Total market view

Last week: "Bottom line - I want to be bullish stocks with tech and global stocks doing fine above all pivots, oil rallying, safe havens crumbling, and VIX giving the all clear without being too low. At the same time I don't like this combination: YR1s acting as resistance on 4 of 5 USA main indexes, monthly pivots acting as resistance on 3 of those, and the same 3 daily 50MAs rolling over with downward slope. Sentiment is a bit too bullish on ISEE as well. You don't have to be max long here and in fact shouldn't be with only 1 of 5 USA mains above all pivots. Maintain longs on the leaders but lighten up if Q4Ps break on SPY, DIA and VTI, or use those levels as hedge areas if they turn into resistance. Basically I am expecting range bound action but don't know whether stocks have energy to move back up to high areas or SPY DIA VTI Q4Ps break and we see a test of QQQ OctP or lower as the next move."

Result was first move bounce for 10/10 high, with ISEE 3rd highest reading of the year warning on the long side, then immediately back down with Q4Ps breaking on SPY, DIA and VTI along with test of QQQ OctP. On Friday 10/14, the SPY, DIA and VTI all Q4Ps "looked like" resistance. Here's a detailed post on what that means.

Sum
Pivot action on all 5 USA mains and VIX is forcing me to be bearish here, so I maintain that stance until we draw bullish conclusions or we see lower levels that might mean taking off hedges (thus being more long) is the better risk-reward play. Also keep in mind that although I take the QP rejections and other technicals seriously, USA mains are still in long term uptrends (ie above 2HP and YPs; and above most rising moving averages on weekly, monthly and quarterly charts) so I tend to view this as some kind of correction to be avoided, and which will wind up being some kind of buying opportunity. 

Bottom line - bearish for now with SPY, DIA and VTI Q4P rejections, IWM Q4P break and QQQ OctP break. A bearish scenario would be lower to see SPY, DIA and VTI Q4S1s, a nice pullback, making the trapped bulls squirm, but still with the possibility of comeback. A more bullish scenario would be QQQ back above OctP and IWM back above Q4P as VIX drops back under its Q4P as well. Due to the long term charts and trapped bulls, recent sentiment extreme and timing I'm thinking the more bearish version.

Either way usually best to buy what holds up best on a drop and right now that is financials, tech, maybe India, then we'll see what happens with the EEM / FXI story if $USD strength continues. 

Pivots
Only a few things left that I track still above all pivots. XIV, XLF, NQ futures, PIN (India ETF, but not INDA), and 2016 market leader EWZ Brazil. 

USA mains - Q4Ps looking like resistance on SPY, DIA and VTI, as Tech set didn't hold OctP, and RUT set broke Q4Ps as well. Bearish until we see something different. This could be Tech set recovery of OctPs as RUT recovers Q4P, especially with VIX confirmation, OR it could be lower until we see Q4S1s and Tech set Q4P. I'm thinking the latter. 

Safe havens - Not so safe anymore so any stock drop is pure pain for investors without TLT uptrend to cushion the blow. TLT below 2HP means long term weakness for the first time sine 2015 on a weekly chart. For now VIX sounding trouble above Q4P and OctP so stock index bounces remain suspect.

Global & other - $USD the story now, one of the best trending moves of Q4 along with TLT and GLD down, and oddly, oil up. But The Pivotal Perspective has been on top of all of these moves. $USD strength will will likely keep lid on USA stocks and puts a kink in EEM story so I'll do a special $USD post soon. 

Other technicals
I factor in moving averages, Bollinger bands on a variety of timeframes but sometimes you have big levels that make things simple and right now these are 4816 the NDX 2000 top, 2134 SPX 2015 high, and 18351 the INDU 2015 high. INDU is leading down and so the first choice for any portfolio hedge.

Here are monthly, weekly and daily Dow charts to show what I am talking about. The charts include the 2015 monthly close high level as well, and this may still act as support. 

Valuation & fundamentals
More headwind than tailwind.

Sentiment
Recent ISEE extreme on 10/10, otherwise no extremes since too much bullish sentiment across the board in mid August. 

Timing
For October, 2 dates/windows published since end of September:

Timing
10/9 - that's Sunday so let's say 10/7-10
10/19

So far 10/10 key lower high. Heading to 10/19 low?

Looks like resistance

In pivot talks and here on this site I have sometimes used the phrase "looks like" support or resistance. What does this mean? 

Sometimes a level clears but barely, and it doesn't turn out to be a good entry. For example, I pointed out a long on DXY because it seemed a bullish trend was developing but this was a mistake as 2HP did not yet have the "look of support" shown near the arrow. 

If we added a simple moving average - just one to be very clear - then we also saw a reason to pass. This is the downward sloping 200MA in black here. 

Adding in QP and monthly Ps, we see a much better entry on 10/4 when Q4P "looked like" support - with price clearly lifting from that level - which also cleared 2HP and D200 as well. Then 10/7-8 the YP also clearly "looks like" support. 

With all this in mind here is a pivots only daily chart of SPY, with RSI and tweaked MACD at the bottom. 

How many times does it "look like" pivot resistance - not breaks but acting pushing the price down. What I see is labeled with arrows.

Some of this depends on what you count as an incidence. If we are measuring by trading days then there are probably a few more arrows, like 9/28, 9/29 and 9/30 all have the SepP "looking" like resistance, but I only drew one arrow. Yet those were clustered in one window. Probably we should measure apples to apples so we would not count that as 1 incidence in a certain number of trading days. 

