#MarketTiming – $TWTR leads latest swing with 33% gain

Been on vacation from this blog for awhile but am back now and will try to be more diligent in posting here.

Now, as it turns out, appears to be an appropriate time to return since latest swing trade on the long-term breath signal will close officially on the open tomorrow. This swing began on the open of the market on 5/31, twelve trading days ago.

In the bellwether stocks (see chart panel below), as of the close Friday, TWTR led the stocks I consider to be bellwethers in this bull market with a 33.2% gain, followed by TSLA up 24.1% and BIDU up 12.6%. Twelve trading days – I’ve said it before but it bulls repeating…this is what swing trading is all about. The position in stocks will be in cash waiting for another swing to begin.

Should be noted, the 3X-leveraged ETF, TQQQ, which tracks the Nasdaq and makes general swing trading easier, is up 12.1% for the trade. FNGU, an 3X-leveraged ETN trading based on the NYSE FANG stock index, is up 33% (remarkably it was relatively small volume).

In addition to TWTR, TSLA, and NFLX, the bellwether stock list also has AMZN, NVDA, GOOGL, BIDU, BABA, FB, and AAPL. The gains for the up swing just ending are in the white flags on the lower right of the charts below. That is a calculation per $100K traded in each position in order to get both a dollar-earned and a percentage gain. Note AAPL is the laggard on the list, up less than one percent for the swing, $800 on $100K. Another example from the charts – NFLX is also up double-digits, 10.7%, $10,690 for the swing.

As for the general market, the sell signal for tomorrow’s open has come most likely because this rally — which longer term price-wise began in early May — is up a lot, overbought and tired.

I would not be surprised, however, by another bounce since short-term breadth has been declining for six consecutive days. Most likely that signals the bounce, at least a feeble one, before a bigger down swing, but if one if particularly bearish after this run up it could signal a hard down thrust this week before the bounce.

(click on the chart panel for a larger view)

#BellwetherStocks – ten bull flags still flying…

The general market took a hit today just when it appeared it could break out of its consolidation at recent lows.

All of this may be on news – Trump proposing a possible trade war with China, stewing over the Mueller investigation into everything from his campaign’s possible collusion with Russia, to the crimes arising from his hush-money payoffs to a porn star and Playboy playmate, to his sons’ threatening reprisals for any foreign government not doing their bidding, to allegations everywhere of corruption, self-dealing and maybe even money laundering; and now he’s rattling missiles at Syria (which is to say, at the Russian military).

Is there an Archduke Ferdinand anywhere in Syria?

There was a time when the one thing almost certain in the stock market was that the market did not like uncertainty.

Well, Trump has been the poster boy for uncertainty since the election and yet, remarkably, the market has ignored that, focusing instead on the Republican tax cut and the ripping away of every sane and insane regulation there is. But it’s beginning to look as if it is not quite ignoring his inconsistency and incompetence anymore. Last year it was hard to get the market to go down. Now it’s hard to get it to go up.

Okay, enough of that. What about right now?

This is an update of this POST ON APRIL 5TH.

The top in place in January may have ushered in a bear market (which is my overall bias) but right now the market is trying to bounce, and maybe even rally.

Today was a setback in that effort and every day seems precarious but I want to point to my twelve bellwether stocks. Despite last Friday’s bloodbath and today’s drop, they have all held firm. In fact, ten of the stocks have bull flags (see the chart panel below). My bellwether stocks are: TSLA, NFLX, AMZN, BID, TWTR, BIDU, AAPL, GS, FB, NVDA, FSLR, BABA. All twelve are in the black from the beginning of this bounce on open of April 4th.

TSLA is leading the bounce up 17.8% , followed by NFLX up 10.%, TWTR up 9.2% and now FB, with Mark Zuckerberg’s testimony to Congress, up 9.1%.

As bellwethers these stocks are, so far, saying this market is going to have another surge to the upside soon. Probably by Friday (unless the news gets in the way).

(click on the chart panel for a larger view)

#MarketTiming – $SPY ready to break up out of its box?

All through the market’s recent wild ups and downs, short-term breadth, measured by the McClellan Oscillator, has continued to work its way higher with each market plunge and recovery.

Now the all-important long-term breadth has also turned positive.

This is very bullish.

And yet, price has to yet to break of its nearly two weeks of consolidation – see the box on the chart below. With today’s general-market surge it is once again challenging the top of its range and appears poised to break through to higher highs. Tomorrow could be key. If SPY breaks out, it will no doubt take the rest of the market with it. The first objective would be that red trend line across the tops of the recent pullback.

