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Lee Adler’s proprietary cycle analysis with market trend and position ideas for investors and weekly individual stock swing trade ideas for traders. Click here to subscribe. 90 day risk free trial!

How to Tell When This Inconclusive Market Turns Dangerous

Lee Adler

Technical Trader subscribers click here to download the complete report.

The timing of a likely 10-12 month cycle top is uncertain. The 6 month cycle, however, has begun to show signs of topping out. This report shows you what to look for.

The shorter cycle setup suggests that nothing significant will happen this week, but at the same time, that anything could happen. We wait for a tipping point that signals the next big move, day to day. But liquidity is trending bearish. 

On the cycle chart, all channels are still rising. The SPX would need to end the week below xxxx (subscriber version) to signal a potential change of direction in the longer term cycles of 10-12 months or more.   

On the Third Rail Chart the SPX is churning in two crossing channels. One is a short term channel with a slight downslope. Support descends from xxxx to xxxx (subscriber version) this week. Uptrending support below that rises from xxxx to xxxx . All would need to be broken to start anything significant on the downside. If the market starts off to the upside there are wide open spaces to the first trend resistance line at xxxx.

On the weekly chart the uptrend is tenuous but intact, despite the negative divergence in 3-4 year cycle momentum. SPX would need to end a week conclusively below xxxx to xxxx (subscriber version) to signal that this might be the start of a bigger top.

The monthly chart now shows the conditions suggesting the formation of a 7 year cycle top. If the S&P ends December below xxxx (subscriber version), the uptrend would be broken, and the target would then be the trendline now at 4000. Conversely, if the xxxx area remains intact, the way would be clear for a move to xxxx-xxxx in early 2022.

Cycle screening measures are inconclusive after dropping last week. Up days early this week would tend to xxxx xxxx xxx xxxx (subscriber version) intermediate term outlook. But weakness would suggest at least xxxx, or even something much bigger. Here again, we await signs of a tipping point. This report shows you the trigger levels.

Technical Trader subscribers click here to download the complete report.

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These reports are not investment advice. They are for informational purposes, intended for an audience of investment and trading professionals, and other experienced investors and traders. 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. 

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Swing Trade Screens – More Buys Than Sells Again This Week

Lee Adler

Technical Trader subscribers click here to download the complete report.

This Friday’s screens had 15 buys and 9 sells. That compares with the previous Friday’s 50 buys and 16 sells, a solid precursor to last week’s rally.

1439 stocks met the initial screening criteria in the current screen. Only 1.7% of them rendered signals on Friday, which is far below the normal 3-5%. Only 1% of the stocks that met the minimum criteria had buy signals. That could mean that the move is already exhausted.

I’m making no new additions to the list this week, either long or short. Last week, I added just one long. Everything else on the list was short, leading to a bad week.  Including picks that were stopped out, and those still open, the list ended the week with an average gain of just 3.1% on a 15 calendar day average holding period. That compared with the previous week’s average gain of +8.1% with an average holding period of 18 days.

The list will now have 8 open picks, of which just one is a long, and the rest are shorts. I’ve added stops to all of the shorts, in case they don’t roll over again.

The table and charts of open picks are below (subscriber version only).

Table (subscriber version only)

Charts (subscriber version only)

Technical Trader subscribers click here to download the complete report.

The strategy and tactics opinions expressed in this report illustrate one particular approach to trading. No representation is made that it is the best approach, or even suitable for any particular investor.

These picks are illustrative and theoretical. Nothing in this report is meant as individual investment advice and you should not construe it as such. Trade at your own risk. 

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Here’s Why Not to be Dumbfounded in Disbelief

Lee Adler

Technical Trader subscribers click here to download the complete report.

The 10-12 month cycle now appears to be in trending mode. The timing of a likely top is uncertain. The 6 month cycle has returned to its up phase path. The up phases in those two cycles that appeared to abort the week before have reasserted themselves. The 6 month cycle projection is now xxxx (subscriber version). There’s a 4 week cycle projection of xxxx (subscriber version).

On the Third Rail Chart the SPX is now in a meltup channel that is targeting xxxx (subscriber version). If it stops at xxxx instead, it could be a top, but I wouldn’t bet on that unless and until it dropped back below xxxx.

On the weekly chart, last week’s rebound repaired the technical damage of the week before. The uptrend is intact, despite the negative divergence in 3-4 year cycle momentum. SPX would need to end a week conclusively below xxxx (subscriber version) to signal that this might be the start of a bigger top.

