On entries

What have been the best entries this year?

TLT, 1/5, haha. Actually The Pivotal Perspective started talking about that on 1/6.
GLD 1/14, but at least there were very bullish posts from later January. 
Stocks indexes, 2/11. Caught that near enough on 2/12, but only as a speculative buy and didn't shift more until recovery of at least 1 pivot later in February. 
Stock indexes 6/27-7/6 (leaving aside March-May for the sake of brevity)

OK, just because we have a level doesn't necessarily mean an entry. Often the best entries are:

Pivot level (hold or change of status)
MA (10, 20, 50, 100, 200, 400, or some combination) with some slope on your side
MACD or RSI contributing

If we really wanted to be thorough, we could want some other technical event on weekly, monthly or quarterly charts as well but I will save this for another day. Also keep in mind my basic outlook - definitive days to take action are when multiple indexes are saying the same thing, like 10/28 "trouble alert" combination of USA main index Q4P pivots and VIX. Lastly, if you are trying to spend most of your capital picking off lows to buy and highs to short - pivots are probably the best way to try but you will go broke or crazy or both. Basically we want to be in the best trends. We have better chances of catching those with the 3 entry criteria. So let's return to the list above with chart examples.

TLT buy chances 1/6-12. This had:
Pivot recovery above 1HP, Q1P and JanP from 1/6 on with a well defined risk cluster.
Above 400MA, 200MA, 100MA, 50MA, 20MA, 10MA - all on the same day 1/6! There was 1 close just below 200MA on 1/11 but small red bar not threatening and still above 100MA and 20MA. Some of these had positive slope and some negative. 
MACD (blue line) crossed positive 1/7. These don't always work and sometimes sideways chop, but often entries better with a recent move to positive (or negative for shorts).

1/22+ add had: 
Test and clear hold of YP
Nice rising 10MA
RSI not yet overbought
 

Now let's check GLD. 1/25 had:

2nd clear move above 1HP, Q1P and already had held JanP on the low
lift above rising 10MA, rising 20MA, slight clear of 100MA on 1/25 and definitive move 1/26
MACD already positive, RSI not overbought
(Note that the first move above the pivot cluster earlier in January was bang into a falling 100MA and failed; often second move will be definitive.)

2/3+ add had:
Slight move above YP but not definitive; jump above D200 though
2/4-5 massive jump above YP
 

SPY in February:
Wait a second - what was there? On pivot only chart, not much except RSI divergence. Keep in mind this chart shows pivots only, not support or resistance levels. So that is why I recommended this as "speculative" setup as multiple indexes held / recovered YS1s with a low test and sentiment extreme. 

6/28 had:
Slight break and huge massive recovery of YP
Recovery of rising D200MA
RSI recently near extreme

7/5-6 had:
Test and hold of Q4P / JulP combo
Test and hold of 10MA, 20MA, rising 50MA
MACD turn to positive (blue line) 7/1 recent enough and about same price

 

With that in mind what is giving us the best entry here? 

SPY has an RSI extreme and D200 which may hold, but no pure pivots (Q4S1 could work though, if recovery).
QQQ also RSI extreme, would have to recover Q4P and D100 for better setup; until then, no buy.
DIA does not have pivot, D200 is lower and RSI not yet extreme - no buy.
IWM also RSI extreme, D200 is just below with rising slope, but needs to recover YP.
VTI is like SPY here, near Q4S1 but not on pivot. RSI extreme and rising D200; NYA which is more a confirming index than a trading vehicle needs to recover YP and better if back above D200 as well. 

All these charts are in the USA main index section so will not repost here. Just open in a new tab and check out the ETF charts in each index category. 

USA sector leader SOXX/SMH both similar in structure, just a bit under NovP and falling 50MA. Better buy if test of Q4P & D100 combo, but you certainly could be holding if bought in July or March when first mentioned on this site.

World leader EWZ also just a bit under NovP, holding rising D50. If higher needs to clear NovP. Though I mentioned area that rally likely stops last week, this also could be a long term hold above Q4P if you got in early.

XLF also a current leader, just a shade under NovP and entirely above Q4P this quarter. Not many assets in that category at this point. Needs to lift back above NovP and 50MA 20MA combo which would like turn MACD back positive; or drop lower near Q4P. 

IYF Financial ETF also decent so far with just a fractional move below Q4P, doing much better than other leaders like QQQ, EEM and FXI all of which had bigger moves under Q4P. Financials may take a hit if rates move the other way but for now holding up quite well. 

In general I don't emphasize shorting too much and try to focus on buying what is going up. But if you want to play the game of picking off highs, then the best chances are RSI extremes on multiple timeframes and pivot resistance (like TLT 7/8 or IWM 9/7 or 9/22-23), or when the trend rolls over with:

Clear pivot rejections (at least quarterly), not just monthly
MAs with falling slope
MACD turning negative

Which we basically had on all the USA mains, just the days varied per index and indicator above. 

 

 

Safe havens

Last week: "VIX and variations (XIV inverse ETF, and futures) of particular interest to me as these *usually* work quite well as confirming indicators on buys and trouble alerts. VIX actually slow to get in gear on drop, but confirmed trouble on 10/27 above its Q4P. Like most USA mains this is the 2nd time above the pivot this quarter. As far as I am concerned, VIX showing trouble means reduce long exposure by getting out of longs or hedging."

Not bad eh?

Sum
Given election wildcard and VIX connection to options, I suspect VIX will push up higher on Monday. This may even force stocks lower due to correlated strategies. Then if you are planning on buying calls as a way to play an H win and relief rally, the VIX collapse will mean a lot less gains. The ETFs are likely to have a massive gap on 11/9. The best way to play this is the futures market. 

For positioning, while VIX is above 2HP that means caution until we see back down OR a move up to YP, but not above, 27.46. XIV holding YP would be better for bulls, but needs to recover Q4P.

TLT does not look attractive here. GLD was the better buy as it held 2HP exact on the low (TLT broke) and recovered a rising D200 late October (TLT below D200MA).  

TLT
Weekly chart has been below 2HP - some long term weakness - for 4 weeks. Any rally will have to recover that level and then face YR1 again, as well as falling moving averages. The recent 11/1 low not on a pivot which is rare for TLT. Basically though RSI near OS the third time and stock market in trouble, this has not given us a decent buy since 9/15-21, and even that wasn't great with only a 10MA and no rising slope. Since 9/30-10/3 one could have been properly short with rejection of both Q4P and OctP and MAs with falling slope. How long to hold positions is always harder than entries, as this rally could go back to 2HP and fail. 

GLD
Unlike TLT, GLD held 2HP exact on the low. While there was some shuffle around the D200MA, the rising slope won out with clear lifts above 10/28 and 10/31.

GDX
High on YR3 exact, low on 2HP. Not bad. Like GLD, below Q4P but above NovP and both long term pivots.  