Now let's try to get the important moves and take out monthly levels, leaving YP, 2HPs and QPs (yearly, half-year and quarterly). It is totally normal even in a strong uptrend to see monthly S1s from time to time. This will give us the more important changes in trend. 

I am only drawing one arrow in October because that is only time I see a red bar with the pivot pushing the price down, ie, "looking like resistance." The 10/11 move I classify as "break." 

Now let's add some MAs to the picture and see if there are any times were these moves are happening with a rising or falling MA on the same move. In the chart below, 10 is aqua, 20 orange, 50 purple, 100 thin black, 200 thick black, 200 thick brown.

The January move had already dropping below several downward sloping MAs. Really trouble began on 12/31 with rejection of 2HP, drop from falling 200MA and 20MA, already under 50MA and break of 10MA all on the same day.

This also puts the March YP pause as less threatening, yes under D100MA but above a nicely rising 10MA which held as support (and if lower a rising 20MA not far below that).

Now price is already under a falling 50MA, and pushing pushed down by falling 10MA, flat 20MA and still somewhat rising 100MA. This is not as bad as January yet, but clearly worse than March. 

So if we view things this way, the move we just saw on Friday 10/14 was the second most threatening day to SPY uptrend all year, after 1/6 (or really 12/31/15 to be right). There is a similar conclusion with DIA & VTI as well. We'll see what happens. 

Safe havens

Review
Last week sum: "Expectation of safe haven weakness from last week's quarterly and monthly chart analysis, in combination with both TLT and GLD opening below Q4Ps, have played out. Both had fast drops down to 2HPs. Maybe these bounce but TLT barely up with stocks down means I think break more likely."

OK folks I have nailed the bond market like no one else here with just 1 and only 1 call at a top / yield low and then was bearish bonds / bullish rates heading into Q4.

Sum
TLT below 2HP is first long term trend weakness we have seen since end of 2015. GLD also testing 2HP and not much bounce thus far. Importantly for anyone holding stock longs, VIX jumped above Q4P & OctP combo on 10/11, same day as SPY / DIA / VTI Q4P break, thereby confirming the move. That was a good reduce longs / hedge signal and in play until we see something else, which could mean pivot recovery with VIX back under those levels, or a deeper stock drop to higher VIX levels that act as resistance ie Q4R1. 

TLT
Weekly chart is beginning of a long term trend change with 2HP acting like resistance. This is the first long term trend weakness we have seen since end of 2015. TLT has been the nice trending move in Q4 with stocks chopping around - straight down and not much bounce to worry about despite 2 day back above 2HP. RSI almost oversold but if it stays below 2HP trend is down. Daily tech chart that includes moving averages and Bollinger bands shows a break of D100, attempted recovery, then resistance by falling 50MA on 9/30, Q4P resistance, OctP break and wham from there. Now below D200 as well, also bearish. It is not hard to imagine Q4S2 near 128 by end of quarter given the pace thus far.  

GLD
GLD also testing 2HP but not much bounce so far, and I would not be surprised at break like TLT. Perhaps YR1 will act as some support however. TLT and GLD, though timing differed, were similar technically with highs on Q4R1s, then a digestion period as MAs rolled over to negative, but when they both were below QPs for the first time in months the result was a fast drop down. 

GDX for kicks
Also on 2HP support and weak bounce thus far. 

VIX
I say every week that VIX weekly is a thing of beauty because that is my reaction every time i see it. VIX daily chart gave the reduce longs / hedge / short signal on 10/11, confirming the stock break, and hasn't been trying to buy anything yet. Still above Q4P - OctP combo!

XIV
Weekly above long term levels. Even daily chart holding above all pivots. I side with VIX here but so far XIV saying pullback and keep finger ready on buy button. Maybe we will see Q4P test on XIV along with other levels I'd like to test. 

USA main indexes

Prior week: "SPX set below YR1s and OctPs, but holding Q4Ps as support. NDX set still strong above all pivots and hasn't even tested OctP yet. INDU continues drop from near YR1 then Q3R1 high, but also holding Q4P as support. RUT second decline from YR1 high and a bit under OctP. VTI also down from YR1, but holding Q4P as support."

Last week: SPX below Q4P and OctP, in addition to YR1 resistance pressure; Tech set mostly break of OctPs, still above others; INDU set like SPX, below Q4P & OctP; RUT slight break of Q4P and also below OctP; NYA/VTI both under Q4P as well.

Sum
Bearish conclusions across the board. It it quite rare to see pivots "looking like" resistance especially this year so I will do a special blog post on this shortly. But that is what we are seeing on SPX and variations, INDU and variations, and NYA/VTI. 

Pivots are forcing us to be bearish here until we see bullish developments. This could mean a pivot recovery - which would start with Tech set back above OctP and RUT set above Q4Ps. Or it could mean lower to more important support, say SPX / INDU / VTI Q4S1s, and a bounce from there. 

SPX / SPY / ES1 / ESZ
SPX chart YR1 clearly turning into resistance which is bearish. Daily charts that include quarterly & monthly pivots show Q4P break and turning into resistance. This invites a move down to Q4S1 small green crosses, 2096 SPX.

NDX / COMPQ / QQQ / NQ1 / NQZ
Recent high not on long term levels per NDX and COMPQ charts. QQQ slight break of OctP but not the look of resistance yet. Still, it could have held on Friday but didn't. NQ1 and NQZ actually above their OctPs slightly, although both have some bearish conclusions from YR1s. Since NDX cash chart also closed under OctP, and the broader COMPQ OctP even looks like resistance, I am not counting this as a hold. 