The monthly chart now shows the conditions suggesting the formation of a 7 year cycle top. If the S&P ends December below xxxx (subscriber version), the uptrend would be broken, and the target would then be the trendline now at 4000. Conversely, if the xxxx area remains intact, the way would be clear for a move to xxxxxxx xxxxx in early 2022.

Cycle screening measures screamed higher in a pattern similar to October-November 2020. That led to a breakout and long upleg. It doesn’t guarantee the same outcome here, but we need to be cognizant, and prepared for the possibility. We don’t want to be dumbfounded in disbelief, and get caught flatfooted. I’ll keep you updated on conditions and signals in these reports.

Technical Trader subscribers click here to download the complete report.

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Not a subscriber? Get price and time targets, and weekly swing trade chart picks, risk free for 90 days!  

These reports are not investment advice. They are for informational purposes, intended for an audience of investment and trading professionals, and other experienced investors and traders. 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. 

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What I Did Won’t Surprise You, as Buy Signals Surged in Swing Trade Screens

Lee Adler

Technical Trader subscribers click here to download the complete report.

This Friday’s screens had 50 buys and 16 sells. This was a big reversal from the previous Friday’s 17 bullish and 145 bearish signals.  That was a big number that indicated downside thrust. The week before that was also lopsided on the sell side, a precursor to last week’s broad selloff.

The current number now suggests a reaction rally.

1380 stocks met the initial screening criteria in the current screen. 4.7% of them rendered signals on Friday, which is normal. 3.6% of the stocks that met the minimum criteria had buy signals. This isn’t enough to indicate a big broad based move, but there are 4 days to go this week where anything is possible.

Last week, I added 4 shorts to the list. I set one of the existing buys to be closed out last Monday. Two others hit stop prices and were closed out from the tracking list at the stop prices. These theoretical trades are shown on the table below (subscriber version only).

I was underwhelmed with the setups on the charts that rendered signals this week. I only found one buy and no shorts that I liked enough to put on the list, as shown on the table below (subscriber version only).

In total, this will bring the list to 12 open picks, of which all but the one new pick are shorts. I’ve added stops to 4 of those picks.

I continue to view stops, particularly trailing stops, mostly as a mechanism for closing out picks that I want to close out. I don’t like them for protection because they just as often get picked off on trades that turn into winners. So I’m willing to roll the dice on the rest this week. I’ll decide week to week whether to pull the plug, protect, or keep rolling.

As of Friday, the average gain of open picks and those closed last week was +8.1% with an average holding period of 18 days. This was a strong performance compared to recent weeks, especially so given the rotten market action. The list was on the right side of that. The previous week the list had an average gain of +2.2% with an average holding period of 20 days.

The table and charts of open picks are below (subscriber version only).

Table (subscriber version only)

Charts (subscriber version only)

Technical Trader subscribers click here to download the complete report.

The strategy and tactics opinions expressed in this report illustrate one particular approach to trading. No representation is made that it is the best approach, or even suitable for any particular investor.

These picks are illustrative and theoretical. Nothing in this report is meant as individual investment advice and you should not construe it as such. Trade at your own risk. 

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Here’s Why Truncated 6 and 12 Month Cycles Are Scary

Lee Adler

Technical Trader subscribers click here to download the complete report.

We’ve seen this before – a market break that was out of synch with where significant intermediate tops should have been, time wise. The last time it happened was March of 2020. It doesn’t guarantee a similar outcome here, but there are keys to watch to tell us just how bad this turn will be. Is it another BTFD opportunity, or the beginning of a crash, or a terrible, multi-year bear market?

If you follow the monetary trends data on Liquidity Trader, you know that the current situation is more fraught with risk than any we have seen since the Yellen Fed Balance Sheet Normalization period of October 2017 to December 2019. In fact, the liquidity outlook is even more bearish now than then, so I take these technical signs of weakness in the market here very seriously, despite the fact that they appear to be out of synch with where the biggest swing cycles say the market should be.

Cycles – Both the 10-12 month and 6 month cycle up phases were truncated early. When such failures have happened in recent years, the up phases have usually reasserted themselves within a few weeks. But that wasn’t the case in March 2020. Because liquidity factors are about to turn extremely bearish I take this turn seriously. True, it may be a false alarm. But it seems more likely to be a warning shot across the bow, or something far worse.

