1/12 Watchlist: SPY, many etfs show bear signals; Fear flies;

Blue chips (SPY) show a pps bear signal on a decline of 1.1% from Monday's close. The mfi and stochastic are falling toward their respective 80-lines. The macd remains in bull territory. The price remains above the 20-day moving average.

The decline is consistent with a minor pullback within an uptrend that began in early March 2008. A decline below the ma20 would suggest a larger decline, such as that seen in June and July last year, as well as in September, October and November.

The blue chips' bear signal coincides with a gap up and sharp rise in volatility (VIX, the fear index). It is trading 9.2% above Monday's close.

Gold (GLD) also shows a bear signal and a 2.2% drop from yesterday's close, with the 20-day moving average below the 50-day moving average but the price above the 50-day. Oil (USO) shows a similar pattern with a pps bear signal.

Bear signals all over the major exchange-traded funds. See below

Otherwise, the signals on indicators and currencies remain as described in the Morningline.

Here's what's interesting among high-volume . . .

Closed AET +3.0% (options +14.6%)

I've closed my AET bull put spread (p31/-p32) on a price reversal, at 32.65 on the stock and for a 0.41 debit on the option.

That's a gain of 3% on the stock and a profit of 14.6% on the options.

12/17 Watchlist

A new bull signal on Treasury long bonds (TLT), and a bear signal on gold (GLD). Otherwise, nothing to add to this morning's discussion of the indicators.

No new signals on the currency pairs (EUR/USD and USD/JPY)

Among holdings:

Three January bull positons -- AET, HPQ, VALE -- have pulled back from peaks. I'm thinking of closing the positions.

LVS, a January covered call, is showing a bear signal, and prices remain in a sideways range.

KO, a January iron condor, has moved back in to max profit territory.

UNG, my December covered call, is trading well above 10. The call is a 9 strike, so the position will be exercised by whoever bought the call.

High-volume stocks and etfs priced $20 and above:

• QQQQ, bear signal, uptrend
  
• EEM, bear with a downward gap, uptrend
  
• JPM, bear, downtrend, but already at resistance
  
• MSFT, bear, uptrend
  
• MJN, bear,sideways trend, on the fourth day following a bull signal; confused puppy mode
• FCX, bear, amid a sharp pullback following an uptrend, the day following a bull signal; drunken sailor mode
• PG, bear, uptrend, on the fourth day following a bull signal (no more metaphors)
  
• FDX, bear, uptrend, on a gap down following earnings
• VWO, bear on a gap down, uptrend
  
• MOS, bear, sideways with some deep fluctuations
  
• DTV, bear, uptrend
  
• IVV, bear, uptrend
  
• XLI, bear, uptrend
  
• XLV, bear, uptrend
  
• VOD, bear, uptrend
  
• AXP, bear, uptrend
  
• GPS, bear (but no gap), trend change (maybe) from up to down
  
• DIA, bear, uptrend
  
• COF, bear, sideways following a strong uptrend
  

So, all in all, a fairly broad switch into bear mode. A lot of the stocks, not just those noted above, showed whipsaws from bull to bear the last few days. With the holiday trading week coming up, closing questionable positions is the prudent course.

JPM is the only trend following trade  in the batch, and since it is already at resistance, I don't find it to be compelling.

No covered call scan today.

12/17 Morningline

The November leading economic indicators report will be out shortly.
This is my favorite economic indicator, because it's forward looking and so matches the mindset of the markets. October was the seventh month to show an increase.

Meanwhile, to the indicators:

• Blue chips (SPY) opens at 110.72 on a gap downward, entered bear mode at close on Dec. 8 (at 109.61)
• Fear index (VIX) gaps upward 21.79, bear, Dec. 11 (21.59)
• Treasury long bonds (TLT) 92.5 on an upward gap, bear, Dec. 1 (95.25)
• Gold (GLD) 109.47 gaps downward, bear, Dec. 4 (113.75)
• Oil (USO) 36.59 no gap, bear, Dec. 4 (38.33)

Mainly, it's a gappish sort of day.

