OVERSOLD SIGNAL IN SMALL CAPS TRIGGERS BARBARIC RALLY

Small caps are up for the 7th consecutive day for only the 4th time in 5 years. The last signal I referenced in 2012 triggered 8 out of 9 days of consecutive gains, but 5 months of nearly uninterrupted gains before pulling back.

Watching the experts circle their wagons now is so painful to watch. This has all been so predictable, yet the pundits are so fucking retarded. I’ve broken this market down in so many ways since fall of last year to show not only why this was going to happen, but also how this would all be made possible.

Now that everyone has additional clarity or “confirmation”, they are all free to adjust and postpone their market death sentence until further notice. Lol.

What’s going to happen next year will require more attentiveness and focus than this year. It was easy to buy when nobody else bought. Now that we are supposed to welcome in the unwelcome, I think there will have to be an element of creativity to take positions after this new found crowd gets slapped around a little. In other words, I want to be more open to the pain trade process for individual stocks going into next year. Buy failed rallies, wait for breakdowns, etc.

I jumped on some $GOOGL, $WYNN, $SBUX calls and $CBI stock yesterday. Today, I booked some $LABU and bought up some $TWLO, $AAPL and $NFLX calls along with $GOGO stock.

I have a John Holmes sized watchlist here, but am waiting for respectable prices.

So much to say here, but by now you’ve seen and heard it all. More importantly, those that spoke out so much on the outcome of pending events are now in quite the predicament.

I suppose the top FAQ I’ll get from here is… “Hey Jeff….should I chase (Fill in the blank)?”

Biggest things to point out are the leadership breakout in transports, copper and financials. For the second phase of this years rally, those are still early cycle indicators. All things I headlined in my last boot camp.

Speaking of which, I’ll be doing one last boot camp for 2017 in early-mid December. There are a lot of details about next year that need to be sorted out. This is where I’ll put out my 2017 predictions and such. More details to follow.

For now, I’m nibbling on some of this tech selloff with $GOOGL. Booked gains in $CARA and $CVI and stalking $WYNN.

I know most of you tell me to get fucked with my historical analysis. That’s part of the fun in blogging. Oh wait, blogging is fun?

This year has unfolded quite similar to how last election year unfolded. In 2012, markets bottomed about a week after the election on a similar oversold signal. This year, that same oversold signal came last week.

In both years, the prior year (2011 and 2015) were a volatile mess. In each election year, we established a trend. Volatility to start the year. Volatility in the middle of the year, trend higher into October, then come in a bit heading into the election.

Last election year, markets bottomed about a week after the election. In this year, we hit the oversold signal ahead of the election.

I was also asked if my longer term analogue is still playing out. Here’s a quick look:

I used the Dow. Last time I used the RUT. Both show a striking resemblance.

One thing is certain, the last few days reflect money on the sidelines waiting to be deployed. I feel any dips you get after the election ought to be bought heading into year end.

I’m looking forward to putting this behind us to start planning for year end, as well as 2017.

Off to cast a vote. Will be out for the rest of the week.

I get pretty giddy over longer term oversold signals. Last week and today, I’ve deployed positions in $AAPL, $FB, $FCX, $BABA, $BIDU, $INTC, $ORCL and $ON is up next.

If you are looking for election protection, premiums have been discounted quite a bit today. Mush easier conditions to hedge into, obviously.

Just as a heads up, I will be out of the office on Wednesday-Friday. I have a three day event I must attend. I’ll try to set everything up for the week between today and tomorrow via After Hours with Option Addict.

After Hours with Option Addict will start today at 5:30 PM ET, rather than our usual 4:30 PM start time.

Apologies for the late notice. See you then, or if not, have a great weekend.

OA

On Monday, the Russell Cash Index registered an Oversold signal according to my own OB/OS indicator. Today marks the third day of this reading.

This is not to be confused with the $NYMO, which is also signaling OS today at -75 here intraday.

My indicator is built on three different time frames, looking to find those longer term action points where all time frames hit OS simultaneously. The RUT has only registered this signal two other times in the last 5 years. One on 8/25, which is a day I refer back to often as a entry point I used last year. The other was on 11/13 after the Obama reelect, and in front of Fiscal Cliff. That particular signal went OS for three straight days as well.