INDU / COMP / DIA / YM1 / YMZ
High of year remains near tag of INDY YR1. Dow variations also below Q4P which looks like resistance across the board, bearish. 

RUT / IWM / RJ1 / RJZ
While some pivots less than ideal this year, it is picture perfect on RUT with low of year bang on YS2, a rally back to YP, a pullback that come back and a rally to YR1, a 2nd test and now another drop. That is the entire year of price action in about 5 moves thus far. Daily charts show break of Q4P, bearish unless recovered. 

NYA / VTI (2 different but both broad market indexes)
NYA high not on long term levels, but daily chart shows monthly R1 thena  key lower high on Q3R1. VTI low of year on YS1 and high of year on YR1, simple. Now VTI also Q4P "looks like" resistance, bearish. 
 

Valuation and fundamentals

Thomson Reuters forward SPX P/E ratio dropped to 16.73. Remember, somehow this data is looking backward to price but we want to see trends over time.

This is most clearly illustrated here in Yardeni's "Blue Angels." In his SPX charts, you can see how forward valuation levels via P/E were support or resistance. A finer turned non graphic version is exactly what I am doing with these posts. Using Thomson data as he does, we have a similar valuation high at 17x forward earnings. The high was on 7/29 at 17.20.

For a very deep dive, see this more extensive PDF here.

For our purposes, 17x area - though the SPX value has moved from week to week as earnings estimates change (and I'm not sure source of these earnings estimates, as there does seem to be some backwards look to price) - has been resistance. Since I moved over to Thomson from WSJ in July, 17x forward earnings has been from 2135 low reached on 9/16 to 2216 high on 7/22. That is obviously quite wide and again, rough trend over time here is the point of these posts. The majority of readings were more clustered; even by tossing the 3 most extreme values over 15 weeks (1 low and 2 high as it turns out) reading we have a range of 2150-2121. For any actual high of 2193 that isn't too bad. 

Citigroup Economic Surprise Index, also as reported by Yardeni, is negative. This has coincided with a range bound pullback. Note the time when it moved from negative to decently positive coincided with the index breakout up to new all time highs. 

 

Timing model review

Dedicated readers will see a section in my Total market view posts, usually near the end, that I don't say much about called Timing. You can also search keywords for "Timing model" and see a few dedicated posts before I shifted to a more condensed format. 

This post is a review of the timing dates - all of which were published well in advance. Maybe members of the math, statistics and back-testing crowd who happen to be reading this blog can give me some official numbers on whether the results are random, or much too unusual to be pure chance.

Here is an SPY chart with all timing dates marked. Most of the time I did not specify bias of high or low, and simply viewed them as turn possibilities. Sometimes were was a window of a few dates clustered. So, single green lines mean 1 day; a green followed by a red means green was the start of the period and red was the end. Most of the windows were 2-3 trading days, with just a couple going beyond that.

From 2/11 when I started this project through end of October, I have listed 52 trading days (if I counted correctly) as higher chance of turn areas. Over the same period there have been 184 trading days. This means I have selected 28% of all trading days as higher than likely turns. But if we extend -1 & +1 from each day, then obviously it extends quite a bit, and maybe it is just chance.

From other view, though, I have selected 23 1-3+ day periods where we are more likely to see a turn. 

In these 52 days & 26 periods we have:

2/11-15 key stock index low of year, and oil low of year both 2/11
4/22 stock trading high -2 days arrived on 4/20
6/7-9 major stock high in middle of window 6/8
6/28 major stock low on 6/27 -1 day
8/19-22 major stock high (SPX high of year) 8/23 +1 day
9/12 medium stock index low of September exact
9/23 key stock index lower high 9/22 -1 trading day
10/7-10 key stock index high, and NDX high of year thus far, on 10/10

Then several days turned out to be minor highs or lows. A few were pure misses. 

I did not get the 5/19 stock index pullback low, 7/6-8 GLD & TLT high, or the 9/7 lower high in stocks. But I'd say all the other important turns on SPY have happened on or near timing dates.

This method cannot really be back-tested. It is nothing to do with what most of you are thinking. Not trading day or calendar day counts. Nothing Fibonacci. And remember, aside from starting on 2/11 I have usually published these days near the end of the month for the following month. That means all advance. Yup, I used to do this for a hedge fund too :) If I had more time, then it is possible to get direction (ie high or low) in addition to timing the turns. 

So if you are paying more attention now, the next date for October is 10/19. 

Maybe now some of you are starting to get it: pivots + other technicals + valuation & fundamental basics + sentiment + timing = very high chance of being on right side of the market; having exposure to leaders; avoiding, hedging or shorting what is going down; and having high reward & low risk opportunities for leveraged trading. Any funds out there seeking better performance to retain their AUM?

Monthly charts redux

Based on quarterly and monthly chart analysis conducted here on 10/1 I gave edge to stocks and said safe havens TLT and GLD looked weaker. If you avoided damage on TLT and GLD or even shorted, as both were below QPs for the first time in months, you have done well even if holding some stock longs.

But some interesting levels are again in play for SPX, NDX and INDU. Key point: potential bull trap with anything much lower than 10/11, specially SPX 2134 (2015 high), NDX 4816 (2000 top), INDU 18132 (2015 monthly close high). 