Currency pairs:

• Dollars per euro (EUR/USD) 1.45, bear, Dec. 4 (1.49)
• Yen per dollar (USD/JPY) 89,76, bear, Dec. 9 (87.86)

Holdings, December expiry:

• UNG, covered call (-c9) 10.20, bull, Dec. 7 (9.22)

Holdings, January expiry

• AET, bull put spread (p31/-p32) 33.56, bull, Dec. 8 (30.47)
• HPQ, bull put spread (p49/-p50) 50.94, bull, Dec. 9 (49.95)
• KO, iron condor (p50/-p52.5/-c57.5/c60) 58.26 and falling, bull, Dec. 1 (58.08)
• LVS, covered call (-c16) 15.55, bull, Dec. 14 (16.31)
• X, bear call spread (-c40/c41) 49.26, bull, Dec. 9 (46.74)
• VALE, bull put spread (p30/-p31) 28.27 on a gap down, bull, Dec. 14 (29.20) 

VALE is showing a new bear signal on a gap down but with a rising price since the open. It will bear watching.

KO is dropping back into profitable territory on my iron condor.

(Signals derived using Person's Proprietary Signal applied to daily charts.)

12/16 Morningline

The Consumer Price Index rose 0.4 percent, a fraction of the Producer Price Index's 1.8 percent rise announced on Tuesday. So, we can all refrain from a full-scale inflation panic for at least another month.
The Federal Open Market Committee will make their statement on rates and the economy at 2:15 p.m. Eastern (11:15 a.m. Pacific).

December options expire on Friday, which is a Quadruple Witching day,  sort of a speculators' Halloween. Be sure to lay on a supply of candy for any frazzled traders that come trick-or-treating at your door on Friday.

No new signals on the things I look at.

The indicators:

• Blue chips (SPY) opens the day at 111.8, entered bear mode at close on Dec. 14 (at 111.87), barely changed from yesterday
• Fear index (VIX), 21.5 , bear, Dec. 11 (21.59), falling
• Treasury long bonds (TLT), 91.93, bear, Dec. 1 (95.25), at the top of yesterday's trading range.
• Gold (GLD) 110.83, bear, Dec. 4 (113.75), rising
  
• Oil (USO), 36.08 , bear, Dec. 4 (38.33), rising
  

Currency pairs:

• Dollars per euro (EUR/USD) 1.45, bear, Dec. 4 (1.49), rising and within yesterday's trading range
  
• Yen per dollar (USD/JPY) 89.6, bear, Dec. 9 (87.86), at the top of yesterday's range.
  

Holdings, December expiry:

• UNG covered call (-c9), 10.22, bull, Dec. 7 (9.22), at the top of yesterday's range
  

Holdings, January expiry

• AET bull put spread (p31/-p32), 33.54, bull, Dec. 8 (30.47), slight gap up and rising
  
• HPQ bull put spread (p49/-p50), 50.9, bull, Dec. 9 (49.95), at the top of yesterday's range
  
• KO iron condor (p50/-p52.5/-c57.5/c60), 58.95, bull, Dec. 1 (58.08), within yesterday's range (and 1.20 above max profit at expiry)
  
• X bear call spread (-c40/c41), 48.95, bull, Dec. 9 (46.74), at the top of yesterday's range
  
• VALE bull put spread (p30/-p31), 29.04, bull, Dec. 14 (29.20), within yesterday's range

(Signals derived using Person's Proprietary Signal applied to daily charts.)

12/15 Watchlist

Indicators, currency pairs and holdings are showing no new signals since the Morningline.
Mobile phone companies showed bear signals after reports that Google plans to enter the cellphone hardware and service business. Among the high-volume stocks and etfs:

• BBY, bear signal on a gap down following earnings guidance; the stock has shown three signals in five days. The stock has been on an uptrend since June, so a bull signal after a pullback would be playable.
  
• VZ, bear, uptrend since October
  
• T, bear, uptrend since July
  
• GILD, bear, pretty much sideways since February
  
• XLE, bull, downtrend since October
  
• BK, bear, sideways, mainly, all year
  
• FLR, bull, downtrend since July
  

The number of new signals is something of an indicator. Compared to yesterday, today is a yawner.

BBY, VZ and T  might be playable on the next bull signal, if accompanied by price/volume confirmation, but the bear signal is counter-trend, something I'm avoiding these days.

The rest are either counter-trend or stocks going nowhere, and so don't pique my interest.

Looking more closely at my holdings:

UNG, my remaining December option, just keeps rising. In hindsight, better to have held the shares rather than hedging with a covered call (-c9). Go figure.  Even so, I'll profit from the covered call when the shares are drawn away from me after the option's last trading day, Friday.

At current prices, it would cost net 0.14 to exit UNG and the covered call, against a net 0.39 profit if I wait until expiry.

