Category Archives: Stock Market

S&P 500: A Perfect Bounce?

By Biiwii

A review of the S&P 500 bounce scenario

[edit] Took well earned profits on AMZN, BBRY and XLE while holding a few other well protected (via shorts on relatively weak areas) longs, including SPY.

If you ask me, a perfect bounce in the stock market would be one that goes high enough and/or lasts long enough to get former, recently bullish participants hot under the collar for fear of missing out.  The sentiment backdrop, extremely over bearish near, but not quite to the level of last summer’s puke fest, would seem to indicate the S&P 500 could get back to 2000 (+/-) for a re-test of the key breakdown.  A bounce that grinds its way up there over the next week or two would be optimal.

Below is the daily chart of SPX again, with everything (volume, indicators, etc.) stripped out of it.  This chart is from Friday’s pre-market post at NFTRH.com, which included this:

“First, SPX has to break the Wedge.  In that case, the downward spike below support would be a scout for future bear activity.  Meanwhile, much will depend on incoming technical, macro and sentiment data.  A bounce to SPX 2000 would be a gift for would-be bears.”

We have noted often in the past however, that the Rising or Falling Wedge is the most hyped thing in TA (this side of Golden & Death Crosses).  The Wedge break below for example, in retracing nearly 38% of the 2016 decline, has already fulfilled all it is required to fulfill.  On a daily chart, these are very short-term patterns.  Other things need to come into play now like down/up volume, sentiment and extraneous news events (this is the stuff of relief bounces, after all).

s&p 500 daily chart

Continue reading S&P 500: A Perfect Bounce?

Amazon is Amazing

By Biiwii

Amazon and internet stocks (DJINET) hit support

Well, not really (Amazon is not amazing, it’s a stock).  But it’s a stock that did this at support yesterday, where I bought it.  Here’s the updated weekly chart from yesterday’s pre-market post.  Simply amazing.

amzn weekly chart

Here is the updated Internet index, also from yesterday’s post.

djinet daily chart, internet stocks

NFTRH subscribers, should they have chosen to play a would-be market bounce were prepared for the 280 support area well in advance.

Similarly, they were prepared months in advance for what would-be energy sector investors should be taking note of this week.

We are only managing bounce potential in the market right now (another 1 day wonder or something more enduring?), but sentiment, as we noted in a pre-market update, has gotten nearly as bleak as August’s fright fest.

Internet Stocks to Succumb?

By Biiwii

Internet stocks still unbroken, but…

In NFTRH we track the weekly chart of an index of internet stocks (DJINET) as part of the US Stock Market segment.  It has been noted as one of the few unbroken indexes and several individual items have remained technically intact.  Also, if the market were to bounce (hint: don’t look at the futures this morning) the 280 area on the DJINET would be a buy for bounce traders (i.e. counter market trend) in a relatively strong sector.

So the question is, will DJINET hold support or break down with the rest of the market?  Here’s the weekly view.

djinet weekly chart, index of internet stocks

Here is Amazon, which we had as a successful NFTRH+ long in 2015.  In a bull market it sure looks like a buy.  Problem is, if this morning’s activity flows through people are going to start uttering “bear market!” far and wide because the venerable S&P 500 would finally be cracking.

amzn weekly chart, one of the leading internet stocks

Sentiment is bleak and when the next bounce comes it is going to be violent.  But this would be an important breakdown on SPX if indeed pre-market follows through and does not whipsaw during the day/week.  Still, it will be interesting to watch this relatively strong sector to see what it does at support.

Market Swing Management

By Biiwii

As posted at NFTRH.com, a general view of US market swings…

up and down arrows for market swingsThe following is the opening, introductory segment from this week’s edition of Notes From the Rabbit Hole. After setting these general ground rules for swing trading this market, NFTRH 378 clearly illustrated the US market from several different technical, leadership, market indicator and sentiment angles. We also thoroughly updated global markets, currencies and explicitly broke down the gold sector to be clear on what will be in place technically, sector-fundamentally and macro-fundamentally when a real bottom is achieved for this counter-cyclical sector.

We began 2015 managing declining market momentum, continued into the summer as the S&P 500 went sideways with a downward bias as momentum eased further, nailed the downs and ups of the August-September bottoming process, projected a big relief spike upward based on unustainable bearish sentiment (at key support), projected a return to bearishness (although a grind at worst, into year-end) and here we are in early 2016, when a resumed bear phase was likely.

