REVIEW
2/11/2018 Total market view: "The consensus view: -20% bear market, -10% correction; bear markets rare without recession. Therefore we are in an area viewed from percentage declines off highs and key technical support levels that we are likely to see professional buying. We saw that twice last week from YP & D200MA test on SPX futures (ES) last week twice and for the session low on Friday with the market rallying 50+ points in minutes. So, is the low in? Not sure - maybe. There are some indications of a low but not as many as I'd like. I view buys here as aggressive positions that need to be monitored carefully. Regardless, what qualifies as a "buy" depends on your role in the market and how you are utilizing these comments and pivots to trade and/or invest. So we'll see. Bullish scenario would be SPX and NYA/VTI reclaiming Q1Ps. Bearish would be inability for this to happen and back down to lows or lower."

Result - SPX and VTI reclaimed Q1P on 2/12; NYA followed on 2/14. In addition, USA indexes reclaimed +YTD% territory which I had said in USA main index post would likely act as a kind of pivot. In addition, VIX dropped under YR3 near 25 on Wednesday which was an area I pointed that would help confirm additional buying.

SUM
After the biggest scare in 2 years stocks held key levels - all 5 USA mains rebounded from long term pivots, either YP or 1HP - in addition to several key moving averages on daily, weekly and monthly charts. So is the low in and safe to be back comfortably on the bull side?

Not quite. Though I bought aggressively on 2/9 I view the market in still mixed and somewhat precarious condition for several reasons. Most importantly:

Pivots - None of the 5 USA mains above all pivots. What is above all pivots? VIX, GLD, then EWZ, RSX (commodity plays) and XBI. So 2 of the 5 market leaders are risk factors. This is in glaring contrast to 2017 when all 5 USA main indexes were above all pivots, and VIX below all pivots, for most of the trading days in the year.
Technicals - Quarterly charts are at configurations were pros are going to sell. New highs vs new lows (10 day avg) are still in caution mode.

What is most likely is development of some trading range. This is the natural sequence after the nearly 18 month run from the last key Brexit low in June 2016. If long, then it is time to exercise more caution via risk management, exposure levels, or willingness to re-enter short hedges. If this idea is right we are going to see more struggles around highs as pros start to distribute to lessen their exposure.

Now the most interesting question - if all this is on the right track, where will this $ go? With late cycle investing playbook on script, bonds no help, inflation picking up, the place is commodities. Smart $ has already figured this out and bought EWZ and RSX even when oil was dropping. These are among top leaders of 2018 so far. Regardless whatever is above all pivots is the place to be and if more commodity themed ETFs, futures, etc join this list then this idea will start to look very correct.

PIVOTS
USA main indexes - QQQ testing FebP important to watch for strength next week.

Sectors of note - XBI on recent buy list and also above all pivots. Despite oil strength XLE actually below all pivots and remains avoid.

Global indexes - SHComp below all pivots, warning, though FXI, KWEB, EEM rallied smartly last week and within range of reclaiming above all pivots like tech. INDA hit by scandal and though it seemed D200MA was being bought it is negative YTD and there are better choices for 2018. As mentioned, EWZ and RSX 2018 leaders so far.

Safe havens - Bonds down, down, down. I have mentioned bond weakness each Total market view this year. Long term investors are losing money in their bond portfolios. I only hope that when stocks are similarly distributed the technical signs will be this glaring. Of major categories - TLT AGG LQD HYG - only HYG has not generated a long term total return technical sell (system described here). Also, key point, VIX above all pivots and unlikely to return under any pivot anytime soon. For now VIX dropped below YR3 and YR2 on 2/14. If stocks are playing out bullish then we should see VIX under YR1.

Currency & commodity - Per view above will try to add to commodity tracking section this year. So far adding UNG (natural gas) and Bloomberg Commodity Index futures (AH on tradingview). DXY nearing YS1 / 1HS2 / Q1S3 areas and starting to see some divergences. But as long as DJT & cronies are blowing up the budget I don't think DXY will rally.

OTHER TECHNICALS
Quarterly chart RSI and Bollinger band configurations are a major concern and to my view setting up professional selling for Q2-3.
SPX Q RSI highs exceeded only by 1996-98 (data to 1981)
NDX Q RSI 88, and expect to see pro selling and possible collapse if we see 90
At some point these charts will drop back inside the Q BBs and not rally outside again, forming divergence tops or deeper corrections.

VALUATION
Valuation top on SPX forward P/E right at 1 standard deviation of 25 year avg. If we actually believe that 19-20X forward P/E is the valuation top for this cycle (as I do) then valuation is a headwind more than a tailwind, and we should start to expect to see pro selling on rallies.

SENTIMENT
Froth reached 2017 Dec and early January on:
NAAIM expsure highest ever Dec 2017
AAII 2nd highest bull bear spread of the decade Jan 2018
Daily put-call at multi year lows

Daily put-call quickly jumped to relative highs and this may help make a floor under the market for the time being. After the drop everyone is prepared for the drop. I am prepared for choppy distribution trading range and possible high test before another wallop, but will certainly re-enter IWM short hedges on any move back to negative YTD %.

TIMING
Tweet from 1/24: volatility window 1/25-2/2 and perhaps extending through 2/15

Tweet from 2/6: "Since vol extended past 2/2, think instability in general through 2/15, & 2/9 looking like key date. With YPs along with D200MAs testing and holding on both ES and YM near term move most likely furious bounce that then fails and sets up lower or divergence lows into 2/9." Ding! And that was pre-open!

February dates
2/2 - middle of drop
2/9 - added per tweet maybe low
2/12 - middle of move
2/15 - end of volatility window per above; so far TLT, AGG, LQD lows all 2/14 (-1)