Oil

When CL1 (continuous oil futures contract) hit 2015 YS1 I called for a short term low. And that was bang on. But in 2016 oil has gone straight down. 

It opened below all pivots and January pivot was resistance right from 1/4/2016. Down to JanS1 and right throught it, down to Q1S1 and JanS2 combo, 3 days stable, then another leg down. CL1 is now approaching 1HS1 at 27.89 and then the all important YS1 at 26.69. This area will likely have to hold for stock indexes to stabilize and bounce.

On CL G6, the levels are 1HS1 at 28.03 (breaking) and then the most important YS1 26.42, along with last chance save at JanS3 25.62. I have added the current contract G6 below.

SPX yearly pivot - 2016, 2011, 2008, 2001

From The Pivotal Perspective, the 2015 SPX high was near enough to 2HR1 and the low below the YP on 2HS1. 2016 has started with a massive break of the YP and very fast move to the YS1. Although SPY and ES are just above, SPX looks like break. So the big question for now - is this it?

With exception of parts of August and September 2015, SPX has been above its YP since the 2011 correction which was close enough to YS1. In fact, reducing exposure and/or hedging during the 7/25/2011 week with the rejection of 2011 YR1 and break of 2HP, then buying the YS1, was about the best possible move that year. 

However, when we look at 2008 and 2001, both the first years to break the YP after long runs above, SPX reached YS2, bounced big, then went even lower. This means buying the YS1 was a loser. Buying YS2 would not have lost, but only gained if out before the breakdown. 

Which will it be? YS1 save and higher? Fast move to YS2 for a key low? We will see. 

Yearly pivot promise

In December I participated in the TSAA-SF Annual Round Up and gave a talk on pivots. One of the key points was: if above the yearly pivot, there is a very good chance of reaching YR1. If below the yearly pivot, then there is a very good chance of seeing YS1. In fact, using the Dow cash index or $INDU, only 4 years since 1950 have *NOT* seen either the YS1 or the YR1 within 1%. 

So just 1 week into 2016 and this has already occurred for:

SPX cash, below YP 2015 on 1/6 (for session and close, 1/5 closed 1 point above) and already nearly tagged YS1 within 5 points. 5 SPX points is .25%, so I am going to say *close enough!*

IWM, below YP from 2016 open and tagged YS1 exact today 1/11. 

NYA, below YP from 2016 open and came within .9% of YS1 today. 

Last year, nearly every asset ETF available met this fundamental yearly pivot promise - so far of the ones I track 3 in the first week. What others will fulfill the yearly pivot promise too? 

2016 so far

Yikes! That was a brutal start to the year, and a lot of people are talking about what it all means. From The Pivotal Perspective, the view is simple: if the index is above the yearly pivot, there is a very good chance of seeing the yearly R1 at some point in the year. Below the yearly pivot the target shits to the yearly S1.

On the big indexes, most especially the Dow / INDU, there is a exceptionally good chance of either one (but not both) happening - in fact, in all but 4 years since 1950, the Dow cash index reached its YR1 or YS1. This makes the pivot a key dividing line for one of these larger targets on the year. 

Find out more in the video with a view of 2016 so far on the 5 main USA indexes: 

SPY / ES / SPX
QQQ / NQ / NDX
DIA / INDU
IWM
NYA

Pivots

Quick video on how many major indexes / ETFs are above all pivots (hint: none!) and how many are below (several!), and looking ahead to 2016 on SPY and TLT.

Key calls

I started this blog just over 2 months ago. In that time, using only this pivot technique and in very simple, clear English, have made the following five key market calls:

1. Caught the turn near end of September low and was very bullish from 10/2-5 on

The 9/30 Ringing the bell blog post - referring to the chance of a major bottom, not a top - across 4 main USA indexes of SPX, NDX, INDU and RTY. "These are the ingredients for major turns...." Then on 10/2 SPY daily post: "After holding 2HS2 1905 for 2 days, SPX again tested and held, then launched. Despite the bad jobs # it managed to close above the OctP at 1937. This was a huge score for the bulls and a a significant development per The Pivotal Perspective." Further confirmed by 10/5 SPY daily post: "Bulls win." 

2. Signaled caution 10/13-14, but gave a great level to watch on QQQ to continue rally

On 10/13 I wrote in the blog post Cracks Appear said for the first time the big turn we were seeing significant signs of weakness. Instructions were: "So from here, QQQ 2HP, DIA YP and IWM Q4P are levels to watch." QQQ 2HP held near exact, and the rally continued. 

3. Continued bullish until suggesting hedge and/or lightening long exposure on 11/9

11/9 SPY daily post said: "If it were me managing a pivotal portfolio, I'd hold USA winners from 9/30-10/6 buys and put on some much weaker index hedges via EEM, FXI, PIN, RSX and EWZ."

4. Caught the November low in SPY exact

I pointed out the level on November pivot on 11/13, and on 11/16 3 major USA indexes held NovPs nearly exact. 11/13 SPY daily post: "For now the level to watch is the NovP at 202.16 on SPY." Low of day 202.18! Then on 11/16: "If there was a place to take off some hedges (mentioned from 11/9) and add back on the long side, it was when SPY held the NovP (small orange dots), which happened along with QQQ & IWM holding NovPs too." From there comments have been bullish. 

