REVIEW
7/9/2017 Total market view: "Basically with VIX dropping from 2HP / Q3P, yearly levels threatening break yet recovering, pivot holds or recoveries on SPY, QQQ, DIA, IWM, VTI, VIX and XIV all (!) on 7/7, I'm going with idea of near term bullish resolution. ... Based on safe havens and larger trends for stocks without any recent bullish sentiment extreme, I think ball in bull's court."
Result was that USA indexes broadly up to new highs for SPY and DIA, new price highs for VTI, QQQ up, and other global indexes ripping to new highs for the year.
SUM
USA indexes are healthy uptrends, above all pivots and moving averages; and should go higher before we see a decent trading top. For additional context: daily RSIs on main indexes are not yet overbought, safe havens are weak, and emerging markets are ripping. Further, most sentiment readings are nowhere near a bullish extreme - in fact, the opposite!
With many participants expecting a correction in Q3, the market may just continue to leave people in the dust.
Bottom line - Typically, key highs like 3/1/2017 are made with multiple USA indexes on pivot resistance levels, with other technicals showing divergence, safe haven strength, and crowded bullish sentiment. None of that is happening yet. Markets should go higher.
I will think more about possible hedges and ways to lock in gains after that happens and when firmly convinced of a top, not before.
Positioning
Back to 10 longs on 7/7 was the right idea; could have added further last week but was a little too cautious after seeing the high ISEE. 2 GLDs also profitable (still holding with breakeven stop). Very glad to have decent chunk in INDA and EEM as these likely to have a lot more long term potential.
PIVOTS
USA main indexes - SPY & DIA should see Q3R1s at minimum. QQQ JulR1 and NYA YR1 levels to watch for this week.
Safe havens - VIX & XIV worked again to confirm buys. TLT and GLD look weak. Despite trying GLD on the YP, below all other pivots and also below all falling moving averages on the daily chart at the time of entry (hence the stop).
Sectors of note - XLF is laggy and maybe first to trim if TLT doesn't drop further this weekend. Otherwise QQQ and SMH worth watching together for tech sector.
Global indexes - The real story in market strength is here.
Currency and commodity - DXY nearing YS1 at 94.86.
OTHER TECHNICALS
Watching RSIs across timeframes (Q, M, W, D, and then 2H session only for shorter term stuff). Referring to SPY: Q chart RSI *higher than 2014-15, sign of strength; M getting up there at 75.3, approaching 2014-15 highs at 77 and 2007 high of 79; W knocking on overbought too at 69.9, and possible to see some reaction from this area; lastly, D only 61.9 and room to go higher.
FUNDAMENTALS & VALUATION
Nice lift in earnings (well, the 10 week average of forward earnings estimates to be precise) and SPX back to 18x.
SENTIMENT
Amazingly, more bears than bulls on AAII each of the last 3 weeks! This is just not how markets top out. I am somewhat concerned by the 3rd highest reading of the decade on ISEE last week, but until standard put-call ratios come down and AAII capitulates this is not as much of a worry.
TIMING
Propriety work in progress model that I am still maintaining in bare bones form due to calls like this.
July dates (published 7/2/2017 Total market view)
7/3
7/21
Bias was for 7/3 to be a high and 7/21 another high. 7/3 was a minor trading high for DIA. As of last week: "If my idea correct 7/21 will be another high, ideally higher than 7/3."