Total market view

REVIEW
9/16/2018 Total market view: “Current take is moderately long but watching carefully if a defensive adjustment is needed.”

Daily comment 9/19/2018: “If the market makes a small shakeout and then resumes higher we have to be open to that possibility as much as a trading top. For now I like the financials into quarter end as re-balancing is hitting the winners and helping the laggards.”

Result
Market had one day shakeout and then recovered. NDX well off the lows, but IWM not that much.

SUM
All 5 USA main indexes are above all pivots, and VIX & VXX below all pivots. Crucially, DJI cleared its YR1 without any trouble. Even though I tend to focus on SPX and NDX above the DJI, historically speaking with pivots it is probably DJI that has most impact. So I view this as quite important clear, as long as it maintains.

However, 2 of 5 of these indexes are testing resistance levels - SPX QR, NDX YR2; and RUT topped on QR in August. Given weekly chart and short term 2 hour chart technicals I think a drop is the next likely move. If that assessment is correct, NDX and RUT will break under MPs again.

But let’s keep the bigger picture in mind - USA indexes are in uptrends, international indexes have recovered somewhat, and safe havens have crumbled. VIX is below YP, so below all pivots. TLT is back to near lows of the year, and of the bond ETFs I track (TLT AGG LQD HYG) only HYG is above its YP on price or total return basis. Metals have been crushed.

The main risk seems to be China problems impacting tech. As I have pointed out several times recently, the quarterly chart RSI of NDX is currently 90.5. This is quite rare territory and risk is to the downside. This is why I have been watching its YR2 so carefully. A combination of YR2 rejection and monthly pivot break could easily be the start of something larger (this is what happened on 2/2/2018).

If NDX was about to power up we would also likely see strength in SMH semiconductors, XBI biotechs and KWEB China tech. Yet of these only SMH is above all pivots. Should we see a coordinated move below MPs then a bigger tech selloff may be underway.

Other factors pointing to risk-off as the next move - value perking up against growth for nearly all of Sept, equity put-call near lows of the year, and RSIs across timeframes approaching overbought or nearly so. For example, SPX Q & M charts 70+ for months now, but when weekly, daily and 2H chart all reach 70 area along with tags of upper Bollinger bands on these timeframes as well then pros are likely taking profits. Lastly, my timing work had 9/20-21 top.

But as mentioned above if we were about to see a major top then DJI should not have cleared its YR1. As long as this maintains above I expect any weakness this week to be soon bought for the start of Q4. Also it is often good to have cash on hand for next setups. If RUT and NDX reach SepS1s then that is probably a good buy.

Bottom line - near term watching to play tech short while holding other longs. VXX tagged SepS1 and looks ready to lift, so that is also a potential hedge. If DJI holds its YR1 as a test I’ll likely be shifting back more long soon enough.

PIVOTS
USA main indexes - Levels to watch this week: NDX and RUT MPs, DJI YR1, SPX QR1.

Sectors of note - XBI SepP test and fail and YR1 break. Could be good short. It would be nice for XLF to make new highs but not sure that will happen as HR1, QR2 and then YR1 all in the way.

Developed - Nikkei moving nicely, back above all pivots on 9/11, part of a tell that China not as impactful. But also heading into resistance at QR2, HR1 and then YR1 not far above that. DAX still weaker but off the lows. EFA, a widely watched institutional index, reclaimed its YP but still under HP and D200MA.

Emerging - These have rebounded with DXY drop but not really giving all clear bullish signals. Watching FXI, EEM, KWEB YPs.

Volatility - VIX below YP. A stock sell signal would involve a decent move of VIX back above YP.

Bonds - See note above. TLT very quickly back to lows of the year as TNX rallied from 2.80 area to above 3 in Sept.

Metals - GLD has stabilized at its YS1 in Sept but bounces have been whacked. Not sure of next move but if below MP again then breakdown more likely. I believe FOMC is hawkish.

Commodity - CL1 continuous contract finally made it over QP last week but quickly dropped from near tag of SepR1 and YR2. Range bound action for the 2nd half so far.

Currency - DXY move of the month was YP / MP top and MS1 low.

Crypto - I’d be more bullish BTC if it can move above is QP in Q4. 2/6low defended several times.

OTHER TECHNICALS
NYAD cumulative advance decline showing some divergence.

Growth vs Value (VUG:VTV) sliding in Sept.

VALUATION
Alas my data feed having issues. Think I can use Factset numbers which should be similar, but need to test. As of last week

SENTIMENT
PC Equity 10 day MA near lows of year. But puts.

TIMING
Timing work has nailed a lot of Q3 turns. This is a very unique system.

September dates posted 8/26/2018 TMV

9/6 - 9/7 index low
9/13 - non event
9/20-21 - index high?

Oct dates
10/1
10/5 - risk on
10/13 - risk off
10/26

In addition, larger cycle weakness after 10/10-11 into early Nov.

Total market view

REVIEW
9/8/2018 Total market view: “Typically pullbacks to support in larger up-trends are bought. Both SPX SPY and RUT IWM are testing MPs, which along with rising moving averages, would be good places for a bounce. … Bottom line - playing for a bounce from SPX and RUT MPs. But NDX along with both SMH and XBI have already broken MPs, and NDX is showing a bearish move from long term resistance YR2 HR1 so this must be respected. If the bounce doesn't happen, I'll move further to cash and watch for the next setup.”

Result - SPX and RUT both held MPs on close. SPX had a better move up towards highs by last week while RUT is struggling a bit more.

SUM
All USA main indexes are above all pivots. The recent test of SPX and RUT MP held, and NDX recovered its MP as well. DJI seems like it could be hit from resistance but hasn’t. In addition, VIX closed under its YP. All these are bullish signs.

We could also point to lack of frothy sentiment, SPX forward p/e reasonable in 17s and weakness in other safe havens as reasons to go higher for risk (SPY/TLT ratio all time highs, SPY/GLD ratio highest since 2005).

But here are the things that concern me:
NDX YR2 selling, along with SMH and XBI weakness
DJI HR1 and weak advances invite door for bears
Cumulative advance decline showing bit of bearish divergence
RUT struggle to lift back towards highs (reflected in the cumulative advance-decline)
Daily new lows picking up
Heading into quarter end, possibility to some profit taking in leaders (More broadly, NDX and RUT; specifically, tech, internet, small cap growth, health care tech, etc.)

Last week I said ready to take defensive action should the anticipated bounce from SPX and RUT not occur. It did so mostly long the market. But it would not take much to generate a major sell signal. If all these happened:

NDX break of MP along with further rejection of YR2
DJI rejection of HR1
VIX lift from YP
RUT break of MP - keep in mind it has already topped on QR1 8/31
SPX high test and rejection or best case QR1 at 2925 then down

Then a lot would be checking off on the TPP top checklist. I’ll post on this in detail should this occur.

But all this is conjecture as monthly pivots are holding and main indexes are moving back to highs.

That said the leaderboard and long positions have thinned out compared to all the long positions in August. That’s OK - often good to have cash ready for next good setup as quarter end approaches.

Bottom line - TPP shifted emphatically bullish near the beginning of July. Played for gains and even correctly hedged for 7/25 top, and quickly moved back bullish. At the end of August said pullback was due. Last week expected monthly pivots to hold. In sum comments have been on the right side of the market for much of the quarter, so I’ll try to keep going :) Current take is moderately long but watching carefully if a defensive adjustment is needed. If NDX clears YR2 along with SMH and XBI perking up then can be fully long again.

PIVOTS
USA main indexes - At this point NDX and RUT MPs are having a lot of sway. If they break likely clues to get defensive.

Sectors of note - XBI below MP since 9/6 and also dropping below YR1. SMH just held HP, QP and D200 again but could not really lift above MP. KWEB in bear market. All these point to more chance of NDX YR2 top.

Developed - N225 looking strong, DAX technical bear (weekly close below YP, below falling W50MA).

Emerging - All local currency indexes looking better than USA denominated ETFs. But $USD is what I buy and sell so those are the charts of more interest. ACWI held long term support last week, and INDA rebounded from QP test (INDA gave back gains of July and Aug in a hurry though). But SHComp, FXI, KWEB, EEM, RSX, EWZ all below all pivots.

Safe havens - VIX slightly below YP actually bullish for risk, but a jump back above turns that around. VXX also approaching levels to watch. Bond weak excepting HYG which is still strong (another larger bullish big picture point). GLD trying to hold YS1 but bounce quickly gone and looks like another move down is underway.

Commodity - Oil more range bound in 2H so far. CL1 cont contract has not closed above all pivots since early July highs.

Currency - DXY still under YP as last week’s drop 9/10-13 from YP MP area helped stocks to rally.

Crypto - BTCUSD below all pivots but hasn’t gone lower than the Feb low. Bounces less and less, so would like to see one more drop to 5K or under. ETHUSD reached YS1 so recovering is some positive. LTCUSD YS1 may be too far to see. Not following others.

OTHER TECHNICALS
New lows increasing.

Cumulative advance decline a bit of bearish divergence.

VALUATION
SPX forward P/E of 17X (green line) has acted as resistance since April. Currently 2920 and most importantly, still rising.

SENTIMENT
Put-call jumped back in a hurry compared to the relative low near the end of August.

TIMING
See this recent review. 

August dates (posted 7/22 Total market view)
8/2 - Stock pullback low
8/6-8 strong - "Seems like setting up for high"
8/17-20 - 8/21 minor high and mild pullback
8/27 (added) - Missed top by 2 days so not close enough, non event. 

September dates

9/6 - Stock pullback low 9/7 and TLT bounce high
9/13 - So far non event unless this week starts lower, will turn into trading top
9/20-21 - Prefer up for risk

Total market view

REVIEW
9/2/2018 Total market view: "Bottom line - Often DJI pivots give the definitive tells. The market just stopped at DJI HR1 so taking steps to lock in some gains, or play for a bit of downside while holding longs, should work or will have low cost at worst. In addition, September is known for weakness followed by a strong Q4 especially in bull markets, so a strategy for near term weakness but likely higher highs seems to fit the market here."

Result - Market pullback in process.

SUM
Last week I expected a pullback and that is exactly what happened. Last week's suggestions to play for downside worked if you raised cash, played volatility, shorted China via FXI - but a hedge idea on DIA did not work. OK, now what?  

Typically pullbacks to support in larger up-trends are bought. Both SPX SPY and RUT IWM are testing MPs, which along with rising moving averages, would be good places for a bounce. Keep in mind that pullbacks to monthly pivots have been the key lows in the last few months, starting with the launch from HPs QPs MPs across most USA indexes in early July, a pullback to MPs in early and mid August varying by index, and now. 

However, there were some bearish developments last week and we need to be on guard to take more defensive action should this bounce not occur. NDX is below its MP for the first time since early July, and a YR2 HR1 rejection is in process. SPX and DJI HR1s are also acting as resistance, though without much selling pressure yet. If 3 of 5 USA mains had rejections at long term levels, then this would indeed be a bearish development warranting further reduction in risk. But this hasn't happened yet, and I still think the odds are that SPX and RUT hold MPs and a bounce is the next move.

That said, keep in mind the larger environment - global markets are in trouble. Emerging markets in $USD terms are getting crushed (FXI short last week the best performer of recs from last week). DAX is also near its low for the year, and Nikkei225 has been chopping range bound for several months as USA has rallied. 

Fixed income is not helping to steady portfolios with most major categories negative YTD. And of course, a bloodbath in cryptos. 

In sum the QT dominoes are falling and I believe it is only a matter of time before these impact the last in line, USA stocks with a focus on tech and small caps in particular. For now still focusing on these leaders although last week small caps took over from tech as the relative pivotal leader both in terms of monthly pivot (IWM above MP, QQQ, XBI and SMH below) and long term levels (IWM above YR2, QQQ below).