The bull put spreads:

• AET (p31/-p32)  is bumping up against resistance set last January. I'm holding for now but will close at the first sign of a price pullback. 
• HPQ (p49/-p50) has hit resistance set in November, and I'll be fairly hair-trigger about closing that position as well.
• VALE (p30/-p31) is trading within the range set yesterday, when I opened the position

X, a bear call spread (c41/-c40) is toying with upside resistance set in September. If it bumps through then I'll close for a loss. The stock flipped into bull mode on the fourth day after I opened the position.

KO, an iron condor (p50/-p52.5/-c57.5/c60), sits at a resistance level set in May 2008 and remains above max profitability, proving yet again that an iron condor has double the risk of beaking your heart. It can be unprofitable on both the upside and the downside.

12/15 Morningline

A new bull signal is showing this morning on USD/JPY, the third signal in nine trading days. The price, now 89.94, remains below resistance at about 90.20 and is trading within Friday's range.

Treasury long bonds (TLT) gapped down in price after the Bureau of Labor Statistics said the producer price index increased by 1.8%. The TLT decline prices in a likelihood that the Fed will increase interest rates sooner rather than later to stave off inflation.  (Rule of thumb: Higher interest rates, lower bond prices.)

The Fed is meeting today and will make an announcement on Wednesday, at 2:15 p.m. Eastern (11:15 a.m. Pacific).

Indicators:

• Blue chips (SPY) opens at 111.46, entered bull mode at 111.87 on Dec. 14, but with a suspicious price bar that leads me to believe that it's a spurious signal. Prior, SPY entered bear mode at close on Dec. 8 (at 109.61)
• Fear index (VIX) , 21.09, bear, Dec. 11 (21.59)
• Treasury long bonds (TLT) 91.57, bear, Dec. 1 (95.25)
• Gold (GLD) , 109.94, bear, Dec. 4 (113.75)
• Oil (USO), 35.62, bear, Dec. 4 (38.33)

Currency pairs:

• Dollars per euro (EUR/USD) , 1.47, bear, Dec. 4 (1.49)
• Yen per dollar (USD/JPY) 88.62, bear, Dec. 9 (87.86), but with a new bull signal showing this morning, confirmed by an intra-day price rise.
  

Holdings, December expiry:

• UNG, covered call (-c9) , 9.99, bull, Dec. 7 (9.22)

Holdings, January expiry

• AET, bull put spread (p31/-p32) 32.13, bull, Dec. 8 (30.47)
• HPQ, bull put spread (p49/-p50) 50.52, bull, Dec. 9 (49.95)
• KO, iron condor (p50/-p52.5/-c57.5/c60) 59.15, bull, Dec. 1 (58.08)
• VALE, bull put spread (p30/-p31), 28.89, bull, Dec. 14 (29.20)
• X, bear call spread (-c40/c41) 48.18, bull, Dec. 9 (46.74)

(Signals derived using Person's Proprietary Signal applied to daily charts.)

12/14 Morningline

Indicators:

• Blue chips (SPY) opened at 112, entered bear mode at close on Dec. 8 (at 110). SPY is showing a new bull signal this morning.
  
• Fear index (VIX), 22, bear, Dec. 11 (22)
• Treasury long bonds (TLT), 93, bear, Dec. 1 (95)
• Gold (GLD), 110 , bear, Dec. 4 (114)
• Oil (USO) 36, bear, Dec. 4 (38)

Currency pairs:

• Dollars per euro (EUR/USD), 1.46, bear, Dec. 4 (1.49)
• Yen per dollar (USD/JPY), 89, bear, Dec. 9 (88)

Holdings, December expiry:

• UNG, covered call (-c9), 9.94, bull, Dec. 7 (9.22). I'm giving up 0.31 profit on the stock, and it would cost 0.99 to buy the call back.

Holdings, January expiry

• AET, 32, bull put spread (p31/-p32) , bull, Dec. 8 (30)
• HPQ, 50, bull put spread (p49/-p50) , bull, Dec. 9 (50)
• KO, 59, iron condor (p50/-p52.5/-c57.5/c60) , bull, Dec. 1 (58)X, 47, bear call spread (-c40/c41) , bull, Dec. 9 (47)
• X, 47, bear call spread (-c40/c41) , bull, Dec. 9 (47)

All in all, a fairly calm opening, except for some large bounces in SPY pre-open and the new bull signal, which must still be in place near the close to be valid. (My rule for trading signals is that a signal counts at the end of the period.)

