Sunday, August 20, 2017

Ponzo Updates for SPY, QQQ & TLT + Trader's Outlook......08.20.17

This week's forecasts have changed only slightly from recent outlooks.  The SPY looks to be more susceptible to a pullback while the Qs remain bullish and TLT has adopted a wider range neutral stance. The instances of potential 5% + pullbacks have increased for SPY and QQQ.
An optimistic earnings season has managed to keep the markets in a buy the dip mood, BUT ...increasing tensions with China & NOKO internationally and a tide of anti-Trump attacks by the media may serve to destabilize an already tenuous political situation nationally.
Trader's Outlook has become cautious in anticipation of volatility rising....a reflection of the TLT forecast adjustment..



Saturday, August 12, 2017

Ponzo Updates for SPY, QQQ and TLT plus Trader's Outlook....08.12.17

This week's Ponzo updates reflect some divergence from recent forecasts.
We now have a black swan type scenario on SPY, not imminent but still looming as geo political tensions ramp up and increasingly expected volatility pops in the Fall pose a risk for vested positions.
QQQ looks slightly less optimistic than recent posts although the downturn last week really didn't impact the index significantly.  FANG stocks are increasingly at risk so keeping an eye on support levels in critical.
TLT has suddenly become significantly more bullish, moving out of its narrow range consolidation and despite numerous talking heads droning on about the impending collapse of the bond market.  
Trader's Outlook is bullish and reflects the obvious....bull trend still intact but increasing risk makes the whole investment game a precarious undertaking.
Thursday saw the biggest daily volume (and volatility) since February.  Friday's recovery was iffy both in terms of strength and volume with many likely holding their breath over the weekend waiting to see if NOKO is going to grace us with a nuclear winter or Yosemite delivers a blast to end civilization as we know it.  (readers in the Dakotas take heart....you've got good odds for survival....the rest of us are toast).



Sunday, August 6, 2017

Ponzo Updates for SPY, QQQ & TLT + Trader's Outlook.........08.06.17

This week's updates forecast a slightly more tepid outlook for SPY and QQQ while the TLT forecast remains firmly in the channel established 2 weeks ago. The historical bias for a summer sell off has so far failed to materialize as the VIX hovers at 10 and incremental new highs are reached.  The dollar has plunged below long term support and the low volume slog continues to create a risky trading environment with option premiums at dismally low levels and occasional flash crashes (due to a number of factors) scaring the bejesus out of risk adverse traders.
I've added a neutral range bracket (yellow) for all models set to one standard deviation.
This helps me set up option trading strategies like butterflies and/or iron condors easily.
Trader's Outlook is moderately bearish for next week.



Sunday, July 30, 2017

Ponzo Updates and Trader's Outlook for SPY, QQQ & TLT.......07.31.17

SPY and QQ finished the week only pennies off the previous week's close while TLT pulled back 2%.  The surprising  forecast this week is the Qs, which had been bullish, but which has now become almost hyperbolic in outlook.  While FANG and its outliers have continued to gain momentum recently this outlook looks like some kind of statistical anomaly rather than a realistic scenario in the next 5 months.  Of course these are just probability scenarios based on previous historical patterns and given the current frothy levels of the markets may not reflect likely outcomes but, it does provide some food for thought.
Trader's Outlook is net neutral for next week.....reflecting the longer term forecast for TLT which looks ripe for iron condor & butterfly positions..
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Saturday, July 22, 2017

Ponzo Update and Traders Outlook..SPY, QQQ, TLT.....07.24.17

This week's Ponzo forecasts reveal a significant risk increase for SPY and QQQ while the prospects for TLT, which Ponzo turned bullish on last week, now show the greatest potential for longer term gains.  Summer months are historically weak performer, although that hasn't been the case in recent years.  As the yield curve flattens once again and macro economic fundamentals begin to deteriorate the possibilities for treasuries and composite bond ETFs like AGG look increasingly attractive.
The Trader's Outlook is modestly bullish as we roll into earnings season and increased expectations.
Trading volume has been running about 50-70% historical levels and periodic flash crashes in oil, the Euro, the dollar and various select stocks suggest volatility surges may confound stop orders as liquidity becomes thin and spreads widen.
It's hard to find any good risk/reward scenarios these days.



