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Category: 2 – Technical Trader

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!

Patience, Patience! Grrrrrr….

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There was only one stock left on the list last Tuesday after the remaining shorts from the week before were closed out from the list on the open. That last one hit its stop later in the week, leaving us empty handed. The 5 picks that were closed averaged a 1.9% gain on a 12 calendar day average holding period.

The raw daily data for last week as a whole tilted strongly to the buy side. For the week ended Friday there were 230 charts with at least one buy signal and 96 with at least one sell signal. On Friday alone, there were 15 buys and 28 sells.

On the four days Monday-Thursday, there were 222 charts with at least one buy signal and 70 with at least one sell signal. This was the universe that I then screened with Friday’s action to find strong candidates to add to the list, whether long or short. Despite the 222 buys leading up to Friday, on that day there were only 7 that had a second buy signal indicating signal progression. I looked at those and didn’t find any appealing. So I sat out the buy side again.

Of the group of 70 with prior sell signals, only two triggered another sell on Friday, and neither was interesting. So no new shorts this week either. Reminds me of the old, “Patience, jackass, patience,” joke that we old fogeys learned in sixth grade. Ha ha.

There are times when a lack of clarity means that it’s just best to sit on your hands and not lose money.

The table of open and closed picks along with charts of open picks are in the report  (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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Raggedy Market Has Ambitions

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The cycle picture is mixed but leaning toward starting xxxx xxxx xxxx (subscriber version). phase. How far will it get? My guess is “not very.” Nor is there much indication of significant near term xxxx xxxx xxxx (subscriber version).  Just beware if the market is weak early this week. That would suggest structural problems that could lead to xxxx xxxx xxxx . Crashes happen when apparent bottoms drop out.

Here are the particulars.

Cycles are now opposed. The outlook is more bearish if the market xxxx xxxx xxxx (subscriber version). , more bullish if not. The 10-12 month, 6 month, and 13 week cycles all still appear to be xxxx xxxx xxx. The two longer cycles hit initial downside projections, but xxxx xxxx xxxx. The 13 week cycle projection is still xxxx. The 6-7 week and 4 week cycles are in up phases, with a 4 week cycle peak due now.

The 6 month cycle low is ideally due between xxxx xxxx xxxx (subscriber version). Strength early this week would suggest that the 6 month cycle xxxx xxxx xxxx.

Third Rail Chart- The downtrend is intact for now. It would need to clear xxxx this week to break the first downtrend channel. Then subsequently it would need to break xxxx to get something more bullish going. On the other hand, a daily close below xxxx would signal that more declines are likely. A close below xxxx would break a long term uptrend. A close below xxxx would confirm the bear market.

Long Term Weekly- The market made a typical intermediate term bottoming signal by breaking a long term wave channel, then recovering within it. Given the rollover in the 3-4 year cycle indicators, the rebound in the market suggests xxxx xxxx xxxx (subscriber version)

So far, there’s no material change in the long term projections of xxxx xxxx xxxx (subscriber version), but I now believe that they are wrong and will not be met. I’m giving these no weight, and instead focusing on the price patterns, support breaks, and cycle indicators to show us the way.

Monthly Chart – The market now needs to be above xxxx at the end of February to get back into the two uptrend channels. Failure to do that would imply the beginning of xxxx xxxx xxxx (subscriber version). If that does not happen, the target in February would be xxxx xxxx .

Cycle screening measures made a lower high than the December and January peaks, at least so far. The prior low was also lower than the previous one. Therefore the intermediate term pattern xxxx xxxx xxxx (subscriber version) However, other indications are more bullish. The outlook is therefore xxxx xxxx xxxx . If the rally xxxx xxxx xxxx more bullish and that should play out into xxxx xxxx xxxx (subscriber version). If the market declines early in the week, the numbers will turn negative again and confirm the bear market.

The cumulative cyclical breadth index stopped confirming the bull market in August 2020. This shows concentration of buying in fewer and fewer big stocks. Such long periods of negative divergence between market breadth and price indexes often precede bear markets. I will keep you posted on how the pattern is playing out this time.

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. 

Just Wait Till Next Week!

