$TSLA slams into an “outside day”

And it hit that wall on the day after its earnings report vaulted it into the airy realm of irrational exuberance.

All over stock market social media, Elon Musk fans and TSLA shareholders were ecstatic as the monster stock, in the midst of a world-wide pandemic and facing the prospect of a dire economic downturn, virtually doubled in no time at all. TSLA has boundless prospects long-term – long-long-term – but its recent rocket ride was crazy. Even Musk said so some time ago.

CRAZY!

So no surprise today as one of the oldest of Wall-Street adages strutted on stage yet again – “Buy the rumor, sell the news.”

The stock plummeted 163 point from its open today and 77 points lower than its close yesterday on higher than average volume, in other words the very definition of an outside day.

So what next?

Actually outside days are somewhat up in the air. In an up trend (and TSLA certainly is in one), it can be a mere bump in the road so to speak, but whenever violent action like that a happens, particularly on good earnings news, one has to see if anyone has been killed in the crash.

Today’s low, me thinks, is the line to live by. If TSLA rises above it, tomorrow, it’s a long with the today’s low as the stop loss. If it continues to drop, the low becomes the protective stop for the shorts.

(click on the chart for a larger view)

$SPY – Up, up, up…and KERPLUNK?

Just got back from a week in New Orleans so if my head feels a bit thick, don’t blame me, blame the Nawlins’ food, drink, the music.

W.C. Fields once said: “I spent half my money on gambling, alcohol and wild women. The other half I wasted.” New Orleans is a perfect city to not do the wastin.’

Anyway, the market after a break of its December/January uptrend line, took another shot and manage another high on SPY (among other index ETFs) last week but dropped back down below the January high (332.95) to close at 332.20 Friday.

Not such a big deal except the NYMO after the rally off a double-bottom earlier in the week (see the white line with the red dots on the chart below) fell with the price weakness to turn the all important NYSI (longer-term breadth) negative.

That’s an automate sell on its own but there’s maybe more…

In his book “Methods of a Wall Street Master,” Trader Vic Sperandeo says determining the trend is a simple as 1-2-3. One is the break of the trend line, which happened on the gap down from 1/24 to 1/27 (see the chart); two is the attempt to resume the recent trend that fails, which may have just happened; three is a fall back to through the low after the trend line break.

Since “three” hasn’t happened yet, there’s a chance, and maybe even the likelihood, the pattern here is just a pause before more advance but…

But Trader Vic Sperandeo’s has more. His most classic set up for aggressive traders is right here, right now. He calls it “2B”, as in “2B or Not 2B, that’s where the money is made.” The fade off the old high on Friday is the 2B, as pretty as can be (see the chart).

This a short.

And it is made all the better by the stop being close by at the old high at 334.20.

That simple. And if it follows through, without stopping out, it could be a great big KERPLUNK right at an all time high.

P.S. There’s also a bearish full moon today for those who put some store in such lunar signs.

(click on the chart for a larger view)
and

$SPY – The drop too far, too fast?

The market took a plunge today and all the why-did-it-happen pundits are citing the Chinese coronavirus fears for the sell-off.

Once again, this is news arriving to confirm what’s already happened. The NYSI, measuring long-term breadth on the New York Stock Exchange, turned negative last week. That was the tell that the market’s advance was faltering. News can accelerate a decline, but no-news would have also but probably at a slower pace.

What we have now is a fast fall and based on one of my key charts it is likely too far, too fast. See the chart of SPY below and note nearly every time the average SPY pull-back (as displayed as a histogram) pierces one of lower green lines, it bounces, and sometimes runs. The Nasdaq Composite chart is showing the same pattern.

In addition, 45 of the stocks on my nifty-50 stock list are on sells and 23 are oversold. Forty or more on sells is usually the bottom or the beginning of a bottom of a down swing.

Although today looked relatively ominous, not a lot of damage has been done – most of my bellwether stocks are only down two to three or so percent since the NYSI down turn.

So what’s next?

I think the market bounces tomorrow. The question for the week is will it be a dead cat? Or will it, in this bull market, be the start of another run to the highs?