VIX
Yikes! That weekly bar is really the worst since 12/7/2015, because the other jumps stopped at long term pivots. Before that, the 8/17/2015 bar above both 2HP and YP. Now of course that turned into a buy afterward, but you were scramming from the market when VIX showed signs of trouble on 8/20-21 you but you saved yourself a lot of hassle by waiting to fully commit to stocks until VIX had a weekly bar below its YP (ie the first week of October). VIX really needs to drop back under 20.07 to confirm a stock buy, or go higher to the YP at 27.46 to take another stab.
11/2 was a small up bar below the 2HP, and stock indexes had just held support. That looked like a place to try some longs. Didn't work, out. 

XIV
Too bad weekly chart did not reach target area, although daily new high of year just on 10/24 just below NovR1. XIV testing YP - still above - but below Q4P and 2HR1 combo. 

USA main indexes

Prior week: "SPX 1 day Q4P recovery then another move below and rejection; Tech less strong with slight break of OctP on 3 of 5 variations; INDU below Q4P and OctP; RUT also break of Q4P; NYA/VTI below Q4P as well."

Last week: SPX set broke Q4S1s, Tech set broke Q4Ps, INDU set broke NovS1s but still well above Q4S1, RUT broke YP (!); NYA also 1 day below YP and VTI below Q4S1.

Sum
That is quite a bearish week but don't say I didn't warn you. 2 of 5 USA mains are below YPs! That is serious, but with RSIs where they are a recovery certainly possible. The big levels are what I just listed above, with the emphasis on pivots (not support levels). Meaning if the bounce is for real, then Tech set jumps above its Q4P, RUT set massive rally above its YP, and NYA decently back above YP as well. Until then, caution warranted. 

Charts
Cash index charts with long term pivots only
ETF chart with long & medium term pivots
Futures continuous "1" contract charts with pivots and MAs only for clarity of trend
Futures current "Z" contract charts with the works (some long term pivots turned off due to lack of data)

SPX / SPY / ES1 / ESZ
That YR1 looking quite definitive now (I added SPY weekly chart for clarity of this move). But this is not a hindsight call as when markets were near the level and below I had several comments showing concern. But the weekly charts also show the SPX is a quite a ways from changing long term status. Daily charts show the Q4P rejection 10/27 which coincided with VIX above Q4P, hence our "trouble alert." From there straight down and no bounce at Q4S1 which is fairly rare. The futures level is only 5 points higher than Friday's close so a recovery is still possible. But from here we have NovS2, then a long way down to NovS3 and Q4S2. 

NDX / COMPQ / QQQ / NQ1 / NQZ
NDX did not reach long term target areas (although futures did on NQ1 YR1, and NQZ on 2HR2). What surprised me was very weak bounce attempt at the Q4P. On any real bounce this level will have to recover. 

INDU / COMP / DIA / YM1 / YMZ
INDU high within 100 points of YR1, and COMP 2 week slight overshoot then 6 weekly highs bang on the level. DIA below Q4P since 10/11, and below monthly pivot since 9/9 with exception of 1 day. DIA looks like we need to see Q4S1, although recovery of that NovS1 would look better. 

RUT / IWM / RJ1 / RJZ
Thing of beauty. RUT/IWM below YP is serious. Then 2nd break of Q4P on IWM was a much better short hedge than DIA. Per monthly and quarterly charts I should have gotten that, as IWM did not make a new high above 2015 highs. 

NYA / VTI (these are differently constructed but both very broad indexes, and pivots work on both)
The NYA could be subject of an entire blog post because pivots on this have done a great job. After topping out 9/6-8 there is little positive and several negatives. 9/22-23 was Q3R1 high test and rejection; 9/28-10/3 was monthly pivot rejection; 10/4 was the first break of Q4P; 10/5-10 was OctP clear resistance; and from there 3rd break of Q4P on 10/11 and continued as near resistance. Now 1 day below the YP. 
VTI similarly amazing with low of year on YS1 and high of year on YR1. Very simple. Currently testing NovS2, and Q4S1 will have to recover on any bounce. 

Valuation and fundamentals

I am starting to see the same issues in Thomson Reuters that was in the WSJ data and honestly don't know what to make of it. Was Wall Street slashing forward guidance last week? If so that didn't make the headlines did it? The forward earnings estimates lows have been mid September and just last week - how convenient. My point is that ideally we are seeing valuation change as price chops around and estimates don't move as much in the short term; but instead we are seeing valuation levels react to price which doesn't help us as much.

I think there must be some curve fitting to someone's idea of an established model, because those Wall Street types want to feel like they are masters of the universe. Still I will keep an eye on this, because clearly with election and FOMC ahead some very big players decided to sell near 17x forward earnings and didn't want to push higher to 18x. 

Current P/E dropped just .05 from 16.64 to 16.59 last week, which is bearish considering the price drop. Forward earnings back on the low end of the range since I shifted to Thomson Reuters data. Yardeni has a very detailed report here, and by his chart (also using Thomson btw) it looks more like move towards 16x area forward earnings - but his chart says data is 1 week behind so maybe he has figured out that is the way to reduce the price chopping effect. Using my Thomson numbers from 10/27, 16x forward earnings implies 2044.

I would say this chart of the Citigroup Economic Surprise Index has done a great job. While entirely in negative territory from the start of 2015 USA markets went nowhere and had two decent corrections (August 2015 and January 2016). When the index broke out into positive territory indexes followed - yes, this index led indexes on the rally. Then it promptly fell back into negative territory - again leading a significant drop. 

TPP vs Mohamed El-Erian

There is a CNBC story from today, 11/2, that Mohamed El-Erian is recommending to take money out of the market. 

The Pivotal Perspective has consistently said upside limited from August 21+, and issued a rare trouble alert on 10/27. So we've beat him by a few days and a few %s. 

But here is where we really differ - I am thinking this looks more like a key low than a time to sell. We'll see what happens. 

ps: In spite of his illustrious reputation and enviable status as retired investor, El-Erian hasn't been the best on stock market lows, claiming that "markets had much lower to go" on 8/24/2015.

*

11/13 update: Speculative buy right idea, but I didn't give it enough room and used SPY Q4S1, QQQ Q4P and IWM YP as stop areas, and said out 11/3. SPY NovS2 would have worked. 

Monthly charts

Last month this checkup pointed to stocks being in the better position compared to TLT or GLD. Stocks went a bit lower, but TLT and GLD got hammered. USO also started out strong. 

Sum
3 /5 USA mains still OK here, as NDX is just a fraction below the 2000 top and both SPX and INDU are so far holding the 2015 monthly close highs as support. But the market has a breadth problem as RUT small caps and VTI (Vanguard Total Stock Market ETF) are more bearish, with RUT getting hit from the 2015 monthly close high that acted as resistance, and VTI falling below 2015 monthly close high as well. 

TLT hammered and now closer to support. GLD in mixed condition. USO no follow through from last months bullish close above the 10MA is vulnerable. What looks clearly best here is DXY.

SPX M
Though it below the 2015 high of 2134, the situation doesn't get serious until below the previous monthly close high of 2107.

NDX M
Just slightly below the 2000 top of 4816 but not enough to be threatening. Back above that level will likely bring a surge of additional buying.