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Trailing stops took out most of the chart picks, which were all on the short side. I’ll consider the rest to be covered at the opening price today. The rally took back about half the profit from the previous week. At Monday’s close the average gain was 4% and the average holding period was 9 calendar days. That’s assuming all cash, no margin, no options, no leverage of any kind.

The raw daily data for last week as a whole ripped to the buy side, obviously. For the week ended January 31 there were 209 charts with at least one buy signal and 93 with at least one sell signal. This was the universe that I then screened with Monday’s prices to find strong candidates to add to the list.

On Monday, the unfiltered data gave us 95 buys and 14 sells. Of those, there were only 9 buys and one sell that were in the universe of charts that had rendered signals the week before. On visual review, I did not feel that any of them were worthy of going on the list this week.

As a result, after closing out the remaining shorts we’ll have an almost empty list, with just one remaining short with tight stops.

It will be interesting to see if the market leaves us in the dust, having missed the turn at the low.

Wait till next week!

The table of open and closed picks along with charts of open picks are in the report  (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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Nice Travel Day

Today is a big day. I’m about to board a flight to Nice, France, where I’ll be making my home, hopefully for many years of sunshine, good health, and the good life of the South of France. Not to mention, good times producing these reports for you! It is the culmination of years of planning and delays, but the day is finally here.

Normally I post the swing trade chart picks on Monday but because of today’s little jaunt, this week I will post that report on Tuesday.

II will see you in Nice!

A plus tard!!

Lee

 

Stampede of Short Chickens Has Bulls Sniffing Something

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We were expecting a short term cycle low by late in the week, at 4275 or so, and we got it.

Support bent. It stretched. It bent some more. But it didn’t break. So the shorts chickened out on Friday and started covering. The last hour was a stampede. There’s nothing more disconcerting than stampeding chickens.

But is it something more? The VIX says it’s an intermediate low, but intermediate cycle indicators say, xxxx xxxx xxxx (subscriber version). This week will be pivotal. Here’s the key.

Failure to xxxx xxxx xxxx  would xxxx xxxx xxxx. 

Cycle projections on the longer cycles point to xxxx-xxxx (subscriber version).

The 6 month cycle low is ideally due between xxxx and xxxx.

Third Rail Chart-  Resistance is around xxxx xxxx. If they clear that, the next target would be xxxx (subscriber version).

If they don’t clear xxxx , then another test of the low is likely. If they don’t xxxx xxxx xxxx (subscriber version), the crash will probably resume, with the next key support around xxxx.

Long Term Weekly- Long term cycle momentum has broken a 2 year uptrend, signaling that the bull market xxxx xxxx .. When long term momentum and 3-4 year cycle momentum break their midyear 2021 lows, and the SPX ends a week below xxxx, then I’d call it a bear market. That would imply that prices are headed a lot lower for a lot longer. We’re not there yet, but we will be quickly if this keeps up like last week.

I have revisited long term cycle projections. Last week’s move suggests more frequent updates than the usual quarterly schedule will be needed on these. So far, there’s no material change in the projections, but I now believe that they are wrong and will not be met. I explain why in the report. I’m giving these no weight, and instead focusing on the price patterns, support breaks, and cycle indicators to show us the way.

Monthly Chart – The market is now below two long term trendlines. It would need to get back above xxxx by the end of January to reverse the bearish implications of this break. If that does not happen, the target in February would be xxxx xxxx. Ouch.

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. 

Our Chart Pick List Was Short Up the Wazoo, Woohoo! Now What?

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The extra layer of screens that I instituted for swing trade chart picks last week, and a cooperative market, paid off in a big way.

The list had been empty for two weeks after the market shook me out of a slew of earlier short picks that were just a tad too early. I added 9 picks as of the open last Tuesday, all on the short side.

At Friday’s close the average gain was 9.5% and the average holding period was 4 calendar days! That’s all cash, no margin, no options, no leverage of any kind. It more than reverses the battle I lost with my own stupidity at the turn of the year.

Although maybe it wasn’t stupidity. As it turned out, those short picks would have been huge winners had I just stayed asleep for another couple of weeks, Rip Van Winkle like.