If it turns out it’s no more than a dead cat bounce, or the market doesn’t bounce and keeps on going right down without pause, then the damage to the stocks and indexes not done yet will be done on the next plunge.

For now, as laid out in the post below the long VIX ETFs and ETNs are the play on this drop. Stops should be tightened to preserve the quick profits on TVIX (29.9%) and UVXY (22.7%). If the market weakness continues, TVIX and UVXY will no doubt be easy swing trades to jump into and out of going forward.

(click on the chart for a larger view)

$TVIX – From heads up to launch up…

On January 14th, I posted this link as a “heads up” to the what was happening in the VIX and its related ETFs and ETNs like the 3x-leveraged TVIX:

$TVIX – Just a heads up…

“I don’t know what’s going to finally trigger it nor when it’s coming,” I wrote in that post, “but when this leveraged VIX ETF turns, it’s going to explode.”

The trigger turned out to be the old reliable standby – the NYSI, the McClellan Summation Index, as long-term breadth tripped under the price surface of the market, along with the first day TVIX did not make another new low. That was on 1/22 for a buy of TVIX on 1/23 (see the blue candles on the chart).

By the time TVIX finished its down swing, it made new lows 11 days in a row, four days after the “heads up” given here (see the blue vertical line and the pink dots on the chart below) – great anyone short any VIX-related product — but that was also a sign the pop was going be a bang, maybe even more than a bang – an explosion yet to come?

Since then, three trading days ago, TVIX is up 29.9% on today’s close. UVXY, the 2x-leverage ETF, is up 22.7%.

(click on the chart for a larger view)

#STOCKS – on $AAPL gone parabolic

At the risk of a massive understatement, let’s just say AAPL has gone up…a lot.

In fact one look at its chart below reveals is has gone parabolic.

Let’s define a parabolic move first. Basically, according the website, Prometheos Market Insight, when a stock makes a enough of a move to create three distinct supporting trend lines (see the green lines on the chart below), then accelerates, it is in a parabolic move (the red line on the chart).

There is both good news in that, and bad news.

The good news you own it, the bad news its latest rise is unsustainable. Although one can only guess when and at what level it parabola ends (the way it always is with that phenomenon), but when the inevitable end comes it will likely be violent and the stock could eventually go back to where the parabolic began.

At this point, a rough estimate of where it began in AAPL is around $230.

It’s hard to believe it will ever quit going up as it’s wildly (exuberantly) rising, but I would suggest there is no profit here until one sells.

Also, one other thing to keep in mind, AAPL today, according to Yahoo Finance, has a market cap of 1.377 trillion dollars. That in itself is unprecedented in market history, but it is also nearly $100 billion higher than next highest market cap, MSFT (but that as they say is another story).

(click on the chart for a larger view)

#MarketTiming – the NYMO low above a low

One of the signs of a true bull market is the follow through off a low-above-a-low pattern in short-term breadth (the NYMO).

The signal is displayed in the top portion of the chart below.

It is buy signal for aggressive traders looking for a rally to begin off a meaningful market bottom. In bull markets, it almost always has follow through to the upside immediately. That hasn’t quite happened in recent months, which has made everything in the current market psychology suspect. See August on the chart as an example.

But it did happen today — after triggering yesterday for today’s open, there was the immediate follow through to the upside.

Now the bulls need long-term breadth (the NYSI) to turn up in the next day or two, which is the trending signal. The NYSI is the smoothed line in the middle of the chart below. It is still falling but…

If both breadth indicators get in line, there is a good chance the market rallies strongly, possibly for several weeks, maybe back to the recent highs, maybe higher.

But, of course, as has happened all through these unstable times, it will be a rally that can be killed by a tweet.

(click on the chart for a larger view)

$SPY – From Friday to Friday to “de ja vu all over again”

MARKET TIMING SIGNALS FOR 8/30/2019.

Long-Term Breadth (the NYSI): Buy DAY 2
Short-Term Breadth (the NYMO): Buy DAY 2
Price (the Nasdaq COMP): Buy DAY 2
Volatility (the VIX): Buy Day 2
Nifty-50-Stock-List: 39 BUYS, 15 NEW BUYS, 10 OVERBOUGHT; 11 SELLS, 0 NEW SELLS, 3 OVERSOLD.
CNN MONEY’S “Fear and Greed” Index: 28, Rising, FEAR LEVEL.
Bellwether Stocks: 11 UP, 4 DOWN.