SPX M
Plenty of people bought the breakout above 2015 high 2134. Their patience as already been tested as after a few weeks the move has faded and market went nowhere for 2 months. Now perhaps their risk tolerance will be tested as well. The lower grey line represents the 2015 monthly close high and can still act as support. Then below that are rising 10 and 20MAs in aqua and orange respectively. 

NDX M
The red line is 2000 top and it looked so great to be above... but now does it hold?

INDU M
The weakest of the bunch, already below 2015 high and again testing 2015 monthly close high. 

Above all pivots

I don't have the time to watch individual stocks and generally keep to:

USA main indexes (SPX, NDX, INDU, RUT, NYA/VTI and their ETF & futures variations)
Safe havens TLT, GLD, GDX, VIX and variations
USA sectors (semi-conductors, biotech, financials... yes there are many more)
Global stocks (ACWI, EFA also a benchmark, Shanghai, FXI, EEM, RSX, EWZ, occasional peek at EWJ / NKY and EWG / DAX)
Oil & DXY with occasional glance at other currencies

Given this is my watchlist what is above all pivots?

QQQ
SOXX / SMH
XLF
XIV
EEM
PIN / INDA
RSX
EWZ

FXI is not on this list due to YP, but Hang Seng recently cleared that level.

If not above all pivots, then the next strongest are: above 3 Y, 2H and Q4 but below monthly (SPY, DIA, many others) OR below YP and above the others. The latter category consists of:

FXI
USO
NKY

If markets rebound next week then the next likely to regain all pivots (in rough order it should happen) are:

IWM
ACWI
DIA
SPY

XBI held up very well on September drop but currently under YP and OctP. 

Anyway there are different ways to make the same point but this tells you were the best long plays have been (and likely continue into year end) are: technology, semi-conductors (on a tear this year), financials and global stocks, especially the oil related names EWZ & RSX that were beat up last year. 

 

Total market view

Last week: "Bottom line - We'll have new Q4Ps and OctPs on Monday, and it will be easy to see what is above all pivots, what isn't, then what holds and what breaks. While the mixed conditions still exist (SPY YR1, IWM YR1 directly overhead and VTI YR1 not far off), right now I give edge to stock bulls based on the quarterly and monthly charts, and sentiment nowhere near bullish extreme. If SPY & IWM can clear YR1s (that remains an IF) then we should see a run to NDX target area YR1 4959. Watch oil, because the last time we started to see long term strength after a big drop that was on GLD in late January."

Result: Biggest moves were TLT and GLD drops, as they both opened below Q4Ps and down from there. Stocks dropped a bit but 3 USA mains held Q4P support. YR1 still resistance for SPY and IWM. Oil up. 

Sum
If you took gains or hedged longs originally from late June & early July in mid August, and then emphasized market leaders Tech (QQQ, semi-conductors, biotech), China FXI / EEM on the September pullback; recently added on oil; and avoided damage or shorted TLD and GLD as your latest move, you are doing well. [I haven't talked about EWZ Brazil or RSX Russia as much but should be, with EWZ +31% off 6/27 low and RSX +18% handily beating SPX 10% rally in same period.] Now what?

Bottom line - I want to be bullish stocks with tech and global stocks doing fine above all pivots, oil rallying, safe havens crumbling, and VIX giving the all clear without being too low. At the same time I don't like this combination: YR1s acting as resistance on 4 of 5 USA main indexes, monthly pivots acting as resistance on 3 of those, and the same 3 daily 50MAs rolling over with downward slope. Sentiment is a bit too bullish on ISEE as well. You don't have to be max long here and in fact shouldn't be with only 1 of 5 USA mains above all pivots. Maintain longs on the leaders but lighten up if Q4Ps break on SPY, DIA and VTI, or use those levels as hedge areas if they turn into resistance. Basically I am expecting range bound action but don't know whether stocks have energy to move back up to high areas or SPY DIA VTI Q4Ps break and we see a test of QQQ OctP or lower as the next move. If I had to pick one, given overall charts and tech leadership, I would say stock limited bounce off the SPY Q4P and then we'll see how far it gets. 

Pivots
USA mains - Tech continues as leader, above all pivots. But otherwise YR1 declines on SPX set, INDU YR1 near tag in August, RUT YR1 exact at highs and now second drop from this area, and VTI decline from YR1 also underway. At the same time we are seeing red from all these yearly R1s, monthly pivots on SPY, DIA and VTI have acted as resistance. Levels to watch now SPY, DIA and VTI Q4Ps which held as support on 10/7. 

Safe havens - Fast drop down to 2HP & D200MA area support but will it hold? So far safe havens TLT and GLD weaker the second half, as Tech as resumed leadership of the market. I think we could see a long term trend change in bonds, and so we could see some chop around the 2HP. Ultimately I think it will break. VIX & XIV continue to be very supportive of stocks and until they show trouble I think stay long or add back on dips. 

Global & other - Oil up above OctR1 on 10/6, then a drop on Friday. Global stocks continue to be very impressive. EWZ Brazil new high of year on 10/7! RSX Russia perhaps some trouble on YR1 but above all pivots. ACWI global index mild drop off highs and near OctP, well above Q4P (so closer in look to QQQ technically). FXI China, EEM emerging markets both above all pivots despite my expectation that FXI was due to cool off. 

Other technicals
It helps to have the slope of MAs on your side but which timeframe (daily, weekly, monthly, quarterly) and which MA (10, 20, 50, 100, 200)? Let's just keep it simple at the daily 50 for intermediate trends. SPY, DIA and VTI daily 50MAs have acted as resistance at recent highs and rolled over to be sloping somewhat down. I view pivots as more important and if Q4Ps hold then that is bullish, but slope of MAs makes me more cautious and contributes to upside limited base case.  