INDU M
This has held the 2015 monthly close high at 18132. Not a coincidence especially as several indexes dropped last week and INDU held sideways. 

RUT
Ugh, hit hard from the prior close high. 20MA possible support but flat slope, then 10MA below that. 

VTI M
Weaker than INDU here, below the 2015 close high.

TLT
That got hammered, didn't it. Big move in for now, and possible support at the 20MA. 

GLD
Not as bad a bar as on TLT, as it held rising 10MA (aqua). But still pushed down from falling 50MA. 

USO
The first close above the 10MA since 2014 was last month, but no follow through. CL contracts will look different depending on continuous or current contracts, but still. Sigh.
 

DXY
I don't believe this chart will stop at head and shoulders. This means breakout above 100. 

Total market view

Review
Last week from 10/22 Total market view: "Bottom line - Though the leader has held and VIX/XIV, which tend to be on the right side of the market, say buy stocks, I am still in upside limited camp due to: strengthening $USD, fundamentals per Citigroup Economic Surprise index, daily 50 moving average with falling slope on SPY, DIA, IWM and VTI. Stock trading range likely to continue, even if stocks bounce. If Q4Ps fail to recover then that is more bearish and we can still watch for Q4S1s. But shifting my bias to some limited bounce; let's say guess at this point is buy the rumor sell the news into the election."

And: "Even if SPY, DIA and VTI can clear Q4Ps - which would be a bullish development, basically taking away the Q4S1 targets for now - I still expect upside limited to OctPs."

Result was one day bounce on 10/24 that stopped at ES (SPX) and YM (INDU) futures OctPs, then lower with another rejection of Q4Ps on SPY, DIA, IWM and VTI. 

Sum
SPY Q4P rejection move 10/27 was accompanied by VIX moving above its Q4P. Hence, "official trouble alert" on 10/27 Daily SPY comment. Perhaps we will see another bounce, but technically a move like 10/27 with clear rejection of quarterly pivots, resistance from falling MAs (moving averages) and VIX confirming is fairly rare and ought to be respected with reduction of longs and/or putting on hedges. Sometimes you may have frustration of seeing market come right back, but just as often you have the relief of avoiding a significant drop like last summer in oil and global stocks, 1/6/2016+ in USA stocks, and most recently 10/3+ in TLT and GLD, etc. More important it completely avoids the "hope it bounces so I can sell" mindset that takes over when one should have sold already. 

Positioning
Last week: "So this means long tech, financials, XIV maybe, global stocks, oil, $USD or short GLD/GDX, and hedged with DIA shorts. If USA mains recapture Q4Ps then hedges based on those levels come off, but at the same time think better to be soon taking some profits on global indexes and/or oil due to $USD strength." 

It was the right move to take some off on global stocks (EEM, FXI, RSX, PIN) because now there is the chance to buy back at lower prices. But long QQQ & XLF, maybe XIV, some portions long global stocks as above, yet hedged with DIA shorts did not work because the longs lost gains and shorts did not drop. Grr. 

As long as VIX is signaling trouble I believe it is right to raise cash / hedges until we reach lower levels on stock indexes and/or VIX trouble ends. After watching QQQ drop for days and DIA not budging, a partial reduction warranted but will be first to buy back on any move back above OctP. DIA shorts are still a hold below its Q4P/OctP combo. IWM shorts would have worked better but I didn't specifically recommend it. See Pivot status post for buy ideas and a recent post on Global indexes - EEM, FXI and PIN nice holds of Q4Ps as most USA mains are below.

Bottom line - SPY & VIX "trouble alert" issued 10/27 via SPY clear rejection of Q4P and VIX move above its Q4P. Consider previous incidences this year: 1/4-6, 1/29-2/2, 6/24, 10/11. 10/11 not much damage before the next alert issued, and 6/24 turned out quick buy 6/27+, but that was not the case on the first two. Until we see lower levels on stock indexes (ie SPY Q4S1) or recovery and end of alarm I think cautious positioning warranted. This means reduction of longs, more cash, perhaps short hedges though as mentioned DIA shorts have been frustrating. 

Pivots
USA main indexes - 4 of 5 USA mains below Q4Ps, and Tech cracking. Bullish scenario would be QQQ recovery of OctP, DIA & SPY back above Q4Ps and perhaps opening above NovPs. Bearish is anything lower.

Safe havens - Not so safe in 2H. TLT no bounce from 2HP at all is weak. GLD managed to hold, but bounce weak so far. VIX above 2 pivots is a key component in my "trouble alert." 

Global & other - $USD nearly reached first target area (99.18 target, 99.12 high) and so far pause. I think higher long term but if $USD slows this will allow the global indexes EEM FXI and PIN, also likely EWZ & RSX, to bounce. 

Lastly keep in mind new November pivots as of 11/1.

Other technicals
Monthly bars about to close. Not as important as the September bar close that also means the close of Q3, but still worth a look. Despite moves below 2015 highs on SPX and INDU, and below the 2000 NDX top, factoring in the monthly close high levels make this move less threatening. More on this soon on a post this week.

Valuation and fundamentals 
More a headwind than tailwind.

Sentiment
No recent extremes in put-call, NAAIM managers or AAII individuals. Recent daily spikes on ISEE 10/3 & 10/10 near stock trading highs.

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

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

10/27 was added last week as a minor turn.

Result was 10/10 high, 10/19 minor high/non event, 10/27 too soon to tell.

November dates
11/1
11/18-21

12/1-2 (there will be other dates later in Dec) 

 


 

 

Pivot status

This may become a regular feature. 

Remember I don't track everything (S&P sector charts for example) and don't have time for individual stocks. If you have any questions, feel free to send a message through the contact page. 

Above all pivots (not so many things right now)
EWZ
NQ futures on both 1 continuous and current Z contract
SOXX/SMH
XLF (but not IYF)
XIV
$USD (but i am not tracking that many currency pairs, only the major crosses)

Nearest to recover status of above all pivots (ie first buy choices if we get general long signal)
QQQ
EEM
PIN
IYF another benchmark financial ETF
DIA actually easier than SPY at this point

Recent tests & holds of Q4Ps
EEM
FXI
PIN

Long term weakness of note (less common this year because USA stocks, global stocks, bonds and commodities all up for much of the year)
TLT, below 2HP with first break on 10/10 and second break 10/24 (shorts are quite late)
EFA (Developed world ex USA index ETF) below YP all year, but above 2HP; any lower will be below 3 / 4 pivots
XBI / IBB biotech gave back all summer gains; IBB below all pivots as of 10/12, XBI sitting on 2HP (last one left) on 10/28 (This may also determine fate of Tech set.)
ps, FXI & ASHR (Shanghai ETF) both under YPs, more due to 2015 high in stratosphere; both above 2HPs so i'm not really considering these as weak 

Quite a lot now in mixed condition above both long term pivots (YP & 2HP) but below medium term pivots (Q4P and OctP), or opposite
SPY, DIA, IWM, VTI all long term strong but medium term weaker
GLD & GDX also, although these could more easily break 2HP than USA stocks due to proximity
NKY & DAX under YPs but otherwise OK above 2HPs; also both above Q4P and OctP

Oil varies per vehicle: CL1 continuous, current Z contract or USO all different picture
CL1 above all pivots handily from 9/28
CLZ YP break 10/24
USO above 2HP, Q4P and monthP from 10/3 but well under YP all year

Global stocks

If I had more time I would include these in the weekly rotation. These have been great trading vehicles both on the long and short side with a lot more movement than most USA stock indexes for quite some time. 

