-term breadth chart, YTD (it is set to go long again tomorrow).

Remember this is day trading and swing trading, no long-term buy and hold in my world (far too risky).

(click on the charts for a larger view)

#MarketTiming – tricky, tricky, tricky…

So the market did not go down Friday as expected here.

And it may have switched gears to rally some more to the upside.

While long-term breadth, as measured by the McClellan Summation Index ($NYSI), continues to decline, short-term breadth ($NYMO) turned up Friday with a low above a low on its chart (see the green circle on the charts below). In bullish times, that is an aggressive traders buy signal. In bearish times, not so much.

Now if the Summation Index turns up, which it needs to do in short order (like Monday…), it could be the start of several weeks of rally. And if it doesn’t, and the low above low on the NYMO is canceled out, which seldom happens in bull markets but is common in bear markets, we will again, immediately be looking at a likely down swing again. One that could be big.

A lot hinged on Friday’s market action and now more may hinge on Monday’s.

The the first chart on the left below is based on the long-term breadth signal year to day. Because of this monster rally that ended at the end of February, TQQQ, the leveraged ETF for the Nasdaq is up 48% for the year. It is flat now but will go long if the NYSI turns up. TQQQ on the center chart is riding the short-term breadth signal and is currently up 14% for the year. It will go long on tomorrow’s open (Monday’s open). The chart on the right is a purely a price-base signal (I say “buy the yellow, sell the blue”). It has booked 3.1% profits and is currently up 5.1% on this latest on-going upswing.

If the market rallies tomorrow again, it is likely all three will be long at the same time. That is truly bullish.

IF not, then it won’t be bullish. As I said, much hinges on Monday for now. Tricky, Tricky, Tricky.

(click on the chart panel for a larger view)

#MarketTiming – “a gift for the bears”…

I expect the market to go down tomorrow.

Really? Why?

Long-term breadth, as measured by the McClellan Summation Index (the $NYSI) is declining, and today short-term breadth, as measured by the McClellan Oscillator (the $NYMO) turned down after basically a four-day bounce in the market, but more importantly, timing-wise, this NYMO pattern is more than the usual turn down.

In this case it is a “high below a high below the zero line.”

And whenever this happens I believe it is a gift for the bears.

Take a look at the blue vertical lines on the chart below, which mark each time this pattern has repeated in the past six months. Focus on what happens next. It is always what happens next in the market that matters — not many indicators are consistent as this one – a sell off every time and usually hard downs the next day (tomorrow).

In addition, the SPX and Nasdaq Comp both clicked down today (to state the simply obvious, every dip or swing or slide or whatever the market wants to do to the downside has to begin with one down day), and VIX, after four days down, clicked up, giving its own first-day sell signal. Furthermore, my nifty-50 stock list which has 41 stocks on sells a week ago Wednesday rallied to 42 on buys yesterday before clicking down to 39 on buys today. CNN Money’s “Fear and Greed Index” is at a “greed” level trying to diverge with the rally highs. AAPL, by far the most important stock in the market and one capable of triggering a sell off all by itself, gaped up today on top of a five consecutive days up, but then sold off below its open (putting a black candle of indecision at a high on its chart).

But more important than any of that in my expectation is high below the high below the zero line, the gift for the bears, a gift in bull markets let alone in what may now be a bear market.

Okay, what if it doesn’t sell down? Well, that will be particularly bullish and I’ll take that up when and if it goes that way. As Trader Vic Sperandeo would say “if the market doesn’t do what’s expected, it usually does the opposite twice as much.”

(click on the chart for a larger view)