Total market view

REVIEW
1/28/2018 Total market view: "It is The Pivotal Perspective that most major turns and market decisions happen on long term pivot, support and resistance levels (YP, YS, YR). This is especially the case when multiple main indexes, sectors, global indexes and commodities are are making the same move in unison. Last week, more USA main indexes, sectors, global indexes and oil all were in vicinity of YR1s than at any week I can recall since Februar 2016. So far, still powering up. Simply stated it is very bullish for a market which is historically stretched to have a mild pause and continue higher. I will change my tune if we see a fade back under INDU & NDX YR1s, but so far that hasn't happened. If YR1s turn into support, as they did in July - August 2016, then that opens the door to YR2s. Also keep in mind that Dow yearly levels have been major turns or key continuations every year from 2005. Clearing YR1 or making a trading top here is an important decision. Bonds are largely weak. While metals are above all pivots, they look vulnerable to a drop. Interestingly, while VIX returned back under all pivots on 1/26 it has closed above its Q1P for 4 trading days. Likewise, XIV is not rising like stocks. UVXY is looking increasingly attractive as a hedging trade (and recommended on daily comments and Twitter last week). Timing cycles points to increasing volatility 1/25-2/2+ and perhaps beyond. This doesn't mean I am saying stocks go down from there - volatility across asset classes, expanding ranges, potential shakeouts and recoveries (as what happened 1/25-26 in semiconductors, EWZ, etc)."

Results
Extensive quote but:
1. Major turn looks in
2. Tune changed in daily comment and tweets - partial profit taking signal and further volatility hedge recommended in 1/29 Daily comment, further bearish alert 2/1 on Twitter, etc
3. UVXY +47% from initial tweet to 2/4 close; +21% from 1/29 close to 2/4 close; best hedging idea other than stock index shorts
4. Nixed metal idea 

SUM
It is rather amazing that of the 5 USA main indexes, 4 sectors and 11 global indexes that I track (all covered in previous blog posts) than ALL of these had 1HR1-2 or YR1 rejections in the past 1 or 2 weeks. 

As stated last week, this is the most amount of indexes having the same move from yearly levels that I have seen from early 2016. Thus, likely we just saw a major top. That said, tops tend to stretch out compared to rapidly formed lows and I view this move as the first phase of a transition from trending market to range market for risk assets. After a historic run of massive gains without as much as a -3% drop, I believe buyers will step in in the -4.5% to -7% range and then the next likely move is a rally back towards highs. 

In this way I can hold simultaneously that we probably just saw a major top, and that probably the initial decline won't be too bad, and that the market will likely make a move towards highs and test or even go higher before a larger drop.

It is great to have raised cash (as recommended 1/29) before a decline because then it is possible to view buying opportunities with fresh eyes. Now, we see what holds up best on the decline and most simply and crucially remains above all pivots or reclaims this status sooner than others. So far, the potential buy list is:

QQQ (will likely reclaim above all pivots sooner than other USA mains)
XLF (still above all pivots), XBI (barely below FebP)
RSX, EWZ, EWJ, SHComp best among global indexes in terms of holding or slightly below FebPs
GLD

Avoid: IWM (anyway, have been short this), XLE, INDA which are the major laggards in USA mains, sectors and global indexes respectively.

XIV reached 1HP and so any additional positions on UVXY I think were better taken off on Friday though stock indexes are set up to go lower. If you took gains on longs 1/29, added UVXY hedge, took further longs off the table and/or short hedges on 2/1 then you likely finished positive last week despite a stock/bond combination having the biggest loss since 2009. It is this kind of week that I pursue this work.

PIVOTS
USA main indexes - 5 / 5 USA mains below FebPs, above the others. QQQ will be first to recover if bounce on Monday. IWM likely first to reach Q1P on any further decline. Expecting to see FebS1s for USA mains. 

Sectors - Interesting that 2017's hot sector semi-conductors are starting to cool compared to biotechs. XLF one of the few indexes still above all pivots!

Global - In a list of key emerging and developed indexes, ALL had YR1 or 1HR1-2 rejections. The story is larger than just USA Treasury bonds and USA interest rates. 

Safe havens - The Pivotal Perspective has been warning about bonds and thus interest rates from the start of the year. Last week LQD and HYG joined TLT and AGG below all pivots on a price basis. Using my long term technical total return system, TLT and AGG gave long term sell signals last week.

Currency & commodity - 1 day rebound on DXY doesn't change the trend yet. USO also near YR1 but no significant damage. BTC and LTC below all pivots from 1/22 and 1/16 respectively; ETH the clear leader, still above all pivots.

OTHER TECHNICALS
After historically high RSIs on USA main indexes, it is likely that we will see divergence highs (RSI & Bollinger band) before a larger drop.

McClellan Oscillator (MCO) into the red several times without damage from 2017 Q4; sharp acceleration into negative 1/29-1/31. 

New highs & new lows (NHNL) - new lows jumped 1/30, further confirming take profit and hedge signals.

VALUATION
Here's the tweet with the chart of SPX forward P/E levels. I think we will see the FINAL bull market high in the 19X-20X range so this means upside limited from here to a 2800-3000 top. For now monitoring if the valuation levels keep increasing (ie earnings continue up) or flatten out.

SENTIMENT
We know that put-call was already at multi-year lows and other measures (AAII, ISE) had been making extremes in recent weeks. 

TIMING
A bit disappointing nothing near 1/26, the top. 

However, tweet from 1/24: "Special timing post: volatility cycles picking up 1/25-2/2 maybe through 2/15. This does not mean i am saying stocks down from here. There are a lot of YR1s to watch though. Yup back in UVXY already."