Bottom line - playing for a bounce from SPX and RUT MPs. But NDX along with both SMH and XBI have already broken MPs, and NDX is showing a bearish move from long term resistance YR2 HR1 so this must be respected. If the bounce doesn't happen, I'll move further to cash and watch for the next setup.

PIVOTS
USA main indexes - NDX below MP, but SPX and RUT still holding. 

Sectors of note - SMH and XBI both under MPs. If rates keep moving up financials should benefit, and right now XLF still holding its MP. 

Developed - DAX noted as bearish in last week's Total market view and quickly back to near lows of the year. 

Emerging - With nearly all of the indexes I track below YPs, we should see YS1s before a major low. Above YP - ACWI and INDA. Below YP and reached YS1 or lower - SHComp and EWZ. Below YP without having reached YS1 - EEM, FXI, KWEB, RSX.

Safe havens - VIX giving decent tells with recent lows well off the earlier August lows. At the same time the recent move up did not match earlier August. I think this helps the case for a stock bounce as the next move - ie if VIX were really confirming stock trouble it would be higher than the August high. If this idea is correct then we will see VXX move below its MP.

Bonds looked good for a bit but again issuing long term sell signals using total return pivots on TLT, AGG and LQD. HYG reached YR1 resistance and pulled back. This may help XLF do better in the near term. 

Metals are oversold but look ready to tank again with DXY again testing its YP from underneath.

Commodities - CL USO also gave back gains last week, with the CL1 continous contract again showing the definitive move with inability to rally above all pivots before the next drop.

Currencies - DXY near YP again. It had reclaimed this then failed. A second clear "should be" definitive. 

Crypto - BTCUSD 4-5K target that I have had all year looking more likely.

OTHER TECHNICALS
Everyone who uses RSI noted overbought conditions on daily charts and weekly chart divergences. Those indeed played out. Now daily charts are already in RSI buy zones so this is another reason to look for a bounce next week.

VALUATION
Interesting that 17X forward acted as resistance last week. 

Here's more context. You can see 18X orange line was resistance for many months before clearing in 2017 Q4 and the blowoff to near 20X (red line). But 18X acted as resistance after that, and now 17X (green line) seems to be acting as resistance as well. A somewhat bearish long term consideration if this continues.

SENTIMENT
Last week noted that sentiment measures were starting to tilt too bullish - this supported the pullback idea.

TIMING
See this recent review. 

August dates (posted 7/22 Total market view)
8/2 - Stock pullback low
8/6-8 strong - "Seems like setting up for high"
8/17-20 - 8/21 minor high and mild pullback
8/27 (added) - Missed top by 2 days so not close enough, non event. 

September dates

9/6 - Stock pullback low 9/7? TLT bounce high. 
9/13
9/20-21

Total market view

REVIEW
8/26/2018 Total market view: "Bottom line - The Pivotal Perspective has been bullish since early July, and anticipated a minor shuffle from the 7/25 high. Adding back into small caps worked very well last week, so mostly in monitoring phase. While I would like to see SPX clear its HR1, I'm not sure that NDX will blast through its YR2 on the first try. 

8/28 Daily comment: "In the latest Total market view on the blog, I thought SPX would rally above HR1 2883 but didn't think NDX would crack YR2 7572 on the first try. Due to strength, yesterday I said less sure that YR2 stops the rally. That is still the case. ... In sum no sign of rejection from NDX YR2 level yet. Long and strong. Bit concerned about VIX but so far no stock index exit / hedge / short signal."

Result - SPX cleared HR1 to start the week, then contrary to initial expectations but in line with daily assessments, NDX cleared YR2.

SUM
Playing the long side on USA equities from Q3 had had an easy 2 months of gains for the best trending period of the year so far. Touches of monthly pivots have been key entries or hold points, as what happens in a healthy up market. In early July, early August and then most recently mid August multiple USA mains either cleared their monthly pivot (July) or test and held (both times in August).

Last week 2 main indexes cleared major resistance - SPX above HR1 2883, which as long as that maintains, points to the chance of YR2 at 2987. Similarly NDX cleared YR2, and as big turns can happen at major levels it is more bullish for the market for the index leading in gains to be above resistance.

However, DJI stopped bang on its HR1, and RUT is testing QR1. Indexes are overbought or nearly so across timeframes (Q M W D), and a pause or small pullback week would be normal at this stage.

As usual it is international trouble that is leading the way lower, with all 3 China related ETFs, FXI EEM KWEB, trying and failing to recover yearly pivots on the weekly close. 

In addition, sentiment while not extreme is starting to be more of a headwind than tailwind, with PC and PCE dropping down to lower end of 2018 ranges. Other indexes like AAII bull bear spread is the 3rd highest since Q2. 

Recent long focus has been: SPX, NDX, RUT, XBI, SMH, INDA, USO. If indexes do suggest weakness then hedges could be DJI short, TLT long should it rally back above HP again, or FXI short with maximum risk a daily close under the YP. While not threatening, VIX and VXX have not made lower lows on the recent move higher in indexes, which is some sign that smart money is starting to play for a fade. 

Due to strength of NDX and SPX I do not expect a major top here, but if NDX fails back under its YR2 then the configuration could be more threatening. Until that happens market in buy the dip mode as I think pros are eyeing SPX 3000 area, which is well under 18X forward earnings and very doable. 

Bottom line - Often DJI pivots give the definitive tells. The market just stopped at DJI HR1 so taking steps to lock in some gains, or play for a bit of downside while holding longs, should work or will have low cost at worst. In addition, September is known for weakness followed by a strong Q4 especially in bull markets, so a strategy for near term weakness but likely higher highs seems to fit the market here. 

PIVOTS
USA main indexes - SPX and NDX cleared long term resistance levels but DJI did not. (RUT had already cleared the prior week.)

Sectors of note - XBI and SMH both recently held key support, and noting this helped the tech trade. 

Developed - DAX has had several weekly closes below its YP this year, but what has started to happen is that the weekly 50MA has been starting to roll over with downward slope. Um, this is my technical definition of a bear market. USA may ignore this for a while but not forever. Nikkei is above all pivots and participated in the recent rally but not above January highs yet.

Emerging - As noted above, FXI, EEM and KWEB briefly recovered YPs but failed on weekly close. EWZ and RSX are of course well under YPs. This leaves only ACWI (index but not really trading vehicle) and INDA in any bullish condition, and both above all pivots. 

Safe havens - VIX jumped back above its YP last week, but held the MP as support. I'll be watching the new monthly pivot very carefully because VIX above would further confirm to play defense for a bit. TLT has been testing its HP. Rally above, fail, another attempt above and fail. This is a crowded short so may work in a risk off situation. Not sure if metals have bottomed. GLD is above YS1 but GDX has had a very weak bounce and already back near lows, and the same for SLV. 

Commodities - Just off the oil lows I noted that it might have been it and bam 2 weeks later back near highs. This has been a strong move and helped risk on sentiment. Big jump came on recovery of HP and then after holding its MP another strong advance.

Currency - Not sure what to make of DXY here. Monthly bar looks bearish, weekly looks ready to rally. YP resistance, so we'll see where the SepP falls. 

Cryptos - BTCUSD again testing QP from underneath so a 2nd move above would be bullish and noted by smart money as D200MA is starting to flatten and slope upward. For now edge to bulls as it is above SepP.

OTHER TECHNICALS
Overbought across the board would mean Q M W D and 2H session ETF charts. This condition there or nearly so on quite a lot of USA main indexes recently.

VALUATION
SPX tagging 17X forward earnings on moving average basis. (Green line 10 week avg of 17X forward earnings, blue line SPX weekly close). Valuation levels still trending up nicely which means rising profits. 18X currently 3075.

Sentiment
PC 10MA on the lower side of 2018 values. 

TIMING
See this recent review. 

August dates (posted 7/22 Total market view)
8/2 - Stock pullback low
8/6-8 strong - "Seems like setting up for high"
8/17-20 - 8/21 minor high and mild pullback

8/27 (adding) - Missed top by 2 days so not close enough, non event. 

September dates

9/6
9/13
9/20-21

Total market view

REVIEW
8/19/2018 Total market view: "The current configurations point to higher before a top of significance. Sentiment per put call is fairly bearish, valuation hanging around mid 16s per SPX forward P/E, and even a return to 17X implies a test of SPX 2018 highs at minimum. ... of all the sectors that look ready to propel higher I think IWM and other various small cap growth will make the move." 

Result - IWM blasted through to new highs on Tuesday and helped pull other indexes higher into Friday.

SUM
Of the 5 USA main indexes, RUT IWM has jumped above YR2. SPX and NDX area currently testing major resistance. DJI and NYA haven't made it yet. Playing for the small cap breakout worked nicely as positions are now an easy hold above that level.

In terms of what is next, watching for reactions to SPX HR1 and then NDX HR1 / YR2. Due the following factors I think we will see SPX above HR1:

* 2018 2nd half trending nicely, not like start and stop of most of 1st half.
* SPX forward P/E in the high 16s; in January at the same price it was above 19 (this is how much the tax cut and positive environment has benefited corporate earnings).
* Sentiment not that euphoric, with put-call and equity only put-call near median levels for the year so far; in January put-call was at a multi-year low. 
* New highs / new low ratio looks fine.
* Growth / value ratios actually perking up again in favor of growth; out-performance of value along with bond strength would be a concern.
* VIX trading below its YP helps the bull case.

All that said NDX YR2 will be an interesting area to watch and some reaction possible from that level. 

At this point, only recent bond strength with TLT above HP and D200MA is questioning my bullish idea. 

Global indexes got a boost from a dollar index DXY back under its YP, a move I did not expect after the convincing clear earlier in August. INDA (first rec early July) looking great and the clear winner of the global indexes I track. EEM, FXI, KWEB all on the verge of recovering YPs which would add to the bull case. 

Another weak link SMH just jumped from a big support area - HP QP D200MA and then cleared MP, back above all pivots. XBI also held HP QP combo but did not finish above its MP. Still, tech perking up typically helps the market, and at least increases the chance of seeing NDX YR2 7572.

Bottom line - The Pivotal Perspective has been bullish since early July, and anticipated a minor shuffle from the 7/25 high. Adding back into small caps worked very well last week, so mostly in monitoring phase. While I would like to see SPX clear its HR1, I'm not sure that NDX will blast through its YR2 on the first try. Note that RUT was stuck under its YR2 after first test on 6/20 and had several selling attempts before it finally cleared - something to keep in mind for tech longs.

For now though SMH XBI both lifting off key support, and USO about to clear all pivots if there is room to put capital to work. Also watching EEM FXI and KWEB as a coordinated recovery of their YPs could be a decent setup.

SUM
USA main indexes - RUT IWM leading, first to clear above YR2. Note how many weeks it took to do that. Will NDX blast through on first try? I'm bullish on the market in general but think odds favor tradeable reaction down from that level. 

Sectors of note - XLE oddly tepid compared to USO but this has happened before and it could get in gear. SMH and XBI recovering / holding HPs helps the market.

Developed - DAX is below all pivots, but didn't have much of a drop before returning to test QP from underneath. Nikkei similar to SMH, a recent move below HP QP and D200MA and now back above all. 

Emerging - INDA the big winner in the second half. Perhaps instead of looking for others I should just be adding here. That said watching EEM FXI KWEB YPs this week.

Safe havens - VIX under YP helps the stock bull case, and VXX not on a level yet. Bonds showing some concern with TLT strength; actually returning to long term buy. 

Commodities - Last week I wrote that CL1 (continuous contract) has given many good signals, and although CL below pivots it may recover due to CL1 D200MA. Exactly how it played out with big rally in CL USO last week, with USO finishing on its MP; any higher and above all pivots.

Currency - DXY under YP, a move I did not anticipate after working so hard to clear. 

Crypto - If ETHUSD recaptures QP 7430 for the 2nd time then may have second thoughts about my 3-4K preferred low. 

