Market update

Previous market update here

We will not take any ST positions before FOMC meeting announcement on 10/28 - may be we will stay in cash 1 - 2 days later as well. 

The market exceeded the bullish expectations we had at this time . This was at a time when everyone and their mother including, were bearish and short the market. Everybody was clamoring for providing a good bearish number, most of them around SPX 1500 - 1600. So, where are these bearish pundits now after that breath taking rally in the last 2 - 3 weeks? Are they still short? ;) 

Many pundits are talking about this being the market top for the IT frame - we are trend followers, so we don't see any sell signal at this time. We will post when there is change in the update. 

Let's be honest, we were also not expecting this huge rally from /ES 1950. But, our stance is different = We do not have predictions usually, the above one is a rare instance. Hence, we are not shocked about this rally.  Usually we check our charts and take bullish/ bearish positions with an objective of scaling out in profit.  

Some of the positions taken previously (please updated "SilverVen's 100k portfolio for details):

Short $AAPL @ 110.22 - stopped out 2%

Short $SPY @ 200.3 - stopped out 2%

Long $TSLA @ 229.3 - Stopped out 2%

= Currently no positions

The 100k portfolio reflects all the above ST trades - does n't include the IT/ LT positions.

Current market update

ST - Buy

LT/ IT - Buy

We were stopped out of LT/ IT short $SPY positions in our fund @ /ES 2035 as mentioned in our blogspot several times, the last time being here . Even now our line of sand for IT/ LT positions is /ES 2035.

In IT/ LT positions for our fund, we flipped from sell to buy $SPY. 

Our indicator remained bullish throughout, from ~ SPX 1950 or so - please see chart below:

The blue arrow is where we took a ST short position previous week = false signal

/ES - Inverse Head and shoulders pattern

Current market update here

Chart below with notation, click to enlarge. Keep an eye open for this pattern; we might trade different ideas though.

Cycles and bear markets - 1: US real estate

Previous market update here

We have some interesting stuff about the market update, that is for tomorrow. 

Out there in the www world, we have seen that the forecast of a bear market bottoming at SPX 1550 - 1600 is very popular. Now, everybody is 100% sure that this is a bear market. Nobody is doubtful abouut this. There are no questions about it. The focus is on forecasting the bottom and the time of bottom now. The number of experts with the forecast of  bottom at SPX 1500 - 1600 is increasing. 

Does the stock market actually take the pundits's permission to bottom at XYZ number? We have no idea how they can come to a conclusion of market bottom when neither the market top or bear market is confirmed by them. 

Let us focus on the title here. Chart below, click the chart to enlarge:

We use the US real estate index as one of the metrics to guage the stock market pulse from time to time.  

- US real estate index made a lower high in June 2015 when the market topped - comparison to 2007 when the US real estate index made a lower high in Oct. 2007 when the market topped

- This assumption will be invalid if the US real estate index breaks higher than Jan 2015 high, then expect the market to break higher - comarison to 2011 when the US real estate index broke higher in 2012 invalidating the market topping speculations in 2011. 

- Caveat: The US real estate index actually bottomed in 2000 when the stock market topped. The US real estate index is tracked in stockcharts.com from 2000 (no prior data) but if you are not a kid then, you would certainly know the US real estate in the real world topped in 1997 - 1998 while the stock market bubbles blew into the year 2000. We are not ruling out the same happening now as well. 

How do we trade this? 

Like we said above, this is only one of the guages that we look at. We do not trade based on it. But, these comparisons provide confidence to the long term outlook. 

Almost all of the guages have confirmed US stock indices topping in July 2015. Our line in sand for the long term outlook is SPX ~ 2050. If the monthly chart closes above it, then the market topping theory is off. 

Good luck to all! 

Market update

Previous update here

What did we say in the previous update?

At SPX ~ 1978 on Sept 15th, we said "The odds of the market becoming bearish again have increased as our guage indicates below and primed for the market to move south. "

Here we are today at SPX 1923 after a low of SPX 1871 2 days back. I hope you made the best of the market going down.

What did we do after the previous update?

At the time of previous update, we were positioned all bearish in all time frames. The market spiked up in FOMC's bullishness to > SPX 2000 and then went down for the last 2 weeks. We covered the ST short positions on the downturn. Not at the bottom but on the rebound at SPX 1890. 

