REVIEW
6/18/2017 Total market view: "It is not every week that 3 of 5 USA mains are at yearly resistance and so happens that bonds are at yearly pivots. Watch, and if the market makes a "ring the bell" sort of move with VIX and XIV confirming, take meaningful action."
QQQ recovered YR2 and DIA held YR1 throughout last week.
Sum
The market is in an odd state: all 5 USA mains are above all pivots, VIX below all pivots, XIV above all pivots. This remains a bullish configuration for risk assets. There is only slight daily moving average weakness with SPY and VTI below 10 & 20, and DIA testing 10. Others, meaning QQQ and IWM, above all MAs.
Yet TLT is above all pivots and GLD just regained that status as well. How is this happening for all USA stock indexes and 2 key safe havens to be this strong as well? I don't know. I thought market was very ripe to see a drop from Dow YR1, especially considering valuation and fundamental concerns, but so far that hasn't happened. I remain watchful and wary, but thus far any defensive move has not paid.
Bottom line
So far stocks holding up well. I have been expecting a drop from DIA YR1 but so far it hasn't happened.
Soon heading into the second half which means the most change in pivots other than the new year - new second half (2H), third quarter (Q3) and of course July levels for pivots, resistance and support. Often definitive moves begin near the start of quarters. Will tech and global indexes have a re-balancing move? Will energy, financials and small caps gain? Will TLT continue to gain or pull back? As the new quarter approaches, it often pays to do a full analysis of quarterly and monthly charts.
Positioning
Currently 80% long. I thought the 3rd break of June pivot for QQQ would seal the deal for a pullback but no. If markets continue up on Monday I may add back to 100% but likely on SPY as I think the biggest winners will be more subject to profit taking in weeks ahead.
PIVOTS
USA main indexes - DIA above YR1, VTI also back above YR1, QQQ back above YR2 and reclaimed above all pivots. Unlike other times this year, IWM doing fine too. All bullish action but I'm still watching Dow YR1 at 21350 cash.
Safe havens - VIX and XIV still very bullish for risk, but at the same time, both TLT and GLD above all pivots. Weird!
Global indexes - Benchmark ACWI biggest drop in weeks, with FXI, INDA and KWEB a bit off highs. EWZ and RSX have been dragged lower with oil, and SHComp in its own universe recovering in June from May weakness.
Sectors of note - XLK testing YR1, with high bang on 1HR3.
Currency and commodity - Oil via USO slight break and recovery of YS1 - potential speculative buy. DXY remains below all pivots despite recent bounce off 1HS1.
OTHER TECHNICALS
Time to pay attention to quarterly and monthly charts. Small up bars can invite selling.
VALUATION AND FUNDAMENTALS
Valuation healthy, fundamentals not. Stocks ignoring USA economic data but bonds are paying attention with TNX near 7 month lows.
SENTIMENT
No recent extremes - early June bullishness on 2 meters has been worked off.
TIMING
Proprietary work in progress model that I quietly persist in pursuing due to calls like this from three weeks ago:
"In addition, a larger timing cycle points to momentum slowing in risk assets from 6/5 into July."
QQQ, the main index momentum leader, fractionally higher on 6/8 then slammed.
This timing work used to be more of a focus when I worked for a small hedge fund, but I just don't have the time to properly devote to it now. Still, given timing, I would rather see some topping process then more of a risk off move.
June dates (published in 5/29 Total market view)
6/9 - SPY price high
6/15-16 - DIA price high 6/14 (-1)
6/21-26 - TBD, prefer down for stocks especially the hot trades of 2017 (TBD)