Friday May 20, 2016

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Stormchaser80, L.L.C.
Disclaimer: http://navigatethemarketstorm.com/disclaimer/ 
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  VXX: Bought VXX 14C exp Jul 15 2016 on 4/28/2016 when VXX was near $15.18
  401K: Bearish  
  Long Term: Bear Market, targeting SPX <666 by 2022  

!ADLINETOT   +12.86%  
!CUMVOLTOT   +1.05%  

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Welcome to another weekly wrap-up. This one is log-in free. But to gain access to daily reports, I am asking you to take 30 seconds to sign up at the bottom of this post! Its FREE!

SPX Weekly

W

ADX: Declining momentum (from Dec-Feb downturn), in a trading market, with bears narrowly on top

RSI: Middle of the road, neither overbought nor oversold. Near where we have been topping of late.

Candle: Doji up for the week

Volume: Below the 20 dma

Moving Averages: Close>100>50>20>200 period moving averages

% Bollinger Band: Upper quartile of the band

Bollinger Band Width: Quite wide, no huge move expected here

MACD: Bullish at a positive value, histogram continuing to weaken

SPX Daily

D

ADX: Looking like a stalling negative trend

RSI: Middle of the road

Candle: Bullish day but closed below highs

Volume: Very weak, well below the 20 dma

Moving Averages: 20>50>Close>200>100 period moving averages, close occurred below  the 50 dma 4 days in a row!

% Bollinger Band: Lower quartile of the band

Bollinger Band Width: Still quite narrow but a tick higher, a large move at this scale is still on the radar

MACD: Bearish at a negative value, histogram ticked higher

SPX Hourly

H

Between the 2043 and 2070 pivots

ADX: Sideways trading

RSI: Overbought territory

Moving Averages: 200>Close>100>20>50 period moving averages

% Bollinger Band: Top quartile of the band

Bollinger Band Width: Starting to narrow again

MACD: Bullish at a positive value, negative divergence with the histogram vs. Thursday

VXX Daily

VXX

ADX: Weakening negative trend

RSI: Gradually rising to mid range

Moving Averages: 200>100>50>20>Close

% Bollinger Band: Near the bottom of the Bollinger Band

Bollinger Band Width: Still quite narrow (and narrowing again), suggesting a big move could be on the horizon

MACD: Bullish with a negative value, been basing since late March

HYG:IEF Daily

HYG-IEF-D

Sideways trading since mid March. A negative move (bearish) is on the horizon with a double negative divergence forming with MACD as Bollinger Bands narrow.

NYSE Internals

NY

 

On the NYSE price chart I drew an upsloping blue line between two recent lows. However, internally, there is a downward (bearish) channel for new highs and lows as well as the $NYMO. The summation index Full STO is at levels last seen in mid Dec 2015 just before the plunge accelerated downward.

%Stocks above 200dma

200

Full STO for %stocks above 200dma in 5 different market classes is rolling over from the highest level since late 2014 (!!!). Currently this indicator is at early to mid Dec 2015 levels (sound familiar?).

%Stocks above 50dma

50

I drew a horizontal line between 2 recent lows on the NYSE. Yet internally all 5 tracked indices are much weaker. Their Full STO is generally descending through levels last seen mid to late Dec 2015 (cough)!

%Stocks above 20dma

20

Same idea with the Percent of stocks above their 20 dma. Here we see Buy signals from all 5 Full STO signals. Can also be compared to mid Dec 2015.

Oil Daily

OIL-D

I was asked to present something about Oil. WTI is trending higher at the moment along the top of its Bollinger Band. It’s biggest buying volume occurred in late April through mid May. However Bulls should be getting out as the MACD displays a double negative divergence. I think Oil could be one of the best shorts out there in the next 3-6 months. But given that we are still trending higher, scaling into shorts is prudent. I would be surprised if the top is not seen within the next 4-7 trading days.

