REVIEW
6/24/2018 Total market view: "It is hard for me to imagine a pure bullish scenario for risk with VIX perking up above its YP, TLT above its MP and toppy looking bars on the leaders. A pure bearish scenario would be risk off with VIX and TLT leading, international names breaking down, and IWM & QQQ fading off highs. But perhaps what I think is most likely is a reversal sort of week - a bounce on DIA and international names, IWM and QQQ moving lower."
Result - bearish scenario won out with IWM and QQQ leading on decline, with international names breaking down.
SUM
As I have said many times on this site, often definitive moves begin near the beginnings or ends of quarters. I can point to examples for most quarters in recent years, but if you want an easy one go no further than the low of Q2 on the very first trading day.
So what are the signs of the next move?
First, DXY has so far topped on near tag of YP. If DXY lower from here, then international names may bounce further in any catch up move. If risk off, then GLD should do well although far from any major pivot level that would make it an attractive buy. That said, DXY set to open above HP, QP and MP so if DXY weakness theme is real we will soon see DXY below another pivot.
On the indexes I track, only USO is set to open above all pivots (any re-entry longs were already triggered). XLE is fractionally below its MP so if that can also reclaim above all pivots that looks good.
IWM, QQQ and SPY (barring a big gap) are set to open above YP, HP and QP but below MP. There is a fairly big cluster of support on SPY just below - so even if first move is down, dropping onto major support could be a buying opportunity. If the market gaps higher and/or rallies on Monday, then we'll see at least one of these back above all pivots and we'll have an easy answer.
There are several positions one could be holding here, but if not shorting then you'll probably have a lot more cash as the Q2 longs were encouraged to take profits.
If long TLT - which is set to open above HP, QP and MP - also helpful to have a decent move above its total return YP at 121.83 as shown below.
With a lot of indexes in mixed condition we will get a clear answer soon enough.
Bottom line - many long term charts seem to be in a topping process. They could recover and move back towards highs, go sideways for many more months, or break down. I'm kind of thinking the sideways move will be more likely, with exception of USO and XLE. However, it is notable that several key indexes - DIA, NYA, XLF, SMH, ACWI, EEM, FXI - are set to open below HPs (or YPs in the case of the latter two). Dow and financials and semi-conductors below major support with TLT strong? Yes it is true - not the time to be complacent.
PIVOTS
New HP QP and MPs start 7/2. Quick rundown of USA mains, sectors and international names below.
OTHER TECHNICALS
Several quarterly and monthly charts showing divergences, which is often the prelude to more serious declines.
VALUATION
SPX forward P/E just under 17X.
SENTIMENT
Put-call rapidly moving up from recent low levels of 2 weeks ago.
TIMING
If interested in this part of my work then here's a recent dedicated blog post on the subject. According to what I have tweeted recently, I expect further reversal in leaders and potential haywire risk off move in the next several weeks.
June dates
6/2 mild - non event
6/5 esp for currency - 6/6 EEM high otherwise not much)
6/13-14 strong - SPY price high 6/13 although admittedly this was a bit tough to read
6/20-21 strong - now we are talking with IWM, QQQ, DXY turns and possible GLD turn all here.
6/26 - spike low
July dates
7/3
7/10-11
7/25