One more improvement, but not the clear bullish signal we want if looking to take off hedges and go back to being leveraged long. VIX dropped under all pivots, so one "should be" more long. But SPY, DIA and VTI still clear resistance at Q4Ps.
I always say buy leaders and run through a mental list daily - what is above all pivots? What held on recent low that others broke? The last time I did a specific blog post on this was 10/8. There has been a stock index drop and some recovery since then, but main points remain.
Would you rather be long tech QQQ right now or DIA? Of course, QQQ long above all pivots and DIA hedge short below Q4P. EEM or FXI? Could be both, as both held Q4Ps exact on 10/13 low (thought I highlighted EEM as a buy rec on 8/3). But right now if adding longs then EEM is above all pivots and FXI is not. Easy.
I could go on quite a lot on this topic but wanted to give some examples about how I am thinking about positioning. Long tech, some financials, semi-conductors, global stocks via EWZ Brazil, EEM Emerging markets, perhaps some FXI China, RSX Russia, PIN India (in fact PIN back above all pivots as well); then also recently long oil and/or oil related as thoroughly emphasized in 10/1 Total market view; all while holding some DIA / SPY short hedges, while out of any TLT / GLD / GDX longs from the first half of 2016 (or short), is doing well. One could also be long XIV based on idea that it held near Q4P test and only spend one day below OctP, otherwise all above this month. There are not so many asset classes that can match that!
If the market drops tomorrow we want to add hedges on what is moving off key resistance - DIA, SPY. If higher and the USA mains close above Q4Ps, then we want to reduce our hedges and add on leaders. If we have a point where all 5 USA mains are above all pivots, then I'd say back to max long (that probably isn't tomorrow due to OctP on SPY). We'll see what happens.
SPY, EEM, XIV, VIX below.