Monthly charts

5 trading days from end of month and quarter, so I will probably post some long term charts again soon. For now, 3 main index monthly charts for consideration.

NDX
2 gray lines are 2015 price high and monthly close high; red line 2000 price high (*the top*). After brief pullback and some shuffle around that 2000 high 4816 NDX has jumped back above the level. This is very bullish. Pushing outside the monthly Bollinger band a bit; RSI not yet overbought. 

SPX
Same idea on gray lines, the 2015 price and monthly close highs. This has basically backtested previous high area and so far holding - bullish. We don't know where the monthly bar will close, and a lot can happen in 5 days, but if it finished here it would look ready to zoom higher, ie 2 small red bars (weak selling) in overall uptrend often continues direction of larger trend.

INDU
The weakest of the 3 - below 2015 price high. So far holding the close high though. If back under that level 18132 then it would look much more threatening. 

Safe havens

Sum
TLT low on 9/15 on 2HP exact, and then on 9/21 both TLT and GLD reclaimed pivots. TLT reclaimed Q3P and GLD back above all pivots. You could say this was some warning for stocks that topped out on 9/22 and fell back on 9/23. 

I am concerned about the YR1 area rejections (SPX perhaps depending on 2163, RUT twice near exact, VTI in August, INDU near tag in August) but at the same time cannot be too bearish with VIX so calm. VIX is often right on markets (like it was on the 9/12-16 lows, dip to buy, not time to panic) - and so until we see VIX above at least a monthly pivot I will remain in "upside limited" camp instead of "bearish." That said, VIX back above SepP would confirm trouble for stocks and likely coincide with SPX YR1 2163 rejection.

TLT
Weekly chart low bang on 2HP along with YR1 acting as support. 
Daily pivot chart also shows recovery of Q3P on 9/21.
Daily technical chart shows RSI near OS (oversold) on the low at 31, rising 400, 200 and 100MAs, countered by falling 20 and 50MAs. 

GLD
Weekly chart choppy range between levels.
Daily chart again lows before reaching a quarterly pivot - very strong, and back above all pivots on 9/21.
Daily tech chart shows low on rising 100MA, back above 20 and 50MA too.

GDX for kicks
Unlike GLD, GDX did not maintain move above SepP, and falling 50MA acting as resistance. I'd be hesitant to short GDX with GLD strong, but at the same time if trading GDX then you'd want a good signal on this chart for an entry like 8/31-9/1 hold of Q3P with RSI OS.

VIX
Weekly chart a thing of beauty for those who take the few minutes to learn my abbreviations. 
Daily chart adds context of Q3P which also held as resistance. Using both of these meant clear signal to take off hedges and buy the dip - then it was a matter of choosing what held up the best (XBI, FXI, then SOXX, QQQ, EEM.) But as of now, daily VIX is not so troubled and under all pivots. 

XIV
Held YP after 2 day break also added to "buy the dip." Doing fine on recent high. 

VI1 and VIV contracts
Only these show a bit of trouble with VI1 mostly above monthly pivots after 8/17, and VI V contract recent low on Q3S2.

USA main indexes

Prior week: "Last week: SPX YR1 again rejection; NDX 2HR1 support; otherwise all indexes formed lows on SepS1s or S2s. Only tech set back above all pivots; all others under SepPs."
Last week: SPX set divided with 2163 key level; NDX still strong above all pivots and not at major resistance; INDU set continuing downtrend from YR1 near tag, and recent high on Q3R1 / SepP combo; RUT back to YR1 for test and so far not above; NYA/VTI also more in bearish camp with earlier August high on VTI YR1 and September high on NYA Q3R1 / SepP combo. 

Sum
Several yearly resistance areas back in play. One can go weeks or sometimes months between seeing these and what happens here often defines the next major move. Cases in point: YS1 area on 4 of 5 USA mains, and YS2 on RUT, for the lows of the year in January and February; recovery of YPs in March, shifting back bullish; the hold of YP area on Brexit drop; the rally up to RUT and VTI YR1s for the highs of the year with near tag on INDU YR1 as well. 

So now we are watching SPX YR1 2163, RUT YR1 1261; and to some extent the SepPs that broke or acted as resistance on 9/22-23 move on SPY, DIA and VTI. Second moves are often definitive and this will be the second time SepP "looks like" resistance on these 3 charts. And if you have a handle on all that, soon new Q4 & October pivots too. 

SPX / SPY / ES1 / ESZ
SPX sitting right on YR1 2163. Although it had a fractional close above the level, it does not have the "look of support" and in fact still looks more like resistance. SPY and ES1 both clear rejections from bang on YR1 level. Only ESZ has different configuration, with YR! recently holding as support along with D100, but recent move above SepP is in doubt. Bottom line SPX 2163 huge level because anything under that looks like real rejection from yearly R1 on 3 of 4 of these variants. 

NDX / COMPQ / QQQ / NQ1 / NQZ
These weekly cash index charts look like they could go a bit higher and tag YR1 & 2HR2 area resistance. NQ1 YR1 version is just a bit closer. NQZ just went from 2HR1 support to near 2HR2 resistance (look for red dots). 