Really nailed that!

February dates
2/2 - looks like low
2/12
2/15

Safe havens

Sum
Have to say VIX had another market move pegged (by jumping above all pivots on 1/29). UVXY worked well as a hedge, though it seemed like it could have moved even more given the greater decline in stocks than August. 

VIX is quite far from returning below all pivots, so we might not have a "everybony back all in the pool" signal for stocks for a while. Near term watching YR1.

Bonds have been clearly weak from the beginning of the year, and this week LQD and HYG joined the others below all pivots. For investing purposes, I still recommend total return pivots on higher yielding vehicles as outlined in recent posts and tweets. 

On metals, GLD could reclaim FebP and if so would be interesting buy candidate again. 

VIX
W: Weekly close above YR1 first time since 2014!
D: Big jump above YP was signal to reduce risk on 1/29.

XIV
Blue arrow at buy rec; orange arrow at FebP clear resistance nice add. Q1P break, already at FebS1.

TLT
Already at YS1. 

AGG
D: Below YS1.

LQD
Below all pivots.

HYG
Below all pivots as of 1/30 then again 2/1.

GLD
D: Back above FebP would be buy candidate. 

GDX
Below YP, 1HP and JanP; holding Q1P.

SLV
Breakdown below all pivots. Avoid. 

Global indexes

Mostly emerging markets, a few developed.
ACWI SHComp FXI EEM KWEB INDA EWZ RSX EFA EWG EWJ

Leaders: RSX EWZ EWJ
Laggers: INDA

All of these have YR1 rejections or failures, and most below FebPs. 

ACWI
M: Falling back inside BB.
W: YR1 rejection.
D: FebP break.

Shanghai Composite
M: Different pattern, but also trouble at upper monthly BB.
W: YR1 rejection
D: Rallied to close a bit above FebP. 

FXI
M: Falling back under 2015 puts China leadership more in question.
W: YR1 slight break (not rejection in this case)
D:  YR1 and FebP slight breaks.

EEM
M: Oops
W: YR1 rejection
D: FebP break. 
 

KWEB
W: YR1 rejection

INDA
W: 1HR1 fail.
D: Almost at Q1P already - weak.

EWZ
W: YR1 fakeout.
D: Slight break of FebP. A reclaim of YR1 would look like a good buy.

RSX
W: YR1 fakeout.
D: Testing FebP but notably still above.

EFA
YR1 rejection, FebP break.

EWG
YR1 rejection, FebP break.

EWJ
YR1 rejection, FebP slight break - interesting buy on any bounce.

Key sectors

Small sampling - of course i would do more if time permitted.

XLF XLE XBI SMH
XLF and XBI testing FebPs; relatively few things still above all pivots, so watching for buys next week. SMH pretty clear professional selling on the last move up. XLE very weak.

XLF
M: Dropping like the others; hasn't taken out 2007 top yet.
W: YR1 rejection
D: Above FebP! 
XLF Sum: Anything still above all pivots as of Friday is on buy watch list - not many of these on the indexes I track.

XLE
M: Undoing gains of January in 2 days. 
W: YR1 near tag and slammed.
D: Opened below FebP, already at S1.
Sum: I was looking at oil shorts and mentioned USO, RSX and XLE. I'm not sure why this is down so drastically with oil stable. Still, seems like we could see a YP test on this. 

XBI
M: Still above the 2015 high; interesting to see if that level is defended or not.
W: 1HR2 high and YR1 rejection; may hold 1HR1 as support.
D: Testing FebP - another buy candidate. 

SMH
M: Divergence high on monthly Bollinger band.
W: Divergence on weekly Bollinger band and glaringly so on RSI.
D: Well under FebP. 

USA main indexes

I've scaled back the detailed weekly posts but still aiming for a more thorough version once a month.

Sum
All 5 USA main indexes had YR1 rejections and monthly pivot breaks last week. This sort of coordinated activity from yearly levels doesn't happen too often. Usually there are a handful of weeks over a few year span that are definitive, and this was one of them. This doesn't mean I think 'the final high' is in, but given the yearly levels involved it is more likely we just saw a more significant trading top. 

RUT/IWM showed relative weakness in Bollinger band structure on monthly and weekly charts, and was a first choice for short hedges as noted in 1/23/2018 Daily comment. 

My Twitter and Daily comments were all over this move. Basically, if we saw VIX above all pivots and any bearish action from YR1 areas I was ready to act. 

1/29: "I have rarely regretted taking defensive action with VIX exploding above all pivots. Today met criteria for taking partial profits per Daily comment of last week."

So if you have been following along, Friday was a rather pleasant after taking profits on longs early in the week and adding to UVXY. Now we can analyze what and when to buy back.

Since all USA main indexes are below monthly pivots for the first time since August-September, I expect to see FebS1s. But let's not get too carried away on the downside. The first drop off highs is usually not the biggest move.

SPX / SPY / ES
SPX M: Monthly chart BB overshoots are rare; price falling back inside band. 
SPX W: Weekly chart BB overshoot 4 consecutive bars, very rare; fall back inide band. 10MA and 20MA likely support. 
SPX W: YR1 rejection. Actual top near 1HR2, also back under 1HR1.
SPY D: YR1 rejection and FebP break.
ESH D: First pivot break since August. 
SPX sum: After torrid rise pushing out outside weekly and monthly bands with RSIs in record territory SPX slammed last week from YR1 levels. Lots of support below and we'll likely see a bounce from weekly 10MA / daily 50MA / FebS1; if drop wanted to be more scary then Q1P 2629 but that is more than I am currently anticipating. 

