Emerging markets

Shanghai, EEM, FXI, PIN, RSX, EWZ

Sum
RSX and EWZ have had huge rallies along with oil. Buys were the clears of FebPs as mentioned in weekly strategy in mid February as USA indexes were still well below, and/or clear buying when they went green on the year. RSX clearing YP currently stronger position, and EWZ testing, with one very volatile rejection and comeback to this level.

EEM also getting into gear, and also mentioned in strategy from mid February. It just cleared a quarterly pivot yesterday. While tougher setup heading into both long term pivots and falling D200MA, already quite positive on the year well before USA indexes and thinking this theme continues. That day above the Q1P could have been some add, but not really a setup to go massively long since still heading into 2 long term resistance levels and a D200MA with RSI near overbought. 

Shanghai, FXI and PIN bringing up the rear, and nowhere close to recovering long term levels, and negative for the year. I suppose they could get moving if oil stalls and play catch up, but for now the relative weakness puts them on the short watch list. No levels nearby for any short trigger however. These are obvious avoids on the long side for now, plenty of other leaders were much better buys the last 4 weeks. 

Shanghai massive run second half 2015 above the YP and all the way to 2015 R3. Then plummet down to YP. Down like all markets early, but very limited bounce so far. 

SHC D above MarP and stable but very limited bounce compared to other markets. Still very negative on the year too. Is this accumulation or pause before another drop? No idea. If back under all pivots then it is short candidate. 

EEM W testing 1HP. The confident approach suggests clear more likely.

Q and month levels here on the daily. The best buy really when above the FebP and/or going with breakout up 3/1. First day after Q1P was yesterday but admittedly tougher setup with RSI almost fully OB and heading into falling D200 as well. Flip side is not much to risk, if back under Q1P then reduce any late add. 

All pivots together; buying above the Q1P meant just in front of 1HP. Tougher setup as they go but also consider red line where EEM went green for year. Clear support and big buying. We could continue to see this theme. 

FXI is up with low very near YS1, but not nearly close to recovering any pivot.

Still negative on the year. All above MarP however, and last 2 days above MarR2. 

PIN (India) also not doing much. Clear hold of YS1 though. 

Still negative on the year. Between pivot levels right now, although just held Q1S1 as support. 

RSX above 1HP the last 3 weeks, with look of support the last 2, and this week clearing the YP! Of course it has rallied along with oil. Now key lows on YS1 and then 1HS1. 

RSX D very strong after going positive on the year above the red line. Some shuffle near 1HP / Q1P area but only 1 day break with several holds and lifts after that. 

EWZ fast move up to 1HP / YP area. 1HP holding as support, but YP maybe resistance here. Smaller blue bar more likely to drop as next move. 

Also huge buying when positive for the year the second time. Big rejection from YP but came right back! Testing level again here with significant RSI divergence. I cannot say good buy setup here. If in from Feb or early March I think it was partial take on the YP rejection. 

Sentiment

Medium length version.

Sum
Recent call buying (daily chart level) near extreme but so far call buyers quite correct this week! This helps suggest some consolidation is next move, but none of the other 3 measures are anywhere close to a bullish extreme. We should see at least 2 of these as well as perhaps weekly call reading extreme, before a big top.

We did see some huge sentiment extremes on the lows; check the tag. 

Daily put call with 10MA near relative low area of past year and a half. This qualifies as low extreme, and was reached on 3/14. A similar condition existed last week and that didn't stop the market from jumping above levels and big rally on FOMC day. So a general sort of thing. 

Here's an weekly version. This is interesting to consider. In 2009 this was very very low, so the call buyers were right! But really people had sold so many stocks there was no longer any put protection needed, or maybe the cost was too high. After that more useful as contrary indicator: Put-call spike high near 2011 stock low; put-call extreme low in Q1 2014 after massive QE fueled run all of 2013 although no immediate major top; then another spike high at the September low. Currently in middle of recent range between early December 2015 low and mid January high, no edge. 

ISEE moving averages remain in bearish extremes, helping the market somewhat. This completely conflicts with the put-call data, though ISEE method attempts to remove professional hedging for true sentiment position. In bull market the low readings were good buys. In bear market, or really from 2015, high readings were near key tops. 

AAII managers jumped up to 62 but consider this is exactly middle of the road, right on 50% percentile in all readings from 2006. No extremes.  

