USA main indexes

Sum
Last week 2 strong, 1 middling, 1 weaker, 1 TBD.

This week 2 strong, 1 middling, 1 weaker, 1 TBD -. (This means still TBD with a slight negative.)

NYA is a bit weaker than last week, because it clearly stalled at its 1HP level; but due to the smaller range selling bar, this doesn't look like rejection quite yet. Not much status change overall. 

To watch next week: most immediate is NDX YP at 4373, because breaking this would turn tech index group from "middling" to weak and join Russell group below long term levels. Then we are also watching NYA because any lower than last week's low will start to look more like rejection than pause. And on Friday new Q2Ps and of course AprPs are in play. 

Due to the rally and likely close it is quite possible that several indexes will be in quite mixed condition heading into Q2 - like RTY group could be below YP and HP but above Q2P and AprP. If so then there is no reason to jump in willy nilly. Soon enough there will be a very clear setup. If some cash on the sidelines then we are looking to put that to work on the best setup and also impacts the portfolio in the desired manner (ie more or less long risk, more or less long bonds, more or less long oil, gold, etc). Above 2 below 2 pivots not great setup; better when you get at least 3 on your side. Or as we did from 2/12 on, we can watch for recovery of monthly levels after the chance of a big turn which means YS1s holding too.  

SPX / SPY / ES
SPX W chart still looks quite good with small red bar and holding long term levels as support. Bullish as long as that holds. SPY and ES similar, showing Q1P as support. All 3 variations above all pivots!

The resistance level on the high was a MarR2 reached on SPX nearly reached 3/21 and then tagged with a lower close on 3/22 (See second chart below.) Usually monthly levels are not enough for a major top, although current quarterly levels are far above. 

NDX / COMPQ / QQQ / NQ
NDX barely holding YP 4373 so that is a level to watch in the coming week. COMPQ still under its YP, as is NQ. QQQ above - what? This is due to 8/24/2015 spike and discrepancy of futures to ETF pivots. It does look in play though, as does NQ YP. Pesky. Still, conclusion is tech is mixed / weaker compared to SPX and INDU. NDX breaking 4373, should that happen, would be bearish development as 3/4 main tech indexes failing at YPs.
 

INDU / DIA / YM
These charts still quite healthy with INDU W small red bar in middle of tremendous up. Well above long term pivots. You will also note INDU and DIA held YS1 exact without breaking (current YM chart looks like break, but different on YM H contract at the time) and this was why I went with DIA on the long side 2/12. These continued to lead the other main USA indexes on the way up so easy choice for long adds.

RTY / IWM / TF
While above YS1 / 1HS1 area, still lagging considerably behind the other USA indexes and not nearly close to reclaiming a long term pivot level. These may open above Q2Ps however, something to watch.

NYA / VTI
NYA W does have a red bar rejection from the 1HP which is some negative. However, it is smaller range than the last blue bar and so looks more like a pause than rejection at this point. VTI looks above long term levels - barely - but side with NYA here. Even if NYA comes back and exceeds the recent high (IF), it will be running into the YP. 

Weekly strategy review

From last week: "Bullish scenario would be indexes continuing higher, with DIA leading above its MarR2, perhaps tech indexes playing catch up, and NYA clearing at least one long term level (it hasn't yet, see the USA main charts). Even if we get this, I'll be watching SPX / SPY / ES MarR2s for resistance. [...]

Due to RSIs across INDU and SPX vehicles, with big run up on FOMC meeting and option expiration week, with the leader INDU reaching MarR2, a pause is the more likely move. But fund managers are not nearly long enough and expect any pullback to be bought. Basically I am expecting some consolidation in the coming week."

So that was a pretty good take! SPX stopped just 2 points above its MarR2 of 2054 with a high of 2056 and faded back under. Strategy list had several "thinking out loud" ideas with TLT and VIX play as first choices, hold longs while short the weaker indexes with emphasis NKY, DAX and XLF, with some caution on IBB short due to VRX YS1 level. (Note: Probably better to stick to hedging USA longs with USA shorts and global longs with global shorts; EU and JPN really in their own categories.) 

TLT was a matter of entry, VIX idea worked well, DAX in then nixed but down, NKY didn't really trigger, XLF worked, IBB was scram. I mentioned IWM in the list then opted against, but short term levels 3/23 gave the green light. . But the gold slam was a surprise, too bad. 

Emerging markets

Shanghai (SHC), FXI, EEM, PIN, RSX, EWZ

Sum
China both SHC and FXI still weak and likely first choice for shorts in Q2. EEM has been doing well but paused on 1HP, interesting area to watch. PIN getting in gear but still well under long term pivots. Nifty/Sensex might be better gauges than the ETF but if you are reading this then assume USA audience and India ETFs are the easier vehicles to trade and factor in currency issue as well. RSX and EWZ have moved with oil up to YP levels; both slightly exceeded then dropped back under. Both are still showing some strength around 1HPs and will obviously move with oil.