I don't like the look of up/down volume either, which was weakly positive in September with a visit to negative territory mid month, and so far negative in October. It is hard to imagine a bullish volume surge with election just 4 weeks away so that means some type of range bound market. Base case remains upside limited even if we see a bounce up from Q4Ps. 

Valuation and fundamentals
More headwind than tailwind.

Sentiment
3 of 4 readings no extremes, but too many daily spike highs on ISEE last week. While this crowd was correctly bullish a few days off key lows 1/26 & 2/16, it was also quite enthusiastic at highs 6/8 with 136 reading, 7/18 156 reading, 8/5 139, 8/12 136. So consider 10/3 149 and 10/5 130 as a red flag. Crowd thinking Q4 has to go up. If any Q4 was under pressure it would be this one with election and FOMC.

Timing
10/9 - that's Sunday so let's say 10/7-10
10/19

So far 10/7 low on stocks but potentially bonds as well. 

 

Safe havens

Sum
Expectation of safe haven weakness from last week's quarterly and monthly chart analysis, in combination with both TLT and GLD opening below Q4Ps, have played out. Both had fast drops down to 2HPs. Maybe these bounce but TLT barely up with stocks down means I think break more likely. VIX and XIV continue to be supportive of stocks. 

TLT
Last week's note "weekly chart with wick vulnerable to drop" and wham all the way down to 2HP. Maybe this holds but lower high in place and I'm thinking break more likely. 
Clear as day drop from Q4P and below OctP on 10/3 and then sharply lower from there. OK there is some support here (2HP, Q3S1 already nearby) but watch YR1 to act as support or resistance as well.
By the time of 10/3 bar, TLT was falling from a downward sloping 50MA (purple) as well. Looks like test of rising D200MA, the first touch since 1/11/16.

GLD
Painful gap down for those not paying attention to GLD below monthly pivots, then below QP (Q4) for the first time in months, MAs rolling over and then no bounce from D100. Test of 2HP and D200MA which brings in roughly in line with TLT technically.

GDX
Think about this combination: YR2 resistance (could be YR3, YR1, principal similar), then below QP / monthly P, and downward sloping MAs. Don't be stuck long in that situation without a stop. Also, shorting is tough game because money is looking to buy something, and while shorting at red resistance levels is enticing usually it is easier when you have at least a quarterly pivot acting as resistance and then downward sloping MA would be a better setup too.

VIX
VIX below all pivots is not worried. I don't like the 3rd time above a rising D50 though. Still if higher then likely resistance at Q4P / OctP combo. Above that would be trouble. 

XIV
Weekly chart between levels, daily above all pivots and rising MAs. Looks fine. If lower then OctP and rising D50 are support. 

USA main indexes

Prior week: "SPX still divided, NDX still strong, INDU set stayed below Q3R1 / SepP, RUT again dropped from YR1, NYA stayed under Q3R1 / SepP combo."

Last week: SPX set below YR1s and OctPs, but holding Q4Ps as support. NDX set still strong above all pivots and hasn't even tested OctP yet. INDU continues drop from near YR1 then Q3R1 high, but also holding Q4P as support. RUT second decline from YR1 high and a bit under OctP. VTI also down from YR1, but holding Q4P as support.

Sum
Note: 4 of 5 USA mains are dropping from YR1s! I switched from bullish late June and early July to upside limited mid August and this is how it has played out. I just didn't think IWM would blast through YR1 after rallying all the way from YS2 in February. So far, 3 Q4Ps are holding as support so maybe the market bounces back. And even if they break, tech is now the leader so if QQQ holds OctP and then rebounds, that will just not be too bad a drop. But a combination of YR1s (long term resistance) and then medium term pivot resistance (OctP) is not what you want to see; this is like the February lows in reverse (YS1, then recovery of FebPs). 

From here: Bullish would be SPY, DIA and VTI Q4Ps holding, bounce back that is able to rally above OctPs. This may mean retest of highs, meaning SPY YR1, DIA OctR1 then maybe Q4R1, IWM YR1, VTI YR1. But if Q4Ps break then the first thing to watch will be QQQ OctP; SPY DIA VTI OctS1s, then a deeper drop would take SPY DIA VTI Q4S1s.

SPX / SPY / ES1 / ESZ
SPX weekly with long term levels only shows a red bar from YR1. This level has been more resistance for the last few weeks. Maybe it comes back but right now red flag. Also spot this level as key lower high on SPY on 9/22 and since then unable to rally above. Daily charts that include quarterly and monthly levels show support at Q4P and resistance at OctP. If Q4Ps go the next support is Oct S1 at 2128 then the more important Q4S1 at 2096 SPX. 

NDX / COMPQ / QQQ / NQ1 / NQZ
Weekly cash charts look great and seem to be headed to YR1 area, another 100 NDX points up. QQQ hasn't even touched its OctP yet, then Q4P below that likely strong support. NQZ with MAs also show nicely rising slopes across the board, in sharp contract to ESZ which is below a flat-ish 50MA.

INDU / COMP / DIA / YM1 / YMZ
Weekly cash charts continue drop from YR1s. Daily DIA chart shows support on Q4P and resistance at Oct1 for the last 3 days.