12/11 Watchlist

BMY rose again today after a bull signal at yesterday's close. It has been in an aggressive uptrend since late October and has about $2 to go until it hits upside resistance set in January 2008. (Yes, I pegged it as a sideways trend in yesterday's Watchlist. I broadened by view.) It's looking interesting as a possible play.
BAX, a bull signal yesterday that looked interesting but which I didn't trade, has shown a strong rise for the second day and has pierced resistance set in September.

New signals among other high-volume stocks and etfs, with the direction of the signal and the trend in which it has occurred:

• ORCL, bull, uptrend since March, sideways since October.
• SMH, bear, uptrend since March
• HD, bull, uptrend since March (trading at resistance)
• CTL, bull, uptrend since March (whipsaw from bear signal given three days earlier)
• BRCM, bear, uptrend since March (strong reversal at resistance)
• DIA, bull, uptrend since March, sideways since November (trading at resistance, whipsaw from a bear signal given four days earlier)
• XRT, bull, downtrend since October
• POT, bear, uptrend since October
• AXP, bull, uptrend since March (about $4 away from upside resistance, but this is the fifth signal given in 11 days, so clearly the stock in neither a bull nor a bear but a confused puppy)
  

Of those, AXP is interesting because of the distance from resistance, but the false signals worry me.

Holdings:

UNG, a covered call (-c9) that expires in eight days, has fallen to 9.53 and remains profitable.

Of the January expiry holdings, there are no new signals.

X, a bear spread (-c40/c41), which has moved contrary to my bearish position, is pulling back a bit but remains worrisome.

AET, a bull spread (p31/-p32) that showed a nice rise this morning, has pulled back to within yesteday's trading range.

HPQ, a bull spread (p49/-p50), is stalled at the cusp of profitability.

KO, an iron condor (p50/-p52.5/-c57.5/c60) remains above the range of max profit at expiration.

No new signals among the indicators.

12/11 Morningline

The fear index (VIX) is showing a bear signal this morning on a rising price from the open. A bearish VIX is bullish for stocks.

Otherwise, blue chips (SPY) are in bull mode, and Treasury long bonds (TLT), gold (GLD) and oil (USO) are in bear mode.

In currencies, the dollars per euro (EUR/USD) pair remains in bear mode, and the yen per dollar pair (USD/JPY) is showing a new bull signal on a price rise.

Paper holdings:

Short USD/JPY is a paper holding in my portfolio. I'm closing now (buying back the position), and have done so at 89.44. The basis was 87.82, so the loss is 1.8%

Holdings (with real money; skin in the game):

My covered call (-c9) on UNG, which expires in eight days, remains well above the strike price and will be exercised, most likely. I keep the 0.51 premium on the covered call and lose 0.12 on the shares.

January expiry:

X is hesitating at the top of its large rise three days ago that put it in bull mode, at resistance. My position is a bear call spread (-c40/c41). If the shares break out above resistance, then I'll close.

HPQ, a bull put spread (p49/-p50), remains in bull mode with little price movement.

KO, an iron condor (p50/-p52.5/-c57.5/c60), is in bull mode and continues to trade about a dollar above max profitability.

AET, a bull put spread (p31/-p32), continues to rise in bull mode.

12/10 Watchlist

AET has penetrated resistance decisively on the third day after a bull signal and is a buy at 31.70 or below with upside resistance around 33.70. See the discussion in yesterday's Watchlist.

I've opened a bull put spread (p31/-p32) in AET at 31.70 for 0.47 credit. The position is profitable on expiration in January from about 31.55 upward.

New signals among the high-volume stocks and etfs, with the signal, mfi confirmation status, and the trend:

• QQQQ, bull, confirmed, sideways
• ORCL, bull, confirmed, sideways
• BMY, bull, confirmed, sideways
• SBUX, bull, confirmed, sideways
• UNH, bull, confirmed, sideways
• QCOM, bull, confirmed, sideways
• XLK, bull, confirmed, sideways
• CVS, bull, unconfirmed, sideways
• BAX, bull confirmed, sideways (at resistance following strong gain)
• MT, bull, confirmed, sideways

BAX has some interest. I'm not opening a position because of the sideways trend, but it could be a play.

The rest are mainly whipsawing in confused puppy mode -- a series of bull and bear signals every few days.

Indicators: The VIX bear signal (bullish for stocks) noted in this morning's Morningline has disappeared. Other indicators remain as described.

Holdings:

UNG had a sharp rise today and the December covered call (-c9) will be exercised at this level. The trade remains profitable.

