I'm not really sure what to make of today's market
action. Another strong open that weakens into the close (the Nasdaq in
particular). Still bullish, and my conviction is strongest with regard to
Emerging Markets. Here's an interesting comparison-> over the past
five years, the SPX is up +79%, the world index (VT)
is up +47%, yet Emerging Markets (VWO) is up just +13%.
That's due to a brutal bear in both commodities and emerging economies in
2015/2016.
The pitch is still good, but perhaps it's time to view it as
a changeup-> one that appears to be a fastball but arrives more slowly
to the plate.
VT (world index) currently +0.11%, VWO (emerging
markets) -0.33%. Both sectors have given back between 74% and 78% of
their gains since the breakout on March 9. I plan to swing for the fences
at the close by reopening VEIEX (Vanguard Emerging
Markets).
The hourly S&P futures chart does not yet give me the feeling that the bottom of the mid-march pullback is in:
ReplyDeletehttps://www.finviz.com/futures_charts.ashx?t=ES&p=h1
On the other hand, the hourly chart of Brent Oil futures does give me that feeling:
https://www.finviz.com/futures_charts.ashx?t=QA&p=h1
Well, I sure glad that I took quick profits on XES yesterday. This allowed me to re-enter today once again. This time I chose XOP as my trading vehicle, since USO is holding up very well in this sell-off. Just bought some XOP at $33.45. Placed a sell limit order at $34.45.
ReplyDeleteTerrible timing. A -7% selloff in FB (Facebook) takes the Naz down -2.3%. The DJIA and SPX tumble -450 points (-1.8%) and 50 points (-1.9%) along with the Naz. Interestingly, Emerging Markets holding up well, with EEM and VWO off -1.4% and 1.2% respectively (both positions display higher betas and would normally be selling off harder). BABA (Alibaba) off -3.4% to 193.50, or about -1.7% from this morning's opening basis.
ReplyDeleteI'm not too worried. Had I not reopened positions on Friday, I'd certainly be doing so today.
I expect SPX 2700 to hold. The last thirty minutes will be a major tell.
"Had I not reopened positions on Friday, I'd certainly be doing so today."
Delete2nd_ave, what makes you think this is a great buying opportunity?
I just noticed that there is much more room in the Russell 2000 to decline further from here and STILL make another higher low:
ReplyDeletehttps://www.finviz.com/futures_charts.ashx?t=ER2&p=d1
S&P has less room to decline before the previous low is breached:
https://www.finviz.com/futures_charts.ashx?t=ES&p=d1
Dow Jones has the least room on the downside:
https://www.finviz.com/futures_charts.ashx?t=YM&p=d1
But since smaller stocks are outperforming the larger ones, the risk is ON, and so today's decline is more likely to be a buying opportunity than a cause to sell out.
Nice to see crude oil recover all of its morning losses:
ReplyDeletehttps://www.finviz.com/futures_charts.ashx?t=QA&p=h1
After such a shakeout and recovery, the next move must be up (hence my XOP purchase today).
As I had expected, the crude oil futures are breaking out tonight. Maybe I'll still have a chance to buy BTE tomorrow at reasonably low levels. Placed a buy stop limit order at $2.75/$2.80.
ReplyDeleteAlso, placed a buy stop limit for more ROYT at $2.18/$2.21
DeleteBought ROYT at 2.21 and BTE at 2.78. Placed a sell limit on BTE at 2.98.
DeleteAlso bought more NMM at $1.89 and placed a sell limit at $2
DeleteFor how much longer, on a 1-year chart, can XOP keep lagging USO and GDX keep lagging GLD?
ReplyDeleteDecided to do a lateral move: sold at $34.09 the XOP shares I purchased yesterday at $33.45 and instead purchased more ROYT at $2.17. I am much more comfortable holding a dividend-paying ROYT than XOP.
ReplyDeleteJust in case there will be a lot of volatility tomorrow, placed a buy limit order for more NMM at $1.75 and more ROYT at $2.00
ReplyDeleteOil keeps powering up, as I had expected. At this point, however, it is stretched out on a daily chart and a pullback is in order. Just sold half of my BTE at $2.95 and a bunch of XOP at $35.30 (that I purchased at $34.50)
ReplyDeleteWho knows -- maybe the Fed says something bad and oil collapses...
DeleteROYT is lagging oil, even though its dividends are very much oil related. So I just purchased more ROYT at $2.18.
ReplyDeleteThe bullish reaction to the Fed is muted. Personally, I think the rally will carry over to Thursday and/or Friday.