RUT / IWM / RJ1 / RJZ
RUT red bar under YR1 / 2HR1 looks more bearish, and the 2nd decline from this area. IWM broke its OctP but still above its Q4P.

NYA / VTI
NYA never made it to long term resistance, but had highs on SepR1 then lower high at Q3R1 and since then down. Note NYA did not hold Q4P as SPY and DIA did on Friday. VTI continuing drop from YR1 area high. 

Valuation and fundamentals

There is a certain amount of curve fitting going on here in ways I don't understand, but Thomson saying P/E ticked up while price down is a move in the wrong way. 

Check page 2 on Yardeni's "Blue Angels" PDF. This is exactly what I am trying to get at with these posts - how certain forward valuation ratios act as support or resistance for the market. Now, these are sloping up and perhaps when election gets out of the way and FOMC does their 25 bps and says that's it for a while, maybe we will see 18x. But given that only smart money is at the table these days, I don't think we'll see higher and so this 17x or 18x will be the top of the market. 

Yardeni's report of Citigroup Economic Surprise Index is near the zero line, but hard to tell if officially positive or negative. This points to limited upside and any further drop into negative territory will increase down pressure. 

$USD

Since time is limited, I post infrequently on currencies. When I worked for a hedge fund as a strategist, I did a full analysis on multiple currencies at least once a week and the daily movements were more part of my routine.

If you are a regular reader, you might have picked up on the fact that extra blog posts beyond the usual rotation of SPY daily comments, then weekend posts on valuation & fundamentals, USA main indexes, safe havens and Total market view, means I am calling attention to something important. Sometimes I do it in SPY daily section, and others get a blog post like I am doing here. For example, I started doing special posts on bonds in June and July and... yup got the top.

In the last Total market view post, I emphasized oil like this: "oil looks very interesting here showing 2 different signs of long term strength we have not seen in quite some time: the first close above monthly 10MA since July 2014, and the 2nd try above a long term pivot, also since July 2014. Oil strength will support the market." I really cannot get any more clear what I think is worthy of attention.

If you search on DXY posts you will see a bearish oriented post in early April calling for 94 area at least (actual low 91.92-92.54 depending on whether you use price or close low); then a skeptical of strength post on 8/27 saying $USD would have to prove Yellen's recent hawkish tone by rallying above 2HP and YP 95.90-96.48 (it didn't); but then I really changed my tune in mid September and recommended a long. If you followed the stop parameters on that post it was a rare small loss, and that is because I didn't check standard moving averages at the time (sorry). 

But if you took the same idea to be long above 2HP then you were in again on 10/4 and now adding above the YP (just like TLT and GLD trades in Jan and Feb, and stocks in March and June) and now you are looking good with break-even about worst case. 

$USD has quietly consolidated for quite a while. If you paid attention to $USD strength then gold or GDX shorts were the easy call, especially when they opened below Q4Ps and were below OctPs as well. Anyway, my main point here is that just because $USD has been sideways since 3/2015 doesn't mean the rally is over. It is entirely possible that DXY breaks out above in months to come and this could, along with rising interest rates, be the next big move in markets. This would probably put a lid on USA indexes, even if rising interest rates support financials.

Let's check a few charts.

DXY Q
This is really very bullish, weak selling above a sharply rising 10MA and next move has been the easy spot UP.

DXY M
Recent small red bar on this chart too, and right now launching above the 10MA and 20MA. Head and shoulders fans (I'm not really one of them) will watch 96-100 for a possible top, but I'm thinking higher. 

DXY W
It is hard to imagine a more bullish working off of extreme overbought conditions. Test of high, drop to low of range, rising 100MA holds massively, builds higher lows, and after another small red bar (those are great to watch for on the long side!) anogher blast off and above all moving averages. 

This will be the 3rd move above the YP this year. Note high on 2015 2HR1 exact, and recent major low near enough to YS1!. I don't know if we'll see 2HR1 this year - maybe - but if not then we should see major resistance for a top. 

That is, if H wins... if D wins I really don't know what will happen with markets except you might want to be in bitcoin / ethereum. 

Total market view

Last week: "Both long & medium term level rejections underway for 4 of 5 USA main indexes while TLT and GLD perk up and hold or reclaim levels is reason for concern. Yet USA 2nd half leader Tech (along with sub-sectors semi-conductors and biotech) remains very strong, and VIX is quite calm. So, some mixed signals at the moment."

Result: USA main stock indexes dropped twice last week, but came back in impressive fashion each time. Tech continues to look great, and even held its 2000 top as support on the 9/29 scare

Sum
Since August I have been saying upside limited. INDU did not quite reach my target YR1 (shy by 100 points twice), and once SPX/SPY cleared YR1s I was looking for Q3R1 (missed by 5 points 2x). RUT and VTI made highs bang on YR1s and down from there. Yet at the same time, Tech has resumed leadership and has been quite healthy, spending just 4 days below SepP then reclaiming status of above all pivots. 

Though I am concerned about YR1 resistance (SPY, RUT/IWM, bit higher on VTI) the quarterly and monthly chart analysis gives the edge to the stock bulls. Tech is jumping above its 2000 top, and SPX is back above its 2015 top as well. While INDU is lagging, in general long term charts look bullish for USA stocks and a bit more negative for the safe havens TLT and GLD. In addition, oil looks very interesting here showing 2 different signs of long term strength we have not seen in quite some time: the first close above monthly 10MA since July 2014, and the 2nd try above a long term pivot, also since July 2014. Oil strength will support the market. 

