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Category: 2 – Technical Trader

Lee Adler’s proprietary cycle analysis with market trend and position recommendations for investors and a recommended option trade for traders. Click here to subscribe. 90 day risk free trial!

In Weakness, There is Strength, and Other Gibberish

In view of the liquidity outlook, I’m on the lookout for a support test in the first half of the week. Pre market futures suggest that the market is on track for that. The futures tested the 3600 area in the pre market.

The market maintained a shallow uptrend last week. The S&P stayed in the upper half of a weak uptrend channel. The channel has a slope of +4 PPD. The centerline will start the week at around 3623 and rises to approximately 3643 on Friday. That line is initial support. A couple of old intermediate channel lines around 3610 also mark potential support. The bottom of the short term channel starts the week around 3560 and rises to 3600.

This report illustrates where the cycle indicators show the market to be headed.

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I’m adding 5 new picks conditioned on opening within the price bracket at the time specified on the table. 4 of those picks are longs, and 1 is a short. If all 5 picks meet their entry conditions, it will leave us with 16 open picks, of which all but one will be buys. That’s extraordinary and, may I say, scary.

The list showed an average gain of 4.8% with an average holding period of 11 calendar days last week. That was despite getting stopped out of 4 new picks on the short side almost instantly, with losses ranging from 2.1% to 9.2%.  That was offset by solid performances from the winners, all on the long side.

Chart pick performance changes week to week and past performance may not indicate future results, as you know.  Trading involves risk, and these reports assume that you understand those risks and manage them according to your tolerance. These reports are for informational purposes for experienced investors and traders. 

Baby Bears Have No Chance Against This Stampeding Herd

The market started a baby downtrend channel last week. The top of the channel will open on Monday at 3572. Here in the premarket around 5:30 AM in New York, that trendline was being challenged as, once again, Asia and Europe have rallied. This report shows you what to look for this week as it affects the longer term outlook.

Meanwhile, the after effects of the disastrous Pfizer gap of November 9 are receding and list performance is recovering nicely. The average gain rebounded to +5.6%, with an average holding period of 11 calendar days.

I have adjusted trailing stops on all but one pick. All ten existing picks are longs. I’m adding 6 new picks this morning, including 4 shorts and two longs. Entries will only occur within the order price brackets, and, if so, are assumed to take place at 9:45 AM. With these gap openings becoming common, that has been a better entry time in the morning.

Technical Trader subscribers, click here to download the report.

Not a subscriber? Try Lee Adler’s Technical Trader risk free for 90 days!  

Chart pick performance changes week to week and past performance may not indicate future results, as you know.  Trading involves risk, and these reports assume that you understand those risks and manage them according to your tolerance. These reports are for informational purposes for experienced investors and traders. 

Not Just Liquidity, Why I Can’t Be Bearish Technically

Cyclically, there’s no reason to get bearish here. Cycles of up to 6 months duration remain in gear to the upside. A 4 week cycle high is due now, but it won’t matter if the 6-8 week cycle is dominant. Here are the price targets and theoretical timing of these expected moves.

Technical Trader subscribers, click here to download the report.

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Stock Market Biden Time for the Bulls

Short term cycles turned up on schedule, triggering the overdue upturn in the 6 month cycle. The 13 week cycle up phase got its expected second wind. All cycles from 4 weeks to 6 months are now in gear to the upside. The 4 week cycle currently projects to 3560. The 13 week cycle points higher–a lot higher.

Chart pick performance was strong last week. The average gain grew from +2.5% to +5.0% while the average holding period fell from 14 calendar days to just 8, or barely over a week. Our shorts got stopped out early, protecting a small net gain on those, on balance. Meanwhile the long picks were able to take advantage of the market surge.

I am adding 6 picks to the list as of Monday including 3 new longs and 3 new shorts. I am closing out one pick. With these changes, that will leave 10 open picks, 7 longs and 3 shorts.

Technical Trader subscribers, click here to download the report.

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Wouldn’t it be nice to be able to generate a 5% gain every 8 days? Obviously, that’s not going to happen. But the plus signs are nice. Of course, we’d like to beat buy and hold, too.

A long/short trading strategy won’t do that in a broad, sharp rally like last week’s. That’s because we always have at least a few shorts. That costs us when we have a straight up week in the market. If we consider the last 8 calendar days as a basis for comparing performance, we were about 1 percentage point below a buy and hold SPY strategy.

But always having a few shorts means that we should outperform rangebound and down markets. My technical stock screens will generate lots of shorts when the market is trending down, and hopefully my eyes will recognize the best ones from that group. The goal is that when the market trends down (someday), the chart pick list should not just massively outperform a buy and hold market strategy, not just by losing less. It should be positive on balance.

Another goal I have for these weekly chart picks is for it to be easy to follow. Once a week entries obviously aren’t optimal from a market performance standpoint. But for busy people, it’s a good alternative. We generally have a few picks each weekend that we can enter on Monday morning. Then, setting trailing stops frees us from the trading screen. We can go about having a life!

But I don’t like automatic stops. What about the use of mental stops? I usually put stop levels on the chart pick table. I set an alert to be sent to my phone and computer screen at the stop level. When I’m actively trading my own account, I use a chart trendline or moving average representing my trailing stop line. When I get that alert, I get on that chart quickly. I wait that 2-3 minutes, and if there’s no reversal, I trigger the trade and move on.