 No immediate signal on any of these but EEM clearing 1HP would be reason to hold that if in, or consider as longer term buy although immediately running into YP makes that not the ideal setup. Red lines are 2015 close and you can see a few that jumped when getting positive on the year. 

For study note lows of year on: FXI YS1 near exact, EEM 1HS1, PIN YS1, and RSX YS1 (some 1/20 area others 2/11). Not bad eh?

SHC W chart stable along with all risk assets but weak bounce considering. 

SHC D chart that has been above MarP most of the month but stopped just under MarR2. It is likely that SHC starts next quarter below Q2P but might be above the AprP, we'll see. 

FXI W also weak bounce, although low of year on YS1 near exact!

FXI D chart well under Q1P, but soon we'll have Q2P as possible trade signal. 

EEM W chart low 1HS1 exact and rally to 1HP. Last bar red but note held last week open level. I think this is pause more than rejection so far.

EEM fading back under Q1P with RSI reaching OB about 3x. Was that it?

PIN W massive buying from YS1 but not much follow through. 

This will look better if above Q2P, we'll see.

RSX strong move along with oil from YS1 low to YP pause. Holding 1HP as support the last 2 weeks and still above despite the drop is a sign of some strength. But for now some resistance at the YP as well. 

Big jump when RSX went green on the year, and smart money taking profits on the Q1R1 exact with daily RSI showing some bearish divergence too. 

EWZ weekly bottomed before reaching any support level, due to how far down there were on last year's range. But fast move up to the YP with 1 bar just fractionally above, then back below; still holding 1HP.

EWZ D chart big jump on getting green for 2nd time. That is picture perfect RSI divergence on the recent high.

Entries are easy...

Holding and exits are more difficult. 

I find this to be true regardless of technique. You can get quite a lot with pivots because they give resistance areas in which to take some profits (or support if short), and then holding a portion as long as the trend continues can also work well. For example, if short Brazil last year, you missed a lot of gains by exiting on YS1 - the real low was 2015 YS2. By holding a portion below all long and medium term pivots, you had a lot more gains. 

You can add some basic candle and volume analysis with moves on the pivots to help decide the next move. For example, last week on SPY, after 3 decent volume up days 3/16, 3/17 and 3/18 there was a very low volume advance 3/21, also a lower volume small candle 3/22 and then there was a drop. But the drop was also low volume and it quickly came back. 

The other thing I would add after that is RSI. This can help on entries as well. We are looking for RSI extremes or divergence. Just hitting 70 or 30 doesn't count. In fact you can get slaughtered trying this and miss all the great trending moves. SPX monthly chart was overbought from 10/2013 all the way to 4/2015. NDX was even more extreme. So in fact exceeding 70 is a sign of strength because the market is telling you to wait for divergence. Ditto in reverse on buying oversold. Just this year daily SPY RSI reached 31 on 1/7 and then was 29 on 1/8. And there was a lot more drop to follow. The clear divergence on 2/11 low helped the buys there. 

If you want even more, then I would think about basic trend momentum using MAs and a more thorough analysis of RSI across timeframes for possibility of trend exhaustion. I don't have time to do blog posts on this with everything I am checking, just putting this out there as a possible addition to the method. 

For example if we take a 20MA on 3 different asset classes across timeframes:

SPY
D above rising 20MA, bullish.
W above falling 20MA, weak bullish.
M testing flat 20MA, uncertain.
Q above rising 20MA, bullish.

Daily chart strong and quarterly chart still strong, but uncertainty on both the weekly and monthly means the daily chart could easily turn back down. If we saw a more positive weekly chart then that would likely coincide with monthly chart resolving to upside.

TLT
D above falling 20MA, weak bullish.
W above rising 20MA, bullish.
M above rising 20MA, bullish.
Q above rising 20MA, bullish.

This is really quite a trend with only the daily showing very mild weakness. Based on this consideration it would have been better to hold portion of original 1/6 buy and not get shaken out by the 1 day break of 3/11. 

GLD
D below falling 20MA, bearish. this came as a surprise on 3/25 with a big gap down.
W above rising 20MA, bullish.
M above falling 20MA, weak bullish.
Q below falling 20MA, bearish.

Issue with holding a full gold position was M and Q charts were not in full bullish mode yet. Now you can hope for this to unfold but right now this rally still different from the glory days of 2002-2012, with nearly all monthly bars on GC1 above a rising 20MA save 10/2008 and 5/2012.

So I went with idea of monthly pivot on the holds but considering the above would have led to a different conclusion, ie better to hold TLT and take profits on GLD. At least so far. 

