29 replies to this topic

[robo]

"Will start buying XLF next week if levels go below at least 4% from Friday's close; also selected Financials."  

 

I will wait for the next buy signal.The move down "COULD" be quick or it could last for several day.  The point is what happens to XLF  in relationship to rates...  See chart below, and the red line is rates... The black dashed is XLF....

 

https://stockcharts....556&a=653981180

 

Something to keep your eye on... I will wait for the next buy signal and I'm back to cash in my Vanguard account. The next buy signal could come next week or maybe next month....  In the mean time I will be VST trading while I wait.  The Fed cutting was NOT a good thing in 2008 so it had better be different this time if the Fed really does stop and start reducing rates again.   Good luck on you trade...

 

Good Trading.

 

So where are we now in the current rate cycle?  Something I'm always tracking and you should too....

 

https://www.treasury...aspx?data=yield

 

https://www.investin...ed-rate-monitor

Edited by robo, 23 March 2019 - 09:45 AM.

[CLK]

All good points.

 

 

One thing no one is talking about is the $NYAD new all time highs, never has there been a bear market when that happens.

What is the usual is that SPX will go up to new highs, and then maybe $NYAD will drop and diverge with price to signal the top,

that happened at the Sept. 2018 top. I'm still looking for 3400 this summer, unless something changes.

[robo]

All good points.

 

 

One thing no one is talking about is the $NYAD new all time highs, never has there been a bear market when that happens.

What is the usual is that SPX will go up to new highs, and then maybe $NYAD will drop and diverge with price to signal the top,

that happened at the Sept. 2018 top. I'm still looking for 3400 this summer, unless something changes.

 

I have learned many things since the Fed started their free money experiment  years ago. However, with the Trump Tax Cuts,  which has fueled this huge Buy Back program, the BTFD BOT program in play,  I have learned some new things. I never try and pick TOPS and BOTTOMS based on anything because none of it seems to matter in this market, until it does.  I just VST trade extremes, and trend trade the signals up and down. My system has  moved to a sell signal,  and I have NO IDEA when it will complete,  nor will I try and guess. I read daily in some forums how they are taking positions/placing bets for 2020/2021. LOL....  Good luck with that. I will pose this questions to all.

 

What happens "IF THE MARKET THINKS" Trump will lose the next election,  and the Dems will win?  Will they sell before 2020?  Maybe they will sell late this year so they will not be the last one out the door. Some investors  act before just in case.... especially if they have huge LT gains they want to protect.

 

What will happen to the Tax Cuts?

 

What about these stock buy back programs that has caused so much wealth inequality gap to increase. That will be a huge item for the Dems to focus on. Again, I'm not saying this will happen, but what if it does?   Even if it doesn't in the end - What if the markets "THINK" it will happen based on odds? Can you say selloff then a HUGE rally if it doesn't!  Again my point to all is....we just don't know.

 

 

Rising Inequality

Earlier this week, finance researcher Karen Petrou explained the problem that comes from ultra-low rates which lead to yield-chasing for the wealthy:

When interest rates are ultra-low, wealthy households with asset managers acting on their behalf can play the stock market to beat zero or even negative returns. We’ve shown in several recent blog posts how wide the wealth inequality gap is and how disparate wealth sources help to make it so. However, even where low-and-moderate income households can get into the market, their investment advisers should not and often cannot chase yields. As a result, ultra-low rates mean negligible or even negative return.

 

https://www.zerohedg...t-ready-more-qe

 

What will Big Money do as we get closer with some still holding Big Gains.

 

My point is I don't know, so trading should be different going into the next election.... Because for now we don't know how this will play out.

 

I say one should stay nimble and I agree with Jason at Sentiment Trader. Right now what really looks good going out for a year NOT KNOWING the answers to these question. Theses are questions for investors -  its all just noise and Bull crap to me.....

 

 

Good Trading next week....  I'm trading SDS for now using plain vanilla shares....

 

The one hour issued a signal and I placed the trade.... I don't know what will happen next week, but when VXF gives me the next buy signal I will take the trade....  

Edited by robo, 23 March 2019 - 12:49 PM.