OTHER TECHNICALS
New lows turning down as new highs perk up - bullish. Although you could say new high level far off June, so continuing motion higher would be helpful. 

VALUATION
Price the same with valuation in 16s compared to the 19s in January. I think smart money is eyeing 18X, which currently targets above 3000. Continued bond strength and yield curve inversion, should that happen, along with other defensive rotations would threaten that view.

TIMING
See this recent review. 

August dates (posted 7/22 Total market view)
8/2 - Stock pullback low
8/6-8 strong - "Seems like setting up for high"
8/17-20 - 8/21 minor high and mild pullback

8/27 (adding)

September dates

9/6
9/13
9/20-21

Total market view

REVIEW
8/11/2018 Total market view: "Bottom line - Risk trends are up. Events like Turkey tend to be one day bear wonders. Anyone remember the great Cypress sell-off of 2013? Didn't think so - and yet this was a real headline at the time. Last week SPX had a simple pullback to YR1 & WP support, as well as rising 10 & 20 D MAs. Usually a bounce is the next move. That said, if VIX is above its YP then I'm less sure SPX will test its 2018 high. Given seasonality, there might be more weeks of range-bound congestion before another move higher. If this happens then DJI DIA likely to lead down given DXY strength. Also, as noted above, both biotechs and semi-conductors (XBI and SMH) are a bit weaker, which makes it less likely that NDX QQQ will power up above its YR2."

Result - Instead of a 1 day bear wonder Turkey was 2 days with indexes lower on Monday. China was the larger reason for the decline on Wednesday, when DJI did in fact lead down and then held monthly pivot support. RUT IWM also held its MP, and along with VXX MP rejection, these three led to an index gain into Friday. Tech was notably missing from the party as semi-conductors (SMH) and also biotechs (XBI) have been weaker, both under one or more pivots. Essentially range bound congestion continues, but in the context of larger uptrend for USA main indexes.

SUM
Last week 3 of 5 USA main indexes tested support and held nicely. DJI and RUT held AugPs (MPs), and NYA tested HP along with D200MA. In addition, VXX tested and rejected its MP. The dip was the first oversold reading on 2 hour charts since the start of the 2nd half and it was quickly bought. SPX had a mild break of its YR1 level and immediately came back the next day. 

Typically when multiple USA mains test and hold support along with VIX / VXX confirmation, the next move is up. I still think this is quite likely. 

But it is the second half of August, total volume is understandably low, and there may not be enough juice for a broader advance. More consolidation could easily happen as 2018 leaders NDX and RUT have been paused under resistance for the last several weeks (especially the case on RUT, under its YR2 since June). 

That said, my expectations for USA mains (if not this week then in the next few weeks) are:
SPX to test HR1 2883 at minimum, very likely if YR1 2830 holds.
NDX consolidation may continue, likely HR1 YR2 area test (will be very important to watch).
DJI looking good to play catch up.
RUT expect move above YR2 1701 if not immediately then soon enough.
NYA also playing catch up.

A few items of concern are:
VIX again testing YP 12.29 area - indexes much more likely to power up if VIX breaks that level.
TLT testing long term resistance HP and D200MA - safety trade strength would increase chances of a fail at major resistance (such as SPX HR1 NDX YR2).
VTV / VUG (Vanguard value / growth) ratio perking up - although it has done this many times in the context of a brutal downtrend for most of the decade.

International indexes have of course been weaker - all 8 of the emerging indexes I track were under Q2Ps to begin that quarter, and after subsequent declines 7 of these traded under YP support. Currently only ACWI (broader index like NYA) INDA are above YPs. But weekly charts look to me like a trading low is getting close or already in - and if this idea plays out, USA tech will perk up and indexes will be broadly higher along with a safe haven fade. If KWEB recovers its YP I might be a buyer, but INDA (rec from early July) has been the best emerging international play.

In sum the second half has been bullish for SPX and DJI, a bit less so but still up for NDX and RUT. Despite making some noise, safe havens VIX, VXX, TLT, and metals have been weaker. The larger move is still risk on. 

Oh yes, a note on the metals that I wish I picked up earlier - there were what appeared to be several moves below all pivots on GDX and SLV that went nowhere or squeezed shorts - but when GLD finally joined them below all pivots in July the plunge was on. The idea of coordinated moves works not just on the USA indexes which I devotedly track every day, but also other asset classes. For those thinking buy, it would be helpful to have a coordinated hold of YS1 YS2 levels, although typically it is better to put capital to work on strength not weakness. 

Speaking of coordinated moves, XBI has been under its MP since 7/27, although still holding HP and QP. SMH is below MP, QP, HP and D200MA. KWEB has been crushed with a -25% drop since mid June! Yet NDX QQQ holds firm, still above all medium and long term pivots. Will tech stabilize propelling NDX higher or will sector weakness spread? Not sure but YR2 area in a crowded trade will be something to watch carefully should NDX get there. 

Bottom line - trends are up, but the sideways period in NDX and RUT could easily continue. The current configurations point to higher before a top of significance. Sentiment per put call is fairly bearish, valuation hanging around mid 16s per SPX forward P/E, and even a return to 17X implies a test of SPX 2018 highs at minimum. For this week watching VIX YP, TLT HP and of course weekly pivots for short term moves. Of all the sectors that look ready to propel higher I think IWM and other various small cap growth will make the move. I'm referring to ETFs like VIOG, VIOO, VBK, VTWG here (though time may prevent detailed tracking). These are on the 2018 YTD leaderboard and I think greater potential to continue higher than the more crowded tech. 

Do you see a theme below? Tech and growth leading benchmark SPX by far. Keep in mind NDX quarterly RSI is 90+ and that is why I think small cap growth more potential and less risk from here. 

PIVOTS
USA main indexes - Last week DJI and RUT held MPs. SPX had mild break of YR1 and quickly recovered. Uptrends testing and holding typically lead to more up, especially when confirmed by VIX/VXX.

Sectors of note - Oddly SMH and XBI below MPs, and SMH even under HP and QP. XBI looks ready to bounce. 

Developed - DAX below all pivots, Nikkei below D200MA but will more easily recover.

Emerging - China taking it on the chin this summer. SHComp down -23% from highs and other tech cos like the ones in KWEB plunging more than that in just a few weeks. India Sensex and Nifty look magnificent and reflected in INDA rally, although currency differential making these charts look quite different. 

Safe havens - VIX back to YP. A big bounce from here along with TLT rally above HP will make me more cautious on the market. On the bonds I track - TLT AGG LQD HYG (using total return technicals!) all except high yield are on the verge of giving a long term buy which would be an interesting warning to stocks. I may add TIP to this watchlist as it is already in much better shape than equivalent duration IEF. Metals could bounce, sure. GDX is -21% on the year, with a -17% drop since 7/9. This is more likely if GDX holds YS2, GLD recovers YS1 and SLV recovers HS2 (ie, a coordinated move). However, why put capital to work here when small cap growth is pushing higher in the midst of consolidation in RUT and NDX and range bound SPX and DJI?

Currencies - Bullish DXY was the right idea, as it rallied to QR1 before pulling back. Given the amount of times YP tested from underneath I'm expecting this level to hold at least on first test. 

Commodities - USO broke under HP support along with DXY thrust. CL1 contract has given many good signals in the past and low bang on D200MA so far, so USO could recover soon. Over the weekend I read a PIMCO piece on rotating to more commodities and TIPSs for late cycle investing. I'm intrigued by this although USO has crushed other candidates or broader commodity funds like DBC, DBA (ags), UNG, COMT or COM. Right now all of these are under at least 1 of 3 long term support levels. I'd rather wait for the market to really turn and show leadership - until then riding USA indexes and especially small cap growth as noted above.

Crypto - BTCUSD has tried to rally fro 5-6K area 3 times, not counting the move last week. Each bounce is going lower. 3-4K target although high 4s might do on its Q3S1. A second recovery of BTCUSD QP 7370 would be more constructive.

OTHER TECHNICALS
New lows have crept higher, but new highs stayed mostly firm. New lows dropping back down would likely coincide to a push to highs in indexes. 

VALUATION
Dip buyers active in second half so far - maybe SPX in the 16s P/E forward earnings is the reason? A return to 18X tag means 3000+, but also watching 17X currently near 2885. In chart below, red = 20, yellow = 19, orange = 18, green = 17 and light blue = 16. Thick blue is SPX weekly close. 

SENTIMENT
Put-call above the median for 2018, which is understandably much higher than 2017. Not so bullish despite SPX and RUT just a bit under 2018 highs.

August dates (posted 7/22 Total market view)
8/2 - Stock pullback low
8/6-8 strong - "Seems like setting up for high"
8/17-20

8/17-20 setting up for stock high or non event. 

Another dedicated post on timing coming soon. 

Total market view

REVIEW
8/4/2018 Total market view: "Bottom line the earliest longs on RUT IWM and XBI were out on a profit taking move. Thankfully the next index longs on SPY QQQ then XLF and INDA are doing well. There is really no reason to not be fully long with all 5 USA mains above all pivots; SPY above YR1 is a good risk/reward level for later longs."

8/7/2018 Daily comment: "Sure daily bars look a bit toppy today. Short term charts (2H ETF session only) reached overbought again on all but IWM. Pushing outside daily Bollinger bands is fairly rare, and in August, that is just not likely to maintain."

8/8/2018 Daily comment: It is August so the market may not move too much. I am expecting some give back on this rally we have had from 8/2 open. But with current configurations, I still think this is a minor shuffle before another move higher. Also, VXX is near key support so if I am right about a near term shuffle this is now a good candidate for a hedging trade. The other thing to watch is very oversold gold which via GLD on HS1 and GC Z on YS1 is holding key support.

8/9/2018 Daily comment: "VXX bottomed today on the AugS1. Stock indexes had a minor reversal bar. As long as VIX remains under its YP I will keep to the view that SPX will test its high. That said a pullback to moving averages, and potentially a down week indexes, would be very normal at this stage. ... Minor pullback in stocks should be the next move."

Result - Pullback happened in the context of an uptrend, and VXX worked as a hedge as I nailed the low (and first volatility trade recommendation in months). However, VIX closing above its YP means the next pullback might inflict more damage than originally anticipated. 

SUM
Last week indexes fell back from a near high test on SPX and NDX, as DJI and NYA made new multi month highs. Though a pullback was expected from daily comments as I recommend a volatility hedge via VXX which worked well, I had been expecting SPX to fully test its 2018 high.

That still may yet happen, but VIX back above the YP makes me less sure. Basically, leaders NDX and RUT fell back from important resistance clusters. It is August so let's not read too much into this; in fact a pullback in a range would be more likely than a huge breakout. I tend to think the Turkey selloff will be a one day bear wonder. If this is right idea then VIX will drop back under its YP early next week as SPX holds its YR1 as support. If this plays out the leaders NDX and RUT should try again to make new highs.

However, if VIX remains above its YP perhaps there will be a larger pullback. Should this happen then DJI will likely lead lower among USA indexes.

Tech via NDX has been the 2018 main index leader with RUT in 2nd. But with recent dollar strength along with XBI and SMH weakness, I'm thinking that RUT IWM may resume leadership. If this idea is correct then we'll soon see RUT IWM above YR2. 

I'm in the monitoring phase of other longs recommended early in Q3 - XLF and INDA. XLF needs to hold its HP MP combo; INDA should stay above its D200MA and HP. Although I expect DXY strength to maintain, and therefore not allocating much to international indexes, due to the success of the XLF and INDA YP buys I'm also watching KWEB as it nears its YP.

Bottom line - Risk trends are up. Events like Turkey tend to be one day bear wonders. Anyone remember the great Cypress sell-off of 2013? Didn't think so - and yet this was a real headline at the time. Last week SPX had a simple pullback to YR1 & WP support, as well as rising 10 & 20 D MAs. Usually a bounce is the next move. That said, if VIX is above its YP then I'm less sure SPX will test its 2018 high. Given seasonality, there might be more weeks of range-bound congestion before another move higher. If this happens then DJI DIA likely to lead down given DXY strength. Also, as noted above, both biotechs and semi-conductors (XBI and SMH) are a bit weaker, which makes it less likely that NDX QQQ will power up above its YR2. Therefore, along with DXY strength, I'm thinking that RUT IWM will have the best chance at the next leadership move.