AAII individuals after being the most bullish since last November dropped significantly and went more to neutral. Savvy bunch the AAII individuals - also get caught on the turns but this reading can be correct a lot of the time. No extremes.

Bonds

Probably there was some selling on bonds / buying on rates heading into the FOMC, and now there has been a dovish surprise: from 4 hikes to 2 already and it is only March. Why not spare everyone the agony and just say .25% every December and then people can plan on 1% for the start of 2018? Oh well... 

Sum
TLT broke a long term level that could have held as support for 2 days but then recovered. Still above yearly, half-year, quarterly pivots; only below a monthly this month, yet didn't even reach the MarS1, a sign of potential strength. Using MAs, there was a 1 day slight break of a nicely rising D50 and recovery. Depending on if stock indexes do with their yearly pivots (SPX, NDX) into the end of the week, TLT maybe worth again keeping in mind as a buy (if out) or a re-add if had reduced earlier this month below the MarP to put into stocks. Also, rate weakness TLT strength likely corresponds with XLF weakness so that remains on the list of short ideas. Another post on that soon. 

TLT W chart below, and I cannot complain about the pivots as they have been an amazing tool for months. Just look at the 2015 high on 1HR2 and rejection under the YR1 and big drop from there all the way to 1HS1. After recovering the 2015 YP was clear support several times, the 2016 1HP clear support and launch, and now the 2016 high is bang on 1HR1/ YR1 combo. So if we have a mildly annoying slight break and now recovery of the 1HR1 level we just have to go with it. 

Here's a daily view of long term levels - I am showing the extreme high volume selling on the high which was also a tag of 2 long term resistance levels. That was the place to reduce any later adds. The 1HR1 level (red dots in middle of range) broke for 2 days but now recovering.

Daily view of medium term levels, note resistance also near FebR1, then especially clear on MarP orange dots. 

Now all together. 

Here's a more typical daily chart. That still has a nicely rising D50 which cannot be said for several USA stock indexes. If stock indexes fade back under long term levels this likely corresponds with TLT moving up. 

 

 

 

 

Currencies

Now that the circus is over let's take a look. For these charts I am going to post daily chart pivots only (Y 1H Q1 and month, but no S/R) and we can arrive at some simple conclusions.

DXY has been chopping with several failed moves (by failed I mean above/below all pivots and not reaching a real resistance or support area). This is the worst that can happen with this method - chop. Is this finally the move for real? This will be the 3rd time below all pivots. After the second time, the recovery was very weak. Maybe so.

EUR looks like DXY in reverse, also the 3rd time above all pivots for the charm?

Everyone pointing to USDJPY & SPX etc correlations have suddenly gone quiet. 

AUDUSD above YP and so all pivots for the 2nd time. Maybe definitive given gold. RSI not ideal but not much to risk for long term buy and hold idea if you have some sideline cash. 

EWZ

50% rally off the lows in 7 weeks - and first mentioned as a buy idea here on February 13, so buying 2/16 open gave you a chance at 35% in under 4 weeks. And now look where the move stopped cold. Bang on the yearly pivot! 

The high volume rejection from the YP was especially clear. But you could be holding a portion of this move above the Q1P at 22.35 and if that survives until Q2P, then can judge based on that along with new AprilP too.

GLD and GDX

Search on GLD tag or look through featured posts and you'll see I started sounding quite bullish on gold in late January, and even suggested an add if it traded above its YP (which happened in early Feb). In the last weekly strategy sum, I mentioned to keep an eye on the YR1s. Of course GDX is an extra juicy way to play gold although the correlations don't always line up exactly. 

Now, whether this is the start of another epic run like the 2000s into 2011 remains to be seen. If you got in early then easier to give those positions some room. Gains on the adds in early February are what are at stake, if still holding those. 

GLD and GDX have held up quite well despite a big stock rally, so if stocks fail at big yearly levels (TBD) then perhaps they will get another run.

Sum
I don't have a firm conclusion at this point. GLD exceeded its YR1 and just now dropping below. GDX has had 2 days of high volume selling exactly from its YR1, but so far holding up fairly well. But both remain above all pivots and have nice upward sloping D20 and D50 MAs. If GLD stays above its YR1 then it is a much easier long term hold. Even though GDX has had selling from that level, if GLD stays firm then that should help GDX as well and then I would think to hold above all pivots. 