Monday, July 17, 2017

Ponzo Updates for SPY, QQQ & TLT....07.17.17

This week's updates have QQQ wildly bullish and TLT in a renewed bullish mode.   TLT has undergone a modest pullback recently and may be resuming its previous long term bullish pattern.
QQQ is the standout of the bunch as analysts' consensus favors FANG and its outliers as the GO TO favorites. Discounting the volatility of Tesla and Bitcoin (and the associated risk danger) QQQ valuations continue to frame well above long term benchmarks as the markets talking heads issue daily warnings on the coming market collapse.  Not a time to get heavily vested.



Monday, July 10, 2017

Ponzo Updates for SPY, QQQ and TLT...07.10.17

This week's Ponzo Updates have the SPY looking at an expanded trading range  (potential volatility) while the recent pop in QQQ has actually resulted in a narrowed lower volatility trading range outlook.  TLT, currently undergoing a pullback from severe overbought levels, has pulled back about $6 from recent highs and bears watching if it penetrated $120...at which point we would expect a potential bottoming pattern to develop and buying opportunities to develop.



Wednesday, July 5, 2017

Ponzo Updates for SPY, QQQ and TLT....07.03.17

This week's Ponzo forecasts all suggest narrowing trading ranges for the next few months and the outlook for TLT has deteriorated from previous long term bullish views.
The forecasts are basically net neutral, favoring iron condor and butterfly setups for option traders.
 


Monday, June 26, 2017

Ponzo Updates for SPY, QQQ and TLT......06.26.17

While the forecasts for SPY and QQQ look extremely similar to last week's outlooks the forecast for TLT has changed dramatically, with outlier scenarios well beyond the 2 standard deviation range.  In addition, the consensus forecast has become considerably more constrained than in the previous 2 months....a significant reversals from the consistently bullish outlook seen since TLT  bottomed out at 117. This outlook contrasts the the current downward yield curve trend, which nominally would suggest further upside potential for TLT.



Monday, June 19, 2017

Ponzo Updates for SPY, QQQ and TLT.....06.19.17

This week's Ponzo forecasts maintain the bullish theme of the past month.  In fact, we're seeing new forecast highs for QQQ and TLT and a slightly reduced target for SPY.  Given the market's current view that any news is good news those forecasts have strong odds...with the caveat that North Korea, some wacked out assassin, or any number of other imponderables could quickly lead to a liquidity draining plunge down 7-10%.



Monday, June 12, 2017

Ponzo Updates for SPY, QQQ & TLT....06.12.17

With an impending yield curve reversal looming when the FEDs hike next week (100% according to FED fund odds), the scenario for TLT remains bullish while SPY and QQQ look prone to reversals of yet to be determined magnitude.  The continuing trickle of economic bad news is eventually going to be seen in the markets as valuations reach extreme levels and the historical summertime doldrums kick in.  The VIX continues to behave in a mean reverting manner as we witnessed a 24 year low last week. Trader's Outlook has changed its format and is non-committal this week.



Monday, June 5, 2017

Ponzo Updates for SPY & TLT....06.05.17

Expect volatility to spike as Thursday approaches and Comey speaks to Congress.  Meanwhile the markets are at new highs and the slow melt up on piddling volume continues.  One of these days the balloon will burst and when that happens expect evaporating liquidity (think spreads) will reveal the absence of buyers.  Crazy times as bonds continue on a melt up track with SPY.
Odds are 90% the FED will hike mid June.