PIVOTS
USA main indexes - SPX holding YR1 as support so far. RUT stuck under YR2 for weeks. NDX resistance cluster YR2 HR1 QR1 not likely to blast through in summer trading. 

Sectors of note - XBI below MP and SMH could be having trouble again at the 2000 top. 

Developed - DAX back down to QP test after clearing above all pivots just 2 days ago. Nikkei comparatively better with a pullback to HP support, but it did break its MP and D200MA.

Emerging - DXY strength causing weakness in emerging market indexes I track. More on this here. It is interesting that currency is the real issue with say Brazil's Bovespa nearly flat for the year but EWZ -19%. Answer is all currency with USDBRL +20% YTD. That said given success of other recent XLF and INDA YP longs, I'm watching KWEB as it nears its YP for a buy.

Safe havens - VIX and VXX bottomed on AugS1s last week. VXX did not move as much as VIX according to pivots. If VIX drops back under its YP then there will be a clear answer - one day bear wonder. TLT popped up above YS1 and QP MP last week as some shorts covered on this crowded trade. Long term indicators are still negative so I'm expecting a move back down. Lastly, how worthless is gold if it cannot rally during a currency crisis? It is trying to hold YS1 area but GDX and SLV have already caved.

Currency - DXY above 95.70 YP looks for good. 

Commodity - Despite DXY strength oil was able to rally back above HP on both USO and CL(U) current contract. Watching this as maybe long, although nothing was triggered last week as USO could not clear its MP.

Crypto - BTCUSD Under all pivots. Rally to 8000+ was rather short lived excitement. For many months thinking 3-4K area, although 5K might do this quarter.

OTHER TECHNICALS
NDX has closed outside its quarterly Bollinger band the last 4 quarters in a row and working on #5. The 90s had a few that were close like this, with 1995-96 run of 7, then 2, then a pullback, then 2, then a pause, then 6, and that was IT. This time its quarterly RSI is above 90. Point here is not time to be complacent especially with 2 second half highs bang on HR1.

VALUATION
Interesting that SPX cannot seem to power through to 17X forward earnings (green line below) again. But this could be a seasonal thing. 

SENTIMENT
Not too toppy last week on the high, and put-call moving rapidly higher. It would be nice to see another move up to higher highs on SPX accompanied by much more bullish sentiment. 

TIMING
This section is quietly at the bottom of every total market view. I don't make a big deal about it. But jeez I've been nailing thins here. 

August dates (posted 7/22 Total market view)
8/2 - Stock pullback low
8/6-8 strong - "Seems like setting up for high"
8/17-20

8/6-8 had SPY price and close high 8/7, QQQ close high 8/8, DIA top 8/7, VXX close low 8/8.

Total market view

REVIEW
7/29/2018 Total market view: "Bottom line - Buying into the rally from early Q3 has done moderately well. It turned out the better gains came on the setups after the first IWM & XBI longs - SPY, QQQ, then XLF and INDA. With former leaders now leading down, and former laggards turning into leaders, there is no simple index hedge (though you can always hedge a QQQ long with the same short). That means taking profits, or at least not letting gains turn into losses, was the right move. If DIA and NYA were leading down and VIX moved more to upside last week, I'd be thinking about a major turn. But with markets making more of a rotation move, I will think at some point soon there will be another attempt to move broadly higher."

Result - Pullback continued Monday and early Thursday, and then most indexes went back up.

SUM
All 5 USA main indexes are above all pivots. AugPs had test or near test on SPX, NDX, DJI, RUT and NYA and this was bought very aggressively. 3 indexes, SPX, DJI and NYA cleared resistance levels (YR1 and two QR1s). All this is very bullish.

Similarly, VIX tested its AugP and rejected it. Friday closed decently under its YP - actually rare this year for VIX to move below all pivots. VIX pivot rejections tend to be risk-on for stocks not just one day but several days ahead. VXX also below all pivots and not near any major support.

Simply stated path of least resistance is higher for indexes, and for now we can watch SPX YR1 to hold as support and VIX YP to hold as resistance. Should these continue it will be likely to see SPX test its 2018 high.

Interestingly, though RUT IWM was the clear leader early in Q2, first to reclaim status of above all pivots, which was a great tell for a 2 month rally, it is not the same in Q3. So far YR2 has stopped the rally three times and if there is any weakness next week it will likely be the first USA main to move again below its AugP.

Similarly, 2018 performance leader XBI started Q3 strong, actually the first leading above all pivots, but has faded quite a bit. Friday closed under its AugP and below YR1 with look of rejection.

This is happening as two of the FAANG stocks, FB and NFLX are also having trouble. But instead of the momentum leaders dragging everything down it seems rotation is the more likely move. NYA is perking up, meaning renewed buying for some international names, and value ETFs also were popping at the end of last week. I like the idea of a rotation into value as growth has far outperformed for so long. 

Bonds are a crowded short but TLT below all pivots and I'm not keen to allocate here with indexes looking so strong.

Metals are also extended on downside and may have reached exhaustion on GLD HS1, GDX YS1 and SLV YS1. Above a WP could trigger a speculative long. 

Bottom line the earliest longs on RUT IWM and XBI were out on a profit taking move. Thankfully the next index longs on SPY QQQ then XLF and INDA are doing well. There is really no reason to not be fully long with all 5 USA mains above all pivots; SPY above YR1 is a good risk/reward level for later longs. I also like the value theme as above, and may try a GLD position and play for a quick pop or more. Lastly I will be watching USO as potential long candidate if above all pivots. If I want to increase reduce long exposure then first choices likely IWM & XBI shorts, and potentially a TLT long if it stays above its YS1.

PIVOTS
USA main indexes - Better if RUT IWM can hold its AugP. If not that is a good r/r (risk reward) on short side.

Sectors of note - XBI turning around in 2H, from performance leader up nearly 20% YTD to be the first to technically break down, below AugP and YR1 rejection last week. XLF seems like it has the most potential though XLE could also get in gear if USO moves back above all pivots.

Developed - Lagging, thought N225 is above all pivots. Currency impact makes these less optimal choices.

Emerging - China looking terrible both on Shanghai Comp, Hang Seng, FXI and KWEB. Sensex / INDA has picked up and have to say thinking that institutions would overweight India to escape China drama was a great call, with INDA turning into the best % gainer in 2H so far. 

Safe havens - VIX under all pivots is bullish for stocks. TLT YS1 worth watching, but I suspect bonds will move lower so not inclined to make any counter-trend plays here. GLD fully oversold on W chart with RSI divergence, and on long term support across the metals - GLD HS1, GDX YS1 and GDX YS1. This is a place were a bounce becomes more likely. If not here, then I'll be watching GLD YS1.

Currencies - DXY high 95 area and YP has been resistance for a long time, but it is back there again. 

Cryptos - ETH and LTC look pretty bad, and BTC is fading back under all pivots as I type. Perhaps that 3-4K target is on track after all. 4800 is the first major support for Q3. 

OTHER TECHNICALS
New highs & new lows indicator did a great job of remaining committed to the bull side both in early May and early July. That said there was some chop earlier this year. Current posture new lows rising from 7/17, but new highs still strong. 
 

VALUATION
If SPX reaches 18X forward earnings again, that will be over 3000. For this to happen it needs to get into the 17Xs, which has been near resistance since March of this year. 

SENTIMENT
Not too bullish here despite the proximity to highs. Put call and Equity only put call currencly not near January and June extremes. 

TIMING
7/3 - Stock index pullback low
7/10-11 - Actually looks like pullback low on 7/11
7/25 - "Pulling for a stock high" DING
7/27 (adding) - "Looks like volatility spike" DING

August dates (posted 7/22 Total market view)
8/2 - Stock pullback low
8/6-8 strong - Seems like setting up for high
8/17-20
 

Total market view

REVIEW
7/22/2018 Total market view: "Bottom line - There have been moderate gains since longs of early July. If RUT cleared YR2 and VIX was below YP then I'd probably err on the side of holding longs. But with the three mains just shy of targets and VIX above YP, with DJI and NYA starting to move negatively from JulR1s, it is time to be watching for a defensive adjustment."

Results - NDX and RUT topped in resistance areas, while SPX exceeded for two days and then dropped. VIX closed one day fractionally below its YP then bounced. It paid to be defensive especially on IWM, XBI and QQQ.

Abbreviated version due to travel. Regular schedule resumes soon.

SUM
Last week was more rotation than pure risk off. The laggards of many months, DIA and NYA, continued up for most of the week with a mild drop on Friday. The two indexes that were first to reclaim above all pivots in Q3, IWM and XBI, had the biggest declines. 

That said the door is open for more selling for the coming week. SPX tried and failed at its YR1; NDX HR1 / QR1 rejection; and RUT continuing to drop from its YR2. Of course FAANG widely owned and the -20% drop sure to have shaken some people up. 

We'll also have new August pivots in a few days. 

Bottom line - Buying into the rally from early Q3 has done moderately well. It turned out the better gains came on the setups after the first IWM & XBI longs - SPY, QQQ, then XLF and INDA. With former leaders now leading down, and former laggards turning into leaders, there is no simple index hedge (though you can always hedge a QQQ long with the same short). That means taking profits, or at least not letting gains turn into losses, was the right move.

If DIA and NYA were leading down and VIX moved more to upside last week, I'd be thinking about a major turn. But with markets making more of a rotation move, I will think at some point soon there will be another attempt to move broadly higher. 

Total market view

REVIEW
7/14/2018 Total market view: "Bottom line - Although the next move up may take a bit more work than the last two weeks, I think SPX is heading to major resistance at 2820-30 and pulling for NDX to reach 7460 - 7570. I am less sure what happens to RUT as that has failed twice on its YR2. I'll keep to this bullish case especially with all 5 main indexes above all pivots."

Result - SPX made it to 2816 but not 2820 yet. 

SUM
The Pivotal Perspective has been emphatically bullish to start the second half. As I mentioned several times, having cash ready, watching for good looking setups and then seeing SPY holding HP the very first day of the new quarter and half was tip to start getting long. On 7/3 sector leader XBI cleared above all pivots, though not above 10 and 20MA until 7/5. Main index leader above all pivots on 7/5 was another clue before SPY and QQQ joined above all pivots on 7/6. 

From these core longs I recommended supplemental positions in XLF, XLE, INDA and potentially SMH (though semi's behind QQQ and XBI). XLF and INDA have gained, the others faded.

Now in monitoring phase of longs checking to see where adjustments might be appropriate. Thus far I have thought if DJI and NYA joined the others above all pivots I would aim for SPX and NDX target zones and expect to see RUT above its YR2. The pivot configuration is bullish but we haven't not quite gotten to targets yet. I'm pulling for these to hit these week, but also ready to make an adjustment by locking in gains, taking a short hedge on DIA, or VIX long, especially if I see a clear message of the market with multiple indexes below WPs and VIX lifting above its YP.

As total volume is quite low, there may not be enough gas in the tank to reach the levels, or the market may need another pullback to have 2H charts reach oversold before big buyers are willing to step in. 

Bottom line - There have been moderate gains since longs of early July. If RUT cleared YR2 and VIX was below YP then I'd probably err on the side of holding longs. But with the three mains just shy of targets and VIX above YP, with DJI and NYA starting to move negatively from JulR1s, it is time to be watching for a defensive adjustment.

PIVOTS
USA main indexes - SPX and NDX haven't quite reached levels. 

Sectors of note - XLF decent bounce from YP, but still below HP and D200MA. SMH has been chopping around its 2000 top for most of this year frustrating both sides. XBI up 18% YTD but the last 5 days stuck on JulR1.