INDU / COMP / DIA / YM1 / YMZ
INDU still in downtrend after near tag of YR1; COMP resistance bang on level. DIA and YM futures charts all show resistance at SepP, and 2 of those include Q3R1 as well. 

RUT / IWM / RJ1 / RJZ
Back to YR1 with highs quite close on all variants except the Z contract. 

NYA / VTI
NYA between long term levels, but rejection from Q3R1. VTI highs on YR1 and now 2nd time under SepP. 

Valuation and fundamentals

Thompson reporting SPX P/E down to 16.61 which would be a very bullish development. This means earnings estimates jumped as price rallied. Keep in mind last week's implied earnings estimate was the lowest since I've track this in July and all of a sudden it has jumped back to the second highest. To be honest I'm not sure what to make of this data, but if you like this sort of thing I found another PDF put out by Yardeni that has just about everything you could want to see on this subject.

In fact his "blue angels" on page 18 is exactly what I am trying to do with this post in text form, and keep track of the subtle details and changes from week to week. Right now on his graph SPX is between 16 and 18x forward earnings. It is too bad 15 and 17 are not on the graph because it looks like 15 area might have been support and 17 area resistance, but hey, that's why I am willing to maintain my spreadsheet once a week. 

Back to Thompson data, 17x area resistance at 2215 (big change from last week) and now 16.5 potential support at 2150. 16x solid support 2085.

Meanwhile the Citigroup Economic Surprise Index looks slightly negative and whatever this means for FOMC I don't think this is helpful for markets. 

Total market view

Last week: "Bottom line - This is real pro selling from yearly levels so caution is warranted. If you heeded my advice you are not too bothered by this drop but instead glad you took some gains (or are hedged) and now have money to shopping when the setup looks good. Watch the VIX as noted above. Buy what is going up, or recovers sooner than others. Best days for action are when multiple indexes all saying the same thing, along with other technicals and perhaps a sentiment extreme." 

VIX note also from last week: "The VIX has worked extremely well confirming the real trouble and when it is ending, so I will continue to use that to guide my decisions. Watch the reaction from Q3P to 2HP 18.28 to 20.07.... Simply stated above 20.07 means real trouble for the market, while a slow-down of the move up and subsequent rejection of that area could be a decent stock buy setup."

Results: VIX high of week was 20.51 with a big drop from that level and back under the Q3P 18.28 on Monday. See safe haven section for the charts. From there Q3P acted as resistance with closes of 17.85 and 18.14 on Tuesday and Wednesday, then moving lower Thursday and Friday. Correspondingly, USA main indexes have held SepS1 or S2 area (SPX, INDU, NYA/VTI all S2s, NDX and RUT S1s). But only Tech showed strength by reclaiming status of above all pivots. SOXX as a sector continued to lead also above all pivots, and though Biotech XBI is below YP it is above 3 others (2HP, Q3P and SepP) and moving well. 

Basically if you bought anything last week there was very clear that Tech (QQQ, SOXX or XBI) is the only game in town. On the global side maybe FXI or INDA, FXI like Biotech above all pivots except YP, and INDU currently above all pivots as well and holding YP the last several weeks. EEM could not reclaim its SepP.

Sum
One cannot be too bearish with VIX holding Q3P to 2HP (18.28 to 20.07) area as resistance and Tech set back above all pivots and knocking on door of new highs. That said, other indexes while forming lows on SepS2s or SepS1 in case of RUT / IWM have not delivered the same move. Monthly SPX and INDU charts look like test of previous high area when you factor in monthly close levels. Right now I give edge to bulls though dislike current look of weekly charts with SPX YR1 rejection still in play. This week FOMC will probably be the big move, then focus on election.

Bullish scenario (slightly preferred but I am flexible) - Market rallies into FOMC and beyond, tech continues to lead up, other indexes back to or above SepPs. 
Bearish scenario - Tech set fades back under SepP, VIX back up (anything above Q3P 18.28 is bad and above 2HP 20.07 is real trouble). 

Bottom line - We will see what FOMC does this week. Despite Yellen's Jackson Hole moment that was taken as hawkish, in the same speech she opened the door to QE4 so I will be surprised at a very hawkish tone this week. Probably things stay the same, ie, maybe next time. Even if market rallies into FOMC I still think upside limited to INDU YR1. But if bearish scenario unfolds as VIX resumes rally there is plenty of room for index drop with no pivot support (not counting other monthly support levels) until SPX Q3P at 2170, INDU Q3P 17720, RUT YP 1170, then VTI Q3P 105.86. 

Pivots
USA main indexes - Tech set strong above all pivots, and semiconductors (SMH) and biotech (XBI) both moving well. Otherwise, recent lows on SepS1s (RUT / IWM) or SepS2s (SPX set, INDU set, NYA/VTI) and still below SepPs.

Safe havens - TLT fast drop below SepP on 9/8 to low bang on 2HP 9/15. VIX held 2HP - Q3P resistance area last week, for now bullish for stocks.

Global and other - Oil weak, USO below all pivots and CL1 contract breaking YP, Q3P and SepP combo; only 2HP remains as support. FXI (China) pullback didn't even reach SepP, very strong; INDA (India) above all pivots. Per this post, watching DXY for real conclusions of FOMC. Anything above 2HP means market believe rate hike soon. Below that and dovish again. 