NDX / QQQ
NDX M: Falling back inside monthly band.
NDX W: Fell back insede band after 4 weeks outside. 
QQQ D: YR1 rejection and FebP slight break.
NDX sum: Before assuming bull market is over check 6/2017 bar on monthly chart; also back inside monthly band after strong run. However, YR1 rejection and FebP break. NDX could easily reclaim FebP on any bounce so this will be a key area to watch next week.

INDU / DIA
INDU M: Similar story, outside monthly band now falling back inside.
INDU W: YR1 rejection.
DIA: YR1 rejection and FebP break.
Sum: At this point expecting FebS1 at minimum; Q1P looks like too much for first drop off highs. 

RUT / IWM
RUT M: Did not push outside band; clear resistance from level.
RUT W: Did not push outside band; 2 weak advances before being slammed.
RUT W: 1HR1 tag and down
IWM D: Did not quite reach YR1.
RUT sum: Noticeably weaker than others on monthly and weekly BB structure. Q1P very doable on this chart. 

NYA & VTI
NYA W: 1HR2 top, YR1 break.
NYA D: 3 days before the plunge NYA was giving clues with resistance at YR1.
VTI W: 1HR2 top, YR1 break.
VTI D: Similarly, 3 days before the plunge VTI resistance at YR1.

Total market view

REVIEW
1/20/2018 Total market view: "Most equity indexes pushed higher last week, and though advances were generally smaller than the week prior it still looks like continuation of an amazing run. ... VIX seems to suggest market expectations of a deal or limited consequences of a shutdown by closing back under all pivots on Friday after being above Q1P and JanP 1/16-1/18. ... Global indexes are also ripping higher with both developed and emerging indexes powering up. It is likely that any gov't and perhaps DXY troubles will be even more reasons to allocate abroad."

Result
Another powerful advance by most indexes.

SUM
It is The Pivotal Perspective that most major turns and market decisions happen on long term pivot, support and resistance levels (YP, YS, YR). This is especially the case when multiple main indexes, sectors, global indexes and commodities are are making the same move in unison. Last week, more USA main indexes, sectors, global indexes and oil all were in vicinity of YR1s than at any week I can recall since Februar 2016. So far, still powering up. 

SPX/SPY cleared YR1 fractionally on 1/22, then established support on YR1, then launched
NDX/QQQ paused for 3 days below YR1, then cleared YR1 1/26
INDU/DIA paused for 2 days below YR1, then cleared somewhat on 1/26
NYA cleared YR1 1/22; VTI paused for 3 days below YR1, then cleared 1/26

Simply stated it is very bullish for a market which is historically stretched to have a mild pause and continue higher. I will change my tune if we see a fade back under INDU & NDX YR1s, but so far that hasn't happened. If YR1s turn into support, as they did in July - August 2016, then that opens the door to YR2s. Also keep in mind that Dow yearly levels have been major turns or key continuations every year from 2005. Clearing YR1 or making a trading top here is an important decision. 

Bonds are largely weak. While metals are above all pivots, they look vulnerable to a drop. Interestingly, while VIX returned back under all pivots on 1/26 it has closed above its Q1P for 4 trading days. Likewise, XIV is not rising like stocks. UVXY is looking increasingly attractive as a hedging trade (and recommended on daily comments and Twitter last week).

Timing cycles points to increasing volatility 1/25-2/2+ and perhaps beyond. This doesn't mean I am saying stocks go down from there - volatility across asset classes, expanding ranges, potential shakeouts and recoveries (as what happened 1/25-26 in semiconductors, EWZ, etc). 

PIVOTS
USA main indexes - Nearly all above YR1s with SPY and VTI already at or near 1HR2s. Only IWM lags, below YR1 and 1HR1. 

Sectors - XLE YR1 near tag and down; XBI YR1 top so far; SMH not there yet due to huge range last year; XLF above.

Global - ACWI, SHComp, FXI, EEM, RSX and EWZ all above YR1s. Only INDA and KWEB not there yet or testing due to huge advances in 2017.

Safe havens - Bonds weaker and metals faded a bit from levels last week. While metals are still above pivots, and XIV above all pivots, VIX/XIV looking increasingly as the safe haven hedge this year.

Currency & commodity - USO and oil testing YR1s as well. DXY seems like it should go lower and test Q1S3 / 1HS2 and especially YS1 for a tradable low. Anything under YS1 would likely make global indexes go into melt-up mode even more than they already are. 

OTHER TECHNICALS
Massive spike in new highs. We will likely need divergence or two for a major top. MCO still solidly in the positive. 

VALUATION
SPX above 19X forward earnings now - 10 week average of 20X 2960 is rising fast. Seems like we will see SPX 3000. 

SENTIMENT
Put-call at multi-year lows increases risk of shakeout drop in risk. 

TIMING
1/4 - middle of up, non event
1/10 - mild pullback low
1/15 - i thought high 1/16 at the time, also looking like mild pullback low (+1 on 1/16)
1/31 - adding date

February dates
2/2
2/12
2/15

Long term investing with technicals

Must include dividend adjusted charts for long term investing. Stockcharts does this by default.

This is a simple system based on:

1. Yearly pivot (YP)
2. 50 week moving average (MA)
3. Slope of 50 week moving average

If all 3 are in the clear, the asset class is a hold. This system does not try to pick tops. It only attempts to get out of the way of an asset class in a yearly downtrend. See, yearly pivot and 50 week average are both yearly technical indicators. The slope of the average also adds a timing factor of of larger trend. There are other ways of doing this using pure % return but this is my way.