What I had hoped for has come about. The stock market’s intermediate trend changed when, using the S&P 500 as an example, the key short-term support at 2000 was lost. I had thought the market might try to bounce there but the impulsiveness of this bearish surge cracked it right down to an even more important support level. That is the October 2014/August 2015 lows that we have often noted.

The market is in an intermediate bearish trend but a bear market for the S&P 500 would only be indicated with a failure here. We are already in a ‘stealth’ bear market by other lesser watched indexes. But the venerable S&P (and Dow and NDX) are still clinging to key big picture support. If the bulls have something up their sleeve they’d better pull it out and throw it on the table right now.

Regardless, we are now in a market swing regimen within a bear trend. Amen to that.

During the bull market you could surely put on shorts but longs worked better because they were going with, not against the tide. Today we flip that script over and realize that the market’s thrust is down in the current phase. Next week is going to be interesting because now there is no more wiggle room. It is either bounce or enter a bear market that everyone (media front and center) will be aware of.

So whereas NFTRH+ focused more on longs through 2015*, we now have a green light to focus on shorts (the brutally bearish Goldman Sachs chart being a prime example) as the primary mode. I won’t tend to display longs unless they are a special situation, like the counter-cyclical gold miners putting in a bottom that looks sustainable or as we did last week, a risk ‘off’ vehicle like long-term Treasury Bond fund TLT.

But as noted last week, I longed the SPY personally to see if I can’t get a bounce out of it. This is well protected with shorts against GS and Emerging Markets and it is a counter-trend bounce position only. A better trade would come if we can bounce this market to the equivalent of SPX 2000 (+/-) and pending current information (sentiment, policy, macro data, etc.) at the time, get short this market for perhaps as low as the 1550 level on the S&P 500 if a cyclical bear market ensues with an eventual loss of today’s levels.

* Given the market’s extended waning of momentum, these were not as fruitful in 2015 as they would have been in an earlier, more robust bull market phase.

Arrows courtesy of visualpharm.com

Positive-Negative

By Biiwii

[edit]  Errr… the market is bearish.  We (NFTRH) have been bearish and have now gotten confirmation of that stance.  But we just had an NFTRH update on the major US indexes and today has not broken the headline indexes (outliers like the RUT are a different story).  Long story short, I just added more SPY long.  It will be a temporary thing.

Amid pervasive (media fed) fears of a stock market crash, a few positives and negatives…

(+)

  • I have a large percentage of cash, as has been usual during the gold bear and the last 2 years of stock market bull.
  • I have short positions against the bearish looking GS and GILD, and the Emerging Markets. [edit: though having 2nd thoughts on GILD, a company I actually like]
  • I hold TLT (along with SHY) as a risk ‘off’ liquidity hedge and income payer, per NFTRH+ update.
  • After some wrangling (in the midst of a 3 day stretch of extreme distraction from the market) I took the profit on JDST, which was hedging my light gold miner exposure.
  • Today, while probably still getting pulled in a couple different directions, I am able to watch the market more consistently.  I enjoy this immensely.

(-)

  • I failed to take the profit on the SPY position bought yesterday in pre-market.  It is my only long position, aside from my few quality gold stocks that I have resisted selling despite the broader sector’s array of lousy charts.

So at 5 to 1, considering that I’ve had a tough week away from the market, I can’t complain.  I think that despite this, I was also able to update NFTRH subscribers at an at least acceptable level.

As for being a market report writer?  It doesn’t get any better than this.  Data points and probabilities are flying in all over the place.

i Spy

By Biiwii

Admin note:  This week has morphed from one challenging day for my schedule into 4 of them strung together.  Hence the lower posting volume here, at NFTRH.com and even subscriber-only content.  Thank you for  your understanding during the interruption in our usual programming, but it cannot be avoided.

As the post title implies, I just took SPY long in pre-market.  While I have obviously only made money being short in 2016 (NFTRH+ long AFFX exploded, but most everything else long served up losses) I am generally a better bullish trader than bearish one, regardless of the market.  Maybe that is due to my bright and sunny personality.  ← and yeh, that is sarcasm.