Other Technicals
Monthly charts on USA indexes so far trying to hold prior high support area (close highs, not price highs). However, weekly chart configuration not great.

Valuation & fundamentals
Citigroup Economic Surprise back into negative may mean FOMC doesn't hike but that should limit upside at the same time. 

Sentiment
Bullish extremes of August have been worked off, but at all approaching bearish extremes yet. 

Timing
Missed 9/7 key high
8/29-9/2 - admittedly wide; so far stock pullback low and TLT high
9/12 - pullback low on a some ETFs (9/12 close, 9/13 price low)
9/16 - ?
9/23-27

$USD

Last update 8/27: "Basically DXY has to prove strength by moving above 2HP and YP 95.90-96.48 area and close above that on a weekly basis."

Result: High 96.26 in zone, then another drop - but Friday's move trying again. 

Now onto a few charts.

DXY Q
Amazing 3 bar rally, then 6 bars of sideways. 

DXY M
Monthly 20MA currently 96.53. That could still be resistance or turn into support, likely depending on FOMC actions and words this week. 

DXY W
2015 high on 2HR1; 2016 low on YS1, both turns near exact. This will be the third time DXY is rallying above a HP. The YP is still the biggest level in play, but if it can clear that again I think that will be definitive. Or, another dovish FOMC and back down. We'll see. 

Q3P has turned into support, and DXY on Friday jumped above SepP and 2HP. Bullish action, and could be long here with partial stop below 2HP and then firm stop below SepP. 

Safe havens

Sum
TLT low on 2HP so far. VIX held Q3P - 2HP area as resistance, showing no panic in the market XIV recovered YP after 2 day break. VI1 futures also Q3P exact on the high. Per my last total market view, the move in VIX so far is quite supportive for stock indexes.

TLT
Look at that, 2HP exact on the low. So far despite the drop no long term damage to TLT (ie below a long term pivot 2HP or YP. Holding YR1 as support also looks bullish. 
Daily chart looks bit less impressive, small blue bars on the lows could be weak oversold bounce. Q3P still may act as resistance. Lastly, only pivots on the 2016 high and recent low so far, no Bollinger bands or MAs. 

GLD
Weekly chart between levels. Daily chart high on SepR1 and down from there.

GDX for kicks
Below YR2 for the second time, along with SepP break and resistance. Earlier bounce of Q3P was nice but mostly gone.

VIX
Weekly chart is a thing of beauty if you consider August 2015, January and February 2016, June and now September. VIX pivot resistance or pivots on or near the turns. 
Daily chart shows no close above Q3P and resistance for 2 trading days. So far no real panic in the market and ordinary pullback. 

XIV
More bullish to hold YP. 2HR1 still maybe resistance. 

VI1
Also confirming volatility high & stock likely pullback low with high on Q3P near exact. 

USA main indexes

Prior week: SPX YR1 rejection and medium term level break; NDX near 2HR1s, INDU YR1 near tag YR1 rejection and COMP clear rejection, medium term level break like SPX; RUT high YR1 exact and rejection, also below SepP; VTI high on YR1 and rejection.
Last week: SPX YR1 again rejection; NDX 2HR1 support; otherwise all indexes formed lows on SepS1s or S2s. Only tech set back above all pivots; all others under SepPs.

SPX / ES / ES1 / ESZ
SPX weekly chart looks especially bearish with the high bang on YR1, now resistance. Daily SPY and ES1 charts show a break of YR1 and below orange dot monthly pivot for the first time since June and fast move down to SepS2 area. ESZ shows low bang on SepS2 and includes other technicals which adds context of rising 100MA support. 

NDX / COMPQ / QQQ / NQ1 / NQZ
Nothing wrong with this chart as a fast drop to 2HR1 area zoomed right back to highs. YR1 looks doable. Daily charts QQQ low held 2HR1 on close, Sep1 there too, and back above all pivots on 9/16! NQZ has different YR1 than others so let's see if still resistance next week; fantastic hold of rising daily 50MA (in purple).

INDU / COMP / DIA / YM1 / YMZ
Weekly index charts continue downtrend from YR1 areas (INDU slight miss, COMP overshoot then clear resistance). Daily charts drop to SepS2 then stabilization, with YMZ D100MA also helping.

RUT / IWM / RJ1 / RJZ
Picture perfect high on YR1 (and low on YS2 for that matter). Maybe that is it for the year. For now IWM recovered SepP one day although without the "look of support" only to break again and make a low on SepS1. Still below SepP though.

NYA / VTI
Weekly NYA chart between levels. Daily chart low on SepS2 exact so far. VTI clear rejection of YR1 and also low on SepS2 / 100MA combo. 

Valuation and fundamentals

Thomson saying P/E 17.03 means earnings slight drop from last week. 

Yardeni's report of Citigroup Economic Surprise Index back into negative territory led the drop (hard to see unless checking this day by day, but I did see below zero before 9/9). Maybe it will be an excuse for FOMC to not raise rates, but the more they talk about it with economic data disappointing the more the market is likely to throw more fits.  