Again, this is just my way. I’m sharing it with you for informational purposes. You have to do it your way. I just try to give you useful, actionable, and hopefully profitable, information for you to use as you see fit. If you are not an experienced trader, consult a professional investment advisor for guidance. That’s not what this is.

Past performance doesn’t indicate future results. There’s always risk of loss. Chart picks are theoretical for informational purposes only.

What If?

The bears took control last week, crushing all the uptrend lines I had drawn on this chart. Now we have a well-defined downtrend. The market has also edged below several old long term and intermediate trendline extensions. If these aren’t immediately recrossed, the downside becomes wide open.

Chart pick performance slipped last week, with the average gain falling from +3.8% to +2.5%.  The average holding period rose from 13 calendar days to 14, just two weeks as recent longs got whipsawed.

12 longs were stopped out last week. That was, in fact, all of them. I am adding 5 picks to the list as of Monday, including 4 longs and 1 short. That will leave 8 open picks – 4 longs and 4 shorts.

I read somewhere that past performance doesn’t suggest future results. I’ll say! Of course, considering how the market got clobbered last week, I don’t think that a long-only, buy and hold strategy did too well.

Now I want to do a little “what-if” exercise. Sometimes I’m a little slow on the uptake and there’s something that I’ve been noticing for… oh… the past 25 years or so. That something is the evidence that the traditional 4 year cycle died decades ago.

By simply tweaking indicators around that traditional time frame, I have been trying to make a square peg fit a round hole. But they never seem to fit the action. Something has not been right. It has been staring us in the face the whole time.

What if… what if…, skewed by aggressive monetary policy, the dominant cycle since 1994 has been 7-8 years, as it appears to be. And what if that’s still the case? I have superimposed 7-8 year cycle indicators on the monthly chart. And wow! Is that revealing! It’s a completely different message than the one we’ve been trying to make sense of.

Technical Trader subscribers, click here to download the report.

Not a subscriber? Try Lee Adler’s Technical Trader risk free for 90 days!  

Past performance doesn’t indicate future results. There’s always risk of loss. Chart picks are theoretical for informational purposes only. These reports are intended for professional investors and experienced individual traders. Do your own due diligence before trading.

Monday Monday, Can’t Trust That Day

We have a selloff in the pre market, but the TA says, don’t trust it yet. Or maybe, “Trust, but verify,” for those of you of a certain age, like me.

Meanwhile, as for chart picks, I didn’t see much that I liked in this week’s screens. I didn’t add any longs. We’re already loaded to the gills there. I added two shorts, and one is conditional on a limit price entry.

4 picks were stopped out last week. With the the 2 new picks, that will leave 16 open picks, including 12 longs, and 4 shorts.

List performance improved last week, with the average gain increasing from +2.9% to +3.8%. The average holding period rose from 12 calendar days to 13, which is still less than the usual 16-20 days because I added a slew of new picks the previous week.

Chart picks are theoretical, assume 100% cash stock trades, no margin, no options, no futures.

I once read somewhere that past performance doesn’t indicate future results, or something. Is that true? Hopefully it is, considering some of my past performances.

Technical Trader subscribers, click here to download the report.

Not a subscriber? Try Lee Adler’s Technical Trader risk free for 90 days!  

Past performance doesn’t indicate future results. There’s always risk of loss. Chart picks are theoretical for informational purposes only. These reports are intended for professional investors and experienced individual traders. Do your own due diligence before trading.

What Selloff? Here We Go Again

Short term cycles have entered down phases. But this looks like a consolidation, not a top.Here’s why and what to do about it.

The chart pick screens are spitting out a ton of interesting patterns. I’m adding 9 picks this week, 7 long and 2 short. 4 picks were stopped out last week and one which was a symbol error was also closed. That will leave 18 open picks, including 14 longs, and 4 shorts.

Technical Trader subscribers, click here to download the report.

Not a subscriber? Try Lee Adler’s Technical Trader risk free for 90 days!  

Past performance doesn’t indicate future results. There’s always risk of loss. Chart picks are for informational purposes only. These reports are geared toward professional investors and experienced individual traders. Do your own due diligence before trading.

Bullish Signals Abound

Scheduled liquidity data has told us for a couple of months that October would be bullish. That played out like a charm in terms of the technical analysis last week. We also know that liquidity only gets more bullish this week. The technical picture confirms that outlook. We must give the bullish factors the benefit of the doubt.

My stock pick screens confirm that. I’m adding 7 picks from those screens this week, 5 long and 2 short. That will leave 13 open picks, including 11 longs, and the 2 new shorts.

Four chart picks were stopped out last week. Needless to say, all were shorts. The two older picks had nice gains, partly offset by small losses in the short side picks from last week.

The list performance improved sharply last week as the average holding time increased a bit. Gains doubled from an average 3.2% to an average of 6.4%. The average holding period last week was 20 calendar days, up from 17 days the previous week. The average holding period has ranged from 16 to 22 days, or just over two to three weeks.

Technical Trader subscribers, click here to download the report.

Not a subscriber? Try Lee Adler’s Technical Trader risk free for 90 days!  

Past performance doesn’t indicate future results. There’s always risk of loss. Chart picks are for informational purposes only. These reports are geared toward professional investors and experienced individual traders. Do your own due diligence before trading.