Bottom line - We'll have new Q4Ps and OctPs on Monday, and it will be easy to see what is above all pivots, what isn't, then what holds and what breaks. While the mixed conditions still exist (SPY YR1, IWM YR1 directly overhead and VTI YR1 not far off), right now I give edge to stock bulls based on the quarterly and monthly charts, and sentiment nowhere near bullish extreme. If SPY & IWM can clear YR1s (that remains an IF) then we should see a run to NDX target area YR1 4959. Watch oil, because the last time we started to see long term strength after a big drop that was on GLD in late January.

Pivots
USA mains - Tech looking great above all pivots and not yet at resistance. However, both SPY YR1 and RUT/IWM YR1 directly overhead, VTI YR1 standing as the high, and INDU/DIA has faded from a near tag of YR1 in August as well. Most USA mains look to open above Q4P and OctP, but the weaker INDU will be very near the levels. 

Safe havens - TLT turning on pivots Q3R1 high, 2HP low, then recently SepP high. Looks to open below Q4P but above OctP. 

Global and other - Oil the story, with USO lifting above its 2HP for the second time this year. To put this in context, USO has only had 3 closes above a long term pivot since July 2014 and one of these two was last week. China has had an impressive summer, with FXI all above monthly pivots for 3 months in a row and a 22% rally off 6/27 low to 9/8 high; this has helped EEM as well. But some cooling off would be normal. 

Other technicals
I wrote a post on quarterly and monthly charts on SPX, NDX, INDU, TLT, GLD and USO. While INDU is lagging these are clearly on the bullish side here, with stocks looking stronger than safe havens and USO ready to get institutional buying. 

Valuation and fundamentals
Appear more headwinds than tailwinds.

Sentiment
Bullish extremes of August have worked off with the drop and sideways in September. We didn't really see bearish extremes. No readings are too bullish currently. 

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 - low test for SPY and DIA; +1 on key low for TLT
9/23-27 - pesky with 9/22 key high (-1) across the board, then 9/27 low across the board

I will try to do a special timing review post soon. Here are October dates:

10/9 - that's Sunday so let's say 10/7-10
10/19

Quarterly and monthly charts

SPX, NDX, INDU, TLT, GLD, USO quarterly and monthly charts and comments. 

SPX Q
Cannot argue healthy close above 2015 highs, with prior quarterly close high acting as support. RSI drifting up to 72.8 is more bullish than stopping at 70. Small wick on the recent bar but could have been worse. 

SPX M
Very bullish configuration - 2 small red bars show weak selling and clear hold of 2015 high area. RSI and BB (Bollinger band) room to go up.

NDX Q
Above the red line is all you need to know. Very bullish. Also look how 2000 quarterly close high acted as resistance for 3 bars in 2015, then turned into support Q2-3 2016.  

NDX M
Pushing outside the BB is sign of strength. Again, above the red line 2000 top all you need to know, with 2015 monthly close high acting as support.

INDU Q
Weaker, below 2015 highs and classic RSI divergence with RSI stopping at 69.27.

INDU M
But this looks more helpful with 2 small red bars and holding 2015 monthly close high as support. RSI and BBs room to go up.

TLT Q
Red bar close back inside BB after being outside suggests down or limited upside to the Q4 BB.

TLT M
Nice comeback from rising 10MA, but below 2015 top. 

GLD Q
Drop from falling 20MA, but small red bar at resistance is not that bearish.

GLD M
This looks more threatening with falling 50MA (purple) acting as resistance. 

USO Q
Small red bar with low all inside the BB shows stabilization after a massive drop. This is a very bullish development. 

USO M
First close above the 10MA since July 2014. 

And for kicks a long term pivot chart. This will be the second try above 2HP on very healthy volume. 

Safe havens

Sum
Safe havens TLT and GLD have been weaker in the second half, as Tech has resumed USA leadership from INDU. This is bullish action for stocks. VIX pivot tests and holds as resistance have been *the* places to buy stocks this year. 

TLT
Held 2HP on recent low, but weekly chart with wick vulnerable to drop. 

GLD
Chopping sideways far from any long term level for several weeks now. Daily chart shows double top on Q3R1, but unlike TLT has held quite steady without even a test of Q3P.

VIX
VIX weekly chart a thing of beauty, with key stock buys of the year on VIX long term pivots. VIX jumped above the SepP 3 times yet stocks have held up fairly well. The drop from 2HP and subsequent hold and rejection of Q3P confirmed buy the dip, but the last week was choppy with 2 jumps above SepP followed by immediate comebacks for stocks. 

XIV
Did fine and held YP 3 bars ago, then 2HR1 as acted as support. Interesting tell on 9/26 week was that XIV held SepP the entire way. 

USA main indexes

Prior week: "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."

Last week: SPX still divided, NDX still strong, INDU set stayed below Q3R1 / SepP, RUT again dropped from YR1, NYA stayed under Q3R1 / SepP combo. 

Sum
Tech set still strong and looks like it should go higher. Others weaker and dealing with resistance on SPY YR1 (yet SPX YR1 2163 could have broken but didn't); INDU near tag of YR1 at August highs, then Q3R1 resistance (which won't exist on 10/3); RUT YR1 still in play, VTI YR1 near enough as well.

Due to how the program works, we cannot see new Q4Ps or OctPs until Monday bars open, so I will keep to long term levels (Y and 2H) only here. For this week only I will use cash index and ETF only, and put both weekly and daily charts for each. This will give us context for the new Q4 and OctPs we will see on Monday.