E-wave

Check the tag for prior versions. We can still debate whether the market will make ultimately more bullish or bearish long term versions. The point here is that it looks like we just had a failed 5th - meaning 5th wave didn't even make 38% of W1 let alone typical target of 61-100% - and now we 'should see' an ABC down pattern. This means the drop won't be done in one go. Down, bounce, down again for the low. Something like this, roughly speaking. 

Total market view

Last week: "I have to be bullish here with all USA indexes above all pivots, safe havens all flashing green light for stocks, sentiment not at extremes. And yet I remain in "upside limited" camp and expecting significant resistance if we see a tag of these target areas: 

SPX SepR1 to 2HR1 - 2193 to 2209
NDX SepR1 - 4842
INDU SepR1 to YR1 - 18630 to 18727
RUT SepR1 / Q3R2 / 2HR1 / YR1 - all 1247 to 1261 in zone
VTI YR1 to 2HR1 - 112.46 to 113.53 also tagged zone

If Friday turns out to be a bull trap the first thing we will see is INDU set below SepP, VIX above and GLD likely above."

Yup that is all a direct quote from 9/3!

Results were:

SPX high 2187, 6 points shy of zone; 3rd time 5-6 points from level
NDX high 4839, deemed "close enough" on 9/7
INDU high 18551, within 100 points; 3rd time under 100 points from level
RUT 1261 *the high!*
VTI high 112.75 in zone! 

Significant resistance indeed! 3 of 5 directly there and remaining 2 coming quite close. 

Sum
I've been bullish post Brexit and been saying upside limited the last several weeks. If you heeded this advice you participated in most of the rally and have been taking some profits at the highs or hedging. OK, now what? 

Keep in mind that this work is designed to make day to day (or week to week) decisions on exposure and setups, and I don't try to plan out too much in advance. That said, due to a combination of factors such as: yearly levels involved in the rejections and the moves we have seen since February lows; quarterly and monthly chart configurations; trapped bulls; Elliott wave patterns; FOMC and election risk; recent disappointing economic data; I think this is more than a two day affair and we are likely going to see a correction of at least -5% in SPX. It could be more than that, but let's start there. This would be about 2085 and near enough to SepS3 on SPY. Also, since the market has been above quarterly pivots since reclaiming in March it may happen that we see a quarterly S1 in Q4, but I am getting ahead of things here. Also, if the market changes, I'll change my mind too.

The VIX has worked extremely well confirming the real trouble and when it is ending, so I will continue to use that to guide my decisions. Watch the reaction from Q3P to 2HP 18.28 to 20.07. Study the VIX charts in the safe haven section to see what we are looking for on a buy like 2/12 and 6/28. Simply stated above 20.07 means real trouble for the market, while a slow-down of the move up and subsequent rejection of that area could be a decent stock buy setup.

If you have cash on the sidelines now or are hedged, then the decisions will be what to buy and when, or when to lift hedges. Maybe I will start to do TPP low checklist :) I ran the top checklist several times in July only to get Nos, then a pause in late August, but if you were running it in your mind 9/7 to 9/9 open then you knew things had changed with the addition of yearly level rejections, highs tested with one lower high, and VIX sounding alarm. 

We want to buy what is going up, or recovering pivots sooner than others. Remember a buy of a monthly S1 or S2 may not be reliable, as those can hold for a day (or a few hours) then break. The turns that matter on monthly levels tend to have others more important levels nearby, like 2/11 low on stocks (SPY & DIA FebS1s exact) also had DIA YS1, SPY YS1 recovery next 2 days, etc).

GLD is above all pivots currently sitting on SepP, and TLT is testing Q2P
EEM above all pivots (barely)
FXI well above SepP, above Q3P and 2HP, but under YP
Shanghai Comp, roughly tradeable through ASHR, also above SepP, Q3P and 2HP (ETF not above SepP however)
RSX, EWJ, EWG all above SepPs but recent long term levels rejections so caution warranted

IWM and XLF slight breaks of SepPs and they will likely be the first to recover on USA indexes on any bounce. EWZ also similar look in relation to SepP, and of course one of the market leaders thus far this year. SMH / $SOX has been the USA sector leader and that may or may not continue. That finally ran out of gas near on SMH 2HR2 exact, with Q3R3 and YR2 not far above, after being RSI overbought or near it since mid July. Amazing run. 

Also, I may start posting charts of pivots only and MAs (no support or resistance levesl) to watch for buys. Best often combination of pivot hold and either an RSI setup (more soon on that) and/or rising MA on your side. 

So there you have my watch list as of today. Remember, it is better to take decisive and meaningful action on good setups when the market is ringing the bell with defined risk reward - (like 7/5-6 most USA mains holding above all pivots, then taking profits near yearly level targets) then flailing about trying this and that, wasting emotional and perhaps actual capital on bad setups, or shorting after the fact, etc. We may get a good setup Monday, or if everything keeps going down then it could be a while yet. I'll be watching the VIX, and oh yes, maybe this too: 

NY Times H / D poll

Last August when DT first came onto the scene the market freaked out too. In the last week H as gone from about 90 to 80ish. Wall Street likes status quo, H is very much that, D is not. 