5. Gave nearly the perfect level to watch on TLT

In this video blog post on TLT from 11/7 I said to watch the yearly pivot at 118.44. The November low was was just .44 below and it never closed more than .12 below the pivot on 11/9. Since then the YP was support very clearly several days. Result was decent rally back up to medium term term resistance at the Q4P. I also pointed this out in process on the 11/19 quick TLT follow up post.

Not bad eh? There is a lot of noise about the market, perhaps now more than ever with social media, but the pivots are giving very clear indications and directions on the moves that matter.

TLT update

In the last video blog post from 11/7, I pointed out that TLT was testing its yearly pivot and this was an important level to watch. While TLT closed slightly below the level on 11/9, it wasn't a clear rejection and only .11 below. Basically, TLT held the YP (large orange crosses in the chart below) so bond shorts not watching this have been disappointed so far. 

TLT

The Pivotal Perspective on TLT in the video. All the key turns on the year have been on pivots, and TLT is again testing major support. 

SPY vs SPX vs ES

Wish I could pick just one of these and be done with it, but fact is all are in play. When all agree, you have a sure thing of a signal. But that doesn't always happen. This longer video reviews the August breakdown and late Sept Low & Oct rally via SPY, SPX and ES pivots. 

Cracks appear

For the first time since 10/2/2015, there has been some notable weakness in the market. A pullback after such a huge run is completely normal occurrence; but it would be helpful to have the correct interpretation of the market thus far. Meaning this: bull scenario is that the more than 10% correction has finally happened, the low has tested and held on most indexes, and now the market has made a decent recovery and could see new highs by the end of the year. Conversely, the bear scenario is that while strong this bounce from 10/2-12 while strong was part of a larger down move. So, bull or bear?

First the main USA indexes (I am using ETFs for ease):
SPY above YP, Q4P, OctP; fell back under MR1 along with ES Z5 futs (both despite SPX holding onto MR1 at the close). Overall a bit weaker, but still largely bullish esp above YP 197.40 & Q4P 195.73
QQQ above YP 97.59, slightly above 2HP 105.86, above Q4P 100.29 & MP 103.07; rejected from MR1 107.40 today. Overall very bullish since above all pivots (not so many asset classes currently qualify); needs to hold 2HP to keep this designation.
DIA fraction above YP 170.57 after looking more positively above it for 2 days; still well above Q4P 164.81 and MP 163.74. Watch the DIA YP!
IWM spent 3 days above the YP 114.85 / Q4P 114.31 combo, but today got rejected from MR1 116.39 and fell below both of the larger levels. This was a bearish development. 

So from here, QQQ 2HP, DIA YP and IWM Q4P are levels to watch. 

Second, risk: TLT could have broken down but didn't. It only spent 1 day below the Q4P 122.61 / MP 122.12 support area on 10/8; recovered MP 10/9; jumped back above Q4P 10/12; and is now only pennies from reclaiming 2HP 123.61! This would be a big deal since there are not that many assets classes currently above all pivots.

In fact, an easy bull / bear scenario from here would be to watch 2HPs on TLT and QQQ, along with the YP on DIA. If TLT recovers 2HP as QQQ rejects, that's bearish - because at that point TLT will be above all pivots and QQQ will lose that status. Obviously, the converse is also true; if QQQ holds 2HP and TLT rejects, then the stronger bull case remains. Probably DIA will move in the similar bullish / bearish direction as these two. 

Third, supporting index ETFs. As markets pushed up into the 10/9-13 high area, both XLF and SOXX approached their YPs at 23.45 and 86.21 respectively. Unlike DIA and IWM, however, they did not clear; ie, the YPs were resistance. Both XLF and SOXX are related to the larger issue of growth in the economy. Combined with TLT strength, fundamental issues are clearly putting a brake on the rally. 
 

Bulls in charge

A lot has happened since the first "Ringing the bell" post on 9/30. Of course it is now obvious that the market has made a big turn,  but it wasn't on 9/30 - unless you were looking at the big pivots SPX 2HS2, NDX 2HS1, Dow YS1 and IWM YS1.  These all recovered on 9/30, held 10/1, then launched 10/2. Since then the market has powered through a lot of resistance for one of the best rallies in months. 

Just a little over one week later, SPX has recovered YP 1963 / SPY 197.40; today NDX is just slightly above 2HP / QQQ 105.86, though perhaps not convincingly; DIA still is below the longer term YP / HP but at least above medium term Q4P and OctP; lastly IWM recovered YP today at 114.85 which is a big score considering this is the only main index that made a lower low in September compared to August. 

On the same day, TLT rejected 2HP and broke both Q4P and OctP for a major bearish status change as well.

While many moving average buyers bought some as D20s cleared on 10/2 then added later this week as D50s cleared, pivot buyers were adding partial longs 9/30 & 10/1, then loaded up the boat on 10/2 and now have an easy ride. Usually pivot signals are sooner than moving averages for both entry and exit. 

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