Last week: "Both long & medium term level rejections underway for 4 of 5 USA main indexes while TLT and GLD perk up and hold or reclaim levels is reason for concern. Yet USA 2nd half leader Tech (along with sub-sectors semi-conductors and biotech) remains very strong, and VIX is quite calm. So, some mixed signals at the moment."
Result: USA main stock indexes dropped twice last week, but came back in impressive fashion each time. Tech continues to look great, and even held its 2000 top as support on the 9/29 scare
Sum
Since August I have been saying upside limited. INDU did not quite reach my target YR1 (shy by 100 points twice), and once SPX/SPY cleared YR1s I was looking for Q3R1 (missed by 5 points 2x). RUT and VTI made highs bang on YR1s and down from there. Yet at the same time, Tech has resumed leadership and has been quite healthy, spending just 4 days below SepP then reclaiming status of above all pivots.
Though I am concerned about YR1 resistance (SPY, RUT/IWM, bit higher on VTI) the quarterly and monthly chart analysis gives the edge to the stock bulls. Tech is jumping above its 2000 top, and SPX is back above its 2015 top as well. While INDU is lagging, in general long term charts look bullish for USA stocks and a bit more negative for the safe havens TLT and GLD. In addition, oil looks very interesting here showing 2 different signs of long term strength we have not seen in quite some time: the first close above monthly 10MA since July 2014, and the 2nd try above a long term pivot, also since July 2014. Oil strength will support the market.
Bottom line - We'll have new Q4Ps and OctPs on Monday, and it will be easy to see what is above all pivots, what isn't, then what holds and what breaks. While the mixed conditions still exist (SPY YR1, IWM YR1 directly overhead and VTI YR1 not far off), right now I give edge to stock bulls based on the quarterly and monthly charts, and sentiment nowhere near bullish extreme. If SPY & IWM can clear YR1s (that remains an IF) then we should see a run to NDX target area YR1 4959. Watch oil, because the last time we started to see long term strength after a big drop that was on GLD in late January.
Pivots
USA mains - Tech looking great above all pivots and not yet at resistance. However, both SPY YR1 and RUT/IWM YR1 directly overhead, VTI YR1 standing as the high, and INDU/DIA has faded from a near tag of YR1 in August as well. Most USA mains look to open above Q4P and OctP, but the weaker INDU will be very near the levels.
Safe havens - TLT turning on pivots Q3R1 high, 2HP low, then recently SepP high. Looks to open below Q4P but above OctP.
Global and other - Oil the story, with USO lifting above its 2HP for the second time this year. To put this in context, USO has only had 3 closes above a long term pivot since July 2014 and one of these two was last week. China has had an impressive summer, with FXI all above monthly pivots for 3 months in a row and a 22% rally off 6/27 low to 9/8 high; this has helped EEM as well. But some cooling off would be normal.
Other technicals
I wrote a post on quarterly and monthly charts on SPX, NDX, INDU, TLT, GLD and USO. While INDU is lagging these are clearly on the bullish side here, with stocks looking stronger than safe havens and USO ready to get institutional buying.
Valuation and fundamentals
Appear more headwinds than tailwinds.
Sentiment
Bullish extremes of August have worked off with the drop and sideways in September. We didn't really see bearish extremes. No readings are too bullish currently.
Timing
Missed 9/7 key high
8/29-9/2 - admittedly wide; so far stock pullback low and TLT high
9/12 - pullback low on a some ETFs (9/12 close, 9/13 price low)
9/16 - low test for SPY and DIA; +1 on key low for TLT
9/23-27 - pesky with 9/22 key high (-1) across the board, then 9/27 low across the board
I will try to do a special timing review post soon. Here are October dates:
10/9 - that's Sunday so let's say 10/7-10
10/19