Now let's do the same for RSI & BBs to consider trend exhaustion.
SPY
D reached 68 3/17, no BB tag; weak high but may come back .
W was not OS on lows (other things were), no real edge except W chart RSI higher 2/8 area compared to 1/11 week. Note SPY weekly chart OB several times 2013-14 with even a good looking divergence that resolved with a simple pullback and another explosive move up. It was not until a deep drop and a very clear divergence 12/2014 that the market stalled for 6 months for distribution before a larger drop. Point - waiting for divergences on a strong run can take quite a while to turn!
M RSI 2 bars 49 , this is partially why there were buyers. Near 50 in an overall uptrend often good pullback area. 
Q bearish RSI divergence possible on current bar and regardless very clear 2015 Q4 and this is additional reason why 2016 Q1 started off with selling. 

So fairly odd here with monthly chart in pullback buy area but quarterly chart also showing possible top. 

TLT
D last time OB 2/11 on high, no divergence; recent low 42, both signs of strength.
W 67 on 2/8 week high up there but not fully OB. high well outside BB sign of strength.
M bearish divergence on 2/2016 high compared to 1/2015 with much lower RSI and entirely inside BB.
Q some bearish divergence on 2016 Q1 high compared to 1/2015 as well.

So the interesting case here is larger timeframes Q and M showing some bearish divergence, but with D and W still stronger. A high test on the weekly followed by daily chart rolling over again could result in a larger drop (ie rate increase). Or the larger timeframes will ignore the divergences for longer with daily and weekly chart returning to high areas on RSI and BBs. 

GLD
D yup classic bearish RSI and BB divergence on 3/7 high area.
W RSI reached 68 2/29 week.
M RSI reached 51 2/2016, sell area in downtrend like 50 area is buy in uptrend.
Q RSI 42 on low, not much edge.

So combination of daily divergence, weekly chart high RSI, and monthly RSI reaching 50 was reason to take gains. 

Of course if all this is enough to make your head spin just keep to pivots, very simple, above / below Y, H, Q and M then have we reached a big R or S level. But if you trying for the multi-month buy and hold it would be better to be in on a strong trend. Usually entries are before this happens but then the momentum of the move gives you reason to hold.

On 1/6 TLT was above a rising D20MA, clearing a flat-ish W20MA that started to turn up, soon jumped above a nicely rising M20MA, and entirely above a very nicely rising Q20MA. By the time of adds 1/25-28 above all pivots, and above all 20MAs all with rising slope. No reason to nix that.

 

Sentiment

For the series check the sentiment tag. Put-call extreme last week was part of safe-haven strategy this week that worked out well.

Sum
Put-call continues to flash a warning sign but all the other readings are quite middling without any edge. I think we should see a bit more enthusiasm for a big top in the market. That said, put call near where it was on the highs was very similar to several major market tops, see the chart and note just below. So, possibility of major high but I don't have too strong an opinion as I'd rather see extremes on at least 2 of 4 reached as we saw near 2/11 lows. If interested in this sort of stuff I also recommend checking The Fat Pitch's review of BAML survey here.

Daily put-call 10MA near area of lows from 2014 second half through 2016. Not many trading days lower and in fact these were near major tops ie 5/20/2015, 6/22/2015, 10/28/2015 - 11/4/2015, 12/29/2015 and now we have a very similar level reached near 3/18/2016. 

Weekly put-call has dropped sharply from last week, increasing the chances we are seeing a major turn. Put-call is now lower than early December, but above the late May and June 2015 tops.

ISEE reached 127 on 3/18 which is on the high side but not where I usually consider extreme, ie 140+. Still that was the level on a high. We immediately saw extreme low values 3/22-23 of 54 and 60 respectively. Consider the 52 week low on 9/28/2015 was 35 and there were only 10 trading days in the past year that were below 54. So this is quite a lot of bearish sentiment in a strong market. 

10MA still 94% of data from 2005, bearish extreme
20MA also 94% percentile
50MA 96% percentile

Honestly I don't know what to make of this. You can read up on their method here but these values are all extreme LOWS ie no calls and lots of puts, while standard put-call is at relative lows, the opposite. 

AAII managers (data from 2006) at 59 just a shade lower than 62 last week. Very middle of the road 52% percentile, not much edge.

AAII individuals (data from 2005) 
bulls 67% percentile, up from the extremes near 2/11, but quite far from any bullish extreme ie top 10% reading
bears 12%, OK, this is fairly small # of bears and close to extreme.
bull bear spread 36% percentile
bull 8 week avg still 90% percentile bearish extreme

OK, it is interesting to see low #s of bears this week but give bull bear spread and 8 week avg hard to say people are too enthusiastic. 