ReplyDeleteHere's the thing. Vanguard Emerging Markets (VWO, +0.74%) is rallying at about twice the 'amplitude' seen in Vanguard World Index (VT, +0.39%).
As my benchmark is the world index and VEIEX (emerging markets) was simply pinch-hitting for VTWSX (world market), I plan to sell VEIEX at the close and use the proceeds to buy back into VTWSX.
Even though GDX is now approximately in the same place it was on Feb 9, the June $21 puts I sold on that day for $1.47 have decreased in price to $0.58. That's the way to make money! I should force myself to trade less frequently but more surely via short puts. Placed a buy to cover limit order at $0.47 for these puts. This order might get triggered soon if GDX keeps rallying this week. And then, when it starts declining, I'll sell some puts once again!
ReplyDeleteUS futures signaling sharp declines at the open. DJIA -300 points, SPX -30 points.
ReplyDeleteRotating from VEIEX (emerging markets) into VTWSX (world index) on Wednesday looks to have been the equivalent of putting on my seat belt.
I'll decide by end of day whether the short-term outlook has turned bearish.
715 am update-> My take on this morning's selloff is peak 'shake down' prior to a sustainable rally. That would require a strong close. For now, I remain open to the bearish option.
ReplyDeleteRussell 2000 is down twice less than S&P. And it is not because it is so much down during the pullback that began in February that investors are taking a pause in selling it -- Russell 2000 was yesterday at the Feb 1 level, thus recovering completely all of its lost ground. It does not look like a risk OFF behavior for the market. Does this factor into your thinking, 2nd_ave?
DeleteDavid- It came down to the last thirty minutes, but I'm out. Capital preservation is top priority. After all, even the best trading system is meaningless if I have no capital!
DeleteYes, the final sell-off was brutal...
DeleteDavid- My sense is that we're nearing selling exhaustion. VT/SPY/EEM now trading at mid-February levels. Is there a possibility we see Black Monday next week? Sure. I just don't think it's likely.
ReplyDeleteDecided to close my short GDX puts at $0.52 on today's jump. Close enough to my target of $0.47.
ReplyDeleteI have no data-driven insight into whether we've reached selling exhaustion, but that's my sense. The DJIA is off -357 points to 23600 (-1.5%), the SPX is off -50 points to 2593 (-1.9%), and VT is off -1.54%.
ReplyDeleteI'm taking a swing at the closing pitch. Will reopen VTWSX (world index) at the close.
Or it could be like in 2008, where traders realized that the music has stopped playing and tried to rush out of this highly overvalued market. Who knows, maybe the fear of the trade war will be just that excuse for traders to leave this market for a while and see what happens...
DeleteGood intuition, 2nd_ave! If this rebound can take out Friday's intraday high, then the charts will start looking like Friday was an intermediate bottom. As it is right now, it can still be a one-day rebound...
DeleteROYT is becoming a better value day by day, with oil going up. Just made a lateral move from 1/2 of my BTE into ROYT (at $2.07) and placed a buy limit order for more ROYT at $2.00.
ReplyDeleteBought more NMM at $1.80, added these shares to my sell limit at $2.00.
ReplyDeleteThat was a pretty powerful day today. Are you taking one-day profits, 2nd_ave? :)
ReplyDeleteThe 6-month chart of SPY shows a double bottom at exactly the same place: 258. If all potential buyers have stepped in today, then we might see a multi-day slide starting tomorrow, which might break the double bottom level. So a follow-through tomorrow is key for future success. :)
No follow-through today -- that's not good. There is still a glimmer of hope, though, as both Dow and S&P still have not broken below their March 23 lows:
ReplyDeletehttps://www.finviz.com/futures_charts.ashx?t=INDICES&p=h1
But if they do so this week, then it would be wise to step away from this market for a while...
I don't know about the broad market, but oil service stocks are definitely undervalued -- XES is at its lowest point since September 2017 despite USO being almost at a 1-year high. I think XES will eventually catch up, once oil companies will start spending their oil profits more actively for servicing their wells. So I just sold some May $15 puts on XES at $1.20.
ReplyDeleteNot bad. DJIA +455 points (+1.86%), SPX +51 (+1.96%), NDQ +162 (+2.34%). VT (world index) +1.61%, BABA (Alibaba) +3%.
ReplyDeleteSo what's the problem? I'm bothered by the low trading volumes.
As strong as it appears, today's rally (in my opinion) resembles more a reflex rally and/or a short squeeze, and less likely to be driven by institutional buying.
I will be closing all positions end of day. I'm just not confident enough that a durable low is in place.