GLD W would be better to hold the YR1 as support, but right now breaking, somewhat bearish especially on weekly close. Of course all could change after 2:00 today, but this is what it looks like now. 

Here's the daily chart so that still quite healthy above all pivots; GLD did far better than TLT maintaining gains through the stock rebound. You could make a case for holding above the monthly pivot and if that lasts, then seeing how the Q2 and AprPs look.

And here's the daily chart with all levels. You can see the attempt to jump above the YR1 has faded and now maybe turning into resistance. Keep in mind that virtually all asset classes had major turns on yearly levels already. 

Here's a standard daily chart chart with simple moving averages (10, 20, 50, 200) and Bollinger bands. RSI is about in buy area near 50 and there is both lower BB and then eventually the D50 can be support soon. So I am not saying sell here; just watching what happens at the YR1s and then deciding whether best to reduce position or hold. 

GDX was structurally weaker so far has stopped right on its YR1 / 1HR1 combo. That said, maintaining most gains so far. 

Daily view with all levels. Large high volume selling bar at the YR1 / 1HR1 combo on 3/8 and again on 3/14. That said, still above all pivots. This is why it is often a good tactic to take some profits on a big level, and hold other positions as long as it remains above all pivots and/or above rising MAs lines. 

Again on this view GDX just doesn't look too bad yet, only 1 slight close below a D20MA.

FOMC day simplified

Hike or no hike? What about forward guidance? What is the dot plot and how did it change? What will Yellen say at the press conference? How is economic growth? Are risks to growth balanced, or nearly balanced? Is low inflation temporary? JOLTS? Wage growth? Are global pressures still a factor in FOMC rate hike decisions? etc Etc ETC!

Simpler method, yearly pivots: SPX 2015 and NDX 4373 and if those reject, back to INDU YP 17048. Bullish above, especially with the look of support; bearish below, especially with the look of rejection.

Breadth

There has been a lot of recent buzz about the breadth of the recent rally; the popular McClellan Oscillator was the highest in 7 years. Yes, there has been big buying in the small caps with the Russell vehicles RTY / IWM / TF futs rallying all the way from YS2 to above YS1 (ps, if you haven't seen already, the YS2 was the low of the year, along with INDU YS1, CL / oil YS1, and HYG YS1). So  the USA market is definitely in a stronger position with RTY / IWM above YS1 / 1HS1 combo 103-104. 

And while other breadth tools like advance/decline, advance/decline volume difference, and probably throw in other things you like such as new highs new lows, etc, all looks good here, I am going to sound a cautionary note. NYA and ACWI have not reclaimed any longer term pivots. This is where a rally could stop cold, ie only the leader INDU jumping above, while SPX fractionally above without the "look of support", NDX failing to clear, and the institutional broad indexes stopping right on or below major long term pivot clusters.

While I am more open to a bullish scenario with the USA leader INDU above its YP, if none of the others follow on their cash indexes then that is more likely to fade. Additionally, daily and weekly RSIs are at the highest levels in months if not longer, and perhaps some would say a sign of strength, but the rally more likely  spent and the broad indexes are still in a downtrend. 

NYA W still enough under its YP & 1HP, while reaching the highest RSI since last May. Perhaps the RSI is constructive, since that is when the market topped out, but still point remains below long term levels. 

D version just under the Q1P, also with highest RSI since 2014 Q4. 

Here is D with all pivots, and you can see huge cluster above with the YP, HP and Q1P all nearby, with MarR2 for good measure.

ACWI bottomed on YS1 near exact and now has rallied back near 1HP, but still under it.

ACWI D reached MarR2 but still under Q1P, with RSI approaching fully OB at 66. 

And here are all long term and medium term pivots. 

Since I mentioned the Russell here's an updated version of IWM with the low bang on YS2 and rally back above YS1, but far below long term levels. 

IWM above MarP but well below Q1P; above MarR1 but did not reach MarR2 yet. 

And combined view. USA market probably safe as long as IWM holds the 1HS1 / YS1 combo. 

Timing model

Timing is part of my total market view, which I have gradually fleshed out here with posts on sentiment and more recently valuation (go to FAQ and search, or use the tags). Primary focus for positioning always pivots until i see them stop working, (note, pivots on INDU have worked well since the 1920s). 

Two models, related to but independent of each other. 

