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

Read More »

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.

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.

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

Read More »

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.

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

Read More »

SPDR S&P 500 ETF (SPY)

Update 6/11/2018: SPY as it turned out extended its 2nd-wave correction to the upside after I entered the position on May 14, entering a persistent rise on May 19 that continues to this day.

I exited for a loss more than a month before the options would have expired, for a $6.94 debit with shares at $278.51. I shall re-establish a position once the correction has ended.

Shares rose by 6.1% over my 39-day holding period, or a +57% annual rate. The options position lost 57.9% for a -542% annual rate and -1.5% share-equivalent loss.

---

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.

Read More »

ProShares UltraPro Short S&P500 (SPXU)

Update 5/25/2018: SPXU underwent a 4:1 reverse stock split on May 24. Here is the updated basis:

sym	entry	exit	result (%)	annualized (%)	entry date	exit date
SPXU	40.56				5/15

---

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, with the basis reflecting the price prior to the May 24 4:1 reverse split:

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

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

Read More »

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.

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

Read More »

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.

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

Read More »

The week’s economic reporting will highlight three broad functions of  business: Buying and selling with retail sales, out Tuesday at 8:30 a.m. New York time,  putting roofs over heads with housing starts, out Wednesday at 8:30 a.m. and making things, with industrial production, also on Wednesday, at 9:15 a.m.

Read More »

5/11 – 3:10 p.m. New York time

No significant change on the SPY chart today. No trades.

5/11 – 10:55 a.m. New York time

SPY rising and the Fisher Transform signaling an uptrend on the daily chart: No trades in sight this morning.

By Tim Bovee, Portland, Oregon, May 11, 2018

Read More »

5/10 – 3:15 p.m. New York time

Having moved above the April 18 peak, SPY in my opinion will continue to zig and zag for weeks. My options position on SPY doesn’t expire until mid-June, and the declines within the complex correction will provide exit opportunities, especially as increasing Theta — the measure of time decay — decreases the cost of exiting the position.

Regarding my shares plays, I go by the rule that I play movements in the direction of the larger trend, which since Jan. 26 has been down at the Primary degree in Elliott wave analysis. However, the correction within that downtrend is uptrending. That implies that I would want to play the A and C waves, while sitting out the B waves.

And so I shall do, using the daily Fisher Transform as a signal for entering and exiting SPXL as a triple-leverage bull play on the S&P 500. (The bear leveraged counterpart is SPXU.)

No trades today.

5/10 – 12:40 p.m. New York time

SPY has moved above the April 18 high of $271.30, the 2nd wave peak in the primary degree. Therefore, I have altered my count to show a more complex pattern developing, composed of several patterns linked together.

A 30-day chart of SPY with 15-minute bars.

5/10 – 10:25 a.m. New York time

SPY remain just barely below the $271.30 level. As of this morning there is no need to act on my bear position on SPY using options, nor to enter a shares trade.

Why is the $271.30 level important? It has to do with the rules and guidelines for Elliott wave analysis of charts.

The red line in the SPY chart below, taken just a few moments ago, marks the April 18 peak of $271.30. That peak marked the beginning of Wave 1 to the downside of the Minute degree.

SPY is now working through a Wave 2 correction to the upside in the same degree. The rules state that a 2nd wave cannot move beyond the starting point of the preceding 1st wave of the same degree. If the count shows it doing so, then the count is incorrect; something else going on.

So far, that rule has not come into play and the present count stands. If it the $271.30 level is breached, then I shall redo the count and figure out what that “something else going on” is.

The chart below covers SPY for 30 days with 15-minute bars.

By Tim Bovee, Portland, Oregon, May 10, 2018

Read More »