Big Moves are coming

I follow four areas of the market very closely; volatility, miners, gold, and the SPY index, and everything smells of deflation.  I trade on the 2 and 4 hour, but I took a step back and looked at the monthly, weekly, and daily charts and everywhere I look it smells of lack of oxygen.

The broad market has a decreasing positive slope (8% y-t-d), and why not, you cannot continue to have 10-14% (from 2014) annualized growth rates with no GDP, Income, or fixed income rates.  The charade started with a relative yield trade, then a squeeze volatility trade, and now we are wrapping up the leverage the balance sheet trade.  The Central Banks and politicians have done everything except the right thing, and maybe because the  right thing is the hard thing.

As far as I can tell deflation is taking root everywhere in the world, and that makes raising prices very hard, and realistically, I believe in the short term, employers cannot really chop until and unless revenues start to fall in earnest.  They are losing all of their variable expenses to exploit, and are sitting on increasing amounts of debt.  If Yellen increases rates (which I have serious doubts she will), the carrying costs of that debt becomes increasingly material.

Bull markets are not made of these.

The charts are bearing me out, SPY is stuck in a range, where the algos are torturing the short sellers, but there are no marginal new buyers.  Margin debt is maxed, retail traders are all in, and the Central Banks has stopped giving the banks new casino money.  Using wedge break mathematics, 900 on SPY over the next 18 months is a distinct possibility.

Biotech cannot get out of its way, and I believe that bubble has burst, and will retrace all gains.  80% of all firms in the index have negligible revenue, and are simply burning investor cash.  Good night. Social Media is showing  that expectations far exceed growth, and the punishments are beginning. Gold has never bought the inflation story, and my expectations are a hard move down, same for the miners.

Enjoy the charts.

Musings

Last week, I thought gold and NUGT would rise, and it did, but not impressed with the move, and it looks likely to fail.  I am staying away from it this week.

SPY is being capped pretty hard by the 161 fib line from the 09 bottom and it is trading back and forth in a range, and now a wedge.  Friday was interesting as 40 points from Thursday's high evaporated like it was nothing.  Any real selling could cause some grief for the markets.

I don't know about you, but does anybody believe that the Fed will raise interest rates anytime in the near or far future?  We are triple zero; rates, wages, and GDP.  I think the Fed is out of bullets, and the Govt is stuck as there is no way the Republicans are going to allow pump priming going into a national election.  Plus, I seriously doubt the Fed will allow the politicians to paint a bogey on their back blaming them for the economy due to rate increases.

Therefore we will see input costs continue to collapse, and I am pretty sure we will see thirty year no cost mortgages in the twos before the next elections.

Finally, I appreciate all of the support and new clients with the stock signals.  They performed very well.  I am now in the process of adding a long volatility signal, NUGT/DUST, SPY, and TNA/TZA. I will be testing for the next few weeks, and release some time in May.  My plan is to keep the price the same for all new subscribers for these additional signals, and keep the price locked indefinitely for those who are subscribed by June 30. I also may cap it at 300 subscribers to keep it manageable. The price is about a 1000 share commission, a month ($12.50.  The program creates the signal and immediately forwarded to you via text through Twitter.  This is the best deal in stock education.  No guessing, no pontification, just math. You can sign up at the top right.

Ok, here are a few charts, enjoy.

I Finally Did It

After many years of desiring to complete an end to end signal that automatically communicates my buy and sell signals triggered by my program within my trading software, I finally did it. It took some clever programming but now I can instantaneously send a text message with clear instructions the moment my software signals it.

My first signal is my bread and butter volatility signal set on the 30 minute, hourly and four hourly, offered based on investors time horizons.  I use SVXY as the symbol, but in using the signal to make profitable trades, you can interchange with XIV, UVXY, and VXX.  For example, if you get a buy 4 hourly SVXY, you can buy XIV or SVXY, or buy UVXY or VXX puts.  What I don't recommend is to use a sell signal to go long volatility.  It does not work consistently enough.  There is another signal I use that I have not released yet.

For full disclosure I only trade the four hourly, and I am up 47% since January 15th with no margin. Other investors trading the hourly have had success using options.  Remember, these are high probability set ups not perfect picks, to be successful you must trade every signal, as you will lose two out of ten times.  But these are here for your education as I can't hope to know your goals and financial condition.

If you look to the right, you can sign up and receive the signals.  I priced it to make it affordable to everyone, yet allow me to recoup my time and costs to maintain and improve it over time.  I want to thank my beta testers in helping me make this a very nice offering.

Now to the week ahead.

The Charts Speak

Short Term Top?

First about last week.  All my trades were profitable and are closed (see last blog post).  First off the signal is working beautifully, and enough traders believing the lie that the Fed is ever going to raise rates just made it easier.

This week, the signals have me in watch and wait mode, with a very interesting pattern in IBB that bears watching.

My automatic SVXY hourly trade signal is being beta'd right now, and the feedback has been favorable, with some great suggestions to improve performance.  We will test for sixty day to get enough data points, and to continue to reduce any latency in the signal, and any slippage due to time to delivery. Both are solvable and are being engineered into the program.

My $50,000 to $1,000,000 trading only volatility challenge in five years is ahead of schedule.  I attached the graph for review, and will continue to post the trades live.

Enjoy the charts.

Thinking It is an Up Week

Ah Movement

OK, I two of the three directions right but made three winning trades.  Long Vix, short SPY, and when gold failed the breakout on Monday, I shorted and covered on Friday.  My new thoughts are in the charts below.  Enjoy.