Anyway, I can’t stand this pervasive bearishness from a contrarian standpoint, so I am taking on a chunk of SPY, no leverage, not nuthin’.  Just ‘the market’.  This is a would-be bounce position against a still-held (for now) short on the EM’s and an initial short against the Squid, as noted yesterday, which I also expect can bounce… possibly into an increased short position.

Generally for the SPY, it could be ‘bounce or crash’.  That is how far things have degenerated in this baby new year.  There is little technical downside left for SPY to avoid losing the major support that some outlier indexes have already lost.

US Stock Market Stuff

By Biiwii

Just another ‘what’s going on with the US stock market?’ post from the blog-Ohhh-sphere…

I have covered most shorts, have a few paper losses on longs and been bailed out big time by one stock, NFTRH+ highlight AFFX, bought for a bottoming pattern and dumb lucked into a buyout at a 50% premium.  Yay me!

Well, in 2015 I had a day where the exact opposite happened; I chose to sell a biotech stock (GILD) that then issued good news and went up and hold a biotech stock (ENTA) that then issued bad news and got cut in half!  So let’s keep it real here.  The stock market is hard.  Entirely due to AFFX and the Semiconductor shorts (LRCX, AMAT and the still-held MKSI) I am up for the year.  Ha ha ha, “the year”… it’s only Jan. 11th!  [edit] MKSI covered as well w/ SOX having hit target and over sold.

None of this bear activity should be surprising.  SPX has worn the blue Dome* over its head for months now, after making a cyclical high.  This is my chart illustrating Peter Eliades’ cycle work.

s&p 500 monthly chart, us stock market

Furthermore, broader indexes have been overtly bearish for some time now.  Here’s the motley crew.  The US stock market has been sick since early summer.

Continue reading US Stock Market Stuff

Housing Index Cracks

By Biiwii

I am expecting a short-term low and market bounce soon.  The time to be putting up bearish charts was before the hard drop, as with our reviews of the Semiconductor sector (the most recent of which was here).  So that said, here is another interesting and bearish chart; the Housing index (weekly chart).

This is an old NFTRH chart dating back to early 2014.  Back then we were managing a bullish Cup & Handle (the measurement of the Cup was 250+, and was hit in July).  Recently I pulled it out of mothballs to note key support, which was as yet still intact.  This week that support, at the rim of the Cup, is getting taken out.

housing index (hgx) weekly chart

I suppose economists who want to cheer the great Payrolls number (see this morning’s NFTRH.com post on the subject; it’s more than just payrolls related, with more views on manufacturing and Semis) will interpret that tanking US markets are a great opportunity.  They are probably fluffing the media about how this market correction is China’s fault and the US continues to be a bastion of economic strength.  Okay then, go ahead and buy the Homies (you might even get a bounce to 225 out of it).  All those consumers bolstered by all those ‘back end’ services jobs are lookin’ to move on up, right?

This index is broken as is the US stock market, now joining global markets.  Any bounce will be an opportunity to sell or reestablish short positions as the case may be.  2016 is not necessarily lost, but the intermediate trend, baring the most miraculous rally I’ve ever seen this afternoon, is.

Semi Bearish Still

By Biiwii

The picture is going from bearish to bearisher and I am learning ever more clearly to tune out people with nothing more than charts backing their viewpoints.  Ref. Team ‘Semi Bullish’, which I and I am sure you saw flaunting the bullish nature of the SOX in December despite what we – exclusively, I might add – uncovered as a developing bearish fundamental scenario.  While I think there may be 2 or 3 analysts on Wall Street who know what the Book-to-Bill ratio is, I’ll guarantee there were none getting the boots on the ground information I got from my former associate.  It’s all right here in this post.

I think you can tell that I find it annoying when markets start moving and hysterics start getting whipped up.  The time to be getting bearish is not now; it was a progressive thing over the last year.  Surely the same technical entities whose charts told them to bull the SOX in December will take us to school about these bearish developments going forward.

Anyway, I updated the chart of Semi equipment guy LRCX, which is a stock I am and have been short.  Until today it was a somewhat frustrating short.  Here are more views of the precarious sector.  The chart boyz are now all over this little H&S I am sure.

sox daily, semiconductor index

Continue reading Semi Bearish Still