Ultimately what matters is the close of the bar, and one of the judgment calls of the method is whether to wait for that or adjust on open. Consider a move as recently as 10/21, which appeared to be ugly open that rallied all day and instead turned out to be a minor low.
This is why I tend to view the 5 USA mains as a group, then add in VIX vehicles to judge. I used to weight more TLT and GLD as safe haven alerts showing risk for stocks, but this hasn't really worked in the second half. Yet I have also recognized this, so let's not get too tied to any one firm rule.
Basics:
Are we seeing any pivots act as resistance? Monthly, quarterly, half-year, yearly?
Are we seeing any major level rejections? Yearly, half-year, quarterly, monthly?
What is the current main index leader, and what is going on with that? (10/20-21 Tech above all pivots). What is the main index lagger, and what is happening there? (10/24 high INDU failed to recover Q4P).
Is VIX or any VIX vehicle sounding alarm?
Other technicals: slope of MAs, RSI, Bollinger bands... a bit too much to get into in this post.
Sentiment, timing, valuation and fundamentals are also involved here. For example, we know that a major sentiment bullish extreme was reached in August and we haven't yet seen a bearish extreme... but it doesn't always work that extremes flip flop like that. We could have a major sentiment high, then middling as some indexes go higher.
Let's get to the point. Yesterday we noted that the bullish developments of Monday were undone on Tuesday. As of Wednesday's open:
SPX set looking like rejection of Q4P (2nd break of quarter), bearish and opening door to Q4S1 target. Recall we are already in process of YR1 rejection that be in play on a weekly basis since throughout October.
Tech set, current leader, just made high on NQ1 YR1, so one of the variations did tag a major level and now looks more like rejection. Still above all pivots though.
INDU set never recovered Q4P and so far this is winning out; also continuing drop from near tag of YR1 that was made in August.
RUT set bounced from Q4P Friday-Monday, returned to level Tuesday, and appears to be opening below. Bearish, and also continuing move from YR1 highs reached twice in September.
VTI had fractional break of Q4P yesterday, but anything lower will look like 2nd break and again resistance. VTI also continuing drop from YR1 highs reached in August and early September.
So this is a lot of points on the bear side.
So what about VIX / XIV? VIX Q4P / OctP combo is 14.94-15.15 so if above that I think better move is to err on the side of hedging / reducing longs / possibly shorting. Let's not get carried away with the last one because very few stock indexes are in even partial long term downtrend (ie below a YP or HP). A few are below YPs due to larger drops in 2015 2nd half and 2016, but all of those that I track are above 2HPs. If the VIX level holds as resistance then it may be better to just do nothing to current positions.