Baltic Dry Index seemed to be bottoming for a week but today it broke below its recent lows. So I decided to take advantage of today's rally and sold at 1.81 shares of NMM I purchased at 1.80. I have a feeling that I will be able to buy them back at 1.70 -- placed a buy limit at that level.
ReplyDeleteThe DJIA was off -758 points to 23,345 at its intraday low. The SPX -87 points to 2554. A ton of stops were hit as the SPX declined below its 200-day moving average.
ReplyDeleteAlthough we're likely to see a short-term bounce, I'm disinclined to buy into today's decline. Why? There just isn't enough panic. If/when the SPX breaches its February intraday low of 2532, we'll be closer to a low-risk buy point.
Good decision on Friday to side step today's mess!
DeleteScaling back in, starting with BABA (Alibaba) @ 177.2x.
ReplyDeleteI was hoping for a steep selloff today to buy into. Instead, we have a decent rally (on volume higher than we had with yesterday's decline). An additional plus is that the bulls were able to run the SPX not only back above the 200-day moving average (2590), but also above strong resistance @ 2610 (currently 2614). Now I don't have a clue whether we revisit 2532 later in the week, but in my opinion the downside risk over the next few weeks is probably limited to another -3%, whereas the upside risk may be as much as +20%.
DeleteI plan to reopen VTWSX (world index) at the close.
BABA (Alibaba) has pulled back to 174 and change from this morning's entry (@ 177.2x). Adding a second allocation here. I think there's a good chance it will retest the early-2018 high of 206 and beyond.
Basically, I remain bullish for 2018. A couple of positives from Twitter you won't see highlighted in the financial media(!):
(a) Q1 dividends for the SPX rose 9.1% over the prior year. Strongest growth since Q2 2015.
(b) Forward P/E for the SPX back to early 2016 levels.
It really doesn't get any better than this.
The bottom line? Until we signs of a recession (no indication whatsoever right now based on the usual leading indicators), the 'right' side to be on is the long side.
Decided to reload just now at $1.71 the shares of NMM I sold on Friday at $1.81. Placed a sell limit order for them at $1.85.
ReplyDeleteDJIA futures -550 points. SPX futures -43 points.
ReplyDeleteShould have waited another day!
No worries, this morning's opening decline is a significantly bullish setup. The best scenario would be a steep drop in the morning followed by a sharp reversal in the afternoon. Not saying we get one, but if we do, it would mark an end to the waiting game.
Your hopes came true! The large up and down moves over the past 8 trading days, all in the same horizontal range, suggest that this range offers a strong support for the market. A sustained market rally usually happens after such situations are observed.
DeleteX looks like it has found a bottom over the past 8 trading sessions, at the same level where the February bottom was. I think its upside potential is much larger than the downside, especially if one places a stop under the recent bottom. Just placed a buy stop limit order for X at $35.90/$36, to catch it on the way up.
ReplyDeleteI've been looking at X also. Agree with your take.
DeleteSubmitted an order to move my 401K from Galliard Stable Value fund (grows linearly at 1 to 2% per year) into LZEMX.
ReplyDeleteWonderful bear trap sprung today. I think the market clamps down hard on bears over the next few weeks. Most likely catalysts? Friday's jobs report, followed by the start of a killer earnings season. The pain may even begin tomorrow with a significant gap up + impulse buy wave. Just my opinion, of course.
ReplyDeleteBDI keeps going down. Used today's jump in NMM to sell at $1.77 the shares I reloaded at $1.71 a couple of days ago. Placed a buy limit order at $1.65 for these shares.
ReplyDeleteMy buy stop limit for X was triggered this morning at $35.90.
ReplyDelete"Just when the stock market seemed calm again, President Trump shook things up, by announcing late on Thursday that he's prepared to impose another $100 billion worth of tariffs on Chinese goods."
ReplyDeleteWTF??? How can we trade in the environment like this? Hasn't he learned already that it is not a good idea to screw with China???
If we abstract away from the news, the X chart is having a healthy pullback. Just added more at 34.67.
ReplyDeleteAlso, my buy limit order for NMM was triggered at $1.65, reloading the shares I sold at $1.77 a couple of days ago.
Let's get my directional call out of the way. I was wrong about market direction. (I may also have been wrong not to worry, but I still see little to worry about.)
ReplyDeleteWhat's next?
I think upside risk (+20%) outweighs downside risk (-3%). (That's my view, and not necessarily the correct view!) If I'm right about downside risk, then much of it is playing out as we speak. The SPX is currently changing hands @ 2590. The retest target is 2532, or about -2% lower. In addition, I have a buffer in the form of a +6% lead over my benchmark.
