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Premium daily stock trading service by Monica Kingsley. She provides extensive analyses and comments at least 1 time per trading day, usually before the opening bell, plus whenever dictated by market action. The analyses focus on all the key factors essential to determining the medium- and short-term outlook for the S&P 500 futures, spanning over several time frames, credit markets and S&P 500 sectors and ratios. They also capture the key fundamental developments, events and trends in assessing the prospects and health of the S&P 500 moves. This way, you’re kept up-to-date on important developments that far too many investors are apt to miss or underestimate.

Whether you're looking for objective analyses to broaden your horizon / add confidence to trading decisions, or want to get inspired by Monica's trade calls for S&P 500 futures, Stock Trading Alerts are the way to go.

  • Grinding, Grinding, Stocks Keeps Rising - Wait, ADP is Here!

    September 2, 2020, 10:16 AM

    Tuesday was again one of those days of higher stock prices. Seems boring, I know, but there are still intraday opportunities to take advantage of. For instance, I took long profits off the table before much of the downswing hit, and reentered on the long side during the regular session's opening selloff yesterday.

    Enjoying the rally continuation, and still thinking that calling tops or corrections is a fool's errand, I prefer riding the bull responsibly as that's definitely more friendly to one's trading equity. One can't be too cautious these days with such extreme greed readings, though...

    For example, this is how I commented on the setup in today's intraday Stock Trading Alert:

    (...) The S&P 500 outlook remains bullish, but I see prices dipping below their current 3550 level as more likely than not during today's session - especially if the market doesn't like today's ADP non-farm employment change. And chances are, its bar (1,250K expected), will prove a bridge too far.

    The market indeed dipped right after the open, and I cashed profits again - just like yesterday.

    Let's dive into the key charts and feel the market pulse - again and continuously.

    S&P 500 in the Short-Run

    I'll start with the daily chart perspective (charts courtesy of http://stockcharts.com ):

    After Monday's move turning out not really either way, stocks rose powerfully yesterday. Best of all, the volume wasn't at levels associated with distribution.

    The Credit Markets' Point of View

    High yield corporate bonds (HYG ETF) finally joined in the buying spree yesterday, and the rising volume bodes well for the upswing to continue. That's positive for stocks - and even more so given the strong day in investment grade corporate bonds (LQD ETF) too.

    Both leading credit market ratios - the investment grade corporate bonds to longer-dated Treasuries (LQD:IEI) and high yield corporate bonds to short-term Treasuries (HYG:SHY), are once again in unison, and supporting higher stock prices.

    The stocks to all Treasuries ($SPX:$UST) ratio keeps pointing to the stock market rising in favor, relatively speaking. And given the macroeconomic backdrop (the inflation move from the Fed), I view stocks as a still an undervalued asset class.

    Yes, regardless of the tech valuations which will get even more outrageous in my opinion. Because TINA - there is no alternative in the hunt for yield than to move ever farther on the risk curve. This hated bull run will see more money deployed before making a top that I don't see happening this year, not at all.

    From the Readers' Mailbag

    The first question is actually a follow-up to the most recent one - you'll find it my yesterday's Stock Trading Alert,

    Q: Thank you so much Monica for the comment on the Cot Report. I understood perfectly your explanation, and it really makes sense. Yes, I had a lot of doubts about the way of that italian trader to trade the sp500, he write every week from more the 12 years in a website of economic information, and he comments how to read and use the Cot... in any case, he has been always long from the 2009, and even with the correction that the market had, he is very proud of trading sp500 using the Cot. And holding position long from when it was around 1000. For sure is good for him, he made a lot of money staying long from 2009, but is not my way to trade for sure ... still thank you, and my appreciation for your topic/ analysis

    A: Thank you, I am glad you enjoyed the answer. My point is that exclusively using such a blunt tool that also pointed to the stock market bottom in March 2009, requires one to have a pretty strong stomach as there have been many instances since, where its signals were less than strong or totally reliable.

    Still, the Italian trader captured the long-term move - but my style is very different for I seek to catch both the medium- and short-term moves. Not a permabull, not a permabear. I pay great attention to the risk-reward ratio, and continually manage my open trades so as to improve this key characteristic. My maxim is to take care of the downside, and let profits grow - subscribers are updated in real-time for I issue many intraday Alerts (whenever market situation requires that).