Bottom line - This is real pro selling from yearly levels so caution is warranted. If you heeded my advice you are not too bothered by this drop but instead glad you took some gains (or are hedged) and now have money to shopping when the setup looks good. Watch the VIX as noted above. Buy what is going up, or recovers sooner than others. Best days for action are when multiple indexes all saying the same thing, along with other technicals and perhaps a sentiment extreme. 

Pivots
USA mains - Damage on long term and medium term levels. SPX YR1 rejection, INDU YR1 near test and rejection, RUT YR1 exact and rejection, VTI 1 day overshoot and rejection. Medium term all main USA indexes below SepPs; some below SepS1s.

Safe havens - TLT leading down, but testing Q2P. GLD above all pivots. The real story VIX and variants - after being below SepP 9/2 to 9/8, VIX exploded higher Friday and moving towards Q3P and maybe 2HP. 

Global & other - Cannot blame selloff on DXY (still below YP, 2HP and SepP) or oil (CL1 contract above all pivots. Globally, China faring best here Hang Seng / FXI and Shanghai Comp below YPs but above the others, 2HP, Q3P, SepP. 

Other technicals
Daily charts on USA main indexes are already approaching RSI oversold, and the reaction from that will be interesting. The larger RSI picture on quarterly and monthly charts is a bit more threatening - more detailed post here. 

Valuation & fundamentals
Citigroup Economic Surprise Index confirmed rally by launching into positive territory for the first time in 18 months; confirmed pause by rapidly fading back down, and led selloff by dropping back into negative territory. 

Sentiment
Bull sentiment extremes reached mid August, written up here. We may need to see bear extremes again for real low.

Timing
Nope, didn't get this one. Maybe other dates in September will be lows. 

8/29-9/2 - admittedly wide; so far stock pullback low and TLT high
9/12
9/16
9/23-27 

Safe havens

Sigh, posted but vanished so this is a shorter v2. 

Sum
GLD still above all pivots! TLT Q3P to watch, then below that YR1 & 2HP. VIX jump above SepP confirmed stock trouble; Q3P - 2HP 18.28 to 20.07 and response from that area crucial to watch! 

TLT
Weekly chart approaching support at YR1 then especially 2HP.
Daily chart testing Q3P here. Also a rising 100MA and SepS2 nearby.

GLD
Weekly chart between levels. Somehow still above all pivots!

GDX
Despite GLD strength, did not hold its SepP.

VIX
Jump above SepP confirmed trouble on Friday. Study previous buys like late June, January and February 2016, August then September 2015, etc. Q3P 18.28 to 2HP 20.07 and reaction from that area crucial to watch!

XIV
YP may also be in play soon. Daily chart one of the craziest 1 day RSI moves I have seen.

VI1 futures also may worth watching, especially if we see the pivot cluster 19.27 - 20.56.

TPPs market top checklist

Version 5. See tag for prior versions (7/16, 7/23, 7/31) answered all No. 8/27 answer was pause not high - which was correct for NDX, RUT and VTI, all of which made higher highs 9/7, although next highs were lower for SPX and INDU. This is obviously a bit academic but let's see what transpired from 9/7 on to make this important. 

The difference towards the end of the week 9/7-9 was that a lot more questions were answering yes compared to past versions.

1. Multiple major USA indexes at major resistance, then rejections? VIX / XIV alert?

RUT reached YR1 exact on 9/7 for the high. VTI had 1 day overshoot of its YR1 on 9/7 and then dropped back below on 9/8. Still, nothing on 9/8 really screamed trouble and the rejections came violently. While SPX and INDU had close target level failures (SPX 5-6 points 3x and INDU under 100 points 2x) NDX reached SepR1 on 9/7 as well. So 3 of 5 USA mains on resistance levels, add the NDX 2000 top for a bit more of long term importance to that monthly level. VIX started with reversal bar 9/8, then said trouble early Friday by being above the monthly pivot and exploding higher from there. 

This criteria more of an issue with RUT & VTI on yearly levels, and NDX on monthly level that happened to be 2000 high as well. But I didn't suspect big trouble until VIX confirmed which was Friday open. 

2. RSI extreme reached? Negative divergence? Bollinger bands in play, or divergence? (ie "other technicals"?)

RUT / IWM weekly chart RSI on 9/7 was very near 70. Quarterly chart RSI and monthly Bollinger bands in play, as discussed in detail here. 

Again, more an issue this week compared to previous with RUT weekly chart RSI reaching overbought and monthly chart configurations.

3. High tested with at least 1 lower high?

SPX set: 8/15 high, 8/23 test, 9/7 stopped at prior close high
NDX set: similarly 8/15, 8/23 and 9/7 highs; all fractionally above 2000 tops then below
INDU set: same dates, 9/7 lower high
RUT set: powered up to higher highs, but ran into YR1. 

Again, this criteria met much more than previous versions of this checklist. 

4. Safe havens showing concern? 

GLD somewhat, but TLT actually leading down. VIX reversal bar, then jump above monthly pivot Friday open. 

5. Breadth or volume divergence (adv / dec volume is my favorite)

Eh, adv/dec volume 2nd lower high but not yet negative for 9/9. Cumulative breadth also made higher highs. So not really in this case. 