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Summary

So where do we sit? Well we got our bounce as expected for options expiration, but on little volume. Could we continue to bounce or go sideways for a few days – yes. However the hourly RSI is getting overheated and there is stiff resistance (20/50 dma) and 2070 pivot not too far off. The potential bounce is too short for me to play in my 401k.

Bears have to like the downward slope to the 20 dma, about to cross the 50 dma too! We have closed BELOW the 20 dma during the past 8 trading days, and the 50 dma during the past 4.

Oh an in case you missed it, we are already 1 year into this drawn out and historically detrimental bear market.

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13 Comments on "Friday May 20, 2016"


  1. thank you for the oil update Storm. I am short oil now via DWTI.

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    1. Just a little at a time, but technicals and time of year will catch up with oil soon

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  2. i believe your VXX july 14 calls settled at 2.12 and your cost basis is 2.34 so it is down about 10%. there is still plenty of time as anything can happen. what/when will you be monitoring whether you will be adding or cutting this position at a loss/profit? (not to be too critical but it’s ok to claim how well your position is doing but the other side of the coin is to also reveal when your position is at a loss. i just hate people when they cherry pick their winners and not disclose their wrong calls/losing positions until it is too late for anyone to do something about it for those who have followed your advice)

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    1. After having some early success with VXX over the past year I think I will be switching to SDS in the future.

      As stated in the disclaimer etc, nothing here is trading advice, just active learning of the market through real-time assessment. I want to gradually build a community to help each other in the comments section. I know it takes time to get that sort of following though.

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      1. fair enough but arent you trying to get a subscription service going? i believe a subscriber would only decide to actually pay if your calls are good as most of the technical information can be retrieved in the internet for free these days. (it truly boggles my mind why anyone would pay 50-100 bucks on a monthly basis when most of the information can be retrieved for free in the internet these days. eg:northman trader charges 179 gbp or about $260 USD on a monthly basis and that is just an insane cost)
        with that said, i think you have a nice looking website with lots of nice charts and technical information but the bottom line is whether your calls are right within your investment time horizon.

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        1. My main focus is protecting/growing my 401k. If you have $100,000 or $250,000 or a million in your 401k, the cost of a small monthly subscription fee to avoid huge losses (2007-2009) or take part in highly supportive uptrends is mere peanuts. I do not focus on day trading nor do I think its healthy. I swing trade on the side with my fun money. VXX is getting tough, so I will switch to something closer to being index based.

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          1. very valid points and duly noted. where can one get definitive pricing details regarding your subscription service? i couldnt find it anywhere in your website. thanks for your feedback

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          2. I haven’t posted any since I have no plans to charge in the near future. I’m feeling things out, getting content on the page, and tweaking my style first.

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      2. Storm, glad to hear that you’re switching over to SDS options but even those have time and volatility decay unless you buy deep in the money calls or puts. I still wish you would have position traded the VXX such as selling it on Thursday near the bottom of SPX and then reloading on the bounce. I think if bulls punch through 2085, it’s game over for bears. I will exit my long position around 2070 but will wait till at least 2075 to load shorts. Stop will be 2085. A safer play is to load shorts below 2040. Trade safe.

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        1. Unfortunately, I have a full time job and can’t position trade like that. I like how the technicals look in the medium term to not be worried. You too!

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  3. My Macro view for last 6 years is consistent to todays transitional market. transition happening for last 12 to 16 months. we are about to enter the last leg and most powerful one. Fundamentals consistent with my view. Discretionary income as good as it gets, increased savings, decreased mortgage debt, low inflation and commodity costs. Transition is about over and financials will lead the way along with high tech. Charts look ugly but it always does after the long sideways action. Small business and consumer sentiment consistent with a rebound. History of consumer savings at todays level suggests a spending acceleration from here on out. FED is very conservative and would never raise rates if a recession is seen, even remotely. Recent data suggests at year end the GDP would be over 3 percent. External factor China/EU are basing and in some cases reversing trend. recession at this time is remote at best. Stock market falling into a secular bear at the best economic conditions for the consumer makes zero sense.