 

Fundamentals

This is not my area of expertise. There are slews of people doing very sophisticated financial modeling so if you want that to guide your strategy I'm sure they are not hard to locate. But I like to incorporate two fundamental factors into the decision making process.

The first is valuation, and this means forward P/Es on the benchmark indexes. This is what Wall Street is doing to arrive at all those year end targets. SPX earnings estimate x multiple = price. That's it. Now a lot may go into the estimates and then who knows how they arrive at what multiple they expect people to pay. But often there are turns on the big round numbers as discussed here and in more detail here. 

Now for the other component. I've just discovered a decent enough source for the Citigroup Economic Surprise index, at least the USA version. Now in the age of "good news = bad news" this was not a lock, but I did notice that moves in these indexes (they exist for China, Emerging markets, EU and Japan) did often lead stock indexes a lot of the time. 

Big money loves to buy improving fundamentals but if it is expected then it is already baked into the cake. But the surprise index measures just that, what is coming in as a beat. Nifty. 

Yardeni is including it here in what may be a daily PDF (?). Note the weakness throughout 2015 with the year end drop leading the plunge in January. And the move up from lows has confirmed the rally. Without seeing the detailed level that would be available directly on the report through Citi (or a Bloomberg if you have that!) it is hard to tell when the turn up began. If you want to follow this yourself, google "Citigroup Economic Surprise Index + Yardeni". 

Main point from here is that it has come back to even. This continuing into positive territory "should be" bullish for USA stocks and bearish bonds, although USA stocks may then have to worry about rate hike. But returning to negative territory very likely bearish stocks and bullish bonds.  

The VIX trade

So idea on this was buying a yearly level on VIX at a place where stocks were very likely to pullback as a way to hedge the longs. 

This was suggested in the weekly strategy here : "If stocks consolidate I like the idea of trying TLT if above its 1HR1 level 127.87 and next weekly pivot; possibly looking to buy VIX futs J6 either with a move from Q1S1 17.72 as support or if one more plunge then down to YS1 (!) 16.85 would be a good stab at speculative long." 

And repeated here on 3/22/2016 daily SPY commentary: "Still, the VIJ6 idea could work as long as it lifts up from 16.85. This is a situation similar to the ES short idea at 1988, although this situation officially "speculative" as we are buying support (ie, speculative buy = something below all pivots). Depending on your agility you can simply wait for a clear reversal and enter there, or watch the hourly chart and buy with any lift from the same level, or could have entered speculatively at the close today in smaller size with trade valid above 16.85 from here. Of course the more time passes the more volume will shift into the K contract with different levels."

16.85 to currently 18.30 is up over 8% with DIA down -1.3% from price high to current level, and SOXX down about -2.8%. Of course you would not be putting in a huge amount of capital on a short term high volatility hedge, but 1 unit VIX would have helped quite a lot of the stock long position drop this week.

Of course the same idea could have been played through VIX ETF like UVXY. Obviously VIX related vehicles are strictly short term with a lot of deterioration either in futures or the ETF. The same idea could have worked through put options but that is just too much for me to go into here.

UVXY is up 15% from Tuesday's close (when VIJ6 reached 13.85) to current level. From Wednesday open to today's high was as 16% move. But this could vanish as quickly as it came so if taking as a hedge I'd be locking in some depending on how SPY and other indexes move on their weekly S1s. In fact SPY holding WS1 as RSI on the 1H chart reaches oversold sets the stage for a bounce which would quickly give back some of the hedge gains.   

Point: in the future if a short term hedge on longs looks like a good idea I'll mention VIX futs or or index puts because they are all doing the same thing - allowing one to hold winning long positions while there is a high probability of a near term drop. 

 

Timing model

Last update 3/15: Model A (rough work in progress, no strong opinions) had "next possible inflection point "3/18-21." This one not too bad with SPY and other stock index high area 3/17-22, SPX close high 3/21, oil high 3/18, VIX low 3/18, DXY low 3/17-18. 

Now what? No strong opinion regarding next week. 3/31 possible turn area but no opinion on direction.

Model B generates strong, medium or mild turn possibilities. No change to previous comments from 3/15 so:

4/1 mild (so near model A 3/31)
4/9 strong
4/22 medium
4/29 medium

This site and my tactics are mostly pivots. Basically this means if we see big levels on 4/9 it might be worth putting more on the trade. That would have been the right idea on the 2/11-15 turn area with all those yearly levels. If you bought DIA that worked well. If you bought DIA and oil as suggested that was even better, following with EEM and other oil related ETFs EWZ & RSX the following week. But if you bought IWM and/or HYG, or simply put more on DIA and oil than just starter positions, then that would have been even more gains. 