Model A pointed to increasing volatility 3/1-11, so this is "inversion" as they say, or wrong conclusion. I mentioned inversion possibility on 3/3 here. Main Model A point from here is that a 3/11 high could be bearish for the market. Other than that, 3/18-21 next possible inflection point. Model A very rough at this point, and I am not doing the proper amount of work on it for higher accuracy, so I don't really hold a strong opinion. Due to Model A I was expecting a weaker first half for 2016, but certainly did not expect January to begin the way it did. Once in play, however, the move to cut or short stocks, then buy bonds and gold, worked extremely well.

Model B has been hot this year, generated 3 dates for Q1: 1/19 which resulted in 1/20 low, 2/11-15 which was the big low, and then 3/9. As the year was unfolding I thought 3/9 would also be another low. On the daily SPY chart it does look like 3/8-10 pullback in larger uptrend. So this one less consequential, but we really won't know that until more time passes. If SPX rallies to 2050+ it will look like an important pullback. If the market falls back and undercuts that low then minor pullback before a larger top. 

Next Model B dates:

4/1 mild
4/9 strong
4/22 medium
4/29 medium

It is a bit annoying to have only 3 dates in the entire Q1 and then 4 in April but sorry I cannot order it around the way I would like to have it. Of these 4/9 gets the focus due to strength and perhaps 4/22 and 4/29 will combine for a turn between them. 

Of course you can completely scratch the timing if you prefer and focus on pivots, although had I fully taken in timing, sentiment and valuation on 2/11-15, I could have emphasized buy side even more than I did. That said, INDU and oil buys 2/12, then emerging market buys the following week, worked out very well :)

Oil

As everyone knows the market has been very correlated with oil this year. So let's take a detailed look.

Sum
Pivots caught the turns, with 2015 low on YS1, January low on 1HS1 and February low on YS1. On an even longer term view the CL1 contract dipped below, but did not close below the 2008 low (on a monthly basis). All this is very constructive for a possible long term low.  However, the weekly RSI and daily chart retracement are both at levels that often pause a rally. The pivots in play through the rest of the month are MarR1 which should hold as support. This is 36.79 for CL1 and 37.04 for CLJ. In addition, after being above its WP for 4 straight weeks it is trading below as I type (37.87). So, below 37.87 shows short term weakness, but medium term strength above 37.04. Below 37.04 would risk a larger drop and thus increase the chance of a more significant fade for stocks back under long term pivots. Back above 37.87 would be stronger and invite a near term move to about 40. 

* * *

CL1 W chart below and yes, the first low on 1HS1 near exact and the low of the year near YS1 also near exact. After plunging through support in 2014 without any attempt to bounce, there was a minor bounce on 2015 YS1 and now again decent rally from major support. But it will take a lot more to recover long term pivots. There is decent RSI divergence on the lows with RSI clearly higher and finally above 30 on the February low compared to 27 in January.

 

And here's the daily chart with all levels.You can see the one day break and recovery of YS1 on 2/11-12, with clear look of support after a selling volume climax. It jumped up to FebP and after some shuffle cleared on the last day (like many stock indexes). It has been entirely above the MarP and cleared R1. 

Here's the current J contract, W chart. 

And the D. Stronger to hold MarR1 as support.

Now on to some more typical view charts (MAs and BBs), again on the CL1 version. MA lines are 10 in blue, 20 in orange, 50 in purple and 200 in black. The first quarterly chart shows dip below 2008 lows and recovery above. Simply stated above the 2008 low of 33.20 is bullish.

Two closes on the 2008 low (ie above, not below) was the tell for the rally. RSI some divergence and quite a lot of BB divergence, but we may need another low at some point and the 20MA is still sharply falling. 

Classic BB and RSI divergence on the lows along with YS1 was why I said short cover or buy on 2/12 (only such call this year!). RSI high at 50 and downward sloping W20MA are both negative considerations. Red line is the 2008 low which now lines up with the 10MA. 

Daily chart nearly fully OB, 50% bounce from last October high to low. 

NKY and DAX

Sum
The Pivotal Perspective is that both of these are much weaker than USA indexes, especially the current leaders INDU, SPX and NDX. While these three have recovered or in the case of NDX nearly recovered long term pivot levels, both NKY and DAX remain far below. While both have traded above the MarP this month, neither has exceeded its MarR1 level, again in contrast to many many USA and other global indexes. Relative weakness puts both on the short watch list going forward. 

