Despite dropping from major resistance levels that I have highlighted in the last two daily posts, USA indexes rallied back during the session. Today has to count as a win for the bulls.

SPX still declining from YR1 and NDX still pausing at YR2; but still no real rejection. In addition, DIA held MayP, VTI held near test of MayP, and IWM held Q2P for the second time this month.

Unfortunately safe havens are not adding much clarity - XIV pointing to the bull side, but VIX still rebounding above Q2S1, and both TLT & GLD thus far are holding key levels, ie, not confirming the strength of stocks.

The purpose of daily analysis is to decide whether the current exposure level is correct and if a change is warranted. Just two days ago on 5/9 I thought slim chance of market powering through SPX YR1 and NDX YR2, and reduced long exposure from 120% to 70% through a combination of 2 long exits and 3 short hedges. Despite concerns in three main components of the Total market view - pivots, other technicals, valuation & fundamentals - today's action forces me to conclude that the market may climb higher. If so, 70% is wrong. That said, I yet don't feel comfortable going back up to 100%. Cover 1 SPY for 80% and we'll see what happens.

ps: Hilarious that XLF and IYF now look the worst among many stock indexes. Financials were the Wall Street favorites for 2017, remember? Both are barely positive for the year, and have been below Q2Ps for most of the quarter.

SPY, SPX, QQQ, IWM and XLF below.