If you are new to my methods you might want to read the last strategy sum and/or the recent review.

Last week I was expecting a bounce and that delivered. Per my view of the market and timing model, my bias is for breakdown in March but I have to respect the bullish action on long term levels last week. It is easily possible that indexes go higher and the simplest strategy is to watch the FebPs that are nearest in play on SPX / SPY / ES, INDU / DIA / YM, and NYA / VTI as posted here. I really don't have an opinion on direction for the coming week and will let the FebPs decide.

If the market shows strength then I might say reduce safe haven trades and add more longs (but only what is above a FebP); but if it shows weakness be ready to pounce by adding shorts or safe haven positions. A breakdown from here could be very fast and messy.

Based on oil, a breakdown looks more likely. But various VIX indexes are appearing more positive, and it is my experience that VIX if often correct. We'll see what happens. More specifically:

1. In 2016, following The Pivotal Perspective would have reduced then cut (or at least fully hedged) USA stock longs, possibly reversing short, early January 1/4-7, while buying TLT. TLT then added after clearing the YP, and probably took gains on a portion of that at the YR1 / 1HR1 rejection. Basically we are monitoring the TLT position and deciding whether to go back to full strength or continue to hold the portion. If you took USA index shorts, then the YS1 holds, turn alerts 1/20-22 and 2/12 along with the INDU buy were good cover areas.

2. Likewise, GLD was mentioned several times before the big jump, with an add 2/4-5. I think the first buy is definite hold but watch the YR1 area this week on the ETF and futures to decide on taking some profits or not. This move likely corresponds with main stock index decision at the FebPs. Also might be worth keeping DXY in mind here, as DXY is again testing its YP. A second break should help support the GLD idea.

3. If in the INDU / DIA speculative buy, then obviously we are watching the reaction from the FebPs. If that clears across the board we could add, but if rejection then cut and take the small gain. I don't want to get cute with the counter-trend. Best gains are made long above pivots and short below. If still in the emerging market longs from last week - RSX, EWZ, and EEM all mentioned as possible buys above FebPs - and of course they have to stay above FebPs to remain valid. Again let's not get too cute with counter-trend, as these have poked above a FebP and still below all the others, but I'd give them a bit more time to play out if the DXY breaks its YP again which was testing on Friday.

4. If in BTCUSD from 2/16 near 407, that is moving well. "Above all pivots" scores again.

5. If market is strong, then really INDU / DIA / YM appeared to be the leader for a couple days last week, but as of Friday came back to be about even with SPX / SPY / ES so either of those could be adds. Basically I would only buy what is above a FebP. If weak then there are plenty of choices for shorts - anything that hasn't tagged its FebP yet. So NDX / QQQ / NQ, RTY / IWM / TF, IBB, XLF.

6. Oil. On the CL1 contract, oil has been below all pivots since 11/4/2015. The recent lows were bang on 1HS1 on 1/20 and YS1 2/11-12. Something that has been down 75% in the last 2 years is going to be quite squeezy. So, if already in this position from last year then your judgment call. Major support levels were the perfect places to cover. You could also hold a portion until oil recovers a quarterly pivot.

7. If in emerging market shorts as suggested as portfolio hedges from last year - FXI EEM PIN RSX EWZ were all mentioned in November - probably you would be out at least some of these positions, most of which had huge gains. First, all except EWZ reached an 1HS1 or YS1 or both. Second, EEM, RSX and EWZ have been above their FebPs 3 times as DXY softens. FXI has been the weakest, remaining below all pivots since 11/25/2015 and so the best to hold at this point. PIN recovered its DecP towards the end of the year but again below all pivots from 1/6/16, at which point there were plenty of USA short choices as well, but also could be held as a short compared to the now relatively stronger EEM, RSX and EWZ.

Intro note: If you are new to my terminology please see the FAQ page and especially the video posted there.

There were quite a lot of long term levels that tagged last week, and I think the stage is set for some stock bounce. But what will it be? Decent rally back to SPY 193-94? Or lower high then breakdown? No idea, but here are some things to watch going forward. For USA main index charts see the last blog post here.

1. The yearly levels that just held - so primarily thinking INDU / DIA / YM YS1s, RTY / IWM / TF YS2s, NDX YS1, need to continue to hold for stock bounce; then the SPX needs to get in gear and recover its YS1 / 1HS1 1895-96 as well, along with NYA / VTI also recovering yearly levels. And of course, oil as discussed here.

2. The safe havens had a huge week with TLT reaching YR1 / 1HR1 134+ target first mentioned in this 1/13 video, but everyone knows that does look a bit toppy. GLD, recommended several times, also jumped over its YP the first week of February and tagged its YR1 / 1HR1 combo 117-118. Lastly VIX and VXD both poked above YPs but closed below, a possible bullish setup. Basically if stocks are going to put in decent rally, we will continue to see a fade in the safe haven trades that have exploded the last couple weeks. If safe havens stay firm, for example, staying above the next weekly pivots, and USA stock indexes cannot clear those, or reach a measly weekly R1 and then sharply drop, then the market could roll over.

3. Interesting vehicles to watch are anything that is poking above a monthly pivot. This is far from the case in any USA main or supplemental index, although if oil continues XLE will have the first shot. In world indexes, RSX will also pop on the oil trade and is just barely below its FebP as of 2/13 close, and selling in EWZ seems to have dried up with a much higher low forming and EWZ above its FebP on 2/13 close. That is probably more currency effect and DXY weakness, but could be squeezy.

4. Big picture point is stage set for some stock bounce, probably hinging on oil. But the vast majority of stock indexes / ETFs / futures are still below all pivots, and most save havens are above. So let's not get too cute with the counter-trend idea. The market is trying to fight off the lows - referring to SPX Oct 2014 low at 1821, Aug 2015 low 1867, Sept 2015 low 1871, Jan 2016 low 1812, Feb 2016 low 1810. But "there is no such thing as a quadruple bottom" and if this idea is correct indexes will put in a relatively weak bounce in the scheme of things then roll over.

5. If you've been following a Pivotal Strategy from the start of this blog, you would have been:

Buying USA indexes QQQ & SPY etc early October
Short oil and some global indexes like FXI and EEM at various points in November, possibly covering some of those shorts already
Short IWM if at screens 12/31 (but who was?)
Reducing USA significantly 1/4-6, possibly shorting there with YP pivot breaks; any tech long final out 1/7 with NDX below its YP and "bear for real" declared on the blog
Buying TLT 1/6, adding 1/22-28, possibly reducing the adds last week
Buying GLD 1/25+, possibly adding 2/4-5, now watching for profit taking signal on the add
Possible speculative buy on INDU / DIA as posted last week, but let's keep a tight reign on this

Now what? My bias is the final low is not in, because this year just not acting like 2014 or 2015 where we saw early weakness in January and early February then done and off to races. Also, as outlined here, I don't think a year long topping process means selling is over in a few months. This would mean playing a bounce lightly, look to add back safe havens on a pullback to monthly or even weekly pivot support. Probably a lot hinges on oil; if that continues, then stocks will put in a decent bounce, bonds will drop further, and oil related vehicles will obviously participate in a quick squeeze. I'll also keep an eye on VIX, because I think that has been subdued given market action. If VIX again lifts above its YP/ 1HP combo at 27.46 - which has poked above, but not yet closed above on a weekly basis - then we'll probably also see a major breakdown of all the YS1 levels that have just held along with SPX low areas listed above. A breakdown will be very messy and could happen quickly, so this is a good time to watch the short term levels like weekly pivots on an hourly chart.