    Combining technicals with fundamentals heavily, I view information, data and headlines as being one or the another way discounted in the price chart(s), and the most profitable way of approaching these is to be trading market reactions to changing data and narratives - attentive to the main trend. As a macroeconomist, I could venture into the data much deeper - the same goes for my extensive political or medical knowledge. But I do so only as regards stock prices, or other markets I comment on. False or not, happening or delayed, my job is to identify such moves and profit on them - and to help as many people (subscribers or free readers) do the same too.

    There are many factors involved in my calls with shifting weights assigned - I am not taking a mechanistic, quantifiable view. What I think as a result, having considered them all, is presented - and you read those missives in my daily key analysis on the net...

    Q: MK without divulging any personal information can you describe a reasonable approach to utilizing trailing stop loss percentage range....I am looking more for a reasonable theoretical approach to the current market situation and using trailing stop loss percentages. 2% 6%? or some other range and any theory or thoughts you would share knowing it is a personal choice. I read 2% for bond ETFs and 6% for equity ETFs.

    A: Thank you for your question. First of all, this is a very special market - a strong bull, still very much hated, powered by a few key sectors at nosebleed valuations while the others lag, amid a slow but ongoing recovery from a mini-depression that can still turn into something more serious if the monetary and fiscal support gets unplugged whichever way.

    Every trade starts with a moment of entry, where you look at how much you're willing to risk for what kind of gain (where the market realistically has the power to reach). Such sketch of the open trade enables you to set how much of your trading account you're willing to risk in a given trade - my very rough preference is between 2-6% indeed, but I have seen systems work with even 15% in case of taking medium- and long-term trades predominantly. Charting the trade idea helps with planning ahead where could those tactical milestones of where you could move the trailing stop-loss so as to lock in open profits, be.

    See? I am not talking percentages much. It's a question of win rate, and risk-reward ratio - coupled with discipline to take both profits and losses. In every trade, I look at momentum, volume, intermarket analysis, headline risk, personal anticipation of the coming short- or medium-term move, and first of all - the price chart of the traded asset.

    Used correctly, this technique has the power to improve one's equity curve greatly. Just like other money management techniques that I am not diving into these articles, because they fit very different trading approaches, risk tolerance, and influence the stability of returns. And that's exactly what professionals aim for - to have a low, predictable volatility on the downside. That's precisely the gist of what I wrote right above: "take care of the downside, and let profits grow".

    The point is about judicious and logical tightening, where you evaluate the scenarios, and answer for yourself whether the market does or doesn't have the power to likely get there. That can be set tight, that can be set wider - it differs, because every moment in the markets is unique. Unique, but to a certain degree fitting a more or less distinct pattern.

    Applied to the current situation, the direction is solidly higher in stocks, volatility is generally declining, but a correction can come with little notice. In September, I look for it to be rather shallow (still a positive month), but in October, I expect a steeper one (we'll see, I wouldn't be surprised at all if the month ended in the red). The medium-term trend is higher, and it is your friend - that's the long-term view.

    Summary

    Summing up, the S&P 500 market character hasn't changed, and it's still bullish. The case for a pause hasn't disappeared, but with solid credit market and tech performance, keeps being moved into the future. As the put/call ratio keeps sliding and sliding, it's my opinion that the pause is approaching - and today's ADP non-farm employment change could very well be the catalyst of such. Relatively shallow correction within a bull run, that is - which I, as a medium- to short-term trader, prefer to pass by and wait for a stronger setup to deploy capital again.

    Thank you for reading today's free analysis. If you would like to receive daily premium follow-ups, I encourage you to sign up for my Stock Trading Alerts to also benefit from the trading action described - the moment it happens. The full analysis includes more details about current positions and levels to watch before deciding to open any new ones or where to close existing ones.

    Thank you.

    Monica Kingsley
    Stock Trading Strategist
    Sunshine Profits: Analysis. Care. Profits.

  • Stock Trading Alert #1

    September 2, 2020, 7:12 AM

    Available to premium subscribers only.

  • Stock Trading Alert #3

    September 1, 2020, 9:35 AM

    Available to premium subscribers only.