NKY low of year on 1HS1, rebounded above YS1 / 1HS1 combo. More bullish for that to hold. 

Low also on Q1S3, and above monthly pivot this month but that is it. NKY did not even reach a MarR1 and a far distance from re-claiming any long term pivot. So NKY really still quite weak compared to most USA indexes which is the opposite of last year (NKY big rally while USA flat.)

DAX bounce back above YS1 and 1HS1 but hasn't gotten far. 

This is a weak high right on MarR1. It will not take much for DAX to again drop below all pivots. 

Valuation

This is a technical strategy site that incorporates sentiment and timing elements; one area of my total market view I have not discussed is valuation. 

First, Wall Street runs on valuation so there are people who know far more than me. Second, I don't have the tools I like to use (aka Bloomberg) so have not really addressed it in these posts. 

But while working for a hedge fund for 3 years I cobbled together a valuation monitor for the S&P. It was not fancy but I think complexity can be over-rated; like my sentiment watch the important thing is relative valuation and the combination of certain levels and price response.

For example, Tony Caldaro of The Elliott Wave Lives On recently summarized in a study what I knew to be the case: valuations are all over the map. He cites: "bull market multiples have been as low as 9 in 1980, as high as 35 in 2000.... bear market multiples as low as 6 in 1949, as high as 23 in 2002." And 1929 surprisingly topped out at 20!

So with this history how does one take an official stance that any p/e is under-valued or over-valued? I'm sure there is all kinds of financial complexity to address this question, but as stated above I prefer a simpler method. Here's an example.

The Wall Street Journal lists the current (trailing 12 month) p/e for 3 Dow indexes, the Russell 2000, the Nasdaq 100 and the S&P 500 here. 

The current numbers are n/a for Russell (negative p/e which is why that has led on the drop), 21 for NDX and 23 for SPX! That sounds high but the more important number is the estimate. These are provided from Birinyi Associates and maybe different than Bloomberg. Keeping to the S&P, the current 12 month forward p/e is more in line at 16.72 with SPX closing on Friday at 2022.

Simple division tells us the current SPX earnings estimate is 120.93. That may continue to change, and both the changes and rate of change are something to watch, but let's plug in some other p/e ratios.

15x = 1814
16x = 1934
17x = 2055
18x = 2176
19x = 2297

The recent February low was 1810 - and I don't think this was a coincidence! In the current environment, Wall Street saw 15x forward earnings as under-valued and buyers stepped in. Surely there was not a huge change in estimates in just 4 weeks. In fact if the estimate was a bit lower like 120.70, then the 1810 low was precisely at 15x forward earnings. 

There are enough turns on the big round numbers to watch this sort of thing. Last year a lot of the May to July highs were near 18x forward earnings. Big players like David Tepper were selling there at that valuation. That article has a typo (high 2034 not 2014) but this coincided with 18x earnings at the time. Trust me, I was watching this daily at the time, and there were just too many readings with S&P p/e at 17.97, 17.98, 18.01 etc right at the highs for this to be random. 

Based on the recent low of year very near 15x earnings it may be the estimates from Birinyi are about the same as the Bloomberg. Where will sellers come in? If we see 18 again that means a lot of upside. In the context of FOMC rising rates and election uncertainty (surely Wall St at this point prefers H over DT) we may not see 18x, in which case 17x 2050. I will remain bullish above long term pivots on the Dow, SPX, NDX etc but at the same time we may have conditions for a fade, with a lot depending on oil and FOMC. But if we see 18x earnings again, then that will roughly align with the SPX YR1 at 2163!

The ideal setup then becomes: long term pivot level hold or change of status, ideally with VIX confirming, and even better with other technicals in favor like RSI divergence if picking off a low and maybe some other moving average in support; with a sentiment extreme, especially on lows; ideally in a timing window, like we had on 2/11-15; and a valuation level / round number.

All these did come together on 2/11-15, although I was not aware of the valuation at the time and I thought maybe the sentiment extreme was not quite enough. Although I mis-judged the last Model A idea, 2/11-15 timing turn (both model A & B) was bang on. 

So I'll be keeping all this in mind for the next turn.  

 

 

Weekly strategy sum

Basic bullish is follow through gains with INDU remaining above all pivots so holding Q1P 17138, SPX holding YP 1HP Q1P support all 2014-16, and NDX above 4373. 