As soon as we go outside USA we have a currency issue. This is at times not insignificant. Consider Japanese Nikkei move from June 2012 to 2015 highs was 154% trough to peak, while EWJ owning the same stocks (though likely not as broad) was 54%. A deep pockets hedge fund with a global desk could trade futures on various exchanges, but I will keep this to ETFs that are more commonly available for the typical reader. 

EEM is quite commonly mentioned emerging markets ETF with high volume.

FXI China, mostly Hong Kong shares. (There are ways to play Shanghai and Shenzen - these were great in 2014-15, but stuck in range this year.)

India has choices of a few ETFs; all have currency issue (compare Nifty to any of the ETFs), but will usually mention INDA or PIN. PIN has been a bit better, so let's keep to that. 

RSX also a lot of volatility that has moved somewhat with oil.

EWZ Brazil led the drop last year and this year has been the best thing to own. Funny. 

ACWI is global benchmark ETF that tracks the MSCI All Country World Index. This corresponds to NYA/VTI for global stock market activity. 

Sum
As 4 of 5 USA mains are below Q4Ps, EEM has tested its Q4P once and held, FXI 2nd test on Friday but still above, PIN also 2 tests and holds, RSX 2 Q4P breaks the weaker of the bunch (in addition to high on YR1), EWZ soaring and great if you are holding but buy now just late. ACWI as a benchmark (to compare global stocks vs USA via NYA/VTI) also testing Q4P but mostly above this quarter places it relatively stronger than USA. 

A full chart workup on all of these is definitely worthwhile project but for this post will keep to 1 weekly tech analysis chart, 1 weekly pivots chart, and a daily pivots only chart for trend. 

EEM
This was hammered 2015 second half, but has outperformed in % terms on the rally this year. Rising W20MA (orange) support, along with W100 (thin black). If above the W200 (thick black) and top of BB obvious resistance. 
EEM weekly pivots chart cannot really get going above 2HR1 level despite trying a couple times.
EEM daily pivots only (no support / resistance) with MAs shows all above Q4P. Compare that to USA indexes (4 of 5 below Q4Ps right now). I'm thinking a re-test of Q4P with nice rising 100MA would be ideal buy (if out of longs). Of course if market rebounds it could easily recover status of above all pivots. Remember there is likely to be performance chasing into year end and everyone will be eager to own the 2016 winners. 

FXI
This weekly chart was an additional reason I thought that EEM & FXI would cool off in Q4. 10/1 Total market view: "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." I was looking at the weekly 100, 200 and 400 all likely to be resistance. But now FXI has dropped into a rising weekly 20MA. Again compare this to USA indexes, as 4 of 5 mains are below weekly 20MAs and some of them even sloping down. 
FXI is under its YP because the 2015 range was so wide. Above 2HP was enough of a trend change to again consider that as longer term buy. Better if holds that 2HR1 as support. 
2nd test of Q4P with rising 100MA just below. 

PIN
Also dropping onto rising W20MA. Though this has done nothing since August, most USA indexes haven't done anything either. Check out that consistent buying near the YP on the daily chart from late July everything down there immediately back up. 2 holds of Q4P so far and anything higher on Monday would be back above all pivots. 

RSX
RSX has struggled up near its upper weekly BB despite oil's recent pop. It is also above its W20. And there it is, the low of year on YS1 and high of year on YR1 acting as resistance since mid August. RSX had multiple holds of the YP from April all the way to June before putting in another 18% up from that level. 2nd break of Q4P here, though slight.

EWZ
Last but not least! I first mentioned this along with RSX back in February because I saw it was above its monthly pivot when USA were below. That was odd at the time because this was one of the worst performing assets in 2015 and had been one of the best shorts. If you force yourself to buy what is above all pivots and hold, then you wind up with things like this sometimes. Note that aside from 2 day drop in March right on top of sharply rising 20MA, this has had some kind of long term strength (above HP or YP) since 3/4. Potential buys:

2/3 above monthly pivot and rising 10MA, stopped out
2/12 deceptive but above monthly pivot and slightly rising 20MA, could be holding
3/3 above Q1P, could be holding still
4/8 above all pivots and rising MAs, doing fine
5/10 probably stopped, if you bought there
6/3 brief drop below YP, recovered above all pivots; could be holding still
6/16 also nice looking bar
6/27 Brazil not really caring above Brexit eh? Higher low than 6/16 which learly held YP and above all pivots.
7/6 test of Q3P / OctP combo really hold or add at that point
8/2 massive hold of AugP and 2 rising MAs
9/21 doing OK fractional break of SepP otherwise fine
10/3-4 above all pivots with nice rising MAs, when much of USA was below

But I'd say given weekly chart falling 200MA, weekly and daily chart RSIs, % move off lows, certainly it is getting late in game to be now thinking to try a long. Even though leaders often benefit into year end, with charts very overbought the risk shifts to traders taking profits. 
 

ACWI
Sitting on W100 the last 3 weeks, with W20 nearby. 2nd time near Q4P, interesting to see if holds. 

 

 

 

 

 

Safe havens

Last week: "[TLT & GLD] Both back above rising D200 suggest bounce, but both also heading into sharply falling 20MA. If we are due for a long term trend change in bonds as I expect, it would be historically normal to see some chop around long term levels ie 2HP before another definitive move lower. Even if bounce plays out, both of these remain under Q4P and OctP so I think better longs are elsewhere."

Result: TLT continued lower below 2HP but GLD had limited bounce as it held the 2HP. So really the question of whether to hold shorts was answered by the 2HP (TLT hold, GLD partial cover). 

Sum
TLT leading down, with fast drop from Q4P to 2HP, weak bounce, then lower. Remember, this site recommended a short within .02 of the high on TLT (one and only counter-trend short trade recommended this year) and then pointed out weakness end of Q3 and bearish start to Q4. Shorting is not everyone's game, but at least an underweight to bonds has benefited portfolios in Q4 thus far. 
GLD / GDX also started below Q4P and got whacked, both holding 2HP so far, but still rather limited bounce.
VIX and variations (XIV inverse ETF, and futures) of particular interest to me as these *usually* work quite well as confirming indicators on buys and trouble alerts. VIX actually slow to get in gear on drop, but confirmed trouble on 10/27 above its Q4P. Like most USA mains this is the 2nd time above the pivot this quarter. As far as I am concerned, VIX showing trouble means reduce long exposure by getting out of longs or hedging. 