[robo]

 

For the record: I just trade the signals, and all the rest is just noise and crap to me. CNBS... is always telling us why things are happening in the market... Now that is some funny [bleeeep] folks! The daily news cycle causes the market to move, tweets, CNBS, the dollar, Kudlow, the Fed, Sentiment etc... The whys should mean nothing to traders that are using a system -cause means nothing unless you are an investor and good luck to those guys the rest of this year and next.

 

When all that noise happens and it causes a signal change I trade it... Bullish, Bearish.... is all crap to traders that have a real trading system based on signals... and someone said once the most important thing is to trade in the direction of the trend on the RIGHT side of the market.... Some do have early warning system like  Thomas - Volume and what  Seven Sentinels  (lots of really good indicators in my opinion)

uses, but I'm not smart enough for a system like that. I use the KISS system for trading...

 

Have a nice weekend!

 

 

1:45 PM Markets Down Sharply on The Worst Breadth Of 2019 - Triggering a Whole Series of Key Signals

https://twitter.com/...erp|twgr^author

 

thomas‏ @* 39m39 minutes ago

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thomas Retweeted thomas

We can call Friday.. the Bull's BEAT DOWN...quite a greeting for new 2019 highs on Thursday... the bulls got drunk,-what a hangover! My, how the entire World has changed behind a few numerical "adjustments"... and now those "adjustments" reverberate... move into MIMD processing

https://twitter.com/VolumeDynamics

 

Maxed

BY SVEN HENRICH ON MARCH 20, 2019 • ( 1 COMMENT )

So the Fed croaked. No surprise as they have signaled it all year, but perhaps the extent of the capitulation is surprising.  How scared are they? No rate hikes in 2019, one rate hike in 2020 and markets don’t believe a word of it as they are now pricing in a 47% probability for a rate cut into January.

That’s recessionary fear action, far from the optimism of just a few months ago. You know my view on all this:

 

 

https://northmantrad...19/03/20/maxed/

Edited by robo, 23 March 2019 - 01:49 PM.

[ryanoo]

 

 

...according to this:

 

Liz Ann Sonders‏Verified account @LizAnnSonders

FollowFollow @LizAnnSonders

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Liz Ann Sonders Retweeted Daniel Grioli

Inversion Recession Start

June 1973 November 1973

November 1978 January 1980

October 1980 July 1981

June 1989 July 1990

July 2000 March 2001

August 2006 December 2007

Liz Ann Sonders added,

Daniel Grioli @market_fox

Replying to @LizAnnSonders

Exactly, around 6-18 months if memory serves.

1:05 PM - 22 Mar 2019  

 

 

Start in November?  

 

End time is the key for the 2020 election.   If it last most of the year Trump will lose.  Economics is the key for incumbent presidents.  If good economics, Trump wins, if poor he loses. 

 

He loses, the market goes down. 

 

maybe the only good thing out of a recession.

[robo]

"maybe the only good thing out of a recession."   

 

Lots of good things happen "after" a recession. They are a normal part of the Business cycle.  Some companies fail and go out of business and new ones are born. The Fed waited to long to bring rates back to normal. Maybe the next recession would have been very mild if the Fed had all of it's tools to use...   I'm not so sure at this point, but it doesn't matter since I trade both ways. Bring on the next 1000 S&P points up or down. I'm ready to trade both directions. Currently on a sell, but I will flip back to a buy next week if the signal changes... LOL... investors can't do that so good luck to them the next few years....

 

The clueless Fed chart..... Why did they wait so long will be asked for many years in my opinion.

 

 https://stockcharts....556&a=653981180

Edited by robo, 23 March 2019 - 03:22 PM.

[dTraderB]

A few pages long, but quite informative:

50ma moving up quickly to cross 200 ma (red & green dotted lines)

 

Market Review & Recap

The volatility in the markets continued this week with another big whipsaw for investors following the Fed meeting. On Thursday, the S&P soared after the Fed announced they would not be hiking rates this year and ending their balance sheet reduction by September. On Friday, the rally was reversed as the realization of what the Fed actually said sank into the markets.

In just the course of 4-weeks, the market has swung from overbought, to oversold, back to overbought and then begin correcting back to oversold on Friday. I am exhausted just writing about it. 