Basic bearish would be reversal from last week, and the first signal would probably be SPX back under 2014 and then ES re-testing 1988, INDU back under Q1P 17138 and NDX rejection from 4373. Seems less likely. 

Markets could also go higher and then return to support or have some mixed scenario with SPX below 2014 but INDU holding its YP again. Let's call that the bull / bear market line since INDU has been the pivot leader on the 2016 rally.

Main point is that markets have been quite healthy from all the YS1 holds and recoveries that happened early February. I won't list all the recoveries as virtually everything did this, but 2/11-12 lows were INDU YS1, RTY YS2, CL YS1, and HYG YS1, all very near exact holds. Now after 4 straight weeks up we are again seeing indexes above major levels on INDU etc and SPX etc with NDX almost there as well.

If these indexes stay above their big pivots then it is appropriate to be reducing or cutting the safe haven especially TLT below 1HR1  and buying more stock indexes, though if following this system on a daily basis you have already done this. Starter longs were 2/12 on DIA and oil, then possibly EWZ and RSX above FebPs from mid Feb if you held (or got back in early March) and now watching EEM, then a shuffle but more longs late February with USA leaders DIA and maybe SPY, in my view better to add via  the leaders so SOXX and/or DIA the last two weeks.

If stocks fade then it is simple to reduce some recent longs from the last two weeks, or can hedge out via shorts on weaker vehicles so that means is still below most pivots ie Q1P, 1HP and YP. Right now on USA that means IWM, then IBB, XLF and XLE though oil has been on tear so careful with the latter. 

Take a look at the emerging market vehicles since if DXY continues weak some of these should continue to pop. EWZ and RSX have been leading and above pivots, EEM testing, while FXI and PIN are lagging and well below levels so first shorts. The leaders are already overbought or nearly so and thus late adds at this point, but still worth consideration as trading vehicles in general. They have moved quite well as shorts last year and longs this year. 

GLD and GDX are a bit of tricky case as they have held up quite well during the stock rally, so probably better to view those positions separately with less idea of correlation ie stocks up gold 'should be' down. Watch the YR1s on both. 

Lastly if you like individual stocks you can scan for what has held pivots or is moving above pivots, but I just don't have time to track all the possibilities. Here's an example of a basic investing method using long term levels only. 

 

 

USA main indexes

First from last week's post in the sum section: "If indexes jump further above long term pivots then semi-bear is over and bull market back! We could see a rejection, which of course keeps bear market idea alive. But given the strength of last week's up bars, some pause seems likely. [...] Right now you could say indexes confidently approaching major long term pivots and that is bullish - it looks a lot stronger than creeping up with weak advance especially on lower volume."

And then in the INDU comments: "What a huge decision for the market here perfectly illustrated on INDU! Note all the big turns on levels, 2014 low of year, 2014 higher lows, 2015 all big lows, etc. If bear market for real this should be stiff resistance; if this clears on a weekly close that would be big sign back to bullish! Both DIA and YM like the SPY / ES are just above 1HP & YP but below Q1P and MarR1."

DIA and YM held their YP for 5 straight trading days before the big leap on Friday. 

Sum
More significant pivot status changes. As of the close of last week on 3/4: INDU / DIA / YM above 3 pivots but below Q1P; by the end of the week YP had acted as support for 5 days on DIA and YM and all 3 cleared the Q1P to regain status of "above all pivots." SPX cleared fractionally on Friday, so 2014-16 gets you the Q1P, 1HP and YP so a big tell going forward if that holds. Similarly, SPY and ES also jumped above all pivots on Friday from being below 3 levels on 3/8. NDX testing its YP 4373 another key level to watch; then better if VTI holds its 1HP / YP combo at 102.50 - 102.73 and clears its Q1P at 103.41 as well. 

RTY while healthy gains from the low, still a ways to clear pivots; NYA a bit closer but basically in similar condition.  

Due to all the Q1Ps in play I am going to follow the same format as last week. Weekly charts for cash indexes showing long term levels only, then daily charts on the ETFs and futures.