If an asset class makes a weekly close below its YP, below its 50 week average, especially with a negative slope, then it is time to reduce, hedge or exit.

If an asset class that has been on a sell recovers its YP, 50 week average, especially with rising slope, then it is time to buy back. 

Do i have a backtest on this system? No. At times there can be exits that don't seem to protect one from much hard such as XLE last year. But just as likely you will avoid major drawdowns like IBB in 2016, EEM and IWM in 2015, USO and XLE in 2014-15, GLD in 2013+, etc. You might even buy back at a somewhat higher price if technicals have turned around. But a proper backtest would also have to include the gains made from reallocating to other vehicles that are going up. Then there is psychological factor of not holding your money in things that are dropping -20%, -30%, or more. Now you won't exit at the high but still one can avoid most significant declines with this system. This can also be used with individual stocks. 

This system won't work with a flash crash from high levels like 1987 or 2011.

The worst possible circumstance would be chop, like an exit, recovery another exit followed by another entry. To be fair this did happen in 2011 and that would have resulted in losses more than the index. But consider being totally out of the way from 2008 from the end of 2007 and fully committing to stocks in September 2009. Not out at highs nor in at lows, (unless you want to add some speculative buys on YS1s etc), but avoiding that year would have been massive for the account and psychology. 

Sometimes things will be mixed like above its YP but below its 50MA. In that case maybe a partial exit is better or if the slope of the 50MA is increasing one could take a wait and see approach. But when there is a clear signal it is time for action.

Of course stocks are all in uptrends so most indexes could have a -10% drop and not be threatened at all. Bonds are another story. Here's AGG.

YP is 108.10; just look for the numbers under the basic info in the upper left. The system will go like this: S2, S1, YP, R1, R2 so all we need is the YP.

50MA is the blue line, also available in the upper left. 108.17.

Price is 108.18, testing both 50MA and very near the YP. 

Slope of the MA is still somewhat positive. 

This is on alert, but in this long term system the weekly close is what matters. Check back next week. Note - AGG did generate an exit early 2017, and then a buy back in April. Should the decline continue this will be the second exit in as many years, and i think especially worth acting upon.

If you want to do this yourself:

1. www.stockcharts.com
2. enter symbol and default chart will pull up
3. select weekly, then update
4. go to overlays
5. select pivot points, then update (chart must be weekly first to work, otherwise pivots will not be yearly)

Perform analysis as above. 

Total market view

Abbreviated post today, just the summary and no supporting charts. 

REVIEW
1/14/2018 Total market view: "Markets are in a euphoric blow-off phase and we are likely to see higher highs in Q1 and 1H; in this kind of environment we 'should' see at least some main indexes reach YR1s before a major top. Assuming one is decently long with some GLD/GDX the thing to do now is monitor to make sure the portfolio remains long leaders and decides when to take hedging positions to lock in some gains. As noted from the first week, bonds are weak across the board while metals were clearly the place to be. Interestingly, VIX and XIV have not shared index enthusiasm so i think the next place for a trade is UVXY. See safe havens for details on this setup."

Result - setup triggered early 1/17 and if exit near close one day gain of about 9%.

SUM
Most equity indexes pushed higher last week, and though advances were generally smaller than the week prior it still looks like continuation of an amazing run. Meanwhile, bond breakdown continues. I find it striking how clear the market is being in terms of the asset class that is not in favor - bonds. I can only hope that when it is the turn for stocks, there is similar indications and time to make adjustments. 

As noted in the daily comment, VIX seems to suggest market expectations of a deal or limited consequences of a shutdown by closing back under all pivots on Friday after being above Q1P and JanP 1/16-1/18. Perhaps like Brexit, the market may be genuinely surprised on Monday. That said, also like Brexit, perhaps whatever lows form will be temporary. 

Global indexes are also ripping higher with both developed and emerging indexes powering up. It is likely that any gov't and perhaps DXY troubles will be even more reasons to allocate abroad.

PIVOTS
USA main indexes - Things may change on Monday but as of Friday's close indexes were above resistance levels that had pressured stocks lower on 1/16. YR1s are getting within reach. 

Sectors - SOX index (influencing SOXX ETF and to some extent SMH) breaking out up above its 2000 top. XBI still testing 2015 high. Financials depend on the index; XLF not yet above 2007 high (seems like going for it) but IYF above. 

Global - China still ripping with FXI, KWEB, SHComp, EEM all decently higher; all others higher as well. ACWI global index weekly RSI at 91; NYA index quite strong but still under that level at 87.

Safe havens - Under all pivots: TLT, AGG, TIP; Under 3/4: LQD, MUB. Only HYG holding above pivots and this is because it tends to trade more like a stock. A few more comments. FOMC raising rates, unwinding balance sheet, global QE taper, global growth, corporate earnings, stock strength, potential inflation pressures and perhaps DJT budget blowup are all contributing to the bond breakdown. Long term investors should include the yield in technicals especially for these fixed income vehicles as I described last week in this column and tweets. Using this system, TLT and AGG are approaching critical levels. This will impact anyone 40+ who has some bond allocation. Financial advisors, robo and otherwise, that are following typical textbook of increasing bond allocation with age without considering the current context have people 40+, especially those about to retire or already retired, in an asset class that is already showing pricing stress and on the verge of a long term exit according to my system. 

Currency - DXY under all pivots from 12/20, reached long term support of 1HS1 but weak bounce so far and likely lower on Monday.