Whether this is a resumption of the bull market or just a short-term swing in a bear being born is still a question. If SPY fails to climb out of its box, it could go all way down again and possible turn that box into the bull’s coffin. There are plenty of doubts this bull can keep going but for now the fight is on the upside.

Those rising green circles, marking the lows above the lows on the upper graph below, are a telling prelude to a strong up swing (see their history on the chart) and right now the bulls have the benefit of the doubt.

It is time to be long to be long and to buy stocks on dips until it isn’t anymore.

(click on the chart for larger view)

#MarketTiming – Swing trading the bellwether stocks…

My swing signals, based on breadth, price and volatility, turned up in unison on April 3rd for a buy on the open of April 4th.

More importantly, short-term market breadth put in a divergent low in the midst of recent market thrusts to the downside. When that happens, the next step that usually confirms an upside swing is the upturn in long-term breadth. That confirmation came yesterday.

There was a previous discussion and chart of this yesterday HERE).

From stock trader’s or investor’s point of view, the purpose of market timing is tell when to buy. And once again, the bellwether stocks list proves that point.

My “bellwethers” are TSLA, NFLX, AMZN, BID, TWTR, BIDU, AAPL, GS, FB, NVDA, FSLR, BABA.

On the chart panel below, the white flag on the right axis is the current gain per $100k invested (also calculated for the percentage gain). At the moment, this upswing is lead by TSLA at 17%, followed by NFLX and AMZN, both up 6% plus. Remember when (three days ago) there was some dope speculating TSLA would go bankrupt and President Dumb-Ass was attacking AMZN like it actually owned the Washington Post? What a difference a day or two makes in swing trading.

(click on the chart panel for a larger view)

#MarketTiming – From follow through to follow through

The general market, after Tuesday’s bounce, followed through today for big gains across the board, made all the more bullish by coming back from a deep gap down.

The Dow, or instance, was down 500 points at the open and finished up 230.

The question now, of course, can there be more tomorrow.

All indications are this correction is over with many of the indexes touching their 200 daily moving averages, with my nifty-50 list of momentum stocks triggering 30 buy signals in the past two days (Monday all but two of those stocks were down, today all but six were up), with CNN Money’s Fear and Greed Index finally lumbering up off a very low readings at 12 today (it got as low as six and can’t go below zero). That later index is still registering “extreme fear” which is the time a time for investors to be looking to buy stocks.

But most importantly (see the chart below), short-term breath put in a low above a low in negative territory, a divergence with the SPY Tuesday which needed a follow through into positive territory to turn the all-important long-term breadth up. The follow through came today.

All three of my swing-trading signals, based on price, breadth and volatility, are on buys now.

So this market bounce has more to come and could morph into a full-fledged multi-week rally.

Some notes. AAPL is probably the safest bet during a market bounce (emphasis on “safest”) but NFLX, NVDA and TSLA will probably out-perform among the big boys. Look at TSLA today, up 7.5% on the day and 13.7% from the open — there was some dope just last week predicting Elon Musk’s baby would go bankrupt.

(click on chart for a larger view)

$DBX – An IPO easy to buy at the right price…

When a hot IPO is launched, as was the case with Dropbox (DBX) yesterday, the headlines are usually how much it leaped over it initial offer price. That is a worthless commentary. Unless one is on some broker’s favored clientele list, it is impossible to have the stock and to be able to sell it on that leap.

So what to do?

With IPOs this is actually one of the easiest decisions in stock trading. Simply note the high price and the low price on day one of the IPO. Those are the lines in the sand.

Buy on a close above the high of the first with a stop loss below the high of the first day. With DBX that buy is a close above 31.60. If the stock drops back below that number, take the loss (likely small) and forego the anxiety of being locked into a foolish IPO buy made on whatever day. If it rallies from there, it could trend up and become a longer-term investment.

#MarketTiming – Plunge to a climax low?

The general market seriously tanked today – Dow down 724 points, SPX down 68, the Nasdaq Composite down 178.

And it was an across-the-board slaughter as every one of the nine sector ETFs I follow slammed into sell signals, with eight of the nine now oversold on the close.

The all-important long-term breadth indicator – the McClellan Summation index — is on its fourth day down, making it obvious which side of the market to be on, but even more telling is that this is a wind down that began nearly two weeks ago on the first day down from the bounce top on March 12th (see the chart below).