HPQ, a January bull put spread (p40/-p50) remains in bull mode iwth a price rise today.

KO is trading above the upper end of profitability at expiry of the January iron condor (p50/-p52.5/-c57.5/c60).

X, showing a bull signal from yesterday, contrary to my Janurary bear call spread (-c40/c41), is pulling back a bit at the upper end of yesterday's trading range.

Currencies (paper trade):

USD/JPY remains in bear mode and is trading within yesterday's trading range. I continue to hold my short position.

12/9 Watchlist

New signals among the high-volume stocks and etfs, with pps signal, mfi confirmation status, and price pattern:

• TXN, bear, confirmed, counter-up-trend retracement
• PEP, bear, confirmed, counter-up-trend retracement
• T, bear, unconfirmed, counter-up-trend retracement
• WMT, bear, confirmed, counter-up-trend retracement

As a dedicated trend follower, I don't like any of these. They're all counter-trend pullbacks.

Or, as the option addict Jeff Kohler said yesterday in a plaintiff scream of agony, "Get me the hell out of this range. Please."

AET, which was on yesterday's watchlist with a bull signal, opened this morning at upside resistance and then declined to within yesterday's trading range. It didn't decisively pierce resistance, so no trade.

My holdings:

X, a January bear call spread (c41/-c40), is showing a bull signal with a push up to near-term resistance. If it pushes through, I'm closing.

HPQ, a January bull put spread (p49/-p50), is showing a bull signal today, after a bear signal yesterday. The issue is clearly in super-whipsaw mode, as it has given three signals in four days. I'll hang on for now pending some sort of price confirmation.

UNG and KO are about where they were in the morningline.

No new signals on the indicators.

The USD/JPY currency pair continues to show a bear signal confirmed by the rsi.

12/8 Wrap

HPQ keeps showing (and unshowing) a ghost bear pps signal. I'm going to keep my bull put spread and see what happens tomorrow.

AET is below 31, so no entry today.

No trades today. That's -30-.

12/8 Watchlist

I've found one possibly decent trade, and that one ambiguous, after scanning all etfs and stocks with volume of 5,000,000 and up for pps signals, status of mfi confirmation by direction, and the trend.

The one possibility is AET, which showing a bull pps signal, confirmed by the direction of the mfi. True, the stock has been in a sideways trend since March, but the bull signal is coming at the top of a fluctuation cycle that has been running about a month measured peak to peak.

AET is not yet quit at resistance, and I want to see what happens. If the price breaks above 31.25, then it might be a trade a for me.

Here's the reject list, showing pps signals with status of mfi confirmation by direction and trend:

• SPY, bear, confirmed, sideways
• EEM, bear, unconfirmed, sideways
• MSFT, bear, confirmed, counter-up-trend retracement
  
• ORCL,  bear, confirmed, sideways
• MRK, bear, confirmed, counter-up-trend retracement
• HD, bear, unconfirmed, sideways
• XLI, bear, confirmed, sideways
• ITUB, bear, unconfirmed, counter-up-trend retracement
• DIA, bear, confirmed, counter-up-trend retracement
• PG, bear, confirmed, counter-up-trend retracement
• XLP, bear, confirmed, counter-up-trend retracement
• VWO, bear, unconfirmed, counter-up-trend retracement
• TWX, bear, unconfirmed, counter-up-trend retracement on news
• BBD, bear, confirmed, counter-up-trend retracement
• XLK, bear, confirmed, counter-up-trend retracement

I've rejected the sideways trenders (except AET, as described above) because they tend to be too short term for my purposes. My ideal options position will be short (i.e., I sold the options)  and will last for 30 days and trend in my direction, giving me a bump from both the price rise and theta decay.


I also rejected the counter-trend retracements, since my present strategy is to trade with the larger trend.

In today's scan, I gave little thought to mfi confirmation. There was just so much not to like that the mfi became irrelevant.

In my holdings:

HPQ has lost the bear signal it showed at the opening this morning and has barely budged during the day. So, no action appears necessary.

X is looking nicely bearish in line with my position.

UNG, at 0.46 above the strike of my 9.00 covered call, is showing a bull signal. For tomorrow I'll do  calculation of when (if) it makes sense to sell the call and retain the shares rather than waiting for exercise.

KO, in bull mode with a sideways price, remains at the top of max profitability of my iron condor.

The indicators -- SPY, VIX, TLT, GLD, EUR/USD, USD/JPY -- remain as described in the Morningline.