OTHER TECHNICALS
Weekly RSI on NYA Composite Index and many others highest in history. NYA from 1993, SPX from 1980, Dow Ind from 1970. I am not saying these are the proper beginnings of these indexes only what I can see on TradingView. Only NDX had higher weely RSIs than now in 1995. So we are in monitoring phase - watching for at likely several higher highs in price with lower highs in RSI and inside Bollinger bands, then ultimately forming with RSI near 70 or lower. This could take years to play out. Or perhaps this time around, we will see a flash crash for a more swift resolution of the overbought condition. 

New highs and new lows - new lows increasing somewhat but new highs so strong that a significant top will likely occur with a lower peak.

VALUATION
SPX has pushed above the 10 week average of 19X forward earnings for the 2nd week in a row. Yardeni's SPX and Blue Angels (google it) are literally going off the chart. 

SENTIMENT
Daily and weekly put-call at multi year lows. This indicator also requires context. For example, the absolute low was 5/2009 and puts were at a very low level from December 2008 on. Investors had already sold stocks with less to protect or knew the the worst had likely past. But considering 2010 on, daily put-call at current levels end of 2010 (followed by 6 months of choppy range followed by -20% drop), end of 2013 / beginning of 2014 (-10% drop in next weeks), and June 2014 (followed by another extended range period and correction). 

While I think we will see the YR1s, perhaps after shutdown related drop and recovery, this implies one should start thinking about taking profits on the next high.

TIMING
1/4 - middle of up, non event
1/10 - mild pullback low
1/15 - i thought high 1/16 at the time, also looking like mild pullback low (+1 on 1/16)

Oil

Well I am just happening to notice a few things here...

CL1 continuous contract quarterly chart at falling 20MA resistance

CL1 M
On 200MA.

CL1 W
Highest weekly RSI this decade. Last seen with oil above 100.

Cl1 D
Near enough to YR1 / 1HR1 combo; Q1R1 rejection seems about to happen.

RSX
Maybe this is the best vehicle with YR1 and 1HR1 rejections on same day.

Total market view

REVIEW
1/7/2018 Total market view: "All systems go for stocks with all USA mains, the four sectors that I track (SMH XBI XLF XLE), and all 8 global indexes (ACWI, SHComp, FXI, EEM, KWEB, INDA, EWZ and RSX) all above all pivots. Bonds are clearly the weak link with TLT, AGG and LQD below 1HP, Q1P and JanP. ... Interestingly metals making a move with GLD, GDX and SLV above all pivots; partially reflecting DXY weakness below all pivots."

All these moves continued: stocks higher, bonds weak, metals up, DXY lower.

SUM
Equity indexes have had an amazing start to the year. SPX and INDU weekly RSIs of 88-89 are both significantly higher than levels reached in the 1990s. Markets are in a euphoric blow-off phase and we are likely to see higher highs in Q1 and 1H; in this kind of environment we 'should' see at least some main indexes reach YR1s before a major top. 

Assuming one is decently long with some GLD/GDX the thing to do now is monitor to make sure the portfolio remains long leaders and decides when to take hedging positions to lock in some gains. 

As noted from the first week, bonds are weak across the board while metals were clearly the place to be. Interestingly, VIX and XIV have not shared index enthusiasm so i think the next place for a trade is UVXY. See safe havens for details on this setup.

Simply stated, even if indexes pause next week, given momentum i think we will see YR1s on at least 2 of 5 main indexes and likely more. This means market going higher. Dollar weakness is an obvious tailwind for all overseas markets and commodities. The commodity theme could be especially worth watching along with value as a factor; as healthy global economy along with commodities as an asset class near the bottom of returns for most of the decade could combine for a healthy rebound in returns this year. 

PIVOTS
USA main indexes - SPY, DIA, IWM and VTI all cleared Q1R1s last week (QQQ cleared 1/5), all without any trouble. SPY and NYA even above 1HR1 with QQQ and VTI testing that level, DIA and IWM a bit more to go.

Safe havens - VIX lows 1/3-4, and XIV top near JanR1 and some minor fade from that level. GLD, GDX and SLV above all pivots partially due to DXY weakness. Bonds the weak link and long term investors should watch their allocations and take defensive action if dividend adjusted technicals weakness further. See safe haven post and tweets for details. 

Sectors of note - XLE on a move along with oil. SMH has not made a new high; in addition, the all time highs on XBI and SOX worth watching. 

Global indexes - All 8 above all pivots so the question is relative focus. I had recommended INDA in Dec, and long time favorites EEM and KWEB recovered above all pivots later in Dec. FXI was trickier entry with a massive gap. My time is limited for this project, and cannot do everything I'd like, but developed ex-USA also looking great due to $DXY plunge - for example EFA and EWJ both particularly strong.

Currency & commodity - Oil getting institutional rotation to start 2018. DXY below all pivots and likely going lower. Also, since commodities have been near the bottom of asset allocation models for many years, think this could be year for significant improvement. Not sure the best way to play this but will likely benefit RSX and EWZ.

OTHER TECHNICALS
New highs / new lows very strong, and likely slowing highs and more new lows before a turn that matters. MCO also suggesting strength. 

VALUATION
18X acting as support, with SPX bumping up against 19X 10 week average forward P/E.

This could add to pause idea with some shakeout or volatility spike as next move.

SENTIMENT
Also something to watch because risk will increase as crowd get more bullish and more leveraged. 
Daily put-call back near relative lows; weekly put call on the lower side but not really extreme.
AAII correctly massively bullish to start the year; a bit lower last week. Bull-bear spread top 2.5% of all readings since start of index in 1987.
NAIIM surprisingly weaker but seems that IWM caught up late last week.
ISEE index moderately high reading 1/8 but averages room to go up.