    Immediate market condition: Viewed 2040 as most likely strong resistance and launch platform. Two immediate targets that I agree we have to see. Over 2067 and 2084 on SPX. Gold is about to fall hard as the dollar firms and bond yield catch up with the Feds intention. We are only 5 percent off the all time highs yet everyone expects a breakdown cascading drop. Huge outflow this last year along with huge short position. The reverse will happen very soon as the street realizes the transitional phase we are in. Next week is as important as last week. need confirmation. We should rally multiple days and break both 2067 and 2084 mark. 2100 is MY line in sand. if we break that all the EW chartist will have to revisit the wave structure.

    My best estimate is that a breakout event, not drop is most likely. Odds are 75 percent chance we are launching a new leg up. February lows should not be breached till the last leg of this bull run is reached. last leg is at a minimum 12 months away. Bet Gold’s drop right before FED announcement and have bet the SPX calls from the February lows with some puts when reversal seemed warranted.

    Have we ever in the past started a bear secular move without excesses? not the equities market, nor credit. Ever started the bear market with a tight labor market and low inflation? Ever start a bear market as the health of the consumer improves? Odds favor strongly another bull leg. BTW, 6 years ago I used the phrase “sweet spot” for corporate earnings even as higher productivity was taking place which adversely affected the consumer. The reverse has been going on these last 12 to 16 months. transition phase about complete. 3 percent GDP by end of year and 2 rate hikes. mentioned the 2 rate hikes 6 months ago when it was thought we were falling into a recession. All bull cycles complete when excess occur. We don’t need inflation to be very high this time around since the debt saturation level is so high. A 200 basis point move by the FED will cause debt issues. till that time we advance.

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    1. Hello and welcome!

      1) FED does not have a great history going back to 2000.
      2) GDP forecasts have been inflated on a quarter to quarter or year to year basis for years now
      3) Read up on my use of Hindenburg Omens and check out the chart under the Techniques menu at the top
      4) You don’t think all the moves of the world’s Central Banks has not built excesses? China has built empty cities. No more to purchase so prices tanking.
      5) The labor market may be tight, because all the jobs are part time or minimum wage. Household income has declined since 2000!
      6) The amount of dept to GDP is HUGE. The only question is when does it all end?

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      1. You misrepresent the economy as if there is no expansion of spending. there is and has been since the 2009 debacle ended. Macro views might be correct but in actuality the trend has been declining since the 80’s. Travel and leisure along with eating out has expanded way beyond your assumption of part timers. the stats are there if you care to read. JOLTS report shows huge number of unqualified workers and inability to fill those jobs. Service sector has been running high for a long time now. Discretionary sector in stocks had earnings these last 2 quarters that were very good. m China will grow for a very long time simply because they have the population and huge work force not yet tapped. Internalizing growth as they should. Any over expansion will be short lived. They will surpass us in 10 to 15 years time and will dominate the economic landscape for another 50 years.

        You can’t arbitrarily decide when the debt saturation will occur. it certainly will not happen in a zero rate environment. When we raise the FED FUNDS by 200 basis points we will start to see problems. till then the scenario for a pickup in spending and demand will be there. In fact we should see it in all the data going forward. How many years have you thought the end was here? To miss out on the tripling since the lows were established and to place bets on Gold is bunker mentality. When pressure on wages and inflation pick up enough we will be well prepared to exit. till that happens enjoy the show. make money where available. To run from a potential crash is foolish. the signs will be there. it is not now and in fact screaming for another leg up. Everything in place for one and to miss out makes no sense.

        II am sure you never expected to see a 7 year stock market run and this high. Underestimating the power of consumers and behavior. I can only guess that when the next few quarters show read expansion you will dissect it to find reasons to dismiss it. Most people take a myopic position and stick with it no matter what. I have no pride only wish to be on right side of bet. If/when the fundamentals deteriorate I will be prepared. Still best game in town bar none. Your correction has been going on for over a year now. Huge shorts and cash flow leaving stocks already happened. it will start to reverse here. SPX breaking 2085 will be a significant event. 2135 and it seals it.

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