Live: Monday, May 21, 2018

3:15 p.m. New York time

No trades today. My analysis of the markets from this morning remains unchanged.

10:55 a.m. New York time

The revised Elliott wave count, showing that the 2nd wave of the Minuette degree is still underway.

The chart covers 10 days with 10-minute bars.

spy20180521

10:15 a.m. New York time

SPY’s gap upward this morning pushed the price above what I had labelled as the end of the 2nd wave peak of the Subminuette degree of the Elliott wave count. That means the 2nd wave is still in force, invalidating my previous count. I shall reanalyze the chart and post it later today.

The Fisher Transform on the SPY daily chart moved back to uptrending on the daily chart but remains downtrending on the monthly chart. At this point I intend no exits from my present positions, composed of SPY options (here and here) and shares in the inverse S&P 500 fund SPXU.

By Tim Bovee, Portland, Oregon, May 21, 2018

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The Week Ahead: Housing and durables

Real estate takes the spotlight in the week’s economic reporting, with the larger part of the sector, existing home sales, out Thursday and the remainder, new home sales, out Wednesday, each at 10 a.m. New York time.

Also, look for durable goods orders on Friday at 8:30 a.m.

In Fedworld, minutes of the May 2 Federal Open Market Committee meeting will be published on Wednesday at 2 p.m. At that meeting members voted unanimously to keep the federal funds target unchanged at 1.5% to 1.75%.

Fed Gov. Lael Brainard speaks on revitalization of the Community Reinvestment Act at a conference of the Association for Neighborhood and Housing Development in New York City, on Friday at 9:15 a.m. The event will be streamed live to viewers who register, here.

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Live: Friday, May 18, 2018

3:20 p.m. New York time

I placed no trades today.

10:45 a.m. New York time

The Fisher Transform on the SPY daily chart has returned to downtrending, validating the more complex signal handling I discussed in the May 17 Live post. The Elliott wave count, the daily Fisher and the monthly Fisher are all three aligned in signaling a downtrend.

Today’s early trading marked a new low in the decline from May 17, which I count as a 3rd wave down of the Subminuette degree.

I see no need for action on my present positions, SPY options (here and here) and shares in the inverse S&P 500 fund SPXU. I have no new positions planned for today.

By Tim Bovee, Portland, Oregon, May 18, 2018

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Live: Thursday, May 17, 2018

2:45 p.m. New York time

Rules are a bulwark against failure. Rules are fallible. Such are the Scylla and Charybdis through which traders must navigate every day.

Today’s six-headed monster and giant whirlpool, described in Homer’s Odyssey, are the signals from the Fisher Transform vs. the ambiguities of the Elliott wave count.

In beginning my trades into and out of the triple leverage inverse fund SPXU, which is based on the S&P 500, I proposed to rely solely on the daily chart’s Fisher Transform signals.

My resolve happened to coincide with a period of weak trending by the S&P 500 and consequently, a series of whipsaws, even on a metric as whipsaw-resistant as the Fisher.

And whipsaws, as we know, are like the gluttonous geese, also of the Odyssey. They nibble away at the prospect of profits until only the impossible dream remains.

What is a trader to do?

The chart below cover a month with daily bars. The upper metric is the Fisher Transform itself, with signals occurring when the yellow line crosses the blue line. The lower metric is a signal chart, showing the state of the Fisher: Uptrend or downtrend.

spyfisher20180517

The Fisher whipsawed on May 15, moving to a downtrend signal , and then moved back to an uptrend signal the next day. The price chart itself shows a three-day sideways move, with the two lines in the upper metric crossing each other only in the most minuscule way, without an real change in the price trend. It’s as through Odysseus’ boat had only inches to spare to avoid the six-headed monster.

Under such circumstances, the signals aren’t meaningful. Add to the confusion the face, discussed in the May 16 live post, that by the Elliott wave count is clearly downtrending at the degrees I care about. Market charts are fractal in nature, with trends within trends. So a downtrend at one degree can contain both uptrends and downtrends at lesser degrees.

One way to navigate through the waters is to calm them by moving to a longer-term chart for the Fisher signals.