Bottom line is getting up there but given fade last week not across the board extremes which we will likely see near a major top.

TIMING
1/4 - middle of up, non event
1/10 - mild pullback low
1/15

$USD

DXY charts look terrible; obvious tailwind behind all global indexes and commodities. 

DXY
Breaking slightly under 38% Fib from 2006L to 2016H at 91.12. Q100MA also nearby at 90.71. Seems like we will see 80s. 

M
Same Fib. Monthly 10MA sharply lower and near resistance on the bounce. Again seems like we will see 80s. 

W
Weak RSI pattern. Probably we will see RSI tough 30 again at minimum.

DXY D
Below all pivots from 12/20 and opened 2018 below all pivots. Red line is 2016 low.
 

First long term support 1HS1 90.03; YS1 87.59.

NHNL & MCO

New highs soaring, now lows just a slight rise from very low level.

MCO
Despite lengthy stretch of red in October and November, only a pullback to 20MA and 1 day below that (NovP near exact tag). December reds just pullbacks to rising 10MA.

Very healthy market and I think we will see YR1s in Q1.

Safe havens

Sum
The interesting thing is that VIX and XIV are not sharing the enthusiastic start that indexes have enjoyed. Typically VIX and XIV wind up being on the right side of markets.

A strong start of 2018 was expected - OK not this strong, but still, right idea. I was also on top of GDX YP hold in mid December and GLD moving above all pivots on 12/26, and holding those positions. But now I think the next move to watch is XIV / UVXY as a trade against XIV JanR1; triggered if XIV below its weekly pivot next week.

Also, on a larger level, the market and pivots is making it so clear what is to be avoided or at least underweight; these are bond indexes below 1HPs such as TLT, AGG and LQD. AGG even below its YP as well. 

Now, because the yield is impacting the return, long term investors are already getting a clear warning sign of these as an asset class and would do well to check stockcharts.com dividend included charts and use a simple YP and weekly 50MA and its slope as a guide to allocations. 

See these tweets if interested:

https://twitter.com/pivotalmomentum/status/952237594703675392
https://twitter.com/pivotalmomentum/status/952238688448126976

VIX
D: Low on 1/4 some divergence to indexes, but comfortably below all pivots.

XIV
D: Very near JanR1 tag on the high sof ar. Well above all pivots due to Dec spike, but could be worth watching as r/r trade on UVXY. XIV below a weekly pivot next week would trigger this trade.

TLT
D: Low near 1HS1 and rebounded back above YP somewhat. Still well under 1HP, Q1P and JanP.

AGG
D: Under all pivots. Low on 1HS1 exact so far.

LQD
D: Below 1HP, Q1P and JanP.

HYG
D: Holding large pivot cluster of YP, 1HP, Q1P and JanP all 87.24-50.

GLD
D: Pointed out on 12/26 as back above all pivots worth a position. Doing well and now easy hold above Q1R1.

GDX
D: Pointed out on 12/13 as partial position based on YP recovery. 8% up since then.

SLV
Even SLV above all pivots due to $DXY plunge.

USA main indexes

Sum
Power move continues with SPY, DIA, IWM and VTI all clearing Q1R1s last week (QQQ cleared 1/5). SPY and NYA even above 1HR1 with QQQ and VTI testing that level, DIA and IWM a bit more to go.

Broadly speaking YR1s seem like done deal and likely to be seen in 1H if not Q1. Current JanR2s on SPY and IWM possible pause areas. 

SPX / SPY / ES
SPX W: Reached 1HR1 in the 2nd week of the year. YR1 seems likely if not next week then likely in Q1. Also note last touch of long term pivot June 2016. Wow. 
SPY D: Above 1HR1, JanR2 test. Next levels above are Q1R2 and then YR1. 
ES H D: Last day below a monthly pivot 8/29/2017; nearly all of that time above 10MA as well.
SPX sum: Amazing move just becomes even more stunning. Keep it simple target of YR1 from first week nicely on track. Currently JanR2 maybe a level to pause and consolidate, but bullish to be above 1HR1 in the 2nd week of the year. 

NDX / QQQ / NQ
NDX W: Testing 1HR1, with YR1 and 1HR2 very doable targets for Q1.
QQQ D: Testing 1HR1 after getting through Q1R1 without any trouble. 
NQ H: Below a monthly pivot as recently as early December. 
NDX sum: Healthy, above all pivots and MAs. Testing 1HR1 but not above like SPX.

INDU / DIA
INDU W: Going for 1HR1, not quite there yet; then above that YR1 likely.
DIA D: Since reclaiming above all pivots in early Sept, just no sign of any trouble at red resistance levels. Last test of pivot 12/1 with exact hold of DecP. Above Q1R1, heading for 1HR1.

RUT / IWM
RUT W: Going for YR1 / 1HR1 combo.
IWM D: Through Q1R1, JanR2 top so far. Big cluster at YR1 / 1HR1 and Q1R1.

NYA & VTI
NYA W & D: Above 1HR1 already, going for Q1R2 then YR1 above that.
VTI W & D: Testing 1HR1.

Total market view

REVIEW
12/31/2017 Total market view: "I wouldn't be surprised to see risk start off strong in 2018 but at the same time I doubt it will be a repeat of January '17. ... Moderately long, getting out of the way of tech, global focus INDA, with a starter GDX from 12/24 and later bigger add on GLD on 12/26, seems a fine way to begin 2018."

Result
2018 starting strong; adding back on tech, SMH, EEM was a great start to the year.

SUM
All systems go for stocks with all USA mains, the four sectors that I track (SMH XBI XLF XLE), and all 8 global indexes (ACWI, SHComp, FXI, EEM, KWEB, INDA, EWZ and RSX) all above all pivots. 