These swings make portfolio management very difficult. While the markets have been fairly well contained, allowing us to “hold” our long-equity exposure currently, the market continues to show signs of “exhaustion” in the recent price action. As I wrote at the beginning of the month:

“The markets are not immune to the ‘laws of physics.’ While the price action is indeed bullish in the short-term, the shorter-term moving averages act like ‘gravity’ on prices. Given the current extension and deviation above the 50-dma the odds of a pullback, before a continued advance, is a high probability.

As shown in the table below, it is very likely that if you sold everything today, and went to cash, that you would miss little over the balance of the year. In other words, the bulk of the gains have likely been made for the year.”

 

.....As Barbara Kollmeyer noted asked on Friday:

“Does the Fed know something investors don’t?”

Given the rapid reversal on policy given just one little hiccup in the economy and the markets, one should wonder. 

To answer Barbara’s question, “yes.”

The Fed’s comments are NOT supportive of higher asset prices driven by stronger profit growth. What investors picked up on Friday was this:

“A weaker outlook for the economy means weaker profit growth. As such, this puts a market currently valued at 30x earnings at risk of a repricing to equate it with reduced expectations for future cash flows.”

 

As my friend and colleague Doug Kass noted on Friday there are substantial impediments to the economy and markets in the near-term which support the Fed’s reversal. 

• “Negative or near zero interest rates represent conditions that understandably exist immediately following a deep recession, not 10-years after. 
• Fewer Tools Left in the Policy Shed as the Fed ends the tightening cycle with the absolute and real Federal Funds rate several hundred basis points lower than any economic cycle in history. 
• Debt Is a Governor to Growth and debt that is not self-funding is future consumption brought forward. 
• Deficit and Demographic Threats combined with a Fed balance sheet, which is four times normal, and slowing population growth, diminish intermediate to longer-term economic and profit growth prospects. Such is not supportive of higher valuations or asset prices. 
• No Country Is an Economic Island and the lack of coordination between the super economic powers in the world will likely exacerbate worldwide economic risks.
• The Misallocation of Resources Causes Bubbles and low interest rates which we have experienced for years have always – in every cycle – been a source of “mischief” and a misallocation of resources. The only question is “when” something breaks it will ripple through the financial markets like a tidal wave. (Think about the proliferation of ‘covenant-lite’ loans.)”

As stated, these risks, which we have chronicled many times in the past, are not lost on the Fed. They realize that by continuing to hike interest rates, and tighten monetary policy, they are exacerbating the risk of something “breaking.”

However, they may already be too late, as the bond market is already sniffing out the problems. Currently, 5 out of 10 yield curves we track (50%) are now inverted. Such is the highest risk of a recessionary onset as we have seen since 2007.

Clearly, professional investors have continued to pile into fixed income and safer equity income assets over the last several months despite the sharp ramp up in asset prices. This demand for “yield” and “safety” has been one of the reasons we have remained staunchly bullish on bonds in our portfolios as of late despite continued calls for the “Death of the Bond Bull Market.” 

Charlie McElligott noted on Friday the three most important points about low interest rates (h/t Zerohedge)

1. Low interest rates are (ultimately) deflationary, sustaining zombie-firms in a “liquidity-trap,” which weigh on overall economic performance while also weakening investment.  

2. Low interest rates and QE are deflationary as you incentivize mal-investment and blow perpetual speculative-asset bubbles, which (ultimately) correct and drive deleveraging—thus the ‘balance sheet recession.’ 

3. As there is still a lot of debt-related “scar tissue,” you can’t push credit on a string. This then leads to quick “muscle memory” returns to a defensive posture: “If there is no return on capital, capital should not be deployed.” 

Here are the most important takeaways from all of this:

1. Despite an expected uptick in economic growth in Q2, look for weaker economic growth through the end of this year and into 2020.
2. Employment is set to weaken markedly over the next 12-24 months. 
3. Wage growth gains will also reverse as tightness in the labor force eases.
4. Inflationary pressures will remain non-existent as debt, disruption, and demographic forces continue to suppress economic growth. 
5. Go back to #1.

 

This is the cycle we are likely locked into currently and will continue to play out over the next several quarters. 

https://realinvestme...y-said-03-22-19

[robo]

A few pages long, but quite informative:  50ma moving up quickly to cross 200 ma (red & green dotted lines)

 

Thanks for all of your posts that have some kind of data supporting the opinion.  