Developed - DAX the weak link, and did not hold on to status above all pivots. Currently mixed above HP QP and MP but not YP. 

Emerging - Shanghai Comp so far low 7/6 and trying to move back above YS2. Global indexes bounced quite a lot with DXY dropping; there may be more to this move with EEM back above its YP as well. 

Safe havens - TLT started the 2H with a move above HP and D200MA, but didn't reach even a monthly resistance level. Sometimes it pays to do homework as I noticed levels on the continuous futures contracts that I thought would stop the rally. This was also part of the XLF long idea. TLT broke down in a big way on Friday and if we emphasize the long term levels of YP, HP and D200MA (or W50MA) then all these are currently bearish for bonds, bullish for rates. Conversely metals though only in avoid or short mode may have found a bottom on the GC current contract YS1. For stock positioning, I'm most keenly watching VIX flirt with its YP. This will be especially the case if we see a coordinated message between VIX and VXX.

Currency - DXY rejected big time at its YP, but still above MP and D50MA. 

Commodity - USO tumbling to start 2H and currently below YR2 and QP, but did recover HP. Not sure which way this goes. 

Crypto - It seems my 3-4K target idea being called into question with the recent pop. For all the decline this year this was a simple retest of the February low. 

OTHER TECHNICALS
Total volume notably low, even for summer. I think this increases the risks on downside and may explain the target fail on SPX and NDX.

Another important note - NDX quarterly RSI about to reach 90. While there have been rare occasions with an asset class that maintains above this level, it is more likely on a monthly or quarterly chart that a major top and big drop is about to happen. For example, DJI Q RSI topped 90 only 2 quarters before the crash in 1929; IBB topped 90 2015Q1-2 before a fast 40% drop off highs. 

VALUATION
Mid 16s. A tag of 17X implies 2850 area. All lines are 10 week averages as provided by Thomson Reuters. 

SENTIMENT
My favorite sentiment meters remain simple put call and equity only put call as they continue to work very well. Simple put call was screaming warning in January at multi-year lows, was massively bullish to start Q2 at multi-year highs, and again warned of a top in mid June. Currently not at extreme so if the market goes higher not everyone has embraced this idea.

TIMING
7/3 - Stock index pullback low
7/10-11 - Actually looks like pullback low on 7/11
7/25 - Pulling for a stock high
7/27 (adding) - Looks like volatility spike

August dates
8/2
8/6-8 strong
8/17-20
 

Total market view

REVIEW
7/8/2018 Total market view: "The second half is starting with a risk on move. There were a lot of potential buys in the last week and here's the key thing - not much is at resistance yet. Only IWM has reached a JulR1, even 2 hour charts are not overbought on RSI yet, and indexes have room to hit most Bollinger bands (Q, M, W, D). This means a lot of indexes are set up for a decent move higher."

Result - Most USA indexes except RUT higher last week.

SUM
Last week DJI and NYA joined RUT, NDX and SPX above all long & medium term pivots (disregarding weekly & daily pivots for this type of basic status). So bulls have the ball. RSIs on daily and weekly charts are not overbought, so room to move higher in that regard. Valuations per SPX forward P/E still in 16s so even a tag of 17X again would push to 2850+. Sentiment per daily put-call is skeptical. New lows plunged last week, the opposite of what we would be seeing if this rally was about to stall. 

Simply stated most evidence supports the bullish case. OK, 2 hour charts are overbought. Financials are weak and TLT remains stubbornly strong. It is summer and SPX stalled in this 2790-2800 several times this year. If DJI and NYA were below 2HPs I would be sounding more cautious. But with all 5 indexes moving together, it is easy to prefer the bull side.

In the move off the lows, IWM was the first main index to recapture above all pivots. SPY and IWM quickly followed. Among the indexes I track, XBI was actually first, above all pivots on 7/3 and then clearing above all MAs on 7/5. These were core longs. 

In last week's Total market view I mentioned several additional good looking buy setups: XLF was set to bounce off its YP and it did in a big way, until a quick fade. XLE launched then dropped just as fast. INDA had a nice move up. Only SMH didn't work but if already long XBI and QQQ no real need to pile in huge on the tech laggard. So the core longs are still doing fine (thought bit concerned about IWM), the extra setups were mixed.

Bottom line - Although the next move up may take a bit more work than the last two weeks, I think SPX is heading to major resistance at 2820-30 and pulling for NDX to reach 7460 - 7570. I am less sure what happens to RUT as that has failed twice on its YR2. I'll keep to this bullish case especially with all 5 main indexes above all pivots. 

USA main indexes - more detail here.

Sectors of note - XLF weak below HP and finished the week slightly under QP. XLE topped on JulR1 with YR1 just above so no bias to next move there.

Developed - Nikkei improving also above all pivots as of 7/13. DAX struggling, below YP.

Emerging - China starting to stabilize. INDA was a nice pick last week, but still under HP. If EEM and FXI can reclaim YPs then that further supports the basic bull idea.

Safe havens - VIX testing YP with a fractional close below the level on Friday. Any move up could be another hedge idea if other bearish events. TLT the outlier safe haven. Metals terrible.

Commodities - Turned out I didn't miss much in oil as drop came rather suddenly not from any pivot level. Pesky when that happens. Still above all pivots, but prefer to go with indexes that are starting 2H by moving up not with a semi-crash.

Currencies - DXY still under YP. 

Cryptos - BTCUSD really slowing down but if it can't get moving with tech flying higher then probably going lower. Core target 3-4K, possible 4800.

OTHER TECHNICALS
New lows making it more likely current stock rally will continue. 

VALUTION
SPX could easily reach 17X again (green line) currently near 2850 and still rising. 

Sentiment
Put-call still on the high side. Next week monthly options expire. SPX 2825 anyone?

TIMING
July dates
7/3 - Stock index pullback low
7/10-11 - Actually looks like pullback low on 7/11
7/25

Total market view

REVIEW
6/17/2018 Total market view: "Bottom line - If markets go higher it is likely the leaders will have another push up to reach IWM HR2 / YR2 area and QQQ JunR2. If lower then likely international names leading down, and one could have already have a partial short position on anything below Q2Ps. Until VIX & VXX confirm trouble the bull trend of risk on gets benefit of the doubt. At the same time the combination of crazy momentum on IWM, quarter end r-ebalancing soon in play, frothy sentiment and the HR2 / YR2 combo make this an ideal area for a decent reversal." [bold added]

Rather nailed that with 6/20 top just a bit above YR2, and then a quick slam the next 2 days. NDX topped on JunR2 near exact (QQQ version a bit shy, NQ futs exact tag).

SUM
While I pay attention to all levels, when indexes are near yearly pivots, support or resistance then these typically become my focus. Last week IWM topped on YR2 in a similar manner to CL1 (oil continuous contract) earlier this year. We might not see the same percentage drop but so far it has been the right move to take gains near that level and reassess or even take a speculative short.

Yearly levels don't always generate major turns but here is a partial list this year:

DIA high of year (1/26) on YR1, along with many other risk asset highs on YR1s that week
SPY low of year (2/9) on YP exact
BTCUSD key lower highs 2/20 and 3/5 testing YP from underneath (since then down ~50%)
ZB1 (continuous contract) low of year 5/18 on YS2
XLE high of year (5/21-22) on YR1 exact, along with CL1 (continuous contract) YR2
SMH 2nd high of year 6/6-7) on YR1 exact
IWM high of year (6/20) on YR2
DXY high of year YP (6/21) near tag
EEM low (?) on YP 6/21 exact

I think you are getting the point now. This means we may have just seen a major IWM high along with a DXY high. Interestingly GLD dropped just a bit under its YP but could easily recover with any more higher.

This week ends 1H and Q2 and June so soon all the pivots except yearlies will be changing over. It is often good to have cash ready for the next best looking setup. It is also time where we can see institutional re-balancing which typically trims winners and adds back to losers - this would put pressure on IWM and QQQ, and potentially support international names and bonds. As it turns out IWM and QQQ weekly charts look quite toppy, and if DXY drops further from its YP then emerging names (EEM, FXI, RSX, INDA) could get more a bounce. Note - all 4 of these had tag or near tag of YP last week and close above. 

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. 

In this system trend trades are my focus, especially what is moving up. In Q2 this meant huge overweight on IWM (read the USA main index post for more detail on this), and then tech names and regional banks. If you were looking to short in Q2 then anything below QPs as other indexes were above all pivots were the candidates and there were several of those. Although the absolute best shorts this year were below all pivots and not just a QP - first bonds in Q1, the BTCUSD and EWZ in Q2.

Occasionally a "surprise" trend change is worth playing like XLE moving above all pivots on 4/11 after being below all pivots just a few days before. These can be tricky because sometimes surprises fade and a quick poke above all pivots remains just that with a fast drop back below (DBA good example this year).

Lastly, once in a great while, I will mention a purely speculative move (short above all pivots at major resistance, long below all pivots at major support) - recently, TLT buy mentioned 5/20, SMH short 6/7, and IWM short last week. 

In terms of new trends, we have the pending 2HP, Q3P and July pivots to consider. There is something interesting going on with TLT and XLF. TLT has been quietly stabilizing since the fast rally off the HS2 low on 5/17. In June YS1 was bought, and it has essentially held its MP since reclaiming on 6/14. At the same time, XLF is glaringly weak. It failed at the Q2P several times, and finished last week under its MP and D200MA! A weekly close at the same price would put XLF below 2HP, Q3P and JulyP. 

Bottom line - If pure bullish scenario next week, then I may miss out on QQQ and IWM bounce gains but I don't think these will be very much. And one can always hop on SPY to add long exposure though it hasn't done much this year. If international names rally then it will be time to scram from any remaining shorts (and if taken against QQQ and IWM longs, one could be out of those already if long side reduced). If the mixed scenario above I'll be watching for deep pocket buying in names like EEM, FXI, KWEB, INDA. If risk off, then GLD could start looking good with a move above its YP.  

PIVOTS
USA main indexes - Another key high near a yearly level on IWM last week. As called! 

Sectors of note - XLF trending weak. XBI took lead on SMH with SMH having YR1 rejection as XBI not much damange then clear.

Developed - Still weak despite DXY fade. EWG below all pivots! 

Emerging - Several YPs in play: EEM YP low exact, FXI YP near tag, SHComp YS2 low, INDA held YP higher low 6/19. RSX also benefited from USO bounce and recovered YP as well. 

Safe havens - VIX above YP some warning for stocks. But could not move above MP last week. TLT quietly strengthening. If GLD joins VIX above its YP then this would point to further risk off move for stocks.

Commodities - USO still fairly strong, with simple pullback to JunS1 and then an explosion higher on Friday to move back above all pivots. 

Currency - DXY YP exact on the high. 

Cryptos - Seems like BTCUSD heading to 3-4K as I have mentioned on this site several times. This is even more likely now with ETHUSD having a 2nd rejection from its YP just last week.

OTHER TECHNICALS
Noticing screaming RSIs across timeframes was part of take gains on IWM last week. That said now lows remain rather dormant and until we see uptick then we have to give bull scenario in stocks some weight.

VALUATION
SPX seeming to have resistance at 17X (green) recently after 18X (orange) earlier in the year, and near 20X (red) on the January blowoff top. 

Sentiment
Equity put-call reaching very low areas near where it was in January. All issue (including index) put-call not that different. 

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 - TBD

July dates
7/4
7/10
7/25

Total market view

REVIEW
6/3/2018 Total market view: "Bottom line - Easier money usually made by long strength and avoid/short weakness. After small caps (IWM and KRE) led in May, in the last few days all tech indexes - QQQ, SOX, XBI and KWEB - have been on fire. If market plays out bullish, tech likely to make new highs. If bearish, the international names likely to drop. At some point we may see an institutional rebalancing move, but these typically take place in the latter 2 weeks of June and not in the beginning of the month."

