Last week: "With the strength in 2 of 4 safe havens, I am a bit less bullish on USA stocks and think risk of some fade from RUT / IWM YP area has increased. At the same time, all 5 USA main indexes are above JunPs and VIX / XIV area unconcerned so one cannot be too bearish either."
DIA and VTI reached JunR1s near exact; SPY near test just shy, and IWM 1 day overshoot then fell back. So that is 4 of 5 USA mains testing JunR1s and retreating from there. Also, after RUT / IWM cleared YP for 4 trading days Friday fell sharply and back under the level.
Sum
As I have been saying the last few days in daily SPY commentary, *usually* monthly pivots are not enough for a major top (SPY, DIA, IWM and NYA all near JunR1s then down last week). But a few other components of my Total market view are considering if we just saw a turn of more significance.
I don't have a strong bias as to what will happen. Safe havens could soar and stocks fall further, or safe havens drop down as stocks bounce back. In recent weeks long USA stocks AND safe haven positions in TLT and GLD/GDX has been the way to go - all of these above all pivots as of various dates. Although if I had to chose a bias, I would say the former: safe havens up as stocks drop further.
If stocks index hold above all pivots then proper thing to do is hold positions. If they break, then can hedge or reduce. IBB is actually under all pivots (the only index I track with this status), and if stocks go lower in the coming week QQQ will probably break JunP before SPY, DIA, and NYA/VTI. One could also short against IWM if it falls under the 1HP too, although this more of hedging idea than trade since below long term levels ie 2 pivots and above medium term levels ie 2 pivots. Above 2 / below 2 is not much edge either way, though if choosing I'd go with the larger long term levels.
Pivots
Levels to watch on USA mains: IWM YP / 1HP most important, QQQ JunP, then other JunPs. On safe havens TLT YR1 acting as support could be *very* bullish for TLT.
Other technicals
There are many ways to calculate support and resistance and obviously from this site I am focusing on pivots. But close values can also work on daily, weekly, monthly and quarterly bars. The monthly close high for SPX is 2107, achieved 5/2015. So it adds to bearish concerns for the index to try to clear that then fall back below.
Valuation & fundamentals
I have been pointing to 18x forward earnings for SPX as resistance all year. This value will change per fluctuation in earnings estimates, but for the prior week it was 2121. the high was 2020.55; this is not a coincidence! For the coming week estimates dropped and 18x is down to 2105.
Further, fundamentals just cannot really get going in full gear. Why should we expect to see SPX 20x earnings with fundamentals weak along with election and FOMC risk? This means the rally could and should stop near this 18x area, and what can change is the estimate.
Sentiment
Last week 3 of 4 sentiment readings reached into excessive bullish territory. Crowd bearish at the lows, bullish at the highs. Until the entire market is taken over by machines, this is how it works! See the recent sentiment post for details.
Timing
Lastly, I had 2 important and 1 less important timing areas for June (published end of May):
6/7-9; so far 6/8 decent turn in USA and some global indexes
6/13-14
6/28 (mild)
So, although 3 indexes on monthly pivots and 1 on yearly, valuation, sentiment and timing are all pointing to the possibility of a more important top.