[Darris]

The idea that seems different in the timing of past patterns is the recognition of the 'IBM Watson', the BOTS, or computers actions in the event that they reprogram like they did in December 2018.  500 spx points straight down in 17 days.  Friday seems similar to the abrupt change that occurred on Dec 4th 2018.  Cumulative tick saw a minor negative divergence on March 21st towards the end of the day while making new price highs.  TWT

[robo]

Trader for me.....  I just take the signals. It doesn't matter what the reasons were that caused the trend change. And yes,  sometimes I get whipsawed! 

 

The system below works well for those that want to learn how to trend trade using a very simple system. And yes you will get whipsawed sometimes.  Friday's one day move does not change the MT trend, but I trade using my own system so I'm back to cash in my 401k.

 

Investor or Trader... Which Are You?

Most market participants consider themselves to be "investors." But if you look at a list of the really big winners on Wall Street, you will see that most of those who make big profits, list themselves as "traders."

By "big profits" we mean doing better than the S&P 500 Index or Nasdaq 100 Index by a substantial margin over any three-year period.

Investors

 

"Investors" put their money into stocks, real estate, etc., under the assumption that over time, the underlying investment will increase in value, and the investment will be profitable.

Typically, investors do not have a plan for what to do if the investment decreases in value. They hold onto the investment in hopes it will bounce back and again become a winner.

 

Investors anticipate declining markets with fear and anxiety, but unfortunately, they usually do not plan ahead of time how they will respond to them. When faced with a declining (bear) market, they hold their positions and continue to lose.

We all know investors. In many cases it was us before we realized how dangerous buy-and-hold investing could be to our savings.

 

Investors often have some knowledge of trading. But that knowledge is tainted by how it is all too often described in the financial press. Trading is risky, dangerous, foolish, bad, involves a great deal of work, etc. On the other hand "investing" is good, reliable and safe.

"Investors anticipate declining markets with fear and anxiety, but unfortunately, they usually do not plan ahead of time how they will respond to them."

Investors had a taste of what buy-and-hold can do to their capital in the 2000-2002 bear market. They lost again in the 2008-2009 bear market.

 

Traders

On the other hand "traders" take a proactive approach to their investing. Traders have a defined plan and invest with one goal, to put their capital into the markets and "profit."

They "trade" with a plan that tells them what to do in any situation. When to enter and when to exit. They never allow large losses.

Being a trader does not mean you must move in and out of the markets frequently. This is a common misconception. A trader simply is one who has a plan for entering and exiting. They know what to do if their trade goes against them, and they know what to do when their trade is profitable.

 

Some traders go short (take bearish positions) as well as long (bullish) positions. Some are unable to go short, or they find short positions to be uncomfortable. Probably the majority of traders do not ever take short positions.

But traders "do" have a plan. This is where they differ from investors.

 

Every Trader Needs A Trend

If you think about it, you will quickly realize every trader needs a trend to be successful.

No matter what trading method is used, whether it is pattern trading, swing trading, long term buy-and-hold investing, fundamental analysis, technical analysis, buying or selling on news events, IPOs, splits, you name it. If the stock or mutual fund does not trend in the required direction after the trade is made, you cannot be profitable.

 

This also applies to all asset classes. Stocks, bonds, currencies, commodities. You must have a trend to profit.

 

 

Trend traders wait patiently for prices to tell them a trend has begun. Then they jump on board. If the trend fails, they exit quickly to control losses. Price tells them when to enter "and" when to exit. If the trend continues, trend traders have no predetermined profit goal. They stay with the trend until it reverses.

 

Cutting losses quickly and staying with a trend until it ends is how trend traders realize huge profits in the financial markets. The financial markets are trending "about" 80% of the time. That means trend traders are profitable 80% of the time. During the other 20% trend traders keep losses very small so that they are ready when the next trend starts.

 

This does not mean 80% of their trades are winners, just that they are in the plus column for that 80%. If you have three losing trades of 2% and one winning trade of 18% in a year, you finish with a 12% gain, even though most trades were losers. This fits the old saying, "cut your losses short and let your winners run."

 

 

https://www.fibtimer..._commentary.asp

Edited by robo, 24 March 2019 - 09:18 AM.