There is a lot of stuff going on that could have led to this drop — Trump, Trump’s tariff plans, Trump’s saber rattling, Trump’s staff members bailing as fast as they can, the Trump chaos (we have a sitting President in litigation with a porn star and so far she and he lawyer are kicking his and his lawyer’s butt), uncertainties springing up everywhere; and the Fed is raising interest rates.

All that is taking a toll of course but this a market that has been moving up too far and too fast so the last two weeks were at some time inevitable.

Is this a bear market? Still hard to tell. The VIX, which measures volatility, is above 20, which is the territory for a correction in a bull market, but it is for the second time this year flirting with the 25-level (it closed at 23.34 today), and that is the door to a bear market. If the SPY (SPX) takes out February low either right now or after a bounce without a significant rally, a bear’s growl may, for sure, be heard.

The trouble with bear markets is by the time everyone feels enough pain to panic they are over. I suspect if this becomes a bear market that pain is going to last a lot longer than anyone believes.

But back to today. So was this drop enough downside to make a climax low. Probably not but it could lead to another quick bounce. Given that there are now pretty defined resistance trend lines in place (see the chart), this next bounce might be worth trading but it is not likely to do anything more than produce another selling for shorting opportunity.

Regardless, this is a market that after two weeks down is oversold everywhere. Four times in the last seven days, my nifty-50 stock list has had 40 or more stocks on sells, which usually indicates the bottom of a swing or the beginning of a bottom. CNN Finance’s “Fear and Greed” index is at an “extreme fear” level (at 9…it can’t go below zero), which longer-term is usually buy territory. As noted above all of the sector ETFs, as well as the index ETFs I follow like TQQQ, UPRO and TNA, are also oversold.

All in all, time for another bounce…

Except this time, maybe a crash into a climax bottom tomorrow and Monday instead (an echo of 1987)…

SWING TRADING SIGNALS:

LONG-TERM BREADTH: Sell (Day 4).

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

CONTEXT:

SPY CLOSE – 263.67
QQQ CLOSE – 162.8
CNN MONEY’S FEAR AND GREED INDEX: 9, falling, extreme fear level).
NIFTY-50 STOCK LIST: 8 Buys; 3 Overbought, 24 Oversold, 1 new buys today, 13 new sells.

(click on the chart for a larger view)

#MarketTiming – long, strong and more to come

Didn’t getting around to posting the timing signals last week for various personal reasons so this post probably looks a little late to the party.

Oh, well…

A lot related to the headline above has already happened. The Nasdaq is already up six days in a row and the SPY, except for a minor dip during the week, would be too. My nifty-50 stocks have risen from 13 on buys and 15 oversold six trading days ago to 41 on buys and 29 overbought as of the close Friday. Virtually every index and sector ETF is overbought.

Once again, the market internals, ruled by short-term and long-term breadth, called the swing low, the turn, and the rally (see the circles and lines on the chart below).

So why bring this up now?

Because there is more to come in this bull market, either right away or right after a shallow pullback. The short-term breadth indicator is just too strong to be turned on a dime, and with the long-term breadth having just come out of a divergence itself (see the circle in the middle of the chart), there is a good chance this rally has another three, four, or more weeks to run before any significant sell-off is possible. So every dip is to be bought, and every surge savored.

Could it be different this time? The market could do whatever it wants but history says not right now, and history, when it comes to the mass psychology and movements of the market, is the best indicator of all (no matter who says otherwise).

(click on the chart for larger view)

#SwingTrading – the top stocks on the nifty-50 list

Just revised and sorted the stocks on my nifty-50-stock list – a powerful group they are!

I’m just going to feature the top 12 here because they are just too many moving too much. On the charts below the keys are the white flags on the lower right and lower left of each chart. On the lower right are the closed gains based on the 10 swing trades so far year-to-date and on the lower left are current open trade results using the short-term breadth signal as the trigger for the buys and sells.

Each trade is a $100K stock buy (so the cash in the flag is also the percentage return). For instance, QNST on the upper left of the chart panel is up 55.6% on trades marked up this year and the current open trade is up another 5.4%. VCEL, just below QNST on the chart panel, is up 66.5% on closed trades and down 2.1% on the open trade. And so on, and so on across the charts…

The stock trading here is entirely a market-timed swing system based on the basic idea that most stocks move with the movements of the general market. It is purely technical and what each company does is largely irrelevant. The measure of each stock is how well it tracks and how big it moves in accordance with each market swing.

Needless to say these and many more stocks are doing very well as the bull market so far continues.

(click on the charts for a larger view)

#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)