A monthly chart, for example, signals at a more stately pace, as seen on this five-year chart with monthly bars.

spyfisher20180517b

And I think that provides the solution. In assessing the Fisher Transform, I shall initially look at the daily chart signal. But I shall look at the monthly chart for confirmation. And I shall use the Elliott wave analysis as a tie-breaker.

In today’s case, the daily Fisher is showing an uptrend, but the monthly Fisher is showing a downtrend and the Elliott wave count is also downtrending. The consensus, then, is to continue to hold my bear positions on the S&P 500, including my long shares in the inverse fund SPXU.

10:55 a.m. New York time

The Fisher Transform on the SPY daily chart continues to signal an uptrend, and the intra-day signals agree. If the signals remains uptrending my rules require exiting my shares position in SPXU today.

My Elliott wave analysis shows SPY continuing in 3rd waves to the downside of both the Minor and Minuette degrees, so I shall continue to hold my options positions on SPY (here and here). See the chart in Wednesday’s Live discussion.

By Tim Bovee, Portland, Oregon, May 17, 2018

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Live: Wednesday, March 16, 2018

3:15 p.m. New York time

I entered no positions and exited none.

The Fisher Transform on the daily hart moved to uptrending as the closing bell approached. However, as of this posting the trend was unconfirmed by the 10-minute chart Fisher, which is signaling a downtrend.

The signals would affect my shares trade on SPXU, and I shall wait and see if the signals will align before taking any action.

The uptrend signal is unsupported by the Elliott wave count. Below, a 10-day chart with 10-minute bars showing my Elliot wave analysis of the 3rd wave of the Minute degree, which began on May 14.

spy20180516

10:35 a.m. New York time

SPY has traded largely within yesterday’s range so far this morning. I have no trades in sight.

By Tim Bovee, Portland, Oregon, May 16, 2018

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SPY Analysis

SPDR S&P 500 ETF (SPY)

I have entered a short vertical spread on SPY, using options that trade for the last time 66 days hence, on July 20. The premium is a $3.26 credit and the stock at the time of entry was priced at $270.86.

I made the decision to enter the trade in my account based on a reversal from the peak of May 14, beginning by my Elliott wave count the 3rd wave to the downside at the Minute degree.

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Shares: SPXU

ProShares UltraPro Short S&P500 (SPXU)

I have entered a shares position in SPXU, a triple-leveraged inverse fund based on the S&P 500 index.

The Fisher Transform on the S&P 500 signaled a downtrend this morning on the daily chart, a profitable direction for inverse funds.

The trade:

sym entry exit result (%) annualized (%) entry date exit date
SPXU 10.14 5/15

By Tim Bovee, Portland, Oregon, May 15, 2018

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Live: Tuesday, May 15, 2018

5/15 – 3:30 p.m. New York time

I placed two trades today, a short bear call spread on SPY using options and a long position on SPXU using shares.

5/15 – 11:20 a.m. New York time

I have entered a bear call spread position on SPY using shares that expire July 20.

5/15 – 10:40 a.m. New York time

I have entered a long shares position on SPXU.

5/15 – 10:30 a.m. New York time

SPY reversed to the downside this morning with an opening gap. The Fisher Transform signaled a change to downtrending.

I shall add to my options bear position on SPY, with a later expiration date, and also re-open my shares position in the inverse S&P 500 exchange-traded fund SPXU.

By my Elliott wave count, SPY has begun the 1st wave down in the Minuette degree of the 3rd wave of the Minute degree, usually a wave a great power. An alternative count would count the present decline as a downward leg within a continuing Minute wave 2. Time will resolve the two options.

The SPY chart below covers 20 days with one-hour bars.

spy20180515

By Tim Bovee, Portland, Oregon, May 15, 2018

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Live: Monday, May 14, 2018

5/14 – 3:20 p.m. New York time

No change in my analysis and no trades today.

5/14 – 10:35 a.m. New York time

SPY continues to rise in what Elliott wave analysis labels as a C wave of the Minuette degree. I see no action as necessary until the C wave is complete.

My current chart with the Elliott wave count, covering 20 days with hourly bars.

spy20180514

By Tim Bovee, Portland, Oregon, May 14, 2018

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