Result - IWM and the tech names higher in June; several international names lower that 6/1 (SHComp, EEM, FXI, INDA, EWZ and RSX). 

SUM
All 5 USA main indexes are above long and medium term pivots, but there is notable difference between leaders IWM and QQQ (both well above YR1); SPX in middle zone doing fine but not yet back to YR1; and then the more international influenced DIA and NYA which remain relatively weak. 

Sectors are similarly mixed, with SMH and XBI just off recent highs at YR1 and HR1 respectively, yet XLF unable to clear QP. 

EFA, EWG and EWJ all below QPs as well. And then in the emerging indexes that I track, only only China tech KWEB has joined the party in June. 

As mentioned above, it has been a great strategy to focus on the technical leaders and avoid the laggards. But heading into the last 2 weeks of Q2 there is more chance of an institutional rebalancing move which would pressure the leaders and could help a bounce on the losers (which could mean bonds as well as international stocks).

Momentum on IWM using RSI and BB across timeframes is at a fever pitch, so all the more reason to be locking in gains near the HR2 / YR2 combo (one more push up would do it). This could potentially be a speculative short as well. I have already mentioned SMH in this regard, and so far YR1 remains the top.

Yet the reason to still be decently long here is VIX, closing below its YP and thus below all pivots for 5 of the last 8 of the last trading days. If there is any bear scenario for USA main indexes we should see VIX back above its YP. 

TLT reclaimed its MP last week after holding its YS1 for 5 consecutive trading days. That said, weekly chart seems to limit upside.

Metals perked up then got totally hammered the next day with DXY strength seeming to have a delayed reaction. GLD nearing its YP support (with GDX already below all pivots) could be level to watch for further breakdown.

Bottom line - If markets go higher it is likely the leaders will have another push up to reach IWM HR2 / YR2 area and QQQ JunR2. If lower then likely international names leading down, and one could have already have a partial short position on anything below Q2Ps. Until VIX & VXX confirm trouble the bull trend of risk on gets benefit of the doubt. At the same time the combination of crazy momentum on IWM, quarter end r-ebalancing soon in play, frothy sentiment and the HR2 / YR2 combo make this an ideal area for a decent reversal. 

PIVOTS
USA main indexes - For this week SPX / SPY HR1 to watch. Bullish above, weaker below. 

Sectors - I mentioned SMH as long early May, then said hold above Q2P; so far YR1 is the top. XBI has been a bit stronger, currently above YR1 but slightly under HR1.

Developed - DAX well above all pivots, EWG not; N225 the same with EWJ. Issue is DXY strength.

Emerging - RSX joined EWZ below all pivots last week. Several of these names at areas of weekly Bollinger bands / 50MA that would bounce if typipcal correction territory. As EWZ showed this is not guaranteed to happen. 

Volatility - VIX below all pivots; no problems for market until that perks up.

Bonds - TLT strength and XLF weakness both point to upside limited for leaders as players more inclined to take gains off the table if the next move is risk off. 

Metals - Any lower and all three metals ETFs will be below all pivots.

Currency - DXY massive move from HP low last week; seems like it should test YP.

Crypto - BTCUSD near major low area for the year and no real bounce. Testing JunS1 here, but first major support is 3000-3700.

OTHER TECHNICALS
Currently on RUT
Quarterly RSI at 79 higher than all bars than 3 in the late 90s. 
Monthly RSI at 75 higher than all bars except 10 bars since 1988. 
Weekly RSI not extreme but 2 bar close outside BB fairly rare, with RSI at 68.
Daily RSI has stayed overbought in June, a sign of strength, but making slightly lower highs.

This is what I mean by "crazy" momentum - this is a stretched move, speculators are record long the Russell. There is a lot setting up for a reversal here. Have I been clear enough on this point?

VALUATION
SPX forward P/E under 17. Implied valuations rising nicely due to increased earnings. SPX could reach 3000 area and be less expensive than the January top.

SENTIMENT
Equity only pull call near lows of the year. Those calls likely on popular tech stocks and small cap names.  
 

TIMING
April dates
4/2 - USA main index low, date listed per 3/18 Total market view
4/13 (mild)
4/18 - so far stock high
4/23 - 4/24 close low, 4/25 price low slight miss

Why do I quietly persist in this timing project? Because of 4 dates listed for April (from the end of March!) 

• one was the low of the month across the board for USA stock indexes, and same date TLT high
• the date listed as mild was mostly non event, perhaps a small pullback low on SPY and other stocks
• 4/18 was the high of the month for stocks
• 4/23 slight miss, 4/24 close low 2 weeks with 4/25 slightly lower lows

Not bad eh? 

May dates
5/6 (could be 5/4 session or 5/6 globex)
5/11 for currencies esp - DXY pullback low 5/10-11
5/15-16 area looks important change of character -5/17 TLT low of year

June dates
6/2 mild - non event
6/5 esp for currency - 6/6 EEM high otherwise not much)
6/13-14 strong - tough to read with a few stock tops but not much bearish on 6/15 and could have been pullback low on 6/15 (+1)
6/20-21 strong
6/26

7/4
7/10
7/25

Total market view

REVIEW
5/27/2018 Total market view "Bottom line - I still think it is time to watch to lock in stock gains and will do so when the market tips its hand with a DIA QP break, QQQ YR1 rejection and VIX/VXX confirmation. Until then perhaps the bulls will surprise me with a push to higher levels."

In the last 2 weeks, it was correct to lock in gains on USO/XLE, but not so much for IWM, QQQ, SOX or XBI.

SUM
In May I have been stressing the yearly levels in play - IWM YR1, QQQ YR1 and VIX YP. First IWM cleared its YR1 and then it held on a test. Last last week QQQ finally blasted through its YR1 after sitting under it since 5/10. But VIX is still above its YP, and really tech is the outlier in terms of strength as most other indexes, especially international, haven't had the same move.   

Either tech strength will lead to a bullish resolution with DIA recovering its QP, or DIA and other international indexes will drag others lower. 

Let's just point out the Pivotal Momentum basics - stock indexes to stay above QP or recover above it first:

USO 2nd time above QP 4/9 from there huge out-performance until 5/22 continuous contract YR2 top
IWM 2nd time above QP 4/10 and above from there; led USA mains through 5/30
XLE recovered above all pivots including QP 4/11
KRE 2nd time above QP 4/23, from there up to 5/22
QQQ 3rd time above QP 5/4

Others that cleared QP later, although I did go out of the way to recommend SOX as it recovered above its MP on 5/4 (mentioned in 5/5) Total market view.

These have been the best longs. 

And what had bearish action from QPs?
EWZ, EEM, INDA, SHComp below QP entire Q2
FXI below QP except 1 trading day
RSX below QP except 2 trading days
KWEB below QP except 3 trading days
XLF below QP except 5 trading days
NYA below QP except 10 trading days
DIA below QP except 14 trading days

These have been avoid or short. 

I don't know the way the market will go, but we aren't seeing the coordinated strong trend of 2017. Therefore long/short strategy doing well, if you get on the right side of the trade.

In general DIA pivots do seem to be especially important for the larger market, so until DIA joins IWM, QQQ and SPY above all pivots I have to allow for the possibility of a bearish scenario. It just wouldn't take much more for DIA to clear its Q2P.

Bottom line - Easier money usually made by long strength and avoid/short weakness. After small caps (IWM and KRE) led in May, in the last few days all tech indexes - QQQ, SOX, XBI and KWEB - have been on fire. If market plays out bullish, tech likely to make new highs. If bearish, the international names likely to drop. At some point we may see an institutional rebalancing move, but these typically take place in the latter 2 weeks of June and not in the beginning of the month.

PIVOTS
USA main indexes - QQQ blasted through YR1 resistance but DIA unable to reclaim QP.

Sectors - SOX and XBI powering up. XLF not so much.

Developed - Some trouble in Germany.

Emerging - Most names weak for much of Q2.

Safe havens - TLT hanging on by a thread. 

Commodity - USO topped as CL continuous contract ran into its YR2.

Currency - DXY above JunP; still gets benefit of doubt on long side which pressures DIA and other international names.

Crypto - ETHUSD 1 day break and then recovery of YP; but still under MP and QP. Reclaiming JunP would really help the rally case. BTCUSD also below JuneP. Personally I think these are going lower.

OTHER TECHNICALS
There are only 10 times when the 10 period average of weekly new highs resumed above the 10 avg of new lows. All these are shown in green arrows below. 4 of these 10 times had 2 in fairly quick succession. So far this decade these have haven't been bad times to fully recommit to the long side:

8/2010
12/2011
7/2012
11/2014
3/2016
5/2017
 

On another note - watching the Q Bollingers closely across the board.

VALUATION
Institutions were all over the drop in SPX valuations in March and April.

SENTIMENT
Put-call far from the lows of January. The only crowded long per COT is the Russell, which further suggests tech taking over leadership for June.

TIMING
April dates
4/2 - USA main index low, date listed per 3/18 Total market view
4/13 (mild)
4/18 - so far stock high
4/23 - 4/24 close low, 4/25 price low slight miss

Why do I quietly persist in this timing project? Because of 4 dates listed for April (from the end of March!) 

• one was the low of the month across the board for USA stock indexes, and same date TLT high
• the date listed as mild was mostly non event, perhaps a small pullback low on SPY and other stocks
• 4/18 was the high of the month for stocks
• 4/23 slight miss, 4/24 close low 2 weeks with 4/25 slightly lower lows

Not bad eh? 

May dates
5/6 (could be 5/4 session or 5/6 globex)
5/11 for currencies esp (DXY pullback low 5/10-11)
5/15-16 area looks important change of character (5/17 TLT low)

June dates
6/2 mild
6/5 esp for currency
6/13-14 strong
6/20-21 strong
6/26

Total market view

REVIEW
5/13/2018 Total market view: "Bottom line - if you followed recommendations of the past few weeks, you have been long oil, small caps, tech and most recently semi-conductors and did well on the recent rally. It is time to watch to lock in some of those gains, but if indexes continue to show strength then letting the trend play out further will be the right decision."

Result - In the past week USO and IWM cleared resistance levels, but QQQ ans SMH/SOX gave back some gains.

SUM
Stocks indexes are in uptrends, with all 5 USA mains still above long term and medium term pivots. However, most of these had a mild reaction down from resistance last week: SPY MR1, QQQ YR1, DIA MR1 and NYA MR1. Only IWM had brief pullback and finished the week above resistance.

This was mostly as expected per last week's USA main index review: "Indexes are at resistance in the context of a bull move. The task is to judge the likely path - immediate clear (less likely to my eyes), pause or small pullback then clear (possible), or decent drop (also possible)."

To use this language again, only IWM had small pullback then clear; and others had a small pullback and next larger move is still TBD.

I think we are seeing signs of professional selling which means that next larger move will be down. SPX quarterly Bollinger band is 2742 and that was the exact high to the point. NDX got whacked from its YR1 level which also happened to be near its monthly close high. The Dow Q2 high at 25K is still outside its quarterly Bollinger band and so far it seems to be falling back inside the band. 

If this idea is correct then we will soon see DIA and NYA break under their QPs and other USA mains join QQQ below WPs (weekly pivots) as a short term tell; or at very least upside will remain limited on rallies with pros selling near the highs. 

The flip side is that small caps are leading the rally, daily new highs / new lows look strong, and forward valuations under 17X SPX are not terrible. In addition, VXX is below all pivots and VIX looks rather weak. Typically we will see breadth weaken, VIX & VXX get in gear, new lows increasing and other safe havens show signs of caution before a big drop. We aren't really seeing those yet. 

Emerging markets have been weaker throughout Q2. In fact this is not a function of their respective indexes, as Sensex, Bovespa, and Micex look far better than INDA, EWZ and RSX - but their currencies have been in freefall vs the USD. Following a pivotal momentum approach, one could have played EWZ and RSX off the 2/9 low but definitely not these names (along with KWEB, FXI, EEM, INDA) in Q2. 