I hope you got the summary of my post and traded the same way! When in doubt, ask questions. Simple. 

Why was this blog quiet for 15 days?

When there is no change in the update, no posts are done. 

Traders are often frenzy aiming for 100% in 10 days or 1000% returns in 90 days. Come on, people. Be modest in your expectations. And then trade calmly. You don't have to flipflop your positions every single minute to score big annually. 

You get the outlook correct. You get in the positions. If you are wrong, get stopped out. Otherwise you have a chance to score 2 - 3% on the ST. Few scores like this will take your account to 20 - 30% up annually. Trading every minute takes your account to zero in no time, Believe me.

Current market update

As the chart below indicates, the market is primed for ST (short term) neutral to bullish. We use other guages as well to position ourselves, which currently indicate for a bounce short term.

ST - Buy

IT/ LT - Sell

Our positions

This is a counter trend ST move against IT/ LT bearish outlook. Usually we position 50% of our account in ST, 20% in IT, 30% in LT. Since this is a counter trend move, we position only 30% of our account in ST.

Always remember, we are mostly right. We are not always right. When we are wrong, that is when stops are useful for us, stops are useful for you as well.  

Good luck trading to all! 

Market update

We were eerily quiet for the last 2 weeks, right? When the market does nothing, it is better for us to not do anything as well. If you try too much, you will get chopped up and you will lose heart to play the market when it matters the most. 

Last 2 weeks = chop

We = stayed out

Blog = no posts :)

We do have ST, IT, LT short positions but we stayed out of trading, all right? We did the same thing for the 1st 6 months of this year. Market chopped all the participants on a regular basis, we stayed out till we saw signs of movement.

Anyway, previous update here

I mentioned we go bullish VST before driving south. We did go bullish by 40 - 50 /ES points since that post and then came down, but not much. At that time, we too did not expect this boring. We thought the market will show its hand right after. As we checked our charts everyday, it was obvious that nothing was there. We remained quiet. 

Current update (chart below)

The odds of the market becoming bearish again have increased as our guage indicates below and primed for the market to move south. 

VST - No recommendation

ST/ IT/ LT - Bearish

We hold 25% of our positions in the ST/ IT/ LT time frame as we closed the remaining 75% on that plunge around Aug. 25th = gains $$$$$$$$...........

If you don't have positions now, it is not time to open because this is stupid (FOMC) meeting week. You cannot afford to open a new position this week. If you have positions, be nimble should the trade go against you. GLTA!

What happens next - part 1

Yesterday we tried something foolish  , more on that foolishness in the next blog post. But, let's try to understand where we stand in this market "crash" and what is next. 

Ivanoff suggests this is a market bottom like Oct. 2014. Technical trader says puts haven't been this high since March 2007, hence this is THE BOTTOM. Is it? May be both are right. What if they aren't right? Are we trying to playing a guessing game on who is right or wrong? Are we gambling with our money on guessing?

I am going to post tomorrow what our game plan is. Hence, watch out!

1st let's look the current situation from my perspective. Last market update was this. Our market guage suggested a decline. We got a 3% decline. So, what is the next scenario? Chart below.

1) Market bottom like Ivanoff suggests and bear crushing rally!

2) What if market declines further for 1-2 days and then rally for few days and further decline?

3) Who knows what happens? And why exactly are we trying to guess!

This post is about perspective, so let's just do that. Chart below. 

More puts have been bought in several instances before. And does more puts bought = harder the market crash? I don't think there is a linear relationship between extent of market decline vs puts. It is not wise to guess based on "VIX hasn't risen more ever" or "puts are high" this time. 

So, what do we do? That is for tomorrow. Thanks...........

Market update

Previous update here

We had to post the previous update to guide ST longs on when to close the position and what levels are important. The /ES futures market was down 15 handles, hence defining levels was important. As posted yesterday, market closed below /ES 2060 and /ES 2035 as well. 

ST - changed from buy to sell

IT - had been a sell signal since July 26

LT - changed to sell from buy

Our options machine is in the "sell" zone, so exercise caution. Chart below. Could this sell move be a headfake? Well, may be, but let the market tell us that point. We are confident to read the charts when that happens.