Bonds

Sum
TLT above YP, HP and even 1HR1 acting as support and Q1P; still under MarP. Upward sloping 20MA on Q, M, and W charts, but not daily. Ie, mostly still strong uptrend. However, potential BB and RSI divergence forming on the quarterly chart, for now something to note. For more see the details below. 

Recent rec of buying TLT if above both 1HR1 and WP did well, although probably a better idea was one portion on the 1HR1 and then add above the WP. That would have been lower average cost. 

TLT W well above long term pivots and despite 1 week break of 1HS1 recovered that level and acting as support. High of year on YR1 / 1HR2 combo so for now that is the long term range.

TLT D with medium term levels. TLT has spent all of March below its pivot and yet not much damage. Also, it didn't reach MarS1 while many stock indexes reached MarR2s. Point: TLT holding up quite well. If it maintains strength into quarter end then it will be poised to be above all pivots, but several days to decide that. 

TLT D with all levels harder to read unless fluent in these methods. Remember, MarP in play only through end month but active until then. Jumping above Q1R2 bullish today, though still some resistance near the MarP. 

As quarter end approaches I think it could be worthwhile to look at regular format charts on larger timeframes. Standard bollinger bands, 10MA in light blue, 20MA in orange, 50MA in purple below. Quarterly chart here and very strong trend with nicely trending 20MA. But te top shows classic divergence pattern from previous highs both on BB and RSI. The top is completely inside the BB while previous highs were outside; and despite a quarterl close near the high bar RSI likely lower. Divergence precedes big turns but also can last an excruciating amount of time if you are looking for a turn. For now, something to note. As we head into Q2, is the big money move sell bonds or buy bonds? Not sure!

Monthly chart below. A close here would look quite bullish, ie small red bar in  uptrend that held last bar open area. 

GLD and GDX

These got whacked today. Too bad, I thought stocks may consolidate this week but didn't think that would correspond with a big drop in GLD. FOMC chatter. Anyway, yesterday GLD was comfortably above YR1 and today gapped under the level. If you had full positions then the decision here is to reduce taking gain today or use the MarP as a rough stop area and see what happens.

The other thing to factor in is the DXY yearly pivot; see the recent currency post. Point being DXY above YP would be additional pressure on GLD and GDX.

GLD W chart 1 week up bar above levels, 2 weeks red bars, this one looking like break although 2.5 more trading days left before close. 

And there is the MarP smaller orange dots which still can be support. 

GDX W looked like it might clear the YR1, but fading under this week. 

GDX yesterday looked fine above YR1, today down but not so bad. Well above the MarP. 

Currencies

There have been fantastic moves in every other asset class but currencies have been chopping around (I don't follow soft commodities). One of the the worst parts of any trading strategy is chop. It is rare but can happen with pivots and stock indexes too; if a level that usually works just doesn't for 3 tries in a row call it day and come back in next quarter. 

That said there were some levels on the 3/17-18 turn.

DXY W dropped below both long term pivots but rebounding before reaching a long term support level. 

There's the rebound from Q1S1 so at least there was a level on the turn. 

All levels; reclaiming YP would be bullish, but hesitant to take any currency trades with so many moves failing with much better movement in other asset classes.

EUR W chart also looked like rally on but dropping back to test the YP.

No level reached on the recent high before a fade qualifies as chop.

USDJPY W, now that is a nice turn bang on YS2!

Time limits currency check to once a week, but that was a decent spec buy setup as of 3/21, with clear hold of YS2 and lift from 1HS2.

AUDUSD W, did not quite reach 1HR1.

At least rally reached Q1R2 so cannot complain too much. Better entry above 3 pivots on 3/3 chance for gain.

GBPUSD maybe returning to status of "below all pivots." 

Sell stocks? UBS vs TPP

Business Insider is reporting that a tactical team at UBS with a hot hand is saying sell. And ZeroHedge is sharing a Goldman note about raising cash for expected volatility. Seems accurate, but you know, ZH. I cannot confirm their list of companies issuing bearish notes in that article.

Anyway, sell stocks is the easy call to make right now. Daily RSI on ESM6 as I type is 71, and has been 69+ for 4 consecutive trading days. Also, the buyback window is closing as we head into earnings season. CNBC is also noting this here through their artificial intelligence market wisdom software collaboration. 

I thought markets would pause this week too and had several short-term defensive play ideas. Yesterday only 1 triggered on DAX and today is already out. TLT cannot catch a bid, and has been rejected from its weekly pivot 2 days in a row. Stocks could be dropping but they aren't. I did suggest a VIJ6 buy at 16.85; the low today was 16.92, so that missed by a hair unless you allowed some discretion. And IBB the weakest USA sector has rebounded quite strongly as VRX stabilized, as I thought might happen. 