So I think the right move here is to enjoy the selloff, and hope the markets are in the process of putting in a durable low.
I also sense a significant amount of capitulation in today's selloff.
I have certainly capitulated mentally last night and even more so today, when Powell's comments showed that there is danger to US economy not only from the external trade war but also from the internal interest rates. I just hope that market participants are very quick nowadays to digest the news, and the outcomes of today's news (China's retaliation with 100B of new tariffs and economic impact of higher interest rates) have already been priced in.
DeleteLooks like the black box algos have finally figured out that it is better to sell near the top of the range established over the past 2 weeks, and they did it in earnest toward the end of the day. But S&P still closed green, which means that tomorrow traders will start cautiously buying once again, until we break out of this range to the upside, unless China retaliates with a $100B tariff before that :)
ReplyDeleteThe DJIA reversed a +440-point gain (+1.9%) to close up just +46 points (+0.19%). Basically, the index gave up 90% of its intraday gains.
ReplyDeleteWhat do I make of that?
I don't know. I thought long and hard during the final hour about exiting, but opted instead to maintain all my positions. For some reason, the reversal doesn't strike me as bearish. It feels more like another fake out.
Good decision, 2nd_ave! The futures are spiking up tonight. The black box algos have figured another pattern over the past few weeks -- selloffs tend to be followed by fast rallies. So, in anticipation of tomorrow's rally, they are buying the futures now. I wouldn't be surprised to see the market open tomorrow above today's high...
DeleteThat was a close call. I could easily have closed positions yesterday.
DeleteThe XOP chart since the early Feb bottom has been trending up steadily. With the market ready to take off, just placed a buy stop limit order for more XOP at $34.80/$35.
ReplyDeleteCrude oil futures are also spiking up. In case XOP jumps over my buy stop order tomorrow, placed another buy stop for ROYT at $2.05/2.08.
ReplyDeleteDJIA +350 points in the opening minutes. Global markets rally overnight on positive comments from President Xi re global trade.
ReplyDeleteRemember the January letter from Jeremy Grantham re a melt-up in global equity prices?
https://www.marketwatch.com/story/stock-market-investors-should-brace-for-a-possible-near-term-melt-up-jeremy-grantham-2018-01-03
It would be just like the market to launch a powerful rally right now, on the heels of bearish positioning by fund managers and retail investors.
Now that markets have traders expecting another late-day selloff, odds are we close at the highs.
DeleteMy my biggest surprise now that I'm looking at the market is how high VIX is! Everyone is expecting a major sell-off, which is a reasonable expectation given that we are at the top of the range established over the past 3 weeks.
ReplyDeletePaying respect to the sell off pattern once we hit the top of the range, I decided to take some profits today and sold my ORCL shares that were given to me a week ago via ESPP. Also, I sold some XOP at 36.19 and BTE at 3.11. I had almost ran out of my margin, and so closing some positions is a good idea when a good opportunity presents itself.
DeleteMy buy stop limit order for more XOP was jumped over today, but I did manage to buy more ROYT at $2.06. Its dividends are a leveraged function to the oil price, and so if oil stays where it is right now or keeps going up, ROYT will pay nice dividends over the coming months and most likely will explode higher at some point.
ReplyDeleteDJIA nearly +500 points higher halfway through the closing hour. SPX +1.93%, NDQ +2.37%, VT (world index) +1.7%, BABA (Alibaba) +4.53%.
ReplyDeleteI have one concern re today's rally-> volumes are low, about 80% of Monday's.
My expectation is that markets in 2018 will continue to be volatile (ie, unlike 2017) and offer trading opportunities.
I plan to take profits at the close, and will look for another entry later in the week.
Placed a buy limit at $35.40 for the shares of XOP I sold today at $36.19.
ReplyDeleteDamn! I was drunk yesterday when I was placing this order and I placed a sell limit instead! Don't drink and trade! :(
DeleteIt was executed today at $36.22. I still have some XOP left, though. And maybe it rallied precisely because of this "sacrifice" :) And ROYT finally rallied as well. Nice...
Placed a sell limit order for my last bunch of BTE at $3.3.
ReplyDeleteUSO is at a one-year high -- there is no reason for ROYT to stay that low. Just bought a little more of it at $2.13.
ReplyDeleteBuying back in at the close. VTWSX, VEIEX, BABA, EEM, and ASHR.
ReplyDeleteThe bet is that today's close at/near the highs will complete a double bottom, and will indicate a major buy signal.