  • Grinding, Grinding, Stocks Keeps Rising

    September 1, 2020, 9:18 AM

    Every day, higher stock prices every day - sounds really nice? I bet it does for those not caught still on the short side of the market. While readings are getting a bit too exuberant, are they frothy enough to justify a long-awaited correction?

    Let's check the charts and feel the pulse.

    S&P 500 in the Short-Run

    I'll start with the daily chart perspective (charts courtesy of http://stockcharts.com ):

    It's quite hard to pick a soft spot in the stocks rally, isn't it? The rising volume though indicates that a consolidation wouldn't be all too surprising. While I am not calling for September storms, I think that we're in for a leaner month than August was.

    The Credit Markets' Point of View

    High yield corporate bonds (HYG ETF) made a bearish move yesterday - rolling over on rising volume. But how bearish does it get? I see sideways consolidation not breaking below the mid-August lows as the most likely scenario. We're still in a predominantly risk-on environment, after all.

    Investment grade corporate bonds (LQD ETF) recovered for second trading day in a row. The Fed-induced selloff was a bit too heavy, and I continue to look tor LQD to outperform long-dated Treasuries in the very short run.

    And they indeed look set to do so, as more money out of the deepest bond market around, moves into the stock market.

    Gold, Copper and Technology

    Going sideways, and forming what could very well turn out to be a bullish flag in the end. No challenge of the summer lows just as I called for almost a month ago. The sell-the-news reaction to the new Fed approach towards inflation, is over - the yellow metal attempts to extend modest daily gains. That supports the no squeeze ahead hypothesis.

    Copper confirms the bullish bias, and casts a vote in favor of the recovery. Best of all, neither the red metal nor commodities ($CRB) are overheating.

    Technology (XLK ETF) keeps powering higher like there's no tomorrow, but the upper shadow on rising volume could pause it in the short run. Could and short run, these are the key words here. The chart is primed to go much higher, and who could responsibly call for a profound reversal? Not me, as in the current sad state of the real economy, tech stands ready to benefit the most.

    From the Readers' Mailbag

    Q: Hi Monica, first my compliment for your analysis.. one question, do you never follow the Cot Report to analyze the position of the small trader, large trader and commercial trader?? I follow a topic of an italian trader, who is always long from 2008 just following the Cot Report. he always say that is the only way to know what the big investor (commercial trader) are doing. Also he always say that until the small traders (all people like me...) and large traders are short, the market can go only up... commercial traders will protect the market. And looking what is happened in all these 12 years, I can say he is right until now. What do you think about that? About the Cot Report? is a reliable information to know what direction the market is taking?? thank you so much for any your comment/opinion.

    A: Thank you very much, I am glad you're appreciating my writings. I like the sentiment readings and constituent parts of the fear and greed index much more. It's that the commitment of traders report has to a large extent lost its analytical edge over the recent decades, not just years.

    We're living in many bubbles, and I won't mention any of the Fed-blown ones, or allude to the everything bubble - I'll say merely two words: passive investing. That's a bubble in its own right, or who in their right mind would buy into quite a few of the nosebleed P/E valuations? It makes one redefine what the smart money actually is, because that has changed.

    Ignoring the macroeconomics would have been painful for that Italian trader - the flash crash of 2010 followed by 2011 when it looked we're headed for a recession. Or who could forget the summer of 2015 and early 2016?

    I use a much broader mix of tools that I more or less regularly discuss in my daily public analyses (reading them over weeks and months brings out the most value into the open) - and the same goes for narratives that power the markets, or make them turn. The CoT one sounds coherent logically, but the practical application is troublesome.

    Besides, the only ones who I heard to protect the market, have been the central banks really - once their hand gets twisted really badly. That's an example of what I catch with the momentum part of my style. You know, there is a time for everything, and everything in moderation. Powerful wisdom for life too.

    Apart from my thoughts as to CoT in stocks, take a look at the below view of CoT and precious metals.

    Or check Warren Buffet and his value investing theory. Very successful in its own realm, but he didn't really get gold - and only now has bought into the king of metals, whose bull market of the 2000s decade and September 2011 top, outperformed Berkshire Hathaway.

    My point is that we're living in very different times, and need to use a more rich and precise set of tools in getting the market moves right.

  • Stock Trading Alert #1

    September 1, 2020, 7:31 AM

    Available to premium subscribers only.

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