SPX / SPY
SPX W trying to climb back above YR1 but not quite with look of support. Still, twice last week we saw selling from this level only to end with no damage. 
SPY W looks more like resistance, and still seems like an invitation to sellers. 
SPY D all tech indicators shows SepP as resistance for many trading days in the past month, and recently along with a flat 50MA (purple). 

NDX / QQQ
NDX, 2nd half USA main index clear leader, looks like heading up to 2HR1 / YR1 combo. QQQ all tech indicators show hold of nicely rising 50MA with only 1 day slightly below the level. From there has been above rising 20MA and all pivots since 9/15.

INDU / DIA
INDU weekly chart has faded sideways after making a high very near YR1. DIA daily chows SepP as resistance on 9/22 and low on SepS2 on 9/12.

RUT / IWM
RUT stuck under YR1, but looks more bullish here by climbing back above 2HR1. IWM remains below both and also invites selling. IWM like QQQ has recovered a rising 50MA, but spent a few trading days below the level. 

NYA / VTI
NYA between long term levels for several weeks. VTI made top on YR1 which on the weekly chart still looks like it should be resistance. 

Quarter end approaches

Often but not always there are definitive moves near the end of a quarter or beginning of another as big institutions adjust their allocations. Consider a few recent incidences:

7/6/2016 hold of Q3Ps for USA main indexes, definitive; along with 7/6 GLD top and 7/8 TLT high both on Q3R1s.

4/5/2016 hold of Q2P on CL1 continuous contract, which has tended (but not always) to give the best technical signals. This was definitive llow for the quarter and led to one of the best rallies in months up to 6/8-9 high.

1/5/2016 high on Q1P on SPY and other USA indexes, then definitive breakdown 1/6-7 below all pivots across the board; along with TLT reclaiming pivots at the same time.

I could go on but you get the point - all these were key dates early in the quarter that set the tone for the next big move. What will it be next? 

Basic bullish scenario is USA mains opening above Q4P and/or testing early, then soaring up or holding; as TLT opens below Q4P and continues down; or
Given correlations TLT could continue to lead USA indexes lower (ie interest rates up take market down); or
Safe havens get back in gear and after some shuffle USA mains break Q4Ps.

I don't have a bias here, anything could happen. In general the market has been very strong to be back near highs (and Tech making higher highs) with FOMC and elections looming as threats in Q4 with only a -3% dip for benchmark SPX off the August high to September low. But benchmark INDU looks like it could be a quarterly sell based on highs and RSI, economic data per Citigroup Economic Surprise Index is still weak (ie negative), FOMC is trying to prepare the market for another hike, and politics could be seen as lose-lose here with the reign of an utterly fantastic Obama stock market run soon to be in rear view mirror. 

Total market view

Last week: "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. [...] 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."

Result: FOMC said maybe next time, markets rallied. SPY, DIA and VTI back to SepP areas. 

Sum
Both long & medium term level rejections underway for 4 of 5 USA main indexes while TLT and GLD perk up and hold or reclaim levels is reason for concern. Yet USA 2nd half leader Tech (along with sub-sectors semi-conductors and biotech) remains very strong, and VIX is quite calm. So, some mixed signals at the moment. 

If you took some gains and/or hedged in August near highs, and were looking to buy the dip on what looked best (ie held up better than others) if VIX confirmed (which it did), you added back longs 9/12-15 on:
biotech, with XBI nearly all above SepP, or IBB big jump from 2HP support
FXI, which was so strong the drop stayed entirely above SepP
QQQ, first among USA mains to reclaim SepP and perhaps even stab near 2HR1 / SepS1 area as support on 9/12-13 lows
semi-conductors SOXX / SMH has to be on the list, since being one of the first to reclaim long term support in March and sector leader most of the year.

Now what? If you are savvy and then you could be adding some shorts / hedges based on Thursday-Friday move that stopped on SepPs and showed YR1 rejections on two major indexes. Right now INDU is weakest and lagging the others, although SPY with SepP and YR1 combo was a fine choice too. If markets come back next week then simple, stopped out of shorts for low cost hedge. If lower, then locking in some gains on recent longs and holding the shorts will be the right move. Also could be back in TLT and GLD on long side based on TLT holding 2HP & Q3P, and GLD back above all pivots, both as of 9/21.

Pivots
USA main indexes - Biggest levels to watch SPX YR1 2163, RUT YR1 1261; and then to some extent INDU and NYA Q3R1s at 18377 and 10785 respectively. SPX bang on the level (yet SPY already looks like rejection); and RUT, INDU and NYA all look like level rejections as of Friday. The only USA main index category not bearish is the Tech set, NDX, COMPQ and variants. 

Safe havens - TLT and GLD also suggesting trouble with TLT holding long term support on the low, then reclaiming Q3P 9/21. 9/21 GLD back above all pivots as well. Yet, VIX and XIV remain calm and until we see trouble on VIX downside limited. 

Global & other - Oil 3 recent tries to lift from YP since August and 3 failures. 

Other technicals
USA indexes undergoing classic backtest of previous high area. See this post for details. Right now more bullish than bearish, but if INDU breaks 18132 then it won't be. 

Valuation and fundamentals
These both appear more headwind than tailwind.

Sentiment
Sentiment extremes reached in August contributed to major high area. While these have been worked off, we cannot say any extreme since then.

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 - low test for SPY and DIA; +1 on key low for TLT
9/23-27 - so far 9/22 key high (-1) across the board