Regular readers know that I have not been full on bullish despite giving the edge to stocks over safe havens. This was mostly the right take, as safe havens TLT and GLD (and GDX) have gotten crushed, but stocks are also down.
From the latest Total market view: "Bottom line - I want to be bullish stocks with tech and global stocks doing fine above all pivots, oil rallying, safe havens crumbling, and VIX giving the all clear without being too low. At the same time I don't like this combination: YR1s acting as resistance on 4 of 5 USA main indexes, monthly pivots acting as resistance on 3 of those, and the same 3 daily 50MAs rolling over with downward slope. Sentiment is a bit too bullish on ISEE as well."
From 10/10/2016 SPY daily: "But, sorry there are two buts, ISEE is just too optimistic here with a close of 151. This is the 3rd highest reading of 2016. Also SPX a shade above YR1 2163 but not enough to say conclusively either way; in my view it still "looks like" resistance."
So the result was a slam of the SPX YR1 2163 which - again - looks like key resistance. Let's assess the damage:
SPX set Q4P break, with exception of ESZ contract
INDU set Q4P break
NYA / VTI Q4P break
VIX closed above Q4P too
All that is bearish.
But market leader NDX set (NDX, QQQ, NQ1, NQZ, COMPQ to be thorough) is a simple pullback to OctP. So this is not a total victory for the bears either. In the past, for whatever reason - Grexit, Ebola, Brexit, etc etc - when the market leader holds pivots the larger trend is alive. So watch the Tech set OctPs tomorrow!
If you took advice in the latest Total market view, you might have lost some gains compared to 10/10 but slapped on hedges early on DIA / SPY, while holding tech and semi-conductors on USA positions. Global stocks getting hit by stronger $USD, yet recently oil also doing well (both per recent posts BTW). This means I'd rather get out of global stocks ie FXI / EEM, because they are now under OctPs, and hold QQQ / semi-conductors, which are above. Biotechs looked great on September pullback, but have been weaker in October thus far.
If I had to pick a favored scenario here, I'd say SPY, DIA, VTI go to Q4S1s and QQQ visits Q4P.
This is my bias... but I will position on charts and not my opinion.
SPY, SPX and QQQ below. Note: 7th time we have seen selling from SPX YR1 level since September.