Meanwhile, last week was by far the best weekly record since I began this experiment for you a couple of years ago. Considering that the S&P 500 lost 5.7% on the week, I’ll allow for some self back-patting after my self-flagellation of prior weeks. Let’s face it, sometimes the market whips us. That’s why they’re called whipsaws. First they whip you. Then they saw you in half.

Please, no calls from trading rights activists. No actual trades are harmed in the performance of these lab experiments. Results have not been peer reviewed nor replicated under real world conditions. If you attempt to replicate these experiments, your results may differ.

Daily Data Table (subscriber version only).The raw daily data for last week as a whole tilted to the sell side, which would seem obvious. But it wasn’t lopsided. There’s no sign of massive capitulation or widespread downside thrust either.

I must assume that this means that this selloff can get a lot worse. That’s not carved in stone of course, but I want to be open to the possibility, and not cut off the profit potential of an extended decline by setting trailing stops too tight.

Screening on all days of the week, as opposed to just Friday is an extra layer of work that allows me to see the progression of short term sell signals on every one of over 10,000 stocks on the NYSE and Nadsac. I had been running just Friday’s screens, in the belief that once a week was enough. But the results were ragged. So I went to daily screens with the added filter of a Friday re-screen on the charts that qualified.

The next step is to take all the stocks that had signals on any day during the week, and run the buys through a re-screen for buy signals on Friday, and the sells through another screen for sell signals on Friday. That resulted in a buy side screen on the 85 charts that had had one or more buy signals over the prior 5 sessions. The final sell side screen was run on the 122 charts with prior daily sell signals.

Those final screens for Friday resulted in 21 charts with buy signals and 46 with sell signals. The buy setups looked like they might be candidates for dead cat bounces after mostly getting slaughtered last week. No thanks. I’ll leave them off this week. This is not about grabbing quick pops.

The sells had mostly been beaten to death. They could get worse, but they might also have vicious 2 day spike rallies from already deeply extended positions. No thanks to those, too. But there were two that weren’t so extended and looked to be early in downturns. I added those to the list as you can see on the table below (subscriber version only), and in the charts that follow.

Meanwhile, I added trailing stops to the 9 charts already on the list. These have daily price adjustments as shown, with Monday’s starting stop price, minus the reduction per day thereafter.

The table and charts of open and new picks are below (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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Pop Goes the Bubble

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Technical indicators support what the market averages did last week. That popping sound was no mirage. It was the sound of a bursting bubble.

The good news for bears is that the technical indicators rolled over, but only the shortest term indicators got “oversold.” Intermediate indicators are not yet near extremes. And if short term indicators go lower early in the week, that would increase the odds of a crash, right now.

Cycles – All cycles remain xxxx xx xxxx xxxx (subscriber version). Only short term cycles point to xx xxxx later in the week. That currently projects in a range of xxxx xxxx . The odds of getting deep into that projected range look good.

Initial projections for the 6 month and 10-12 month cycles point to xxxx-xxxx (subscriber version), but the 6 month cycle low would ideally come between late February and xxxx xxxx . That’s plenty of time for that projection to shift lower. The 13 week cycle projection is xxxx. I think that is a good benchmark to watch for at this time.

Third Rail Chart-  The first top is complete. xxxx xxxx is now key support. If they try to bounce on Monday, I expect resistance at 4450 stop any rally attempt.  On the other hand, a crash is possible, if not likely if they take out xxxx xx xxxx xxxx (subscriber version). The conventional measured move target would be xxxx.

Long Term Weekly- Long term cycle momentum has broken a 2 year uptrend, signaling that the bull market xxxx xxxx .. When long term momentum and 3-4 year cycle momentum break their midyear 2021 lows, and the SPX ends a week below xxxx, then I’d call it a bear market. That would imply that prices are headed a lot lower for a lot longer. We’re not there yet, but we will be quickly if this keeps up like last week.

I have revisited long term cycle projections. Last week’s move suggests more frequent updates than the usual quarterly schedule will be needed on these. So far, there’s no material change in the projections, but I now believe that they are wrong and will not be met. I explain why in the report. I’m giving these no weight, and instead focusing on the price patterns, support breaks, and cycle indicators to show us the way.

Monthly Chart – The market is now below two long term trendlines. It would need to get back above xxxx by the end of January to reverse the bearish implications of this break. If that does not happen, the target in February would be xxxx xxxx. Ouch.