So maybe things change tomorrow but right now things look quite bullish. I will change my tune if we see NYA and other risk asset indexes / sectors with long term level rejections. Right now we aren't, and only 7 trading days from quarter end. If stocks are green on the year as more and more are this will put pressure on the fund managers to buy. I am not necessarily saying jump in and buy today, as anyone following along got decently long from the end of February through 3/10-11 after having starter longs on 2/12. But right now holding longs, and being careful ie not so eager with shorts or hedges, is proving the right approach. 

File this under TPP (still bullish) vs UBS (sell now).

Oil

Last week: "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."

There was a 1 day fake-out with close at 36.34, then back above the next day. Price high 41.20, close high 40.20 so far. 

Sum
Low of year bang on YS1s but even after all this rally current K contract not above quarterly, half-year or yearly pivot. So, may go a bit higher then running into major long term resistance. CL1 chart 1 day above Q1P but doesn't look convincing. I don't know the next move but like stock indexes running into major pivots, some pause or shuffle is likely but whether that turns into major high, ie rejection and down, or bullish clear, remains to be seen. 

For now I would consider CL1 below Q1P 40.75 mildly bearish, but current K contract may run up to 43.80. It is always tough to decide how much to weight pivots when they have a few trading days left. New Q2 pivot and of course April as of 4/1. 

If you bought the spec buy on 2/12 as suggested then you have nice gains. You could give this a bit more room and see if we get a tag of the current contract quarterly pivot. It is also likely that oil will be above its Q2P and that could be a longer term hold level for a portion of this position. 

CL1 W chart clear low of year on YS1. Decent rally but still below 1HP and YP.

CL1 D chart 1 day above Q1P which looks bullish but small blue bar may be fading back under the level today.  

CL K contract. 

CLK D chart with all levels. Lots of resistance above. For now above MarP led to rally to MarR2. Still under Q1P which will be chaning in about a week, then 1HP and YP above. 

CLK W chart usual view with RSI to 48 last week. Still downward sloping 20MA and 50MA. 

D chart with 1 day break of 10MA and recovery. 20MA nicely upward sloping and 50MA starting to slope too. But, heading into downward D200. Not much edge either side. 

Breadth

There are dozens of breadth tools and other market internal measures out there. Various advance decline measures, new high new lows, cumulative breadth, technical signals on these like McClellan oscillator, advancing / declining volume, etc. Some of these can be helpful, so pick what you like.

Here we start with pivots on broad institutional indexes. 

Sum
Both NYA and ACWI have reached places very likely to pause considering pivots and high RSIs. NYA is testing long term levels from underneath, tagging 1HP with YP just above and Q1P also nearby. ACWI cleared 1HP slightly, but ran into Q1P and YP just above.

From here let's think about the possibilities:
strong bullish: soar above - less likely given RSIs.
bullish: few days pause then clear - possible.
mixed bullish: pullback, then another try - also quite possible.
pesky bearish: fakeout with 1-2 days clear the fall back - not happening so far.
bearish: major top here and down - cannot be ruled out.
worst: chop above break above break - hopefully this doesn't happen. 

NYA W has stopped cold on the 1HP. Clearing this would be additional bullish signal, but a rejection here risks more of a fade on the leaders. Also note the 2015 Q4 rejection of the YP was a major tell going forward, as well as the bottoms bank on on 1HS2 in the second half. 

NYA D testing its Q1P as I type. Even though there is only about 1 more week in the quarter, for now this level is in play.

NYA all levels. The key thing here is that 1HP and YP above will be in play in April, where we will have new Q2P and of course AprilP to consider. For now rejection from a long term level is bearish. 

VTI is also a broad index ETF. I'm not sure how much to weight compared to NYA due to the 8/24/2015 spike low (similar issue on QQQ, XLF, etc). But the low bang on Q1S2 looks pretty good, and the rejection of the YP early January also clear. Something to keep in mind along with NYA possibly. 

ACWI weekly pausing in pivot zone YP and 1HP. Holding 1HP as support this week somewhat bullish; rejection would be bearish. Or it could stay in congestion zone and not give anything clear. 

ACWI pause at the Q1P. 

Now with all levels - a very likely place for a pause, especially with RSI at 68 on the high. But whether this starts a major rejection or shuffle then clear remains to be seen. 

NKY and DAX

Sum
Both relatively weak compared to USA leaders. NKY could be short if below YS1 level 16766. DAX probably second choice compared to NKY but can use MarR1 9981 as short level.

NKY W actually slight break under YS1 16766. Bearish below. 

NKY the one of the few major indexes that did not reach a MarR1, relatively very weak. USA leaders ran up to MarR2!

DAX doing better than NKY, with recovery of YS1 combo, but much weaker advance than USA leaders.

DAX reached MarR1 but no daily close above.

Some doodles

Feel free to completely ignore this one. 