Commodities have been strong this year although this seems to be a function of oil and related, as GLD is muted and agriculturals have been mixed. Though USO cleared YR2, that level is right on the highs on the CL1 contract so further gains may be less likely. XLE also so far topped on its YR1.

Bottom line - if you have avoided bonds (per Pivotal Perspective clear repeated warning from the beginning of the year), were watching for commodity longs per many repeated comments of emphasis, played USA small caps and tech on the Q2 recent rally and out of the emerging markets, then you have done very well. Now as last week it is time to be watching to lock in gains. As usual how one goes about doing this depends on your role and flexibility in the market. One could simply reduce long exposure, or hedge tech longs with an inverse ETF, or have puts, etc. 

Generally it is easier to be long the leaders and avoid spending too much time trying to catch shorts and buy the most beaten up names. But if my idea on pro selling in tech is correct, we are about to see further declines in QQQ and SOX/SMH, and possibly a TLT and bond bounce as oil pulls back from its high.

But what will be the next good looking typical momentum setup is tough to say - I'd be surprised at a coordinated move above Q2Ps in the emerging names although if my bear idea is wrong perhaps that could happen. Simiarly, GLD and TLT would have a lot of work to recover medium term pivots. Should VXX recover its HP, that would be a clear warning for stocks as well as a possible trade. 

PIVOTS
USA main indexes - IWM above resistance cluster, but DIA and NYA back to testing Q2Ps.

Sectors of note - XLE top on YR1; XLF QP rejection seems to be pointing to a bond bounce. SMH/SOX still above QPs but if those break watch out.

Global developed - EFA above all pivots but EWG and EWJ back near or under Q2Ps.

Global emerging - Only ACWI above all pivots with a similar look to EFA. Otherwise, SHComp below all except monthly despite a recent bounce; FXI, KWEB and RSX still below QPs, EEM below QP and MP, and EWZ and INDA diving below YPs.

Safe havens - VXX under all pivots from 5/10 was the bullish confirmation in stocks. However, VIX has not joined in this status so I think there is chance for VXX bounce. The world is bearish bonds but TLT bounced back after a new 2018 low and near tag of HS2 so this could be worth watching in weeks ahead. Metals have been stuck in very sideways trade this year. 

Commodities - As mentioned USO and CL in toppy area YR2. I thought there might be a broader commodity rally this year but in fact so far USO was the easier play and then when XLE got in gear above pivots that delivered a very fast and powerful move.

Currencies - DXY traded above HP for 3 days last week, its first long term strength in months. 

Cryptos - BTCUSD under all pivots and while it hasn't gone much lower yet this puts risk of 3K target area in play. 

OTHER TECHNICALS
Bollinger bands should appeal to the quants out there as they are 2 standard deviations from a 20 period average. So far SPX Q2 BB at 2742 is the exact Q2 high to the point. 

New high new lows look zippy on the daily chart but much less so on the weekly chart. Perhaps more on this soon.

SENTIMENT
Not at extremes.

VALUATION
SPX nearly 20 at the January high and dropped into the 16s on the pullback. Currently about 17X. 

TIMING
April dates
4/2 - USA main index low, date listed per 3/18 Total market view
4/13 (mild)
4/18 - so far stock high
4/23 - 4/24 close low, 4/25 price low slight miss

Why do I quietly persist in this timing project? Because of 4 dates listed for April (from the end of March!) 

• one was the low of the month across the board for USA stock indexes, and same date TLT high
• the date listed as mild was mostly non event, perhaps a small pullback low on SPY and other stocks
• 4/18 was the high of the month for stocks
• 4/23 slight miss, 4/24 close low 2 weeks with 4/25 slightly lower lows

Not bad eh? 

May dates (listed end of April)
5/6 (could be 5/4 session or 5/6 globex) - non event
5/11 for currencies esp - USD pullback 5/11-14
5/15-16 area looks important change of character - so far 5/14 USA main index top

Total market view

REVIEW
5/6/2018 Total market view: "USA main index leaders IWM and QQQ finished the week above all pivots and MAs. SPY, DIA and NYA had (another!) test and huge hold of long term support: HP, D200MA, and NYA reached YP as well. Bulls have the ball."

Rally idea bang on - a bit stronger than planned but positioning long worked out well.

SUM
USA stock indexes put in one of the better rallies of the year last week after again holding long term support (YPs, HPs and D200MAs). This time the move was strong enough to turn medium term trends (QPs and MPs) up on all 5 USA main indexes. Bulls still have the ball, but these indexes have now run into a few major resistance levels that are worth watching - QQQ YR1 and IWM YR1 HR1 QR1 cluster. In addition, VIX is testing its YP. 

If VIX drops under its YP and stays there then I would expect indexes to be marching higher. But VIX hold of YP and QQQ drop from YR1 could be another decent trading top like 2/26-27, 3/12-13, 4/18, etc. 

XLE has had a great rally in just a few weeks after clearing its YP and back above all pivots on 4/11. But note that USO has reached YR2 so that could also be ready for a pullback. PS, last week's rec of SMH above the MP played out exactly as planned and more.

Global developed names joined USA indexes above all pivots last week - not by a lot but above all nonetheless. 

Global emerging participated in the bounce but remain relatively weaker - SHComp only above MP and below YP HP QP, FXI, EEM, KWEB below QPs; EWZ all the way down to HP on recent drop, still well under QP and MP; INDA also below all pivots except YP; and RSX, bullish to hold YP last week but still under QP. 

Still, all nearly stock indexes I track have held long term support levels. All bond categories are still weak, all 4 below all pivots. That said, TLT is within striking distance of recovering its MP which should that happen along with a drop from QQQ and VIX hold could be an interesting countertrend move. Metals are mixed with GLD relatively stronger but SLV and GDX not above their YPs.

Bottom line - if you followed recommendations of the past few weeks, you have been long oil, small caps, tech and most recently semi-conductors and did well on the recent rally. It is time to watch to lock in some of those gains, but if indexes continue to show strength then letting the trend play out further will be the right decision.

PIVOTS
USA main indexes - QQQ YR1 and IWM cluster the levels to watch. DIA and NYA above QP means bulls get benefit of the doubt. 

Sectors of note - Both XBI and SMH barely positive for the year and not too far from QPs. Holding long idea only valid above the QPs.

Global developed - EFA also decent institutional tell, above all pivots from 5/4 on.

Global emerging - Weaker with several indexes below QPs and more. See list above.

Safe havens - VIX testing YP; VXX under all pivots for 2 days last week. Should VIX join VXX below all pivots then new index highs become more likely. Metals have been mixed for much of the year; a coordinated move (GLD, GDX and SLV above all pivots) would be an interesting signal but that hasn't happened yet. Lastly, TLT has quietly rallied as stocks went higher last week so counter-trend rally could have more to go. 

Commodities - USO high on YR2 so might be time to lock in gains if long. 

Currencies - DXY top on 2HP but now positive for the year so think it may try to come back.

Cryptos - BTCUSD barely hanging on to MP but otherwise below all pivots as QP exact on recent 5/5 top. Ideal BTC low for me is 3K area (YS1).

OTHER TECHNICALS
Mixed messages from various timeframes (Q, M W and D). Q and D suggest upside limited, M and W look healthier for the USA mains. Which will win? Not sure yet, but pivots are pointing to the bulls right now.

New high new lows also stayed mostly risk on for May despite flashing caution on 5/3.

VALUATION
Helping keep bid under market as mentioned several times in recent posts, currently about 17X forward earnings according to my smooth 10 week moving average. 

SENTIMENT
Not at all too bullish.

TIMING
April dates
4/2 - USA main index low, date listed per 3/18 Total market view
4/13 (mild)
4/18 - so far stock high
4/23 - 4/24 close low, 4/25 price low slight miss

Why do I quietly persist in this timing project? Because of 4 dates listed for April (from the end of March!) 

• one was the low of the month across the board for USA stock indexes, and same date TLT high
• the date listed as mild was mostly non event, perhaps a small pullback low on SPY and other stocks
• 4/18 was the high of the month for stocks
• 4/23 slight miss, 4/24 close low 2 weeks with 4/25 slightly lower lows

Not bad eh? 

May dates
5/6 (could be 5/4 session or 5/6 globex)
5/11 for currencies esp
5/15-16 area looks important change of character

Total market view

REVIEW
4/29/2018 Total market view: "Bottom line - If SPY joins QQQ above its QP then probably it is a "go with" move. But if QQQ drop under its QP to join SPY back in medium term down trends, that also is a "go with" move."

Result
Mixed - QQQ did drop below QP on Monday 4/30, and SPY continued lower into Thursday. But QQQ recovered its QP on Tuesday only to break again and recover again (bit more chop than I'd like on this QQQ QP).

SUM
USA main index leaders IWM and QQQ finished the week above all pivots and MAs. SPY, DIA and NYA had (another!) test and huge hold of long term support: HP, D200MA, and NYA reached YP as well. Bulls have the ball. But how far they run is in question - I think upside limited to a recent high or or slightly higher in the range. To put it another way, quarterly Bollinger bands have started to act as resistance for SPY, DIA and NYA, and I don't expect to see another overshoot this quarter. 

With QQQ leading momentum on Friday, it would help broader tech gains for at least one and ideally both of XBI and SMH to get in gear. XBI still a bit stuck but SMH huge rally on Friday as well. 

Global indexes have been largely weaker. This is in part due to recent DXY strength, but also the unwind of 2017 popular trades. SHComp remains very weak below all pivots and below D200MA since mid March; FXI the outlier barely holding above D200MA on close; then EEM, KWEB, INDA, EWZ and RSX all under D200MAs and most of these below QPs & MPs.

USO continues to lead the market, above all pivots since 4/10 and continuing to make higher highs. HR2 / YR2 areas worth watching for possible top but considering the year thus far so few asset classes in healthy uptrends that this gets the benefit of the doubt. 

Bonds continue weak. Despite the trouble in stocks last week, TLT stayed below its MP and so below long term and medium term pivots. AGG, LQD and HYG are also below these levels.

In sum, stocks mixed, commodities up and bonds down as the themes of 2018 continue. Near term I prefer the bull side on stocks but at the same time don't expect this to be the start of a multi month rally. 

PIVOTS
USA main indexes - Leaders IWM and QQQ; if playing bull side better to see SPY join these above Q2P.

Sectors of note - SMH back above MP with big hold of D200MA could be worth playing for rally to QP. XLE sideways since mid April but looks like it too may see QR HR area for a decent high.

Global developed - EFA doing fine, also above all pivots; EWG and EWJ just barely under QPs.

Global emerging - See list above. Many of these weaker and still below QPs and MPs.

Safe havens - Odd tick on VIX last week; VXX test and rejection of QP was tell to get long. Bonds weak, metals mixed.

Commodities - Mostly USO, but also trying to keep an eye on DBC and DBA. DBA fractional close above YP but not enough to look like support.

Currency - DXY high on MayR1 but holding above QR1 as support. I prefer a bit higher on DXY though weekly chart reached area of likely struggle. 

Crypto - Leader ETHUSD above all pivots, but BTCUSD still under D200MA, QP and 10K.

OTHER TECHNICALS
Quarterly charts are limiting upside on most USA and global indexes; weekly charts suggest bounce.

New lows jumped recently although new highs just barely holding above.

VALUATION
SPX forward P/E down in 16s again after reaching about 19.5 on the January spike. This 'should' keep bid under market.

SENTIMENT
Not anywhere near toppy. 

TIMING
April dates
4/2 - USA main index low, date listed per 3/18 Total market view
4/13 (mild)
4/18 - so far stock high
4/23 - 4/24 close low, 4/25 price low slight miss

Why do I quietly persist in this timing project? Because of 4 dates listed for April (from the end of March!) 