SPX / SPY / ES
SPX trading through the YP / 1HP and back above all pivots! This is a big deal as it opens the door to 2162-63. That said, the pivot level does not yet have the "look" of support. When we see that, then we can really think about that higher target level. If playing the bull side obviously you'd want to see SPX remaining above 2014-15 in the coming week. 
SPY does have 1 day lift-off from the YP and above the Q1P, bullish.
ES after 3 days of healthy pause, 1 day selling, 2 days pause, broke out to upside and now above all pivots!

NDX / COMPQ / QQQ / NQ
NDX back to YP 4373 so that's a level to watch this week, COMPQ a bit below. Hard to know what to do with that QQQ YP as there is such a discrepancy between that and the cash index & futures levels (due to 8/24/15 spike low). If long against that then watch the others. NQ also still heading into resistance at 4129.

INDU / DIA / YM
Clear pivot leaders with INDU having the most "look of support" on the weekly, and both DIA and YM holding YP for 5 days (!) before the launch. If INDU stays above this pivot support area YP / Q1P 17048 & 17138 then we can start to think about 1HR1 / YR1 targets at 18584 & 18727 respectively, or 8%+ from here. 

RTY / IWM / TF
These have had a tremendous rally from the YS2 low, showing real buying in the market. Back above YS1 / 1HS1 was a tell last week, and now that needs to hold as support. That said, still a far cry from regaining Q1P, 1HP or YP pivots. 

NYA / VTI
NYA clear lift from YS1 / 1HS1 support the last 3-4 weeks, but still heading into 1HP & YP pivots. VTI pivots are at different levels, again likely due to 8/24/2015 spike, although VTI may not be exactly benchmarked to NYA, they are both very broad composites. 1 day above 1HP and YP, still heading into Q1P. 

Weekly strategy review

From last week's post:

"Basic bullish scenario: these clear Q1Ps and regain status of above all pivots. This would likely coincide with TLT breaking its 1HR1, although not sure of impact on GLD. This would mean adding longs above pivot support and possibly reducing safe havens further. 

Bearish bearish: clear rejection, which would mean reducing longs especially some late entries, and possibly adding back on safe havens or stock shorts against the pivots. 

Or we could have a pause and shuffle around this large areas without a clear move. Hate to say it but think this will be most likely. Or 1 day rejection then a recovery or something like that. You can also use weekly pivots for an additional decision point as well."

As it turned out it was a combination of #1 and #3; a one day rejection on SPY / ES, but crucially not in DIA / YM, and not confirmed on VIX vehicles either; then a comeback, then a clear.

A couple daily posts gently suggesting maybe short setups looking at ES 1988, although the earlier idea did not trigger and VIX never confirmed this at all. Even if you shorted near the close on 3/8 at 1971 then the worst possible would have been without a stop judging daily bars and out Friday for -2%. You could have had a tighter stop and quicker out with any trade above 1988, and/or smaller position without any VIX confirmation.

And if you were shorting SPY / ES below its YP, then you should have been buying DIA / YM with clear holds of their YPs on Thursday.

The weekly pivot on SPY was also a good check. If you shorted near the close on 3/8, 3/9 was back above the WP from the start of the day; and then if you still held on for 3/10, there was only 1 bar fractionally below its WP with a recovery the next bar. 

Per the bullish resolution at the end of the week, you might have been reducing on TLT which broke its 1HR1, adding on any USA leader like DIA or SPY, and SOXX has been better than QQQ or IBB for tech exposure which is why I pointed that out on 3/1 as a way to add even more longs if the rally was continuing. Hopefully there is not a fake-out and shuffle but if you want to actively manage instead of plopping in a 60/40 or 70/30 and re-balancing once a quarter, then this is what is required. 

Bull vs Bear

On 1/7/2016 I wrote: "Is this a key low or is the bear for real? Bear for real below the 2016 YP at 4373." This was a simple statement but actually quite carefully considered as explained here.

Now some might say that didn't turn out, because SPX and INDU were down only -15% from 2015 high to 2016 low, and NDX about -18%. If you are using -20% then OK that didn't qualify. Although the weaker USA main indexes RTY and NYA did reach bear territory with -25% and -20% respectively. 

Also consider by shifting conclusively bearish I emphasized the safe haven trades from there: TLT, GLD and perhaps some GDX. After 1/7, these had the chance for 11% upside in TLT, 19% upside in GLD, and 68% in GDX! Now you wouldn't have gotten these exactly because it is measuring a low made after 1/7 to the highs; but similarly, the stock indexes measure the drop from high to low. 