I am not an Elliott wave person. But I have dabbled, as there are many sorts of things I have explored over the years. And it strikes me that SPX is playing out the archetypal pattern - quite well in fact!

W1 up
W2 pullback
W3 up that when strong (it was) sub-divides into 5
W4 down, often more choppy affair & drawn out in time; can replicate W2
W5 up
then major ABC correction follows, ie bear market 

First chart below the green lines are the up waves so W1, W3 and W5. The thinner green lines above W3 and the up portions of sub-divisions of W3. The red lines are the down portions, W2 and W4. 

It is quite interesting to note that W2 down was -296 points and W4 down was -324 points. In other words, W2 = W4 in price points, approximately. And as W4s are supposed to act, frustrating bulls and bears alike, a choppy affair where neither side gains much except for the most nimble players. It is also quite possible that W4 continues to pause and chop. But if this reading is correct, at some point we will see a W5 to significant new  highs. But when that ends, that is it for the 2009 bull market. 

Within W3, w1 and w5 also were quite close in terms of points, totaling 348 (w1) and 313 (w5).

Market structure fans already know that the W3 peak was 161% of the move from 2007H to 2009L - to the point. (Tradingview.com doesn't have a good snap to price so graph shows 2132 although correct number is in fact 2134.) So there is something to these ratios. 

So, stay with me here, we should see some structure relationship between W1 and W5. These can vary from a failed 5 stopping at 38% of W1, to a very exuberant blow-off of 161% of W1, but the most common would be 61% or 100%. 

So if that 1810 holds as the W4 low, then projecting W1 from there, gives is 2241 (let's just say 2250) at 61%, or 2509 (round to 2500) at 100%.

And lastly we add a time component with the same idea - W5 ideally equals 61% or 100% of W1. That takes us to June 2017 or April 2018 respectively.

We could get any combination of the price time targets, meaning it doesn't have to be 61% in price and 61% in time. It could be 100% in price and 61% in time or 61% in price and 100% in time. But basically this gives us an idea, if the classic patterns play out, of 2250-2500 Q2 2017 to Q2 2018 for a major top. 

But remember, if INDU drops back under its YP I scratch the bull alive and kicking idea! 

Weekly strategy sum

Bullish scenario would be indexes continuing higher, with DIA leading above its MarR2, perhaps tech indexes playing catch up, and NYA clearing at least one long term level (it hasn't yet, see the USA main charts). Even if we get this, I'll be watching SPX / SPY / ES MarR2s for resistance. 

Bearish version would be any reversal of status change from last week, most likely would be NDX back under its YP and NYA rejection from its 1HP, along with XLF below YP/1HP and IBB continuing lower. 

Due to RSIs across INDU and SPX vehicles, with big run up on FOMC meeting and option expiration week, with the leader INDU reaching MarR2, a pause is the more likely move. But fund managers are not nearly long enough and expect any pullback to be bought. Basically I am expecting some consolidation in the coming week. 

If mostly long via DIA, some SOXX, perhaps EEM and RSX left, maybe you took some gains on oil and EWZ already but could have runner portions, plus GLD and GDX then what? Keep in mind a nice trade on TLT with one great exit and one shabby exit and you might be out of that. 

If consolidation idea is correct then choices would be:
1. Reduce on last adds and try to get in on pullback; ehh, DIA and SOXX charts look so good i think better to hold the winners and look to play weaker indexes or TLT or VIX.
2. While NDX and IWM remain weaker, and I suppose could be short possibilities if NDX drops under its YP again or IWM against its futures MarR2 (Fri high basically), I think better choices elsewhere.  
3. I mentioned IBB and XLF (along with IWM and XLE) as short possibilities last week, and IBB did break under all pivots so depending on an entry 3/14 or 3/15 you might have gains on that. IBB may continue to drop into quarter end I suppose, but VRX reached its YS1 level 26.05. If that stops going down, IBB likely pops. If VRX below 26, then can still play IBB short. XLF is a candidate if drops back under YP 1HP combo both at 22.65 (barely cleared on Friday).
4. If stocks consolidate I like the idea of trying TLT if above its 1HR1 level 127.87 and next weekly pivot; possibly looking to buy VIX futs J6 either with a move from Q1S1 17.72 as support or if one more plunge then down to YS1 (!) 16.85 would be a good stab at speculative long.
5. Lastly indexes that look especially weak compared to the USA rally are: NKY, DAX, then Shanghai, FXI, PIN. EEM is a theme this year so probably FXI and PIN have more chance of playing catch up, so of these NKY looks the worst! 
6. Just thinking out loud here to share process, of all these choices my top ones are TLT long, VIX fut spec long per levels listed, NKY and maybe DAX, then for USA probably XLF over IBB this week unless VRX breaks 26. In fact IBB only thing I see right now below all pivots (except VIX which is bullish) but if you wanted to play that entry was last week. 