Cycle screening measures broke down after behaving in a way that suggested changing market dynamics in the previous week. The numbers are not yet extreme on the downside. They could get a lot worse before a significant bottom is in.

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. 

Getting Short Up the Wazoo

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Starting fresh this week, after closing out the last pick as of last Monday’s open, I am making some tactical adjustments going forward. First, I am now incorporating screens from the whole week, not just Friday. In that way I hope to snare charts going through a progression of short term buy signals leaving them more likely to move sooner, and in the right direction.

I will continue to (mostly) forego stops in the first week that a pick is added to the list. But I will avoid the stupidity of being overconfident after having some success for a few weeks, and then going on vacation without having trailing or protective stops in place.

I continue to feel that stops should only be used as triggers for exiting trades that we want to close out. That would include both those that have gone well and those that have not. I still do not like arbitrary stop loss as a strategy to reduce loss, because it has equal or greater potential to reduce profits on trades that ultimately turn into big winners. Stop running and false breakouts and breakdowns are time honored strategies of dealers and big speculators. Such whipsaws often lead to big moves.

The raw data for last week as a whole showed a preponderance of buy signals. But lo and behold, when I ran a screen on Friday just on the universe of stocks that had had signals earlier in the week, there were just 4 that had short term buy signals on Friday, versus 42 on the sell side!

I reviewed those 46 charts for structures that looked promising. I chose 9 shorts, shown on the table below.

Sticking my neck out, for sure, but those 9 charts look well positioned to roll over in the weeks ahead. I think that some patience will be needed. They may or may not pop a bit in the short run, so I’m giving them room to breathe without stops for now. It’s a risky strategy, but it’s consistent with the liquidity outlook and the intermediate term technical outlook for the overall market.

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

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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Still Looking for that Rigor Mortis Rally

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The market averages and technical indicators have weakened, but look ready for xxxx xx xxxx xxxx (subscriber version)  before xxxx xxxx (subscriber version)  in.

Cycles – The short term wave looks like it should xxxx (subscriber version)  around xxxx to xxxx over the next week or so. A weak bounce or no bounce should lead to the 10-12 month cycle wave xxxx xxxx .

Third Rail Chart-  The market needs to get below xxxx to break the intermediate uptrend. Failing that, another assault on the highs would be likely.

Should the market break xxxx, the next area of likely support would be around xxxx. And below that, the xxxx-xxxx area would be significant. Breaking that would complete a nice top pattern.

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

Long Term Weekly- SPX would need to end a week conclusively below xxxx(subscriber version)to signal the likely start of a bigger top.

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

Monthly Chart – S&P remains in a narrow uptrend channel with resistance at xxxx (subscriber version). Above that is room to run to xxxx this month.  It would need to end the month below xxxx to break the uptrend and open a chasm to the next support around 4000.

Cycle screening measures are behaving in a way that is unlike the patterns that were prevalent throughout the bull market. Are the dynamics changing finally? Too soon to say, but a downturn from here would signal that the answer is more likely to be yes. The pattern would turn bullish again if the market xxxx x xxxxx xxxx (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. 

No Mercy

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The extrication plan that I posted last week did not go well. All of the shorts hit their stops, resulting in losses in all but one of them. The list overall suffered a loss of 3.8% on an average holding period of 23 days. That was worse than the previous week’s 0.8% loss on an average holding period of 29 days.

I’ll close out the one long on Monday with a small gain.

Why so many sell signals from two weeks before failed so badly is a question that I can’t answer. It may be that the sell signals were too obvious, and that many traders were just gunning for the shorts. It is never a good idea to be so confident as to take a week off without stops. That’s one condition where stops are important.

Or don’t put positions on before year end. I’ll try to remember that one at the end of this year.

This Friday’s screens had 19 buys and 22 sells. That’s nearly even. It follows 16 buys and 34 sells the previous Friday. There was no sign of any emergent moves on any of the charts with signals. Most resulted from rangebound jiggles.

There’s just nothing to do this week. I await clearer setups.

Below is the record of last week’s drubbing. It was enough to wipe out all of the 3.1% average gain for picks closed out in December, with a few tenths left over.

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

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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