The charts certainly look ready to explode higher. The China trade dispute is easing up, and Trump is also scaling back his threats on a Syria missile strike. VIX is coming down, and over the past 3 days S&P had behaved in a much more orderly fashion than in the previous couple of weeks.
DeleteSo much has been thrown at the market in the past couple of weeks, but it held steady at the February lows and did not break below them. In the absence of more bad news of the same magnitude, why would anyone be selling the market now? The buyers should greatly outnumber the sellers now...
DeleteWith BDI recovering in the past few days, NMM should follow shortly. Placed a buy stop limit for a large chunk of NMM at $1.69/$1.70 (4X the size I've been using to scale in so far -- I think we are close to the bottom in NMM).
ReplyDeleteDecided not to wait until tomorrow and bought this chunk of NMM after hours at $1.70.
DeleteBTE hit my sell limit at $3.3. Now I am all out of this sucker with a $2B of debt...
ReplyDeleteMoved the money I got from selling BTW into more X at $35.11.
ReplyDeleteROYT has finally put in a double bottom and started rising. Given how much it lagged XOP so far, a 10% jump can happen any day now. Placed sell limit orders at $2.3 and $2.4 for the shares I purchased at 2.06 and 2.07.
ReplyDeleteDecided to take some profits on XOP, selling at $37.80 half of the shares I purchased at $37 on the way down. Placed a sell limit at $40 for the other half.
ReplyDeleteThe chart of X looks very similar to that of XOP prior to the recent spike. I think X will resolve itself just like XOP, having a spike to $40 soon...
ReplyDeleteWith the continued rise in BDI, a spike up in NMM is inevitable...
ReplyDeleteBought more ROYT at $2.1 after hours. Value is what you get, price is what you pay. :) At the current oil price, it will be paying more than 25% dividend in a couple of months (they will announce dividends for the April oil sales in a couple of months) -- that's what I call VALUE.
ReplyDeleteBDI keeps rising and NMM keeps coiling up for a launch. Just bought more NMM at $1.70.
ReplyDeleteThe chart of US Steel (X) over the past month is a beauty. All the black box algos have already extrapolated its trend and will make sure that a spike up will happen soon. :) Just bought more X at $36.25.
ReplyDeleteThe following was composed around 1216 pm pst>
ReplyDeleteDJIA +250 points (+1.01%). SPX +32 points (+1.2%). NDQ +131 points (+1.83%). VT (world index) +0.9%. EEM (emerging markets) +0.34%, despite overnight selloffs in Hong Kong and Shanghai. BABA (Alibaba) +2.6%.
Euphoria back on the radar. Sensing a little distribution into the two-day rally, and I plan to follow suit.
There's no reason to think the trend doesn't continue higher in the medium term.
Taking most of my positions off at the close. I won't necessarily be 'right.' Just trading as I see it.
After the collapse on April 6th, the S&P futures have been rising almost linearly, so a melt up has not happened yet. It might happen by the end of this week, though, once fund managers realize that this is their last chance to grab S&P at a discount.
DeletePlaced sell limits on X, at 1/4 of my current position, at $39 and $40.
ReplyDeleteBDI keeps rising, and NMM finally started responding. I think it will continue going up for a while, so I have just cancelled my sell limit order at $1.80.
ReplyDeleteXOP looks way to extended now on the 6-month chart. Just sold at $39.50 my last bunch of XOP, which I picked up at $37.90 on the way down. Overall, the February collapse in XOP turned out to be a great opportunity, as I was scaling into it all the way down to $31.80. I am glad that I have learned the art of scaling in / scaling out from 2nd_ave! A collapse always goes much deeper than I expect (NMM is another recent example), and all these times I was able to survive only because of very cautious initial scaling in. I did take a large position in NMM at $1.70, but only after it had stopped going down. We'll see how that one works out...
ReplyDeleteHey, I was wrong (and David is probably right!). The markets are holding up well.
ReplyDeleteAs of last night, I was ahead of my benchmark (the world index) by 5%. As of now, probably just +4.5%.
What now?
The markets are definitely 'overbought' here. Running through my head is the thought that the most violent declines often emanate from an 'oversold' condition. If we flip that thought, is it reasonable to think that an 'overbought' market will launch the most violent rallies?
The markets don't want to go down.
Reopening the same positions I closed yesterday end of day.
I don't know about the broad market, but X, ROYT, and NMM are definitely setting up for a violent rally.
DeleteStarted taking profits on NMM: sold at $1.835 the shares I purchased at $1.65.
ReplyDeletenew post
ReplyDelete