The 13 week cycle down phase came on schedule, but it was sharper than it should have been with the 6 month and 10-12 month cycles both in up phases. The market would need to bounce hard this week, in an overdue 4 week cycle uptick, for this to turn into a benign consolidation. A weak uptick this week, or no uptick, followed by a break of trend support around xxxx (subscriber version) would suggest that something big to the downside was under way.

On the Third Rail Chart, the market needs to clear a downtrend line that runs from  xxxx to xxxxx (subscriber version) this week to signal a short term rally. Conversely, dropping below  xxxx  would suggest a move back to the October low around 4300.

On the weekly chart, 3-4 year cycle momentum has formed a sharp negative divergence at the price highs, which is now confirmed by a price trend break. This suggests a 3-4 year cycle top is finally in progress. Tops on this cycle normally take 10-12 months to develop with a series of rallies and declines, with multiple peaks ultimately failing to surpass a previous high. An instant crash such as in March 2020 is the exception.

Another sign of possible top formation is the renewed failure of the long term trend resistance breakout, and the break of an uptrend line dating to March 2020.

The monthly chart now shows the conditions suggesting the formation of a 7 year cycle top. If the S&P ends December below xxxx (subscriber version), the uptrend would be broken, and the target would then be the trendline now at  xxxx. Conversely, if that area remains intact, the way would be clear for a move to  xxxxxxx xxxxx in early 2022.

Cycle screening measures The aggregate indicator fell to its lowest level since October 2020, low enough to suggest that a significant short term bottom is imminent. Therefore the odds favor a bounce from here.

Six month cycle measures weakened. Six month cycle current status broke down from neutral. That’s bearish. A weak bounce from around these levels would suggest  x xxxx xxxxxxxx xxxxxxxxxx  xxxxx (subscriber version).

Technical Trader subscribers click here to download the complete report.

Subscription Plans

Not a subscriber? Get price and time targets, and weekly swing trade chart picks, risk free for 90 days!  

These reports are not investment advice. They are for informational purposes, intended for an audience of investment and trading professionals, and other experienced investors and traders. 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. 

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Second, Even Bigger, Explosion of Sell Signals in Swing Trade Screens

Lee Adler

Technical Trader subscribers click here to download the complete report.

This Friday’s screens had  26 buys and 136 sells. 9 of the buys were inverse ETFs, meaning that only 17 of the signals were bullish and 145 were bearish. This is a big number that indicates downside thrust, but it can also mean that it’s time for a minor bounce first.

This week’s numbers compare with 19  buys and 53 sells which was a pretty good indication that last week would be bearish. 11/22/21 51 sells is still a big enough number on the sell side to make me sit up and pay attention. I was overconfident on the long side, and overstayed several of the longs on the pick list without trailing stops. I’ve instituted them, and a few outright sells this week.

Only 1246 stocks, about 100 less than usual, met the initial screening criteria in the current screen thanks to the semi holiday shortened session. But a whopping 13% of them rendered signals on Friday, which is more than triple the norm. Last week there were 4% sell signals. 11/22/21 That’s a more than a typical percentage of new signals on a given day. So it’s time to look for a possible rollover and more shorts to add to the list.

Last week, I added 6 shorts to the list and put stops or sells on most of the longs. 8 of them were closed out as a result. I have added a sell condition to one pick and have stops on 3 others.

On this week’s list of sell signals, most had dropped to or near support. As a general rule I would not short a chart where price was at or near support. This might be the rare time that they crash through, but I must go with percentages. Despite the 145 bearish signals I only found 4 charts that were weak enough but far enough above support to add to the list as shorts this week. They’re shown on the table below.

In total, this will bring the list to 13 open picks, of which 2 will be longs, and 11 will be shorts. That’s up from 6 shorts last week. I don’t remember ever having as many shorts since starting this swing trade chart picks a couple years ago.

As of Friday, the average gain of open picks and those closed last week was +2.2% with an average holding period of 20 days. That’s not bad considering the S&P tanked last week. As long as we have a  plus sign when the broad market is down, it has the smell of victory.

However, it compares with an average gain of + 3.6% with an average holding period of 27 calendar days. And that was a drop from an average gain of 8.5% on an average holding period of 25 calendar days 3 weeks ago. I previously allowed the list to age too much without installing trailing stops. Then last week, while I was Jack be nimble, I was not quite nimble enough.

