That's what this private trader's day was like on Friday.
| trend | adx | psar | pps | macd | macd trend | sto | sto trend | |
|---|---|---|---|---|---|---|---|---|
| SPY $118.82 | ||||||||
| VIX 22.05 | ||||||||
| TLT $92.13 |
So, let's assess the damage:
First, the decline blue-chip stocks (SPY) leave the price above the lows set on Wednesday and Tuesday. It returns the markets to where they were in early April. So, not the end of the world by any means. The one-day decline, in fact, is less than three-fourths of Tuesday's.
The volatility index on the blue chips, the VIX, rose sharply, by 21.6%. However, the high ws below the highs set on Wednesday and Tuesday, the amount of the increase was less than Tuesday's 29.3%.
The most significant move, in fact, was Treasury long-term bonds (TLT), which rose 1.2% to a price level not seen since Feb. 5.
I think it's significant that none of those key indicators showed a phase reversal in the technical signals. SPY was in bear phase before Friday, and still. The VIX, bull phase before Friday. TLT, also bull phase before the big run-up.
The price of long-terms Treasuries move on expectations of future interest rates. So a price increase means the traders expect rates to be low, which is not a vote of confidence in a near-term economy recovery.
That's not to the significance of the moves, but the proof will be in the follow throught.
Among the lesser indicators I follow, two showed phase shifts on Friday.
| trend | adx | psar | pps | macd | macd trend | sto | sto trend | |
|---|---|---|---|---|---|---|---|---|
| JNK $40.20 | ||||||||
| GLD $115.36 | ||||||||
| USO $41.33 | ||||||||
| EEM $42.05 | ||||||||
| EUR/USD $1.3184 | ||||||||
| USD/JPY ¥93.84 |
High yield corporate debt (JNK) moved to bull phase on the parabolic sar. Junk bond prices mainly move on expecations of how great a chance there is a default, so a price rise shows increased confidence in the financial health of businesses.
Oil (USO) also moved into bull phase on Friday. This indicator is more complex than most, with its moves dictated by inventories, refinery capacity, political events in oil-producing countries and the value of the U.S. dollar relative to other currencies.
Another possible cause for oil price increases is the expectation of higher demand as the economy recovers, certainly an explanation that would be consistent with Friday's signal action on JNK, although not on TLT.
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Looking at my holdings: Ouch! Or semi-ouch!
| trend | adx | psar | pps | macd | macd trend | sto | sto trend | |
|---|---|---|---|---|---|---|---|---|
| BBY $45.52 bull | ||||||||
| CIEN$18.53 bull | ||||||||
| GE> $18.86 bull | ||||||||
| JNK $40.20 | ||||||||
| MCO $24.72 bull | ||||||||
| NLY $16.95 div | ||||||||
| PALM $5.79 bull | ||||||||
| QQQQ $49.24 bull |
Bull holding BBY took a huge hit, down 4.5% from the prior day's close. The decline brought the price down to levels last seen on April 22. The stock had been in psar bear mode for two days prior to Friday, so the signal didn't change.
Another bull holding, GE, took a 33.2% dive, brinign the price down to levels last seen on Wednesday. Counter-intuitively, on Thursday the Person's Proprietary Signal switched into bull phase, and on Friday, despite the decline, the psar went bullish. Go figure!
A third bull options position, QQQQ, was down 1.98%, to levels last seen on Wednesday. The psar and pps are in bear phase.
Finally, bull position CIEN was up 1.3% and hit a new high intra-day on the three-month chart before pulling back sharply. The psar and pps are in bull phase.
Dividend play JNK was up, as discussed above. Problem child NLY was down, but what else in new?
Zombie shares MCO also lost nearly 2%, but no surprise, given its recent pattern.
And special situation PALM decline about half a percent. It's price is support by a buyout agreement Palm negotiated with HPQ.
So my task on Monday will be to look for pullbacks to the upside on BBY, GE and QQQQ. If they don't happen, then I'll exit.
Indicator Exchange-Traded Fund Symbols:
EEM - emerging markets
EUR/USD - euro/dollar currency pair
GLD - gold
JNK - high-yield corporate bonds
SPY - blue-chip stocks
TLT - Treasury long-term bonds
USD/JPY - dollar/yen currency pair
USO - crude oil
VIX - fear index
Abbreviations:
psar - Parabolic Stop and Reverse
adx - Average Directional Index
pps - Person's Proprietary Signal
ma20 - 20-day moving average
macd - Moving Average Convergence-Divergence
mfi - Money Flow Index
sto - Fast Stochastic
About the glance: The colors indicate the state of each signal.
- trend: Determined by the 5-day moving average, green for up, red for down, yellow for sideways
- adx: orange for above 30-up, blue for 20-down, purple for in the middle. Red is most prone to whipsaws
- psar, pps, macd: green for bull mode, red for bear
- sto: green for overbought, red for oversold, yellow for the neutral zone.
New to private trading? Here's a look at How to Become a Private Trader.
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