Hmm. Several bullish developments of yesterday were undone today. The last few weeks I've been saying watch carefully - especially the Dow YR1 - without making any adjustments to portfolio. I've held QQQ throughout one drop and recovery, despite thinking we might see a re-balancing move out of tech into energy (tech down, energy still lower thus far). But today, given TLT move above its YP and QQQ third break of JunP, think better to exit out of that (a great 7+ month hold btw, just should have added). Tightening stops under EEM longs below the JunP, so any lower will cut those units too.
If there weren't already warnings from Gundach and JPM's head quant, and especially the very low ISEE today, I would think the markets are about to break down. They still might, but given the widespread expectations of summer correction I think perhaps frustration is the more likely move instead of a bear trend. Still, there is just no arguing with TLT clear of YP. I said in the Total market view that a clear of this level would increase the chance of a stock drop and I keep to this view.
Let's try to assess correct positioning:
+s
4 of 5 USA mains above all pivots
VIX below all pivots
XIV above all pivots
So let's not get carried away with bear ideas just yet
But the -s:
QQQ main leader under JunP for the 3rd time this month
IWM Q2R1 rejection
NYA 1HR1 rejection and Q2R1 break
VIX reversal bar after Q2S1 near tag and recent test
TLT YP & 1HP clear!
To watch!
SPY Q2R1 - yesterday cleared, nearly testing today
DIA 1HR1 - yesterday cleared, today testing
VTI YR1 - above since 6/1, another day like today will mean break
XIV 1HR3 / Q2R1 - slight break after clear yesterday, basically testing
KWEB was a later long from 4/20, and was actually one of the best moves in the market from that buy date. A savvy trader would have had a better exit the day BABA gapped up 15% on KWEB's 1HR3, but I didn't say that. Still above all pivots but basically taking gains on the 2nd drop from YR2 area for KWEB.
I'm comfortable with 80% long and will be lower tomorrow if EEM stops out. If markets bounce then I'll be forced to buy back in, but c'mon, TLT would NOT be jumping above its YP and VIX reversing from quarterly levels if some trouble was not brewing here.
An agile hedge fund could be shorting NQ below the JunP, or shorting some IWM based on the crystal clear Q2R1 rejection. The trending short would have been oil based on pivot & MA breaks on CL1 contract and USO both 6/1, but I didn't specify that at the time so not counting in hindsight.
SPY, QQQ, IWM, EEM, VIX, XIV and TLT below.