The table and charts of open picks are below. I have stops in place on aged picks, but I’m leaving fate to the wind on the picks from last week, and this week’s new picks. Have to give them time to breathe. I will add stops as they age.

The table and charts of open picks are below (subscriber version only).

Table (subscriber version only)

Charts (subscriber version only)

Technical Trader subscribers click here to download the complete report.

The strategy and tactics opinions expressed in this report illustrate one particular approach to trading. No representation is made that it is the best approach, or even suitable for any particular investor.

These picks are illustrative and theoretical. Nothing in this report is meant as individual investment advice and you should not construe it as such. Trade at your own risk. 

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Market Variant Not As Bad As It Looks

Lee Adler

Technical Trader subscribers click here to download the complete report.

Cycles There’s no evidence yet of downturns in the 6 month and 10-12 month cycles. They’re still in up phases, but currently without projections.

The 13 week cycle has obviously turned down, ideally due to last xxxxxxx xxxxx (subscriber version) . What can’t be known yet is the shape that the down phase will take.  If the xxxx area breaks down, the target would then be around xxxx . But if the xxxx  area holds, they could bump back up to the xxxx  area by year end.

On the third rail chart the SPX fell into a No Man’s Land on Friday. Support is xxxxxxx xxxxx (subscriber version). It rises to xxxx at the end of the week.  If it breaks, the targets would be xxxx, then xxxx. If the xxxx area holds, then the market should quickly rebound to the xxxx area.

 

xxxx (subscriber version).

On the weekly chart, updated long term cycle projections as of October 10, 2021 show targets ranging from xxxxx to xxxxx for cycles of up to 7 years.

As long as the market is above xxxx (subscriber version) at year end, it would still be in a long term uptrend and the projections would still be doable.

Long term momentum indicators suggest higher for longer. They normally form negative divergences long before price peaks.

On the monthly chart, the market uptrend channel lower bound is at 4300 in November. They’d need to break that to show any sign of possibly ending the bull market. Clearing the long term trendline around xxxxx would set a course toward xxxxx in November and possibly xxxxx (subscriber version)  in December or January. The monthly long term cycle momentum indicator remains bullish.

Cycle screening measures broke down, a week after I was skeptical about the negative indications. Now we know. 6 month cycle measures are now neutral. Another down week would turn them negative. The cumulative line is on the cusp. Market weakness this week would trigger a  xxxxx xxxxx (subscriber version)

Technical Trader subscribers click here to download the complete report.

Subscription Plans

Not a subscriber? Get price and time targets, and weekly swing trade chart picks, risk free for 90 days!  

These reports are not investment advice. They are for informational purposes, intended for an audience of investment and trading professionals, and other experienced investors and traders. 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. 

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An Explosion of Sell Signals in Swing Trade Screens

Lee Adler

Technical Trader subscribers click here to download the complete report.

This Friday’s screens had 19  buys and 53 sells. 2 of those were inverse bond funds so we can ignore that. 51 sells is still a big enough number on the sell side to make me sit up and pay attention. I was overconfident on the long side, and overstayed several of the longs on the pick list without trailing stops. I’ve instituted them, and a few outright sells this week. I also didn’t trust the short picks and bailed on two of them too early last week.

1340 stocks met the initial screening criteria in the current screen. 5.4% of them rendered signals on Friday, including nearly 4% that were sell signals. That’s a more than a typical percentage of new signals on a given day. So it’s time to look for a possible rollover and more shorts to add to the list.

On reviewing the charts, I found 6 setups I liked well enough as shorts to add to the list. They’re on the table below. I will remove 4 longs as of Monday’s opening price. I have added stops to 5 others.

In total, this will bring the list to 15 open picks, of which 9 will be longs, and 6 will be shorts. This is the most shorts we’ve had in many moons. “Many moons” is a way of saying how long its been when you don’t know the actual number of months. Let’s just say it’s been awhile.

As of Friday, the average gain of open picks and those closed last week was 3.6% with an average holding period of 27 calendar days. That was a drop from an average gain of 8.5% on an average holding period of 25 calendar days two weeks ago. I allowed the list to age too much without installing trailing stops. Will compensate going forward, but the market will undoubtedly make that look bad too.

The table and charts of open picks are below. I’m back to using trailing stops, and have instituted a couple of new picks with initial protective “just-in-case” stops.

The table and charts of open picks are below (subscriber version only).

Table (subscriber version only)

Charts (subscriber version only)

Technical Trader subscribers click here to download the complete report.