USA stock momentum is very strong and it would be rare to have a big drop start after such a move with a consolidation phase and high test, so I am just thinking of lightly playing this idea for about a week and then see where things are. Of course all suggestions with pivots only as triggers, ie, TLT above WP, VIX futs above Q1S1, if any shorts look for level rejections and indexes that are still under most pivots. Forget about shorting strength; we are holding strength on the long side. 

GLD is an easy long term hold above its YR1 levels. GDX hasn't definitely cleared yet, but if gold stays strong GDX should continue to catch a bid. 

USA main indexes

Sum
INDU looks fantastic, SPX also decent; we are now thinking about YR1 targets as long as those maintain above their YP levels. The tech indexes NDX COMPQ etc are lagging. RTY remains well under major pivots despite its huge rally. NYA has justed reached its 1HP level (did not clear) with YP just above, although VTI looks better in this regard. 

2 indexes INDU and SPX strong, above all pivots
1 middling (COMPQ and NQ still below YPs, with NDX slightly above, QQQ above)
1 weaker (IWM below YP, 1HP and Q1P)
1 toss up (NYA below long term levels, VTI above)

The more indexes above pivots the better. I think some pause is more likely. There is also the matter of March R2 levels reached on INDU, DIA, YM and TF (RTY futs). If any higher next week then we'll see SPX, SPY and ES MarR2s too and that could also be a place for a short term top. 

Similar format as last few weeks. Cash index weekly chart with long term levels only; then daily charts with all levels on ETFs and futures. 

SPX / SPY / ES
We can start to think YR1s at SPX 2163 as long as the YP area holds at 2016. Near term clear resistance at the MarR2s at SPX 2054, SPY 206.03 and ES 2056. There is also the 2015 close level (red line on SPY chart) which would add to selling pressure if the market drops back under this on Friday. In addition, ES RSI is fully overbought at 70, SPY reached 68, and SPX 69. Mostly likely event is some move to work off the near overbought condition; ie mild pullback or some consolidation phase. 

NDX / COMPQ / QQQ / NQ
NDX just above YP 4373, but less impressive. COMPQ still below, along with NQ too. QQQ is above due to the discrepancy from the 8/24/2015 spike low. Basically tech is lagging here (partially due to IBB impact). I suppose the NQ YP level could be used as possible short area, but NDX is above its cash level and I think there are better choices elsewhere. If NDX falls back under its YP with the look of rejection, then OK that could be a short especially with VXN confirmation.
 

INDU / DIA / YM
Wow does that INDU W chart look fantastic. Ideal high of year 18727 at the YR1. DIA just aboev its MarR2 with YM bang on it. With RSIs that high, it may be a place to take gains on the last adds and then look for a pullback. See this week strategy sum for more ideas. 

RTY / IWM / TF
Impressive percentage move off lows, and bullish to recover YS1 / 1HS1 area, but still under YP, HP and Q1P. Futs tagged the MarR2 level, although more to go on cash index and IWM.

NYA / VTI
And there is the NYA bang on its 1HP 10228 and still under its YP 10302. Back under its Q1P 10160 in additional to returning red on the year would be a bearish trigger. VTI looks better; a slightly different construction along with 8/24/2015 influence on pivots. I am not sure which to weight here so let's say toss up. 

Weekly strategy review

From last week: "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."

FOMC made that easy with SPX staying above the area and NDX not showing any rejection, then a jump above all levels on 3/16 as INDU continued to lead higher.

Per the bullish scenario, "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."

So if following daily SPY comments and weekly strategy ideas you were already significantly long coming into the week. No reason to be max long because there are still plenty of indexes below pivots. Perhaps you took some gains on EWZ or oil. Still mostly long via DIA, with some SOXX or SPY, and maybe EEM or RSX left, and decent chunk of GLD/GDX, is a very good place to be right now.

The first TLT exit suggestion was very good on the day of the high, but the 1HR1 break was a shakeout and not ideal. Still if you want to actively manage this sort of extended swing style, it isn't a bad idea to get out of what is weaker to free up capital for what is stronger. 

 

Valuation

From the WSJ.

SPX slightly above 17x forward earnings (2043), so interesting to see if this level holds. INDU at 16.5 so if that goes for 17x means target 18150 area. Lastly NDX just above 18x (4308) so that is another level to watch as possible support. 

Sum: Above SPX 2043 and NDX 4308 adds to bullish case, means managers willing to pay up 17x for SPX and 18x NDX. Falling back under these levels would add to bear case.

At this point I expect resistance at SPX 18x currently 2163 which very conveniently lines up with YR1 also exactly at 2163!