6. Sentiment extremes reached?

Yes in mid to late August which I wrote up on 8/19. Refresh of fear needed.

7. Valuation / fundamentals? 

Yes. Citigroup Economic Surprise index did a great job confirming the stock breakout by launching into positive territory for the first time in 18 months; then confirmed a pause by fading rapidly, then said sell by dropping back into negative territory. FOMC talking about hiking with recent data disappointing was the perfect storm.  

8. Timing window?

Nope, not this time. I have gotten some key turns with this, but didn't have 9/7 listed this month. Maybe the dates for September in Total market views will be lows. 

Quarterly and monthly charts

There are still a full 3 weeks until the quarterly bar closes, and so the shape of these could easily be different - but with that caveat let's take a peek at the USA main indexes. 

Sum
Read each index chart for specifics, but key points are:
Quarterly chart RSI divergence most glaring on INDU & VTI
NDX 2000 top level resistance
Previous monthly bar doji bars near top of Bollinger bands; current bar "looks like" engulfing red, bearish but not closed yet
Bull traps for anyone who bought breakout of prior price highs (SPX 2134, INDU 18351, etc)

Yet...
Monthly close levels of the previous high bars may act as support (SPX 2107, INDU 18132, etc)
Still sharply rising MA (moving averages) on quarterly charts, and decently rising MAs on monthly charts
Perhaps NDX move is a just a shakeout of weak hands before launching above 2000 high

Clearly mettle of people buying new highs and late to summer rally being tested, and I think their late entry will be punished by the market. The monthly chart configuration is looking bad here, and with both FOMC and election risk, with other central banks pulling back on support as recent data has disappointed, I see little reason for big buyers to step in aggressively as they did in June and early July. This means I think the correction will go on a little longer and probably exceed -5% on SPX (so 2085 or lower). Whether or not we cross the -10% I really don't know. 

SPX Q
From the moving average and direction perspective, this has been an epic run. The last touch of the 20MA (orange) and 50MA (purple) was Q4 2011. Recently the 10MA (aqua) has been near enough support. But RSI divergence and a small up bar with a wick are danger signs that will be official if the bar closes like this in a few weeks. 20MA far below at 1792 but rising fast. 

But let's be clear, as good as this has been, a log scale chart makes this much less impressive compared to the 1980s and 1990s. 

I digress. 

SPX M
Falling under last month's close / current open price of 2171-73, Friday unleashed a cascade of selling. And last month's doji bar with a wick at the top of the Bollinger band with glaring RSI divergence just doesn't look so good. Potential support at the prior high 2134 and the monthly close high 2107. If this zone holds, then it is a healthy test and the uptrend can resume. But a lot of people bought the breakout above 2134 and I think their mettle will be tested and late entry punished by the market. The next MA support zone is currently 2064-70.

INDU Q
Ugh. This RSI divergence has one the one trouble spot in mostly good technicals across indexes and timeframes, and I have mentioned it a few times. Right now this looks to be a huge bull trap for anyone who bought the breakout to new highs. 10MA aqua line support a few times, 1 break and recovery, near test of 20MA earlier this year. 

INDU M
Ouch! Late buyers caught in bull trap! Although would look much better back above the monthly close high at 18132. Next MA support 17590-17650.

NDX Q
Pro selling at the 2000 highs here. Do not dismiss a major index double top (see SPX 2000 & 2007).

NDX M
Same level on the monthly chart. Maybe a pause at highs or maybe something larger. Currently engulfing bar from top of Bollinger band does not look good. 

But like the others perhaps more recent monthly close high at 4664 can be support.

RUT Q
Resistance at the quarterly close high, happened to be near YR1. 

Turns out same levels on the monthly chart too.

And since Vanguard has an awful lot of $ under management, let's look at VTI. RSI divergence picture like INDU.

VTI M
Bull trap! But maybe support at monthly close high just below current level. 

A brief history of SPX drops 2011+

This data should be mostly right but some of this just depends on how you measure. Mostly I am counting every swing of more than 2.5%. Calendar count could be a off by a day or two because it is weekdays. 

From October 2011 low, there have been 31 drops of at least -2.5%. About half of these, 16 to be exact, stay in the benign -2.5% to -5% category. Sounds great right? But 11 have been between -5% and -10%. The remainder have been the scary drops of -10.3% (11/2011) and -10.5% (6/2012), then -12.5% (8/2015) and -12.9% (1/2016). 

Right now as bad as it feels SPX is only -3% from the highs, and calendar count is already a 20 day drop since the high was on 8/15 (indexes vary of course, with NDX and RUT highs just 9/7). 

So what will it be?

-2.5 to -5% buy chance
-5 to -10% pullback
-10% or more scare

To try to answer this question, let's take a look at a few quarterly and monthly charts in the next post.

Dates of swing highs and lows, then showing % drops and weekdays from the highs to low.