Bonds are clearly the weak link with TLT, AGG and LQD below 1HP, Q1P and JanP. They maintain above YPs though. Also, for investing purposes, better to use total return technicals before avoiding as an asset class. More on this in a dedicated post soon. 

Interestingly metals making a move with GLD, GDX and SLV above all pivots; partially reflecting DXY weakness below all pivots. 

As this is happening put-call has lifted off low levels, and new high / new low chart looks very healthy with new lows remaining at low levels. 

Long and strong with some remaining GLD going fine; if we see more signs of top then IWM looks like first choice for short hedges. I'll avoid TLT unless it recovers above all pivots or trades down to YP.

PIVOTS
USA main indexes: Keep it simple likely to be reached targets are SPX YR1 2830, NDX YR1 6984, INDU YR1 26504.

Safe havens: Stocks stronger with TLT below 3 of 4 pivots. 

Sectors of note: Last two touches of SMH pivots were great buys: 4/18-24 break then recovery of Q2P and AprP; 7/3-11 test and hold of 2HP, recovery of Q3P then above JulP. 1/2/2018 hold of JanP and Q1P. 

OTHER TECHNICALS
New highs / new lows have a flat new low line. No worries until we see that drift higher.

SENTIMENT
Standard put-call still working quite well as sentiment measure; off low levels of early December.

VALUATION
Heading for 19X forward earnings? SPX above 18X on real and 10 week moving average basis since October.

TIMING
1/4 (middle of up)
1/10
1/15

Safe havens

Sum
VIX and XIV remain the most reliable safe haven tells and they are both comfortably all systems go for stocks. 

Bonds are clearly the weak link in asset classes with TLT, AGG and LQD below 3 of 4 pivots (all above YPs, below the others). HYG weaker in Q4 but zoomed above all pivots on 1/3.

Metals also strong with GLD, GDX and SLV all above all pivots, partially reflecting DXY weakness; but GLD some toppy reaction from Q1R1 so far. 

VIX
VIX D: All systems go for risk with VIX below Q1P and JanP cluster 11.39-50 then YP and 1HP both 12.29.

XIV
XIV D: Well above all pivots, but not yet at Q1R1 or JanR1.

TLT
D: Below 1HP, Q1P and JanP; above YP.

AGG
Still holding on to YP, but below the others. 

LQD
Below 3 pivots, but well above YP.

HYG
Helped confirm risk on with jum pabove YP, 1HP and Q1P on 1/3. 
 

GLD
Jumped above all pivots late in Q4; so far move stopped at Q1R1.

GDX
Also above all pivots, not yet at resistance.

SLV
Above all pivots.

USA main indexes

Sum
All 5 USA main indexes above all pivots, with tech settling any concern of weakness on 1/2 by lifting from its JanP. SPY, QQQ and NYA are already above Q1R1s. The first long term targets of 1HR1s are already within reach, and given strength so far YR1s seem like very reasonable targets (and we should be aiming that way regardless with all indexes above YPs). IWM is the lagger and so far first choice for USA short hedges. 

SPX / SPY / ES
SPX W: Last touch of long term pivot was June 2016. Heading for 1HR1 2776, YR1 2879.
SPY D: Already pushing above Q1R1 and JanR2.
ESH D: Last close below a monthly pivot was in August - amazing run.

NDX / QQQ
NDX W: Nearing 1HR1 6752 then YR1 6984.
QQQ D: Above Q1R1 and near JanR2.
NQH D: Launching from JanP a tell for strong start.

INDU / DIA
INDU W: 1HR1 25970 then YR1 26504.
DIA D: Due to range differences in Q4, not yet above Q1R1 like SPY and QQQ.
 

RUT / IWM
RUT W: Unlike the others, weekly RSI not yet above 70.
IWM D: Above all pivots, not yet at JanR1.

NYA & VTI
NYA healthy and above Q1R1.
VTI similar but not yet at Q1R1.

Total market view

Very abbreviated post. For those reading thank you for your interest in my thoughts on the market. All the best for the new year. 

REVIEW
12/24/2017 Total market view: "Of the 5 USA main indexes only NDX/QQQ showing any trouble at major resistance. As of last week said 'mildly long' with a small GDX (remaining TLT was cut). Added to INDA as that looks to be the strongest name in the overseas indexes, and KWEB also back above all pivots as of 12/18."

QQQ (and related sectors) continued weaker, INDA zoomed, GDX popped. As noted last week in Daily comments GLD zoomed above all pivots, and TLT recovered above all pivots as well.

SUM
Near the end of every quarter I have said watch for signals happening now or early in the new period as they are often definitive. So far what we have seen is GLD and even GDX recovering above all pivots on 12/26 and 12/28 respectively. In addition, TLT once again above all pivots for last three trading days of the year. 

I wouldn't be surprised to see risk start off strong in 2018 but at the same time I doubt it will be a repeat of January '17. 

Moderately long, getting out of the way of tech, global focus INDA, with a starter GDX from 12/24 and later bigger add on GLD on 12/26, seems a fine way to begin 2018. Good luck!

Total market view

Another abbreviated post.

REVIEW
12/17/2017 Total market view: "Heading into holiday week giving stock bulls the benefit of the doubt especially after the strong rebound last week."

Recent suggestions of TLT long and exit, GDX long, and INDA focus on global indexes all playing out well.

SUM
Market closing out the year in strong fashion. Of the 5 USA main indexes only NDX/QQQ showing any trouble at major resistance. VIX and XIV continue to support risk assets though XIV top on 2HR3 not exceeded last week (but didn't drop either). 

