REVIEW
9/1/2017 Total market view: "As of 9/1 close, all USA main indexes are back above all pivots. This hasn't been the case since 8/1 due to IWM weakness in August. In addition, all global indexes I track are above all pivots as well, and held up quite nicely through August. VIX is back under all pivots. But... TLT and GLD are above all pivots as well, and XIV showed some bearish divergence on 9/1 by not reclaiming all pivots. As of 9/1 close, mostly long risk seemed appropriate, but perhaps not fully long and definitely not leverage with safe havens so concerned about the market. ... Bottom line - a blend of global indexes, DIA and USA tech via QQQ and SMH, GLD, GDX is doing fine here. Next decision will be to hold or increase risk positions and take profits in safe havens, or reduce risk while holding or adding safe havens. SepPs will make this relatively easy process."
Result
9/1 turned out a key high test for USA main indexes. A less than fully long approach with some risk reduction last week, while holding the stronger safe havens especially GLD and GDX, is doing very well.
SUM
4 of 5 USA main indexes remain above all pivots, and 5 are off recent 8/21 lows as weekly moving averages held as support. However, safe havens have been speaking loudly for weeks and the volume of their message just continues to increase. Should VIX move above its critical 2HP / Q3P level of 12.28 and then close above 12.46, they will practically be shouting - trouble for risk assets!
In addition, monthly charts are pointing to risk for stocks and strength in safe havens. Keep in mind that this is occurring with the INDU monthly chart RSI just matching its highest value in the past 20 years.
In the 8/6/2017 Total market view I said it was time to focus on risk management. On the 8/21 low, the Daily comment concluded enough for a 'maybe low' and to watch for buys. Yet again I am stressing the theme of risk management for the coming week. Risk management can mean less long exposure, taking gains of the table, having more safe haven trades, hedging, or shorting per your participation style and view.
Bottom line - 4 of 5 USA main indexes are above all pivots so I cannot be too bearish; however, the message of safe havens and monthly charts to me tilt the scales to a defensive view. This view will be proven correct and even more actionable if SPY, QQQ and VTI break under their SepPs this week.
PIVOTS
USA main indexes - Watching SepPs for SPY, QQQ, VTI; and cluster of SepP, Q3P and 2HP for IWM.
Safe havens - All but the usually reliable VIX are indicating trouble for risk assets. If VIX joins the rest - XIV, TLT, AGG, HYG, GLD, GDX - then I really think stocks will break down.
Sectors of note - SMH / SOXX also near testing SepPs.
Global indexes - Partially due to $USD weakness, all 8 that I track remain above all pivots. Some look more toppy than others.
Currency and commodity - $DXY just continues to melt down. EURUSD happens to be testing YR2, level to watch impacting $DXY and thus GLD/GDX and the global indexes as well.
OTHER TECHNICALS
Monthly chart RSI on INDU matches high of 5/2007.
New highs new lows looks more bullish for the daily view, but still some larger weakness on weekly.
VALUATION AND FUNDAMENTALS
Pro selling at 18X forward earnings, again.
SENTIMENT
No current extremes; from optimism end of July to some fear later in August.
TIMING
As it turned out, 7 dates provided for August. 2 were the high and low of the month. 2 were the second high and second low of the month. 2 were milder turns. 1 was non event.
September dates
9/4-5 - 9/4 mild pullback low
9/13
9/22
9/26