The strategy and tactics opinions expressed in this report illustrate one particular approach to trading. No representation is made that it is the best approach, or even suitable for any particular investor.

These picks are illustrative and theoretical. Nothing in this report is meant as individual investment advice and you should not construe it as such. Trade at your own risk. 

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Underweighting the Negative Signs

Lee Adler

Technical Trader subscribers click here to download the complete report.

Cycles The 13 week cycle up phase is maturing. The projection range is now xxxx-xxxx (subscriber version).  Around xxxx is trend support. Above there, the up phase stays in progress. A breakdown through that level would signal a down phase.

Short term cycles are moving sideways in flat down phases, due to strengthen within a week or so. That could carry the averages a little higher while the 13 week cycle is due to top out.

On the third rail chart Support is at xxxx (subscriber version). on Monday and rises to around xxxx at the end of the week. The market faces a cluster of resistance trendlines at xxxx on Monday, rising to xxxx at the end of the week. Clearing that would signal acceleration with a likely target of 4800. If they don’t clear, it would set up the possibility of a downside reversal, but the market would also need to break support around 4650 to signal more downside.

On the weekly chart, updated long term cycle projections as of October 10, 2021 show targets ranging from xxxxx to xxxxx for cycles of up to 7 years. The SPX is above the 18 month cycle channel extension, suggesting that the long term trend is accelerating toward a possible target of xxxxx (subscriber version) at the end of November.

Long term momentum indicators suggest higher for longer. They normally form negative divergences long before price peaks.

On the monthly chart, the market uptrend channel lower bound is at 4300 in November. They’d need to break that to show any sign of possibly ending the bull market. Clearing the long term trendline around xxxxx would set a course toward xxxxx in November and possibly xxxxx (subscriber version)  in December or January. The monthly long term cycle momentum indicator remains bullish.

Cycle screening measures sent quite a few indications that the market should be making a short term top here. But for the past year or more, the market averages have often trended higher on the basis of a few big stocks pushing the averages while perhaps the majority languished. So I will continue to underweight these indications.

Swing trade chart picks will be posted later Monday morning.

Technical Trader subscribers click here to download the complete report.

Subscription Plans

Not a subscriber? Get price and time targets, and weekly swing trade chart picks, risk free for 90 days!  

These reports are not investment advice. They are for informational purposes, intended for an audience of investment and trading professionals, and other experienced investors and traders. 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. 

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Buys and Sells in Balance in Swing Trade Screens

Lee Adler

Technical Trader subscribers click here to download the complete report.

This Friday’s screens had 29 buys and 30 sells.  It compares with 68 buys and 22 sells the Friday before. That indicated a new, moderate buy side thrust. It was not the kind of surge that comes off a significant low, but it suggested a second wind for the rally.

Initially it didn’t happen, but Friday’s rebound showed promise so I’m sticking with most of the picks from last week and earlier.

1311 stocks met the initial screening criteria in the current screen. 4.5% of them rendered signals on Friday. That’s a typical percentage of new signals on a given day. But the fact that they were evenly split between buys and sells suggests that the market is going nowhere fast. The theory of this method is that more of  the picks will move in the right direction than not. Otherwise, why bother.

Given the mixed picture, however, I didn’t see much new and interesting in this week’s signal list. I added just one on the long side, and no shorts.  I’ll start tracking the new pick as of Monday’s opening price. I’ll also close out 2 shorts and one buy as of Monday’s opening price. Those charts show increased potential to go the wrong way.

This will bring the list to 13 open picks, of which 12 will be longs, and 1 is a short.

As of Friday, the average gain of older and newly opened picks was 5% with an average holding period of 22 calendar days. That was a drop from an average gain of 8.5% on an average holding period of 25 calendar days the week before.

All of that drop was due to new picks mostly starting out in the hole. There’s nothing unusual about that. Gotta give the newbies room to breathe, with the idea that enough of them will move the right way to give us a positive result overall.

The table and charts of open picks are below (subscriber version only).

Table (subscriber version only)

Charts (subscriber version only)

Technical Trader subscribers click here to download the complete report.

The strategy and tactics opinions expressed in this report illustrate one particular approach to trading. No representation is made that it is the best approach, or even suitable for any particular investor.

These picks are illustrative and theoretical. Nothing in this report is meant as individual investment advice and you should not construe it as such. Trade at your own risk. 

Subscription Plans

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