All charts
Weekly with long term pivots
Daily with long & medium term pivots
Daily with pivots only (no support / resistance) and MAs for clarity of trend
Daily with the works

TLT
Weekly chart not much bounce attempt on 2HP at all and already resistance.
Daily chart nearing OctS2 and RSI OS again, but next major support quite a ways lower. D200MA also a tell with 2 weak bounces that quickly failed (10/10-14, 3 days that tried to hold then wham; then 10/21 only 1 day above then wham). 

GLD
Holding 2HP so far exact on the low, but bounce looks like struggle so far. However, managed to fight through falling 20MA and back above rising D200 so obviously doing better than TLT.

GDX
Also holding 2HP on the low, but more problems with D20MA and D200 starting to look like resistance. 

VIX
Weekly chart echoes stock prices; not yet a threat to long term trends. 
Daily chart 2nd move above Q4P / OctP combo. VIX above pivot *is* a threat - see January and early February 2016. I can go on about this.
VIX with other tech indicators shows D200 and 400 acting as some resistance, but note 10/28 lift above 3 MAs and 2 pivots is definitely enough to signal threat. 

XIV
Weekly did not reach long term levels, but a near tag of OctR1. Still above all pivots. 

USA main indexes

Prior week: "SPX mostly below Q4P (but ESZ above, one of 4 varations), Tech set strong above all pivots with both futures holding OctP on daily close on the lows; INDU set also below Q4P yet holding OctS1; RUT set trying to hold Q4P on Friday's close (futures look better, cash and ETF fractional close above the level; NYA/VTI both below Q4P yet VTI not far from another attempt to clear."

Last week: SPX 1 day Q4P recovery then another move below and rejection; Tech less strong with slight break of OctP on 3 of 5 variations; INDU below Q4P and OctP; RUT also break of Q4P; NYA/VTI below Q4P as well. 

What changed last week was that Tech partially broke, RUT/IWM broke, and SPY & VTI had recovery attempts that failed. These are all bearish developments. Keep in mind all long term trends are intact (ie above 2HP and YP). All medium term trends are weaker with leader QQQ still holding up the best (fractional break of OctP) and IWM now faring the worst (biggest drop under Q4P).

Sum
Markets threatening lower with 2nd clear rejection of Q4Ps during the past week on: SPX set, RUT set, and VTI. INDU set below Q4P although not much lower; Tech mostly below OctP, but futures still holding is the one bullish point. It is a fairly rare day in markets when multiple main indexes show clear rejections of quarterly, half-year or yearly pivots (ie not just monthly) with falling moving averages to boot. 

2016 prior highs seeming to act as support could be interesting to watch along with the longer term levels like 2015 highs on SPX and INDU, and NDX 2000 top. Eyeball charts for 2016 prior highs on: SPY (June high), DIA (April), IWM (June), and VTI (June).

Charts
Cash index charts with long term pivots only
ETF chart with long & medium term pivots
Futures continuous "1" contract charts with pivots and MAs only for clarity of trend
Futures current "Z" contract charts with the works

SPX / SPY / ES1 / ESZ
SPX W - Interesting that the high and low look very similar, a few weeks of extension above the big level (YS1 / YR1) then the move the other way. Basically SPX continues drop from YR1 that was the 2nd rejection in October. 

SPX D - Here is long term level on daily chart to show how many times this acted as resistance (my count 9 trading days).

SPY D - After the Q4P break on 10/11, SPY has chopped sideways mostly between Q4P as resistance and OctS1 green dots as support. The grey line is the June high which seems to be involved as support as well. This is also now the 2nd time we are seeing clear rejections from Q4P on this chart (10/14 and 10/26-27). 

ES1 D - Note red bars under pivots and falling MAs on 9/23, 9/29, 10/11 mixed with falling and rising MA, 10/14 same, 10/27 all MAs falling or flat. Best setups often combination of clear pivot move and slope of MA. IE, 6/28 long, 7/5-6 longs, 8/4 hold, 10/24 could have tried long since above Q4P and D100 but obviously cut the next day. 

ESZ D - This looks a bit better with low bang on OctS1 (again) and no breakdown of BB. Red line also this version YR1 holding as support. Still, check the selling around the D50MA early Oct and remember SPX YR1 also right there.

NDX / COMPQ / QQQ / NQ1 / NQZ
Cash charts did not reach long term target areas. 
QQQ slight break of OctP, although both futures charts still holding (so futures still keeps some bull hope alive).
Both futures charts did reach long term resistance on the highs (so there was at least something on that 10/24-25 top).

INDU / COMP / DIA / YM1 / YMZ
Both INDU & COMP below YR1, but minimal decline last week.
DIA clear Q4P resistance 9 of last 11 trading days but not significantly lower.
Both futures same, below Q4P but not much lower. 

RUT / IWM / RJ1 / RJZ
RUT a thing of beauty with low and high of year bang on YS1 & YR1 respectively. YP test within reach! All charts similar here, OctS2 a bit lower, then YP / HP / Q4S1 combo which if reached will probably happen on RSI oversold.

NYA / VTI (different but both broad USA market indexes, and for these purposes count them together as '1' USA main index)
NYA did not reach long term resistance, but high on SepR1, lower high on Q3R1, then resistance on OctP, then down from there. 
VTI high on YR1 and 2nd clear rejection of Q4P, with 3 MAs involved on Thursday (10, 20, 100).

Valuation and fundamentals

Thomson Reuters SPX 12 month forward P/E stayed even as price dropped - so this implies weaker earnings. As previously noted, there is noise to this data but the main point here is that 17x forward earnings has roughly acted as resistance with the highest readings of 17.20, 17.15, 17.15 again at the key stock index tops. Now we are at 16.64. 

Citigroup Economic Surprise Index moved up from last week but there is a problem - still negative. 

Both of these are more headwinds than tailwinds for the market.

Is Deustche Bank a good buy?

This was the question I heard over lunch yesterday from someone interested in markets. This is my take.

About the chart: Using the NYSE listed Deustche Bank AG because this is what gives the most history on Trading View. This may not be the best version but with prices going back to 2002 it is good enough. For the best chart we'd probably want to check a Bloomberg. 

Sum
Although I like financials as a sector in rising interest rate environment, DB is already +30% off the lows and risk-reward for a bounce is not appealing. Significant resistance likely just above 14.71-78 (current upper daily Bollinger band which will change, and prior 2016 low), then all kinds of sharply falling moving averages on every other timeframe will make further rallies a struggle (moving averages with falling slope even more likely to be resistance).

Better financial buy: XLF. Holding up very well on drop, above all daily moving averages, and one of the few things still above all pivots (monthly, quarterly, half-yearly, yearly). Often what holds up best in drop is next market leader. 

Ultimately with either trading or investing we are playing a game of risk and reward, and it is only the time horizon that differs. Sometimes what is beaten up does become the better risk reward play - a great example of that is EWZ Brazil, one of the worst possible country ETFs to own in 2014-15, to be the star this year up 82% from 2015 close to now. That sounds great but everything depends on timing, because if you bought what appeared to be a decent and very beat up low in March 2015 at lets say 30 - a nice pick at the time - you had to suffer a -42% drawdown and over 16 months just to get back to even. Who would do that on any capital of size? 

