REVIEW
3/12 Total market view: "Simply stated I think the next more likely move is settling into a range. If this continues largely bullish for stocks then NYA will continue above its MarP and VIX below its MarP. If a bit more threatening, then we will see NYA below its MarP, VIX above again, and IWM likely lower. That said, at this point I think pullbacks will remain fairly limited until we see more testing of high areas.
Result
3/15-16 high area was near test for SPY & VTI, higher high for QQQ, lower high for DIA compared to 3/1 highs. Stock indexes were mostly sideways overall.
SUM
Last week's basic point is that bullish configuration for stocks but upside limited and range more likely. That is playing out and I think will continue. As of 3/1 I said SPY YR1 or DIA YR1 should be "a decent top" and so far this has been quite correct on the SPY area YR1 with near enough tag and exact tag on the related ES1 contract.
I am suspecting we could see rotation into IWM (left out of 2017 party thus far) yet weakness in XLF, the 2017 consensus long. Regardless, as long as SPX and INDU are dealing with major resistance clusters (YR1 / 1HR2 / Q1R2 - reached on SPX, but not quite on INDU) then upside "should be" limited.
On the other hand, momentum has been so incredible that any pullback will be dropping onto decent support, so it very likely will be bought. If indexes lower, SPY for example, could touch the lower daily BB which it hasn't even tagged since 11/4/16 low! If lower than that, a sharply rising D50MA will be bought on first test. So if stocks drop further, this is a pullback to hedge, but not trade as a short. The only other reason to exit a couple other positions is to have more capital available for fresh signals early in Q2 which often happens. See positioning detail for more on this subject.
Bottom line
Upside for stocks likely limited, but pullbacks will be bought. This has been the view all of March. Yet portfolio is back to 100% net long via 11 longs and 1 short hedge. If next week plays out more bearish I may reduce to 70-80% long via XLF or other exit, or hedge. If stocks higher then easy to hold current positions. The 1 SPY hedge is valid under the YR1.
Positioning
Some nifty recent moves recommended in Daily comments with small gains on 2 IWM hedges and good covers, INDA long 3/3, EEM long 3/13, 1 of three XLF exit 3/14 before a larger drop.
PIVOTS
USA main indexes
All USA mains above all pivots - very bullish. I won't be truly cautious on stocks until we see multiple indexes below a QP and VIX above its QP. Maybe this will happen in Q2 but maybe not.
Other indexes of note
XLF showing bad tick so charts not the best, but base index IXM shows rejection from Q1R1 and below a flat-ish D20MA.
SMH still quietly powering higher despite RSI divergences.
Global stocks
INDA and EEM new leaders. FXI and EWZ weaker, RSX mixed. EEM YR1 high level to watch but if wanting to hold through a decline maybe FXI hedge is way to do that.
Safe havens
VIX and XIV supportive of stocks. XIV YR2 level to watch, with VIX MarS1. GLD perking up. TLT appears to be setting up for more bounce, but still under all pivots so pass on the play.
Currency and commodity
DXY 2017 sum thus far: Mostly weak with high on 1/3; held YP exact on 2/1 low, rally with struggle, now back under Q1P and MarP. No opinion on direction but under 1HP a second time would be bearish and thus very bullish for global index longs.
OTHER TECHNICALS
USA main index charts have resistance or are outside monthly Bollinger bands, and momentum has been so strong that most indexes haven't touched the lower daily Bollinger and/or D50MA since the election. Thus, upside limited and pullback likely bought remains near term view.
I didn't do a full Market top checklist post this week, but the difference between 3/20 week and 3/13 week is that now there is more divergence on daily RSIs and highs have been tested on SPY with lower highs on DIA. Also, more indexes have reached yearly levels - XIV YR2, EEM YR1, INDA above YR1.
SENTIMENT
Clear extreme in mid December capped upside from there, but 2017 has been lacking typical signs of euphoria. This has helped stocks maintain gains and go higher.
Valuation and fundamentals
Fundamentals are supportive but longstanding valuation target reached and now acting as some lid for stocks. See link for details.
TIMING
Proprietary experimental work in progress model)
3/3 - So far stock high 3/1, but I don't count -2 days as a hit. DXY high 3/2 FWIW.
3/20 - TBD
3/24 - TBD
3/20 and 3/24 both look to be stronger than average timing cycle dates.