9/10/2016    -3.05%    20
8/15/2016        
6/27/2016    -6.08%    14
6/8/2016        
5/19/2016    -4.03%    22
4/20/2016        
2/11/2016    -7.04%    9
2/1/2016        
1/20/2016    -12.94%    17
12/29/2015        
12/14/2015    -5.23%    10
12/1/2015        
11/16/2015    -4.59%    10
11/3/2015        
9/29/2015    -7.37%    9
9/17/2015        
8/24/2015    -12.46%    26
7/20/2015        
7/7/2015    -4.03%    12
6/22/2015        
6/9/2015    -2.84%    15
5/20/2015        
5/6/2015    -2.73%    8
4/27/2015        
3/11/2015    -3.77%    11
2/25/2015        
2/2/2015    -5.38%    26
12/29/2014        
12/17/2014    -5.14%    9
12/5/2014        
10/15/2014    -9.84%    19
9/19/2014        
8/7/2014    -4.35%    11
7/24/2014        
4/11/2014    -4.37%    6
4/4/2014        
2/5/2014    -6.10%    16
1/15/2014        
12/18/2013    -2.51%    14
11/29/2013        
10/9/2013    -4.82%    15
9/19/2013        
8/30/2013    -4.77%    21
8/2/2013        
6/24/2013    -7.52%    24
5/22/2013        
4/18/2013    -3.84%    6
4/11/2013        
2/26/2013    -3.00%    6
2/19/2013        
12/31/2012    -3.45%    10
12/18/2012        
11/16/2012    -8.90%    46
9/14/2012        
6/3/2012    -10.50%    24
5/1/2012        
4/10/2012    -4.57%    7
4/2/2012        
12/19/2011    -5.11%    9
12/7/2011        
11/25/2011    -10.37%    22
10/27/2011        

 

 

 

 

USA main indexes

Prior week: "SPX set above all pivots; Tech set mostly above levels with NDX futures just under Q3R2s; INDU set above all pivots; RUT set back to Q3R2 & 2HR1 with YR1 just above; NYA & VTI above pivots with VTI topping on YR1 the last 4 weeks."
Last week: SPX YR1 rejection and medium term level break; NDX near 2HR1s, INDU YR1 near tag YR1 rejection and COMP clear rejection, medium term level break like SPX; RUT high YR1 exact and rejection, also below SepP; VTI high on YR1 and rejection.

Sum
The problem here is not 3% down from high on SPX but the yearly level rejections on Dow COMP, and in particular RUT & VTI both picture perfect pivot level YR1 tops. Action was a bit sloppier on SPX (within 5-6 points of target levels 3x), INDU (within 100 points 2x). NDX did tag or near enough a monthly level for the top, and NYA also showed a stall under SepR1. 
Most charts are well between long term levels (though tech set 2HR1s to watch), so that leaves Q3 levels and SepS1s and S2s and perhaps lower. A lot can happen before we see Q4Ps and of course the new monthlies but the market has been all above quarterly pivots since March so it will soon be very interesting to see if we are above or below those levels. 

SPX / SPY / ES1 / ESZ (note new contract)
On SPX cash weekly chart, a bit sloppier this year than last several, but basically low just below YS1 and high a bit above YR1. YR1 if we happen to see that likely resistance. No long term support until Brexit low.
But daily charts that include quarterly and monthly levels show both futures (and SPX cash not included) at SepS2 already, current contract 2110. If bounce then Q3R1 still maybe resistance at 2138.

NDX / COMPQ / QQQ / NQ1 / NQZ
Weekly charts more bearish below 2HR1, stronger above. 
Daily charts vary a bit here with discrepancies between the ETF, continuous and current contracts. QQQ better above 2HR1, if bleow then SepS2 and Q3R1 combo near 112. Must say NQZ added to bearish concern with rejection of YR1. 

INDU / COMP / DIA / YM1 / YMZ
Target fail on INDU rather pesky, but cannot complain about the clarity of the move on COMP. 2 week slight overshoot, then YR1 resistance for 5 weeks before the drop that mattered. 
Daily charts also vary in monthly support, but 2/3 between SepS1 and S2 levels. 

RUT / IWM / RJ1 / RJZ
RUT weekly chart a thing of beauty. 
On daily charts IWM has been relative leader here with slight break of SepP so far. Watching SepS1 / Q3R1 combo for support. 

NYA / VTI
Wow, I might have to prioritize VTI over NYA here - picture perfect top on VTI YR1 with not one weekly close above the level. 
NYA daily added to concern last week 9/6-8, and VTI screamed trouble with that big gap and 1st hour break of SepP. 

Valuation and fundamentals

Thomson Reuters SPX forward 12 month P/E from 17.10 last week to 16.89 as of Friday. This means earnings estimates dropped to the lowest level since I switched to this data (away from Wall Street Journal) in July.

These numbers change too much from week to week to trade off these levels, but for now 17x resistance 2141 and 16x support 2015.

*

Stock pullback has been no surprise to anyone looking at this Citigroup Economic Surprise Index updated daily and available for free by Yardeni. The drop back to negative combined with rate hike chatter created the storm for the market. While the speed and magnitude of the move is always a shocker after 2 months of dullsville, I have used this since 8/20 to help make the case for limited upside the market, and directly said as much on 9/3. 