Technical analysis does excel over fundamental analysis in spotting these moments when the long term trend is really changing, or what might be a turn to take a shot. This site has picked off the low of the year in oil and high of the year in bonds, without multiple attempts btw!. Both were huge turns on asset classes that had multi-year trends that seemed they would go on forever (search featured post section). I have also recommended GLD in late January, first mentioned EWZ & RSX in February, and more recently oil and $USD - these were not precise turns, but moments when trends seemed to be in early stages of changing (all these recs have given chance for gain with minimal or no drawdowns). I am not seeing that kind of movement on DB yet; or more accurately, it is too late to play the medium term bounce move, and long term trend is still negative. 

Generally it is far easier to go with trends, and this is why I am always looking for the leaders. Do you want a 10% chance of 50% rally and 90% chance of seeing your investment go red? Or 75%+ chance of higher prices? That is my take on DB vs XLF here. Buy the leaders, even better if they have an exciting story (interest rates!), and buy more. That is how the hedge fund I worked with crushed it in 2013. 

First standard technical charts in this order: quarterly (Q), monthly (M), weekly (W), daily.

Each chart has the same indicators: standard Bollinger bands (BB) in green, then simple moving averages. 10 (aqua), 20 (orange), 50 (purple), 100 (thin black), 200 (thick black), 400 (thick brown). Below the chart is standard RSI and then a tweaked MACD. 

Q
So far Q4 lifting back inside BB (Bollinger band, lower green line) after small red bar gives bounce a chance. But really anything under 2009 low (grey line) is pretty terrible. 

M
RSI picture slight divergence and shakeout followed by rebound "looks like" a decent low. But sharply falling 10 MA (10 period moving avg aqua line) and then resistance at 2009 high, and falling 20MA (orange). 

W
Not good from risk reward perspective here, because the upper weekly BB is resistance, then the sharply falling 50MA (purple). Risk is the lower BB. Buy was better end of Sept at the lower BB and huge divergence on RSI but already 30% off lows is just late. 

D
This is just unlikely to break outside of upper band and then falling 200MA not far away will likely be significant resistance. So bad risk reward here. Trying to pick off lows has better shot with RSI near oversold like end Sept when smart $ coming in. 

Pivot charts

W chart, pivots only (orange)
Long term pivots only on a weekly chart for clarity - this was something to dump, not buy after March 2014. If trying to buy into bounce 2015 that failed twice and there is just no long term decent buy after 8/2015. 

W with pivots, support & resistance
Now standard long term with pivots in orange, support in green and resistance in red.
Better above YS2 14.35 but given everything above on other charts not sure that holds.

D with pivots only
Smart $ above quarterly pivot for the first time in weeks 10-4-5 at 13.33-59. That was a decent risk reward setup but up to 14.49 may not sound like much but 8% higher than ideal entry. 

Compare all this to XLF, one of the few things holding up the best in market weakness from August - September. 

XLF W

XLF D with pivots only
Above yearly, half-year, quarterly and monthly pivots. There are only a few asset classes with this status right now. May not take out highs in current range bound environment into election but I like this chart here and would look to accumulate. Hold above Q4P means about -5% risk for the position at 10/27 close price. 

Trouble brewing?

Ultimately what matters is the close of the bar, and one of the judgment calls of the method is whether to wait for that or adjust on open. Consider a move as recently as 10/21, which appeared to be ugly open that rallied all day and instead turned out to be a minor low. 

This is why I tend to view the 5 USA mains as a group, then add in VIX vehicles to judge. I used to weight more TLT and GLD as safe haven alerts showing risk for stocks, but this hasn't really worked in the second half. Yet I have also recognized this, so let's not get too tied to any one firm rule. 

Basics:

Are we seeing any pivots act as resistance? Monthly, quarterly, half-year, yearly? 

Are we seeing any major level rejections? Yearly, half-year, quarterly, monthly?

What is the current main index leader, and what is going on with that? (10/20-21 Tech above all pivots). What is the main index lagger, and what is happening there? (10/24 high INDU failed to recover Q4P).

Is VIX or any VIX vehicle sounding alarm?

Other technicals: slope of MAs, RSI, Bollinger bands... a bit too much to get into in this post. 

Sentiment, timing, valuation and fundamentals are also involved here. For example, we know that a major sentiment bullish extreme was reached in August and we haven't yet seen a bearish extreme... but it doesn't always work that extremes flip flop like that. We could have a major sentiment high, then middling as some indexes go higher. 

Let's get to the point. Yesterday we noted that the bullish developments of Monday were undone on Tuesday. As of Wednesday's open:

SPX set looking like rejection of Q4P (2nd break of quarter), bearish and opening door to Q4S1 target. Recall we are already in process of YR1 rejection that be in play on a weekly basis since throughout October.
Tech set, current leader, just made high on NQ1 YR1, so one of the variations did tag a major level and now looks more like rejection. Still above all pivots though. 
INDU set never recovered Q4P and so far this is winning out; also continuing drop from near tag of YR1 that was made in August.
RUT set bounced from Q4P Friday-Monday, returned to level Tuesday, and appears to be opening below. Bearish, and also continuing move from YR1 highs reached twice in September.
VTI had fractional break of Q4P yesterday, but anything lower will look like 2nd break and again resistance. VTI also continuing drop from YR1 highs reached in August and early September.

So this is a lot of points on the bear side.

So what about VIX / XIV? VIX Q4P / OctP combo is 14.94-15.15 so if above that I think better move is to err on the side of hedging / reducing longs / possibly shorting. Let's not get carried away with the last one because very few stock indexes are in even partial long term downtrend (ie below a YP or HP). A few are below YPs due to larger drops in 2015 2nd half and 2016, but all of those that I track are above 2HPs. If the VIX level holds as resistance then it may be better to just do nothing to current positions. 

 

 

 

Total market view

Last week: "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."

Result was my bias off - QQQ back above OctP and IWM managed to barely recovery Q4P on Friday. VIX dropped back under all pivots as well. But SPY, DIA and VTI remain under Q4Ps so mixed conditions persist. 

Sum
USA leader Tech is strong above all pivots, and VIX / XIV saying all clear. The weaker indexes SPY, DIA and VTI are holding lows and building positive divergence. Therefore, I think some bounce attempt is the next move. Even if SPY, DIA and VTI can clear Q4Ps - which would be a bullish development, basically taking away the Q4S1 targets for now - I still expect upside limited to OctPs. 

Safe havens TLT and GLD also suggest some bounce, but I don't think it will get very far.

The elephant in the room is again the $USD. This has been the best performing asset class (other than TLT, GLD and GDX shorts) in Q4 this far, and all charts look fantastic. As Jeffrey Gundlach notes, currency trends tend to persist so let's consider the consequences of a near term move up to 99 and eventual breakout above 100: Bearish GLD and likely oil at some point, cap on USA upside especially INDU, but better for domestic small caps IWM; and popular EEM stocks increased risk of drop. 