• one was the low of the month across the board for USA stock indexes, and same date TLT high
• the date listed as mild was mostly non event, perhaps a small pullback low on SPY and other stocks
• 4/18 was the high of the month for stocks
• 4/23 slight miss, 4/24 close low 2 weeks with 4/25 slightly lower lows

Not bad eh? 

May dates
5/6 (could be 5/4 session or 5/6 globex)
5/11 for currencies esp
5/15-16 area looks important change of character

Total market view

REVIEW
4/22/2018: "Stocks mixed, bonds weak, commodities up. This is a simple take but I suspect these themes are more likely to continue than not."

Result: Stocks mixed, bonds went lower (though rebounded and finished positive), oil tested near highs but didn't do much. 

SUM
USA main indexes continue to hold long term uptrends. All 5 are above YPs, HPs and D200MAs. There have been several threatening chances to break down, but indexes keep holding on tests of these levels. At the same time, resistance levels keep getting sold - last week saw a big drop from SPY and QQQ QP area. Markets rallied back, and while QQQ was on fire for a few days, it didn't finish strongly with a big drop from HR1 and D50 MA area and could not maintain status of above all pivots.

VIX and VXX look like they are on the side of stocks. If this is true then well see QQQ launch from its QP and SPY clear its QP as well. But if QQQ fails again at its QP I'd expect trouble on the way. So simple agreement between SPY and QQQ is what I am watching for in the coming week.

All the world seems bearish bonds - The Pivotal Perspective has been firmly in this camp since the beginning of the year. While I would still avoid corporates and high yield, the more safe haven trades TLT and AGG may have put in decent lows last week - TLT low test near QS1 and nearly recovering YS1 HS2 combo. AGG reached near YS2. While the widely watched TNX (ten year) did reach above 3.00% the move quickly reversed, and the granddaddy TYX did not make a new high compared to February. If bond rally (yield drop) is for real, then we'll see TNX below 2.93 and then below its new May pivot; correspondingly, TLT above its YS1 and then above its May pivot. 

Time limits me from a comprehensive market review each week, but I did start talking cryptos in the mid April: "After crypto bloodbath for several months BTC looks poised to reclaim MP and ETH needs just a nudge to recapture its YP - should this happen, a significant development." ETH continued up over 30% above its YP since then, but as much of the rally was from lower levels (up nearly 100% from 4/2 low), combined with a top near its QP and falling D100MA, makes me think the move might be done for now. 

Bottom line - If SPY joins QQQ above its QP then probably it is a "go with" move. But if QQQ drop under its QP to join SPY back in medium term down trends, that also is a "go with" move. Due to crowded bond shorts I may also look at the bond long idea as mentioned above. 

PIVOTS
USA mains - Only IWM above all pivots. DIA and SPY both below QP and MP. QQQ still below MP as well.

Sectors - SMH and XBI remain below QPs. 

Global developed - EFA above all pivots (one of the few things I track in that category), but EWG and EWJ both under QPs. 

Global emerging - SHComp trying to hold YS1 but below all pivots all days except 1 since 3/23. FXI, EEM and KWEB doing better, still above long term support, but below QP and MP. 

Safe havens - VXX and VIX caught the stock turn last week with both reversing from MPs near exact. GLD fell under its QP last week, while GDX chopped a bit and finished above so not sure about metals. See comments above for TLT pivots.

Currencies - Is the DXY rally over already? Not sure. Above Q2P was a buy as mentioned but move stopped cold at falling D200MA along with MR level. 

Commodities - Oil has had a great year and we may still see USO on HR2 or YR2 for the real top. But CLM contract ddid reach HR2 twice so oil may be in a need of a rest. As it turns out ags are jumping with DBA lifting above D200MA and HP. If it can reclaim YP then rally should be on.

OTHER TECHNICALS
New high and new low indicator back to bullish on 4/13 but since then not much progress in USA equities. 

VALUATION
Recent drop to low P/E levels helping keep bid under market. 

SENTIMENT
Put-call dropping back into neutral zone.

TIMING
April dates
4/2 - USA main index low, date listed per 3/18 Total market view
4/13 (mild)
4/18 - so far stock high
4/23 - 4/24 close low, 4/25 price low slight miss

Why do I quietly persist in this timing project? Because of 4 dates listed for April (from the end of March!) 

• one was the low of the month across the board for USA stock indexes, and same date TLT high
• the date listed as mild was mostly non event, perhaps a small pullback low on SPY and other stocks
• 4/18 was the high of the month for stocks
• 4/23 slight miss, 4/24 close low 2 weeks with 4/25 slightly lower lows

Not bad eh? 

May dates
5/6 (could be 5/4 session or 5/6 globex)
5/11 for currencies esp
5/15-16 area looks important change of character

Total market view

REVIEW
4/15/2018 Total market view: "With the pivot improvements last week I think the edge has shifted back to the bulls - however, SPY DIA and QQQ remain below Q2Ps so those are the levels to watch. Any moves above QPs are likely buys. Lastly, after crypto bloodbath for several months BTC looks poised to reclaim MP and ETH needs just a nudge to recapture its YP - should this happen, a significant development."

 SPY, QQQ and DIA did move above QPs - with leader QQQ making this move on 4/16 - and after brief pop higher failed back down. Cryptos on the move with ETH nearly 14% above its YP.

SUM
Stock indexes are continuing in range bound fashion. Long term trends remain up for the USA main indexes, but medium term trends tried to turn fully positive and failed last week. They may try again, or the long term trends could again be tested. SPY and QQQ QPs and DIA MPs are the deciding factors here.

Last year's hot trades XBI and SMH (both ~40% gain in 2017) are sectors especially important for tech / QQQ. Both of these have been flirting with prior major highs (biotech 2015 top, semi-conductors 2000 top) and so far the move is fail. Things could change again but so far SMH leading down and XBI also back near its Q2P.

Similarly, last year's hot India and China trades are different this year. SHComp below all pivots from 4/12, testing YS1 for the third time; FXI, EEM and KWEB below QPs and MPs; INDA below HP and QP; 2018 leader EWZ also currently below QP and MP; RSX pummeled on sanction news to recover somewhat.

The clear downtrend of 2018 is in bonds. Major bond ETFS TLT, AGG, LQD and HYG all started the year under YPs or soon moved below. All except HYG are on long term sells per my adjusted total return technicals system as outlined here. After stabilizing somewhat from February lows, another sharp drop last week across the categories. 

Oil and DBC (commodity index ETF) only things that I track to make new highs. XLE got in gear and moved from below all pivots on 4/4 to above all on 4/11 and then continued higher. 

Stocks mixed, bonds weak, commodities up. This is a simple take but I suspect these themes are more likely to continue than not.

PIVOTS
USA main indexes - Medium term trends in jeopardy; watching SPY and QQQ QPs, DIA MP.

Sectors of note - With many trends of 2017 turning on their head for 2018 it seems likely that last year's biggest gainers SMH and XBI could both be facing more trouble this year. These will also move QQQ. Meanwhile XLE has just in the last 2 weeks had impressive move up from fairly low level. 

Global developed - EFA above all pivots, but not EWJ and or EWG.

Global emerging - See pivot status listed above. SHComp below all pivots sitting again on YS1. 

Safe havens - VIX 3 days under YS1 seemed to support the bulls last week, only to lift above on Friday. VIX also in mixed condition above its YP HP yet below QP and MP. VXX below its QP so I think the stock drop may have bounce attempt.

Commodities - USO new highs last week above the January highs. Not so many items in that category. 

Currencies - DXY looks like it is perking up, back to QP as Euro weakens. DXY is buy above QP. 

OTHER TECHNICALS
Weekly charts bounced where they should have (a lot of weekly 50MAs and lower BBs in play in March / April lows) but then several stopped at weekly 20MAs last week. New high new low chart still somewhat in favor of bulls.

VALUATION
Just go to Yardeni's blue angels for a sense of how much the tax cut and earnings jump has shifted SPX valuations. It seems this 'should' keep a bid under the market unless things get stupid with China trade etc.

SENTIMENT
Recent bearish extremes working off.

TIMING
April dates
4/2 - USA main index low, date listed per 3/18 Total market view
4/13 (mild)
4/18 - so far stock high
4/23

Total market view

REVIEW
4/7/2013 Total market view: "While some indexes appeared to be more hopeful on the bull side on 4/4 (SPY test and hold 1HP and rising D200MA), the inability to clear QP and MP (Q2P and AprP), along with falling D20 and D50MAs, invited selling. In other words, many indexes are in mixed fashion (above some levels, below others). As long as this continues better to stay on sidelines or continue to short resistance as this seems to be the easiest play in 2018 thus far. One could also go with current pivotal leader GLD although even this seems to have been hopeful a few times this year only to fade near top of range."

Result was Friday decline from SPY and DIA QPs. Gold soared only to give quite a lot back very quickly.

SUM
Environment continues mixed, but with some pivot improvements compared to last week. Mixed for risk indexes primarily means above YP and HP but below QP and MP. The translation of this is long term uptrend intact, medium term trend weaker. How will this resolve?

I have stated many times that there are often definitive moves near the ends of quarters or beginning of new ones as big institutions shift their allocations. This time was a bit harder to spot, but the fact is 4/2 key retest lows across USA mains and some sectors as well as a VIX and TLT high.

Sentiment was quite bearish at the 4/2 low, with put-call far above the 2/9 area. Valuations in the form of SPX forward P/E have moved significantly lower. Lastly, the new high new low indicators is again (for the 3rd time this year) turning back bullish. With the pivot improvements last week I think the edge has shifted back to the bulls - however, SPY DIA and QQQ remain below Q2Ps so those are the levels to watch. Any moves above QPs are likely buys.

Lastly, after crypto bloodbath for several months BTC looks poised to reclaim MP and ETH needs just a nudge to recapture its YP - should this happen, a significant development. 

PIVOTS
USA main indexes - High of last week on SPY Q2P near exact; low near 1HP. IWM above all pivots, and NYA above MP (still below QP).

Sectors - XLE catching up to oil with move from below all pivots 4/2 to above MP 4/5, then above HP 4/10 then above all pivots 4/11. XBI had strong rebound from HP test.

Global developed - EFA above all pivots. EWJ and EWG not quite there. 

Global emerging - SHComp below all pivots for all trading days since 3/23 except 1. ACWI, FXI, KWEB, EWZ, INDA all below QPs. RSX slammed last week from slightly above all to below all in 2 days.

Safe havens - VIX sharply lower last week as stocks dropped is an interesting move. Either VIX wrong or stocks will try for the Q2Ps again soon. VXX also lower for the week with YP rejection (bullish for stocks) and MP break. A bearish environment for risk would have had VXX above its YP or at least holding above its MP.  GLD also maintaining above all pivots with with fairly sharp rejection from HR1.

Commodities - USO among pivotal strength leader on 4/9 (above all including WP and DP, only missing MP) jumped the next day and now above its YR1! The only asset class I am tracking with this status. Also helps the XLE idea if you spotted that.

Currencies - DXY below all pivots but since March a few times to have this status without much drop. Cryptos on the move and look setup for rally especially if BTCUSD can reclaim MP and ETHUSD above its YP.

OTHER TECHNICALS
Last two weeks saw tag and hold of:
SPY weekly 50MA and lower BB near exact
DIA weekly BB, close enough
IWM weekly BB and near weekly 50MA
NYA similar, 50MA and near BB

New high new low indicator again shifting bullish. 3rd time in 2018 the charm?

VALUATION
Forward P/E has dropped enough to attract institutional attention. This will help keep a bid under the market. 

SENTIMENT
4/4 high on 10 day put-call MA highest since election. Fairly classic sentiment move to have significantly more bearish sentiment on the re-test low.

TIMING
April dates
4/2 (so far USA main index low, date listed per 3/18 Total market view)
4/13 (mild)
4/18 (change from last week from 4/17; this date likely bearish for risk & bullish for safe havens)
4/23