WHAT?

The market, after yesterday’s buy signal on all indicators, actually followed through today with a strong upside move.

As a result of the last two up days, we are right back right back to where we were five trading days ago with the SPY trying again to break out of its consolidation box (see the grey box on the chart below). Since last Friday into Wednesday, we’ve had Trump rally-killing tweets and at least a hint that China may timing the market to compound what he does with Twitter. The market quieted down on Wednesday on light volume with solid up day.

WHAT NEXT?

The NYSI, NYMO, Nasdaq Comp, and the VIX are all on buy signals.

Trump tanked the market last Friday and maybe he can manage to blunder into doing it again but, based on the technical indicators, the market “should” have at least one more up day going into the holiday weekend.

That is about all that needs to be said except to note the Fear and Greed index is up on the day and still at a level that gives it a lot of room to move to the upside if the SPY overcomes resistance that top of its consolidation.

(click on the chart for a larger view)

#MarketTiming – Some notes on the NYSI

MARKET TIMING SIGNALS FOR 8/22/2019.

Long-Term Breadth (the NYSI): Sell DAY 3
Short-Term Breadth (the NYMO): Sell DAY 1
Price (the Nasdaq COMP): Sell DAY 1
Volatility (the VIX): Sell Day 1
Nifty-50-Stock-List: 19 BUYS, 8 NEW BUYS, 4 OVERBOUGHT; 31 SELLS, 4 NEW SELLS, 17 OVERSOLD.
CNN MONEY’S “Fear and Greed” Index: 16, Falling, EXTREME FEAR LEVEL.
Bellwether Stocks: 12 UP, 3 DOWN.

WHAT?

Going into the end of the week last week the market looked ready to rally strongly but Trump tweeted again and China talked and that was that as the Dow swooned nearly 700 points on Friday.

Despite what the nincompoop in the Oval Office has to say, trade wars are not easy. Here’s an assessment of that — THE COST OF A TRUMP TWEET.

Needless to say, when stuff like this holds sway the market has become absurd. But even in the midst of this news and dribble-driven market technical indicators, though inconsistent for a day or two, in the end will again stabilize and win out.

Let’s take long-term breadth, the all-important NYSI, as an example. Formulated by Sherman and Marian McClellan is the long-term measure of the McClellan Oscillator (the NYMO) registering gyrations on the NYSE advance/decline line. It is pretty much the broadest measure of mass market psychology and direction.

Except for a “ledge” at the very end of July (ledges are made to fall off of) and a couple of blips up last week when the market wanted to rally the NYSI has been falling since July 17th. As one focuses on the day to day moves in the market, it is often easy to overlook the longer term when breadth is is bearish so I thought I’d take a quick look back at NYSI’s damage on much of the market in the last month or so.

See the ETFs and stocks in the chart panel below for illustration.

Since the NYSI July 17th turn down, a little more than a month ago, TQQQ, the Nasdaq 3x-leveraged ETF has declined 12.5%; TNA, the Russell small-cap 3x-leveraged ETF has fallen 18.8%. Among notable bellwether stocks on my list FB is down 9.3%, AMZN down 10.9%, TSLA down 16%, NFLX 9%, GS 6.8%, and WYNN a whopping 22.9%.

Obviously, the NYSI is a powerful read on market direction, both on the upside, and now on the downside, and most stocks follow the general market.

When it’s falling be short or be in cash. And long term investors should resist “bargains” and wait for the turn before initiating new positions.

In other words, don’t fight it.

WHAT NEXT?

With short-term breadth turning down today with a high below a high in negative territory (see the second chart below), that is a renewed sell signal so the expectation is the market goes down tomorrow and maybe the rest of the week.

But who knows for sure these days? Some fools might think they hear a positive tweet, or China playing its own game may stand by and let the market bounce.

(click on the chart panel or a larger view)

(click on chart for a larger view)

#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)

$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)