Symmetry update

Back in August I noticed an interesting symmetry pattern setting up on NDX and wrote about it here: "NDX is setting up on something very similar to the upside, with 100% at 4864. Time matches on 9/5, so that would be an interesting area to watch along with AugR1 at 4857."

OK, so by now they got calendar correct on chart and actually it was 9/6. 9/7 just +1 match in time, and it stopped at SepR1 a bit shy of 100% in price. Not bad though eh?

Price chart here:

Time here:

Combined here. Ideal price and time met at 4862 on 9/6. We got 4839 on 9/7. That is just close enough!

China

Shanghai Composite was a traders dream in 2015 but this year has gone to sleep. But Hong Kong's Hang Seng has been on a tear since the 6/27 lows, up 18%. I'm not saying it is a buy here but given the steady media bias against China this is an interesting thing to watch. It is definitely helping pull up EEM as well. FXI is basically correlated to Hang Seng although technicals look just a bit different. 

Hang Seng
Quarterly chart looks fine back above all MAs. Nice hold of rising 50MA in purpose the the last few bars, and already recovered 50% of the drop from 2015 high to 2016 low. 

Monthly chart has also recovered its 50MA, and starting to lift above its orange 20MA as well. 

Weekly chart RSI near overbought, but has reclaimed 200MA and 100MA in the last few bars.

The Pivotal Perspective gave long term partial buy the first week of the second half of 2016, with the first bar above a long term pivot since the August 2015 break of the YP. Heading up to key resistance though, at YP and 2HR2 combo. 

Daily chart with the works shows great hold of daily 400MA, rising 20MA and clear of 10MA, while above all pivots. RSI overbought again, but if higher lots of resistance at the YP / 2HR2 / Q3R3 / SepR1 all 23538-23826.

FXI
Monthly chart doesn't have quite the same look since just under falling MAs (20 in orange, 50 in purple and 100 in thin black)

Similarly the weekly chart is up against a 200MA (thick black), 400MA (thick brown) just above and 100MA (thin black) slightly above that. 

Similar buy using long term pivots, but resistance a bit further away. 

Pivots look great here, but that falling 400MA in brown something to watch. 

Total market view

Last week: "Was that it? Hm. A big scary event - threat of rate increase - but actually hasn't happened yet, with equally bullish conclusion (promise of QE4). Sounds more like Brexit low than big stock high. All stock indexes above all pivots. VIX just mild concern.  I ran my market top checklist again and my answer was more likely stock pause than major high. If this view is correct we'll see VIX below all pivots on Monday and a rebound."

Result: Market did rebound Monday 8/29, only to revisit lows later in the week and rebound again. So far pause rather than high more correct with SPX just -1.6% from highs on the pullback low. 

Sum
I have to be bullish here with all USA indexes above all pivots, safe havens all flashing green light for stocks, sentiment not at extremes. And yet I remain in "upside limited" camp and expecting significant resistance if we see a tag of these target areas: 

SPX SepR1 to 2HR1 - 2193 to 2209
NDX SepR1 - 4842
INDU SepR1 to YR1 - 18630 to 18727
RUT SepR1 / Q3R2 / 2HR1 / YR1 - all 1247 to 1261 in zone
VTI YR1 to 2HR1 - 112.46 to 113.53 also tagged zone

If Friday turns out to be a bull trap the first thing we will see is INDU set below SepP, VIX above and GLD likely above.

Pivots
USA mains & other - Of 5 USA mains indexes, 4 held SepPs on Thursday. The one below, INDU / Dow, jumped above on Friday. As long as these levels hold looking for SepR1s. Market leader SOXX / SMH near key resistance 2HR2.

Safe havens - All flashing green light for stocks. TLT and GLD below SepPs, VIX one day above SepP then back below. 

Global & other - 2016 weak links DAX and NKY above SepPs too. China via FXI jumping, and EEM moving along. Despite oil's drop, EWZ and RSX quickly back up towards highs. Oil is the markets weakest asset class, the only thing I know of below all pivots on USO, though CL1 is more definitive and mixed below YP yet above 2HP. 

Other technicals
NDX 4816 2000 top level to watch. I've mentioned the quarterly chart RSI picture a few times in this section - INDU quarterly RSI 69.92 is not coincidence. It would be more bullish for the market for that to join SPX and NDX above 70, but I don't think this will happen. Otherwise not even 1 hour charts are overbought. 

Valuation & fundamentals
Valuation on the higher side, but what else is new. According to Thomson Reuters data, SPX 17x forward earnings basically held as support last week. Fundamentals weaker with Citigroup Economic Surprise Index fading back to the zero line adds to my "upside limited" perspective. 

Sentiment
After reaching extremes across the board in mid August, markets have tested highs and had a mild pullback. Now put-call has moved higher, ISEE hasn't spiked up on daily close, NAAIM managers have faded a bit, and AAII individuals less bullish too. Ideally we see all these move back towards bull extremes for a key high area.

Timing
An ongoing work in progress. Some of these areas listed in weeks in advance have gotten key turns. Sometimes they are misses, non evens, or in tight range it can be hard to immediately tell if high or low. 

8/29-9/2 - admittedly wide; so far stock pullback low and TLT high
9/12
9/16
9/23-27