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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!

It’s The Most Blunderful Time of the Year

Lee Adler

Technical Trader subscribers click here to download the complete report.

In the last episode of how the trading cookie crumbles before the pre-holiday break, I asked the age old question, “Is it time to quit if your chart picks crushed the market?” The answer, of course, is, “Yes.” But I did not heed. I took the time off nearly fully short, with no stops on new picks, and now must find the best way to extricate from these trades and minimize the losses that wiped out a good part of the previous month’s gains.

Prior to Christmas, the previous Friday’s screens had 24 buys and 72 sells. So I went into the holiday period overconfident that I’d be sitting pretty with all shorts.

In the Christmas week, which I took off, the last screen before the holiday had 67 buys and 16 sells.

That should have been the takeout signal for the shorts. Unfortunately, I was enjoying a little vacation, and working on my French long term stay visa application. In other words, asleep at the switch.

So now the question is, given where these picks now stand on their charts, what’s the best course of action. This Friday’s screens had 16 buys and 34 sells.

After reviewing the charts, I decided that rather than bail immediately on the shorts, I want to give them just a tad more rope, because there seems to be some potential for a pullback. At the same time, I want to set my stops at a level where it would be appropriate to abandon hope, all ye fools who enter there. So the list now has tight stops on all picks.

The charts of the current screen output are mostly trendless, jiggly, and muddy. I saw nothing compelling either as a buy or a short, so I’m adding nothing to the list this week.

The list now has 8 open picks, ending the week with an average loss of 0.8% on an average holding period of 29 calendar days. That wiped out a gain of 5.8% on an average holding period of 22 calendar 2 weeks earlier.

The table and charts of open and new 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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The Rigor Mortis Stock Market Rally

Lee Adler

Technical Trader subscribers click here to download the complete report.

In the long run, we’re all dead, and so is this bull market, whose end is ideally due this year. But in the short run, it still has room to run. We must give the uptrend the benefit of the doubt until there’s more hard evidence that a turn is under way.

Third Rail Chart- The S&P is trading near the center of a short term uptrend channel. The first support line rises from xxxx to xxxx (subscriber version) this week. A second line is just below that. The S&P would need to break both lines to have a shot at a downside reversal.

Cycles The 10-12 month and 6 month cycle tops are ideally due any time between now and xxxx  xxxxxx xxxx (subscriber version). Cycle projections now point to highs of xxxx to xxxx.

The 13 week cycle is in an up phase ideally due to top out xxxx to xxxx (subscriber version). The cycle projection is xxxx, which is an outlier at this point. The 13 week and 6 month cycle up phases would remain in force as long as the market stays above xxxx.

Short term cycles have projections of xxxx to xxxx (subscriber version), and are due to top out in January.

Cycle Screening data is at an inflection point. The current negative divergence between these indicators and the market averages doesn’t mean much yet. It only will if there’s downside follow through this week. Otherwise, the benefit of the doubt still goes to the bullish case. 

Liquidity is turning bearish, but it will be a gradual process that would allow for extension of the stock market rally consistent with the above projections.

Long Term Weekly SPX would need to end a week conclusively belowxxxx (subscriber version) to signal what could be the start of a bigger top.  

New long term cycle projections point to xxxx to xxxx (subscriber version) ideally due xxxx  this year.   

Monthly Chart – In the clear for a run to xxxx to xxxx (subscriber version) in January. It would need to end the month below xxxx (subscriber version) to break the uptrend.

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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Holiday Wishes and Publication Schedule

Lee Adler

I want to wish you and your family Merry Christmas, Happy New Year, Happy Holidays, and Happy Festivus, the holiday for the rest of us.

I will celebrate by looking around Warsaw for an open Chinese restaurant where I can get takeout. I won’t be eating in this year (I wonder why).

Today at Malbork Castle, Malbork, Poland
Today at Malbork Castle, Malbork, Poland 12/22/21 

I want to thank you especially for allowing me the privilege of doing this work that I love, for you for the past 21 years. Whether you’ve been a subscriber for the past 21 days, but especially if you’ve been around for most or all of those years, your interest and confidence in me is a gift that I always appreciate! I hope that you enjoy and learn nearly as much from my reporting as I do from doing it.

I know that you will probably be enjoying the coming days with your families and hopefully not paying much attention to the markets. I’ll use that opportunity to take a break myself over this week. There will be no Liquidity Trader, Technical Trader, or Gold Trader posts between now and New Years weekend. Regular publication will resume in the New Year, with a bevy of reports. So be sure to stay tuned for that.

If anything strikes me as noteworthy over the coming week, I’ll throw up some quick comments on the Capitalstool message board and in my Twitter feed.

So to you and yours, Happy Holidays! See you in the New Year!

Lee

PS. I apologize for the fact that if you subscribe to more than one of the services, you have gotten this email once for each of them.  Sorry for clogging the inbox! 😁

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Is It Time to Quit if Your Chart Picks Crushed the Market Last Week?

Lee Adler

Technical Trader subscribers click here to download the complete report.

This Friday’s screens had 24 buys and 72 sells. That compares with the previous Friday’s 15 buys and 9 sells.

I concluded last week that the small number of signals, particularly buy signals suggested that the rally was exhausted, despite the buys having the edge. I chose not to add any charts to the list, long or short, but held on to all of the shorts that had been on the list.

That looks to have been the correct judgement.  The list had 8 open picks, ending the week with an average gain of 5.8% on an average holding period of 22 calendar days, i.e. 3 weeks and a day. That’s the second best weekly performance of the last month and one of the best since I began this exercise a couple of years ago. It was up from +3.1% and 15 days the previous week.  This is cash basis, no leverage.

By contrast the S&P 500 lost 1.7% over the past 22 days and nearly 2% last week.  Maybe we should follow the old adage, quit while you’re a head, because you never know what might be a foot. Especially when it comes to the TA and the market. Sometimes the TA beats the market, and sometimes the market kicks your ass.

Which is why your trading strategy needs to include a mechanism to minimize losses, or what traders euphemistically call “drawdowns.” Mine is to avoid stops initially, but to minimize risk by spreading it across multiple picks, with the expectation that one or two will run big –  enough to offset the Biggest Loser. It’s not glamorous, but it works.

I then use trend support and resistance based picks to close out picks as they mature.

This week, 1465 stocks met the initial screening criteria. 6.6% of them rendered signals on Friday, which above the average 3 to 5%. 4.9% of the stocks that met the minimum criteria had sell signals. That is also a significant number, but indicates neither thrust, norm maximum momentum. So staying mostly short looks like the way to go this week, but as existing picks have aged a bit it’s time to tighten some of those stops and protect profits.

After reviewing the charts from the screen, I’m adding 5 of them to the list this week, all on the short side. That will bring the list to a full complement of 13 picks, only one of which is long.

I have updated the stops on some of the picks and added a stop to the one long pick. The rest of the stops remain in place. As usual, I’ll roll the dice on the new picks, give them a chance to breathe, and let them ride for at least this week.

The table and charts of open and new 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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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.

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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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.

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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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. 

Subscription Plans

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