Saturday, June 3, 2017

VDX Updates and Trader's Outlook....06.03.17

Good employment numbers drove the markets to new highs on Friday and the general rule of thumb is...don't short new highs.
Trader's Outlook is neutral to modestly bearish....betting on a mean reversion trade.
Looking at the current SPY and TLT VDX charts we see (surprisingly that SPY is not overbought and TLT (on massive volume Friday) continues its bullish run as projected by the recent Ponzo.



Tuesday, May 30, 2017

SPY and TLT Ponzo Updates...05.30.17

We're approaching the last day of the month which will occur midweek and hence bullish odds are enhanced.   This week's Ponzo updates look very similar to last week's....strong bullish momentum for SPY and narrow range consolidation for TLT.
Yahoo data issues are still not resolved for the Mosaic models.  I've been in touch with 6 different   user groups that have been blindsided by the Yahoo issue and bottom line appears to be no more free data (no more free reliable data) and the cheapest option so far appears to be esignal real time at $55/month.



Monday, May 22, 2017

SPY and TLT Ponzo Updates...05.22.17

The YAHOO data stream remains DOA but we are still able to update the Ponzo forecasts on a limited basis.  As such, here are SPY and TLT....SPY suggesting a bullish momentum while TLT looks to be hunkering down to a narrow range low volatility scenario.....with the usual caveats in both cases that surprise geopolitical news could quickly derail any market momentum or stability.


Wednesday, May 17, 2017

ON HOLD......05.17.17

As part of the AOL+YHOO= OATH merger Yahoo has terminated the data strings (EOD and RT) that provided input to Ponzo, VDX and the M series models. As a result ,we are currently unable to update any of our toolbox until this issue is resolved. No advance notice was provided of the termination, leaving us in a scramble mode.  We're currently exploring new data provider options as it appears the new OATH strings will make updating our multi-input models problematic.
For now we're looking for an IT consultant who can facilitate the new data stream.
Mosaic users will be advised when we once again become operational.

Monday, May 15, 2017

M6 Tuesday Forecasts......05.15.17

Despite all the economic and geopolitical risk factors that continue to fester the markets managed
to confound short sellers as SPY blasted through 240 and most of the indices registered new highs.
It was a low volume run up but the A/D line was strong and solid.  Now we await Turnaround Tuesday to see if we get a follow through or pullback.
Meanwhile our World model continues to bank better gains than the US market model and .....heads up......both models have STOP Alerts turning down thereby warranting caution (EWZ is stopped).


Sunday, May 14, 2017

M6 World Outlook, VDX Updates and More...05.14.17

The updated M6 World model has generated great returns recently, led by EWZ (Brazil).  For now this is our go to portfolio as the domestic M6 Market model is stuck in a churn and burn (commissions) mode. While US market momentum may have stalled the international markets appear to be in a rally mode so as long as stops are respected that looks like the better odds situation.
Trader's Outlook is bearish to neutral next week as we hit mid month and the Sell in May crowd has yet to decide whether to quit the game (bad choice last year) or hang in there.
The VDX updates have us in a potential mean reversion setup for a pop in SPY and a drop in TLT although it looks technically premature..




Thursday, May 11, 2017

M6 Market Outlook for Friday....05.11.17

The M6 Market model remains in a STOPPED mode.  The M6 WORLD model is a bit more optimistic as we move into a likely Friday sell down.  Earnings are winding down, mostly with upside results (except retail) and we're currently on Alert for the next big news.....little of which recent news has had much of a negative effect on momentum.

Wednesday, May 10, 2017

M6 Market Outlook for Thursday....-5.10.17

The M6 Market model is signalling vested positions for QQQ in momentum and AGG in mean reversion, basically leaving us with a net neutral outlook.  As the US equity markets continue to frequently confound technical analysis I'm looking for alternate investment venues and in that light here's a look at a variation of the old World model, featuring just 6 ETFs the World covers the the SPY, the European largest 900 companies (EFA), global emerging markets (EEM), Russia (RSX), Brazil (EWZ) and China's nifty fifty (FXI). We're still playing with relative beta to establish appropriate limit stops but for now we're just using a 1% across the board baseline.