I am a contrarian but I do follow the charts to identify the trend. I do not play counter trend moves though. Being a contrarian and a counter trend trader are quite different. 

We will post an update when the ST trend changes.

GLTA!

Market update

Previous market update here

Before the market update, based on the question from a reader, we have a post for crude oil. Chart below. 

If you already are short, right now it is hold. Close the short position on a close above /CL = $43.

If you have no position, then open a long position when the /CL bounces in the rectangle. 

What instrument do you use to trade crude oil? ETFs are the way to go. Unfortunately, there is no "best" ETF as a direct play to crude oil. See chart below, while crude oil is down 54% YoY, other ETFs are down much more. USO is an ETF, OIL is an ETN; UCO and UWTI are leveraged plays for /CL. The best of the worst is USO though. 

Now, let us discuss the market update. We flipped the sell to a buy on ST and the market went down 0.8% on the reading. Yesterday was a FOMC day. Nothing significant comes out of FOMC on most days, except once in a while. Yet the market swings a lot. That is never our problem, anyways. We have our own instruments, our own indicators to tackle all that noise. 

No change in market update, we have a 2% stop on the ST.

GLTA!

Market update

Previous market update here

ST changed from sell to buy
IT - sell
LT - Buy

GLTA!

Market update

Previous market update here

We do not have a change in the market update as of now

VST/ ST - Sell

IT - Sell

LT - Buy

We mentioned that we will take a short position should the market close below SPX 2095. The index did close below 2095 on 08/04 and we did open a short position. However, we closed the position the next day as the market closed above it. 

In short, we do not hold a ST position now. The above update holds good until the next signal comes in. But, we did enter the warning (for the bears) territory already (see chart below). The confirmation would be a turn below the blue line that the turn (to buy) is in place. As long as the indicator is above the blue line, then the bears don't need to worry. I don't rue a missed chance to be short now, sometimes it happens. This stance is for the ST position only. We do hold a IT short position though.

If I were holding short positions now, I would not close the position. Coz we only gained like ~ 1% + with this sell signal , but I would have stops above SPX 2105.

We will keep you posted, GLTA!

Market update

Previous market update here

VST - Buy

ST - Sell

IT - Sell

LT - Buy

ST is on the border of sell & buy. No change yet! Our ST positions were stopped at 2% up from where we opened the position...phew! Should the market drop below SPX 2095, we will open the short sell market ST position again. Should the market continue upward, we will take the signal.

The problem is FOMC day. Things are not straight both before & after FOMC day. Never mind as we can wait.....

Market update

Previous market update here

ST - changed to sell from buy as of close on 07/24

IT - changed to sell from buy as of close on 07/24

LT - buy

ST position: In our previous market update, we posted that we are taking 50% of our position off at 2.5% profit and 25% stopped at 2100. There are times when scaling off seems dumb, for example when the swing trade results in 10% or so. But, that's the reason why we have some left on the table. If the market conntinues in the same direction of our trade, so be it, we will have our chips there. Also, we were not scaling off for no reason. We had this warning sign (chart below) on 07/21. 

IT: IT changed to sell from buy. Previous signal was on 07/17 at SPX 2126. Which is a ~ 2.2% loss of our position. IT loss eats away our ST profits. Ah, humbug!

Anyway, good luck to all! 

Market update

Previous update here

ST - Buy

IT - changed to Buy

LT - Buy

As we noted many times in the past on this blog, we simply hate IT trading. Especially this market since the bull market began in 2009. This market swings almost every month up and down. That is ideal for ST trading. But, at the same time, not so good for IT trading. LT investing on the other hand is good as the trend has been up except in 2011. IT trading was excellent prior to 2006. 

Anyways, we were down 2.5% on the previous IT trade. We have a stop of 5% should the stop hit our trade before the signal comes. Which means our portfolio is okay getting a hit of 5% on this trade. We wouldn't say "fine" but just "okay". If not for these IT chops, our portfolio would be in much better shape. 

Good luck next week! 