Positioning
Recent recommendations have been to buy and/or hold positions in leaders: 

QQQ and semi-conductors (any summer buy on biotechs had to lock in gains)
Some financial indexes/ETFs above all pivots (not all) but XLF held Q4P exact on low and back above all pivots
XIV pointed out as strong in list per 10/8 and produced perfect buy setup 10/17-18
Global stocks especially EWZ Brazil (I haven't been mentioning this as much as should have and will try to remedy), EEM Emerging markts, FXI China, PIN India, all of which held Q4P exact on 10/13 low when 3 of 5 USA mains were below their Q4Ps
Oil per move in late September and early October per 10/1 Total market view
Avoided TLT or GLD, or short per 10/1 Total market view
$USD long if playing currencies or another way is to think GLD/GDX short per weakness idea emphasized in 10/1 Total market view and long term charts
Most recently per 10/8 Total market view, "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."

So this means long tech, financials, XIV maybe, global stocks, oil, $USD or short GLD/GDX, and hedged with DIA shorts. If USA mains recapture Q4Ps then hedges based on those levels come off, but at the same time think better to be soon taking some profits on global indexes and/or oil due to $USD strength. On TLT and GLD, lows look decent enough to have already partially covered shorts but I will pass on a TLT long idea if more USA mains recover Q4Ps. 

Bottom line
Though the leader has held and VIX/XIV, which tend to be on the right side of the market, say buy stocks, I am still in upside limited camp due to: strengthening $USD, fundamentals per Citigroup Economic Surprise index, daily 50 moving average with falling slope on SPY, DIA, IWM and VTI. Stock trading range likely to continue, even if stocks bounce. If Q4Ps fail to recover then that is more bearish and we can still watch for Q4S1s. But shifting my bias to some limited bounce; let's say guess at this point is buy the rumor sell the news into the election. 

Pivots
USA main indexes - Tech set, 2016 second half leader, back above all pivots is bullish. Small caps RUT/IWM trying to hold Q4P as well. But SPY, DIA and NYA/VTI below Q4Ps and OctPs. So mixed conditions - not purely bullish due to 4 of 5 mains below Q4Ps, but one cannot be too bearish when market leader is above all pivots. 

Safe havens - Pivots and other technicals on TLT and GLD suggest bounce, but I don't think it will get very far. VIX and XIV both all clear for USA stock indexes, and these tend to be on the right side of the market.

Global & other - Interestingly, both $USD up and $CL up in October & Q4 so far. Of the two, $USD in stronger position so the oil move may fade. Several global indexes ETFs did better than USA mains on recent lows: ACWI stronger than NYA/VTI, EEM all above Q4P and back above OctP so all pivots from 10/18 on, FXI also held Q4P on low, RSX one day below Q4P then recovery, EWZ 2016 market leader soaring above everything and above all pivots from 9/27. So global stocks have been the better pullback buy, but $USD strength would likely limit upside.

Other technicals
Near term positive divergence building on SPY, DIA and VTI recent lows as written up here makes bounce attempt more likely as next move. At the same time, falling 50MAs and OctPs, as well as $USD move, mean upside still likely limited for USA stocks especially INDU/DIA.

Valuation & fundamentals 
More headwind than tailwind. Citigroup Economic Surprise Index taking a sharp dive back into clear negative territory. This helps limit upside in stocks, even if it stalls the rate hike chatter, and may help a short term bounce in bonds (drop in rates).

Sentiment
No current sentiment extremes. Crowd more bearish than bullish at this point however, which will probably support some bounce. 

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

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

Both have turned into highs, although last week's guess at 10/19 low was off.

I am going to add 10/27 as a minor date for October, more likely to show in currencies. I will list dates for November next week. See this post for a review of timing dates since I started including this part of my work on this site.  


 

Divergence

Savvy traders know how to spot divergence. This is a technical term that really involves rate of change. If something is still going down, but going down at a slower pace, then it is more likely that up is the next move. This can work as part of logic to buy, or to cover shorts. 

It can also work as a tool to hold strong positions. If you spot an immanent move and get it right, then it often pays to "wait for divergence" before an exit, ie a slowing of the pace of the up move. 

As soon as one starts using Bollinger bands and moving averages then all timeframes are in play from quarterly or even down to 5 minutes or less if you want to daytrade. Here are a couple recent examples.

DIA daily with Bollinger band below. There are 4 arrows on recent lows. 
#1 9/9 plunge - low and close outside BB
#2 9/14 - less movement but low and close still outside BB
#3 10/13 - low outside BB, close within
#4 10/21 - low and close all within BB

This is what I mean by building bullish divergences. A weak market would have opened on Friday and kept on going down to have another low & close outside the BB.

It is also common to watch for divergence with momentum tools like RSI. Check the daily DXY chart below.

The move powered up to a reading above 70 - 75.71 on the 10/12 high. Anything above 70 means enthusiastic buying. There was an apparent divergence on 10/14 with lower RSI high at 71.83. The next move after that was 3 day consolidation to a sharply rising 10MA which provided the boost for another launch, and RSI is again up there at 74.21. I consider that close enough - a negative divergence pattern would have stopped at 70 again. Also note the power move outside the Bollinger bands twice. The third time is inside, and that is beginning to slow, but with strong move moves and RSI strong my conclusion is - going higher. 

INDU Q
I consider this the most threatening chart for USA stock bull market due to the glaring RSI divergence with RSI stopping just under 70 on recent 2016 Q3 high (69.27 to be exact). Compare this to the power move above 70 in 2014-15, which was preceded by a close outside the Q BB in 2013, a sign of strength. Both of those meant market was likely to go higher, and it did. But now we just saw a slightly higher price high above 2015 highs - but not a close high mind you - on textbook RSI divergence and the Q BB leveling out. Even if a big drop is not immanent, we could be in for a long sideways or upside limited period, especially if $USD strength continues. 

$USD

From 10/6 with $USD at 96.69: "$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."

As $USD is important for all markets let's again do a very thorough chart workup.

Sum
All systems go for $DXY on every chart below - quarterly, monthly, weekly on other technicals, then weekly on long term pivots, daily on all pivots, and a last daily pivots & technicals chart. While I think it has potential to go substantially higher long term - let's say breakout above 100 - near term expect to see 99.18-88. Continued $USD strength will cap upside in USA stocks, especially INDU, and could pressure the popular emerging markets trade as well. 

Per Jeffrey Gundlach, currency trends tend to persist, so a very strong move up after an 18 month consolidation is not something to be ignored. OK, we can see that 99.88 target and still be within the range, but let's observe pivots and other technicals as weeks unfold to gauge the chances of breaking out up.

Consequences of strong USD for other trades: GLD short, DIA hedge, IWM better long, recent oil strength more likely to fade, and currently strong EEM stocks could get whacked. Conversely if USD suddenly stops or pauses then likely to see GLD bounce, DIA bounce, oil and EEM stocks continue up. 

DXY Q
The best move up in Q4 so far across asset classes. There is really nothing to stop this from moving well over 100, though Fibonacci fans will watch 61% from 2001 top at 101.50.

DXY M
Upper BB right now just above 100 and it looks like we should see that - at minimum.