Meanwhile after 1/6-7, SPX had about additional -9% down to the lows, INDU about same at -8.5%, and NDX a bigger drop after 1/7 (because that is when YP broke) at another -10% down.  The more bearish vehicles as noted above were another -12% down on RTY and another -9.5% on NYA.

So despite SPX, NDX and INDU not reaching that 20% media headline number, this idea of playing the market more defensively worked quite well. Until 2/12 when oil bottomed on its YS1, INDU recovered its YS1 after a slight break (DIA and YM held) and RTY held YS2! I did recommend speculative buys on INDU and oil right on 2/12! 

Since then I have recommended even more longs, but still wary of the rally with two quick short shuffles that were nixed the next day. Why? Because stock indexes were below 3 / 4 pivots and only recovered monthly levels, while still below yearly, half-year and quarterly pivots!

But now it may be time to shift tune. INDU / DIA / YM has been the pivot leader on the rally. This wasn't the case in the 2009-2015 bull market where it was the NDX. What I mean by this is SPX, NDX, and NYA all broke their YS1s, and RTY went all the way down to its YS2, but INDU broke YS1 fractionally as DIA & YM clearly held.

INDU was the first cash index to close above its FebP (fractionally on 2/17) with others still below, and likewise the first to close above a long term pivot on 3/4 above its 1HP, where the others hadn't done that yet. And really YM and DIA were the best tells last week, clearly holding major support before the big jump at the end of the week. On Friday both SPX and INDU leaped above all pivots on Friday, but with INDU the current leader the market call here is:

Bull alive and kicking above 17138 (the highest of the INDU pivots, the Q1P) and still more likely than bear with INDU above its YP at 17048.

Short term levels

I don't talk about the short term weekly and daily pivots here because they change too much for a blog format. Here is an SPY hourly chart, regular session only, with weekly pivots. From the lows this market has been bought very aggressively. After starting the 2/16 week above its WP there are only 5 bars below. 

I have been somewhat doubting this rally as I thought we would see a tradable reaction from this major pivot cluster - and I suppose that could still happen if everything stops about right here like at the SPX and NDX cash index YPs and next week turns lower - but at this point the market is very bullish and perhaps it will continue to surprise to upside. Really it was just 3/8 and everything came right back the next day.

Main point on this post is that if you are deciding on a position, or taking off long or adding short, this (along with VIX) is another thing on the list - is the weekly chart in your favor? Because if we are going to get a decent drop from the longer term levels then at least we will probably see the market below the weekly pivot. 

Emerging markets

EEM, FXI, PIN, RSX, EWZ

Sum
EEM, and especially RSX and EWZ are leading in pivot terms. Funny to think but EWZ beat all the USA main indexes to reclaim its Q1P! RSX too for that matter but less gain since clearing that level.

And now like USA indexes these 3 emerging market indexes are testing or approaching long term pivots and will be interesting to watch. Especially if the dollar continues weaker, these could continue to surprise the market. I first noted this in mid February when all USA indexes were at FebS1s and these three, EEM, RSX and EWZ beat these beat USA indexes back above FebPs by several days. 

FXI and PIN are the laggers and while both bottomed on major support, are not close to recovering their QP, HP or YPs. 

EEM W chart from 2015 YR1 down to pivot, break and then plunge, this year's low bang on 1HS1. Note picture perfect weekly RSI divergence on the 2016 low. May test 1HP orange dots soon. 

Here's EEM daily chart with medium term levels only, all above MarP and even above MarR2 here. Heading into Q1P soon. 

FXI low smack on YS1 but not as much pop as EEM, and far under its 1HP.

Above MarR1 but all below MarR2. 

PIN India also low right on YS1 but not in range of recovering long term pivots yet. 

This looks even somewhat like FXI but PIN low on Q1S2 while FXI was below that. 

RSX massive rally along with oil from low on YS1, and poking above 1HP here and within range of testing YP level. Also perfect RSI divergence compared to 2014 and early 2015 lows. 

RSX D above Q1P! If you bought when suggested mid February and held, or cut and got back in, now the Q1P can be easy hold level along with the 1HP.

EWZ was one of the best shorts last year, but this year bottomed without reaching a long term support level. I cannot think of any other stock index / ETF that did that. Now back to YP! 

EWZ jumped above Q1P on very high volume and has decently gained since then despite being overbought. Quite healthy here.