As each quarter end approaches, it is often a good time to have some cash ready and watch for good setups. Often these moves are definitive. At the end of September 2017 stocks launched and that turned out to the the deciding move of Q4. I can go on and on with other examples across USA stocks, sectors, global indexes, commodities and currencies. Pay attention to new themes and leaders towards the end of next week and into 2018 Q1. 

Sentiment is often toppy around the holidays but without degradation in other breadth measures like new highs / new lows, and the broader indexes like NYA, VTI and ACWI, market is OK. 

As of last week said 'mildly long' with a small GDX (remaining TLT was cut). Added to INDA as that looks to be the strongest name in the overseas indexes, and KWEB also back above all pivots as of 12/18. 

Bottom line - Stocks continue to ignore resistance. So far pause without any damage on SPY DecR1, DIA between levels, both IWM & VTI holding Q4R1 as support. Only QQQ has mild fade from 2HR2 but hey clearing YR3 does not happen every year. 

Safe havens VIX and XIV supportive of risk unless XIV breaks Q4R3. TLT and AGG weakness helps stocks in my book (yes I know at some point we will see stocks down on rising long term rates); only trouble spots seem to be HYG and LQD with stocks content to ignore credit for now. Despite bounce in GLD and nice pick on GDX these aren't yet above all pivots.

I will change my tune a bit if we see more warning in safe havens but given seasonality thinking 2018 will start with a bang. 

More on the usual sections next week. I also plan a more detailed review of my timing work in the near future. 

Total market view

Abbreviated posting this week - Total market view only, no charts on typical supporting posts.

REVIEW
12/10/2017 Total market view: "Although there are major resistance levels worth watching - SPY & VTI Q4R3s, QQQ YR3, IWM YR1 and NYA YR2 - the trend gets the benefit of the doubt especially with all USA mains above all pivots. VIX and XIV fully supportive of risk assets, and most other safe havens not threatening risk." 

Result - SPX & VTI Q4R3, IWM YR1 and NYA YR2 rejections 12/13-14, but VIX and XIV continued on the side of risk and indexes came roaring back on Friday 12/15.

SUM
VIX and XIV remain reliable clues for the market, last week ignoring the resistance rejections across SPX, INDU/DIA, RUT/IWM, VTI and especially the usually very reliable NYA; and sure enough indexes rallied back by the end of the week. 

Global indexes, notably China, have recently turned into the weaker link: SHComp trading Q4P, EWZ also already below Q4P, FXI, KWEB and EEM below DecPs. Benchmark ACWI, INDA and RSX above all pivots. 

TLT has been surprisingly strong - and if using this type of methodology, you don't have to think too hard about taking a position. Widely disliked and panned in strategist 2018 recommendations but all of a sudden perking up in December and above all pivots? Sure, why not? TLT higher despite index strength on Friday. Also note for the files, again a safe haven long easier than stock index short hedge. 

That said, TLT also finished near quarterly resistance on Friday so I don't know the next move from here. Heading into holiday week giving stock bulls the benefit of the doubt especially after the strong rebound last week. 

Interesting levels to watch: SPX DecR1 2684 then Q4R3 2668; INDU DecR1 24652, NDX/QQQ 2HR2 6489; RUT/IWM YR1 1518; and NYA YR2 12735. Then on safe havens there is TLT Q4R1 128.78 and XIV Q4R3 133.14.

PIVOTS
USA main indexes: All 5 USA mains above all pivots and above all MAs. Though several experienced selling from resistance last week including 2 yearly levels (on IWM and NYA), trend strength keeps winning.

Safe havens: VIX and XIV on the right side of markets; VIX below all pivots from 12/5 and clear risk on bar 12/6; XIV closed above all pivots from 9/11 on. TLT stronger yet metals weaker; GDX recovered YP last week also worth watching for partial positions (more likely to play out well fi stocks weaker).

Sectors of note: Locked in gains on SMH long 11/27 with a short-hedge and covered on Friday. Along with QQQ taking over leadership into the end of the week, both of these could be worth watching on long side.

Global indexes: As noted above, only ACWI, INDA and RSX above all pivots with China weakening somewhat across SHComp, FXI, KWEB and EEM (China influenced) all below DecPs.

Currency: DXY in Q4 has stopped dropping but that isn't saying too much. 

OTHER TECHNICALS
All 5 USA indexes (including both sets of the pair that i could as #5) are outside quarterly Bollinger bands! This is very rare - setting the the likelihood of divergence highs before a larger drop. 

VALUATION AND FUNDAMENTALS
SPX soaring above 18X forward earnings this quarter in correct anticipation of tax cut.

SENTIMENT
Put-call near 3.5 year lows. 

TIMING
As it turned out, 7 dates provided for August. 2 were the high and low of the month. 2 were the second high and second low of the month. 2 were milder turns. 1 was non event.

Planning on a full review review of 2017 2nd half timing dates soon.

September dates
9/4-5 - 9/4 mild pullback low
9/13 - QQQ high and TLT low
9/22 (+/-1) - stock index high 9/20 (miss)
9/26 - stock pullback low 9/25 (-1)
9/29 - non event

October dates (listed from 10/1)
10/6-9 - 10/9 mild pullback low
10/19 - pullback low
10/23-26 - 10/25 pullback low

November dates
11/13 mild (non event?)
11/19-20 risk off (mild pullback low 11/19)
11/22 risk on (markets up esp 11/21)

December dates
12/1 (pullback low)
12/12 (mild trading high 12/12-13, but taken out by most indexes 12/15)
12/20-22