DXY W
Launch above all MAs with movst of them rising slope and power move outside weekly BB. RSI not yet overbought. Very strong here. 

DXY W - long term pivots
What I saw early in October was 3rd time above YP and thought that was going to stick given what had happened with medium term pivots and other technicals as well. Right call. It could reach 2HR1 near 100 and technically still be in the trading range. 

DXY D - long and medium term pivots
Blast through Q3R1, also blast through OctR2. Next resistance Q3R2 99.18.

DXY D - pivots & other technicals
Should go higher. Daily RSI 2nd time near 75 sign of strength. MAs and BBs sharply rising and currency trends tend to persist even more than stocks. 

Safe havens

Last week: "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."

Review - VIX dropped back under Q4P & OctP combo but without much movement from stock indexes. VIX tends to be right on the market so this adds to bullish picture. 

Sum
Both TLT and GLD turning very well on pivots with high of year on Q3R1 and recent low on 2HP. Both back above rising D200 suggest bounce, but both also heading into sharply falling 20MA. If we are due for a long term trend change in bonds as I expect, it would be historically normal to see some chop around long term levels ie 2HP before another definitive move lower. Even if bounce plays out, both of these remain under Q4P and OctP so I think better longs are elsewhere. Combination of daily RSI oversold, daily 200MAs, weekly chart Bollinger bands, and 2HP were better partial short cover areas for those who followed Q4 TLT and GLD weakness idea with shorts.

VIX and XIV very healthy for stocks right now, and VIX tends to be right on the market. 

All charts: weekly long term levels only, daily charts with long & medium term, then 1 daily tech indicators chart with the works. 

TLT
Trying to bounce and may recover 2HP. YR1 the next level to watch. 
Daily charts look also suggest some bounce, especially with recovery of rising D200MA. Still resistance at falling 20MA and YR1 however. 

GLD
Recent low exact on the 2HP (with high of year on Q3R1 as well).
While this also suggests chance of bounce like TLT from rising D200MA, it will be heading into other pivot resistance and sharply falling 20MA. 
Bounce possible but upside limited. 

GDX (for kicks)
Also held 2HP on low and back above rising D200 as well. Handling falling 20MA well so far. 

VIX
VIX looks fine here and saying buy stocks 10/19-21, dropping below all pivots. But not too low yet, so a sweet spot for stock bounce. 

XIV
Looks great, just 1 day bit below OctP that also held Q4P and 2HR1. Next day back above all pivots with 2 days to buy near the level, then as of 10/18 above all rising MAs, above all pivots, MACD cross to +, recent higher low - there is just nothing wrong with this picture. 
 

USA main indexes

Prior week: "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."

Last week: SPX mostly below Q4P (but ESZ above, one of 4 varations), Tech set strong above all pivots with both futures holding OctP on daily close on the lows; INDU set also below Q4P yet holding OctS1; RUT set trying to hold Q4P on Friday's close (futures look better, cash and ETF fractional close above the level; NYA/VTI both below Q4P yet VTI not far from another attempt to clear.

Sum
A bit better from last week as leader Tech is in a stronger position above all pivots and RUT set held Q4P on Friday's close. SPX set, INDU set and NYA/VTI remain below Q4Ps, but as at least one variation of each held some variation of OctS1s on lows.

Per the bullish developments in Tech and small caps, and positive divergences on daily charts on SPY, DIA, and VTI, it looks like recovery attempt of the these Q4Ps is the next move. Yet OctPs and falling MAs on those charts remain resistance. If the next move up fails to recover Q4Ps then there is room to return back down. 

All charts: Cash indexes weekly with long term levels only, then daily charts with long & medium term pivots; ES1 contract more technicals like Bollinger bands and MAs, and lastly ESZ contract pivots only (no support / resistance) with MAs to see entries & positioning especially clearly).

SPX / SPY / ES1 / ESZ
SPX continues to trade below the 2nd drop from YR1. How far this drop goes is hard to tell. The level remains resistance until the end of the year or if can turn into support.
SPY shows Friday's low on OctS1 and healthy recovery, yet resistance on the Q4P since 10/12. 
ES1 low of month also on OctS1 and though stuck under Q4P and falling MAs looks like it could try again to clear. 
ESZ contract the one of 4 variations above its Q4P and rising D100 MA. OctP and falling 50MA both remain resistance. 
Basically this is mixed action - we cannot ignore the drop from YR1 and medium term weakness below both Q4P and OctP, but so far damage limited to OctS1 (and not the Q4S1 at 2096).

NDX / COMPQ / QQQ / NQ1 / NQZ
Both weekly Tech charts doing fine and seems like they should reach YR1 area.
QQQ closed below OctP for 3 trading days then recovered.
Futures held OctP throughout on daily close (even 10/13 by 1 point). 
Tech returned to market leader in 2016 2H. The leader has basically recovered (or held in case of futures) all pivots. Usually it is bullish when the leader holds. 

INDU / COMP / DIA / YM1 / YMZ
Weekly charts continue drop from YR1 - INDU a bit shy, COMP a bit above then back under, but basically that is high of year like YS1 was the low of the year.
DIA mostly under monthly pivots in September and October but has held SepS2 and now SepS1 on lows. 
YM1 contract shows building bullish divergence on lows per Bollinger band (first low and close outside band, next low outside band but close within, recent low and close entirely within band). This could recover and bounce to Q4P again, clear and bounce to D50MA and upper band, or break down to Q4S1 at 17683 (futs).

RUT / IWM / RJ1 / RJD
RUT hitting YR1 was part of my upside limited scenario from August - which has turned out exactly right. I just didn't think after a move all the way from YS2 it would blast through YR1 so easily. 
IWM held Q4P.
Both futures also holding Q4P and rising D100 to boot.
Futures look good, but ETF and cash don't quite have the look of support yet. Still this is worth watching as a buy setup - any higher on Monday and all 4 variations will look like lift from Q4P and hold of rising D100MA. The only thing missing from this setup is a long term level involved as well.

NYA / VTI (different but both broad indexes)
No long term level on NYA highs, but 9/8 high on SepR1 and then 9/22 key lower high on Q3R1 show this index worth watching.
VTI high of year on YR1 as well with no weekly close above.
VTI also came back Friday and looks like it may try to recover Q4P. Still heading into falling MAs and OctP however. 

Valuation and fundamentals

According to Thomson Reuters, the P/E dropped slightly while SPX was up slightly, but the overall tendency since the second half remains to hang around near 17x forward earnings. But there is room to move up in price and still be near this level as current 17x estimate is 2192 SPX.

Check page 18 on this detailed PDF for a visual of what I am trying to do with this series of posts. The only issue with that chart is that being very long term it doesn't include the odd numbers 15, 17 etc and this is about where the turns have been this year. 

But yikes! Check out this dive in Citigroup Economic Surprise Index. While this may help FOMC back off hawkish rhetoric, I think this increases the chance of a bounce in TLT and (drop in 10 & 30 year rates). Also it helps the USA main indexes that are stuck under Q4Ps (SPY, DIA, VTI) remain under for the time being.