Market update

Previous market update here

VST/ ST - Sell

IT changed to Sell today

LT/ VLT - Buy and hold

Check my timeframes here

Market update

Previous market update here

My ST signals have been on a sell since 3 weeks. No change yet and we didn't get a buy signal yet. Since something "greek" is going on, let us look at one simple chart. The support for the $SPX lies in the ~ 2065 - 2070 area. A flush below this strong level, there is thin support at the ~ 2040 level. Below that, at the ~ 1980 level. The US market futures are down about 1.5% at this time but remember that it is only the daily close on the actual indices that matter.

We were on a "sell" signal since 3 weeks based on our indicators (one of them below in the chart). You might be wondering what we did in the last 3 weeks. We don't trade only the buy and sell signals. In addition to the flipping of positions during these signals, we take advantage of the dips and rips by scaling in and out. In other words, if the market moves in the direction of our trade, we do take some chips off the table. That ensures that we book our profits. Please read our trading methodology. The market has indeed come to the ~ 2070 level twice in the last 3 weeks. Some of the positions were partially closed when that happened. This is the 3rd time we are about that level. 

What happens tomorrow? I have no idea. Be careful out there. Use stops, and do not over trade on days like this.  I am not necessarily saying we will crash tomorrow but some caution should be exerted. There is always another tomorrow!

GLTA!

Market update

Previous market update here

The market was on a sell signal from the previous update. After 8 sessions, yet, the market is at the same point (SPX as barometer). However, we have not gotten a buy signal. For this swing trade (next few days), the signal is still on a sell. The market should see lower prices. This call is only for the IT/ Intermediate term.

Could this be the end of the bull market? May be an initiation. We have stops for the long term market charts much lower, so we cannot call this a sell signal on the long term yet. But, we will see higher prices and this swing trade is a buy the dip. My common sense indicators suggest that this will be a buy on the dip. One of the stocks that is an example of this raging bull market is NFLX. NFLX is near its all time highs. Bull markets don't end when the leaders are hitting all time highs. We will take note when the change happens. 

Market update

Previous market update here

 

VST/ ST - New buy signal

 IT/ LT/ VLT - Buy

 

Previous sell signal was a fail = This ST/ VST updates could be chop and top/ drop. Trading portfolio is getting chopped. But, IT remained a buy signal through out, so we are better in that account.

 

Except internals (Breadth and other liquidity indicators), everything in the externals are firm including price structure. Breadth has been bad for the last 2 months, indicating topping. In 2007-2008, it took 3 months for the price to realize bad breadth. But, in 1998 - 2000, it took 2 years for the market to eventually top. Bad breadth continued to push the market higher from 1998 to 2000. So, there is no telling if the market will top tomorrow or in 2 years. Our barometer has not given a signal either, so wait for IT change in stucture, not yet at least!

 

Internals are obviously bad, so be prudent; Be flexible; Signals may fail, signals may be profitable but be advised to be change your mind at the hint of change in direction.

 

 

 

 



Market update

VST/ ST/ IT - Turned to sell as of close yesterday

LT/ VLT - Buy

 

 

We can use today morning's bullishness to sell short SPX. Previous market update here

Market update

In my previous post, I indicated that we were rather flat going into FOMC. So, we did not participate in the rise and decline of the markets since.

Previous market update here

If you followed the previous market update or if you followed my FOMC post, you should still be good (= market did not move much either way since 1 week) and be unscathed. I closed most of my holdings prior to FOMC, so I had a 1% profit on the previous IT signal. What now?

Market update

VST/ ST on a buy

IT turned buy on 09/18 close (today's weakness should be good to initiate a buy with a stop...)

VLT/ LT - Buy

I am stressing on the stop this time because the breadth is very weak in the market. While we are still on a buy on all timeframes, this uber bullishness could turn into a disaster. Then, we could simply sell short and wait, right? Not really. We do respect price, hence we follow price. However, it helps to look around what breadth is doing to be cautious.....

Gold update
VST/ST/IT/LT - Sell
VLT - changed to Sell but we will wait till month end for confirmation

Have a good trading!

p.s: I do not have any positions on BABA now but I did daytrade on the IPO day few times for a 1% net gain on the account (not BABA position)....



Market update

VST/ST - Sell

IT - Turned to Sell at close yesterday

LT/ VLT - Buy

Previous update here