For several reasons, I have been skeptical of the market from late May. Without elaborating, I thought that Dow YR1 would stop the rally enough for a decent pullback (meaning 4-5% on SPX). Even yesterday this appeared to be the higher probability outcome, but without VIX & XIV confirmation elected to hedge a bit and not cut too much.

Today DowYR1 held as support, with VTI also back above YR1 despite the rejection of yesterday. In addition, SPY had huge lift of near test of YR1, and QQQ has held YR2 - again - as support. All this is very bullish. Think about it - Dow above YR1 significantly reduces the chances of a major turn here, and opens the door to Q3R1 or Q4R1, 2HR1, or YR2 for a top. This means substantially higher than now. Similar logic on other indexes like VTI and SPY. I have to grit my teeth to say it, but given the year so far maybe YR3 is in the cards for QQQ. We can only think that way when QQQ is above YR2, which it is.

So we can chalk the 6/27 move as yet another false break - and there have been several this year!

In addition, TLT sold off and closed a bit under its YP. This is not enough to be rejection but XLF took the move in stride for a very healthy advance. Even before the bank news after hours, it was clear that IWM and XLF were holding up better than other indexes per pivots and moving averages.

Anyway, bulls in charge. I'm going with it. FXI hedges out, bringing portfolio to 80% net. Buying 2 XLF and 2 more IWM valid above the Q2R1 for now. IWM has had tendency to get smashed near highs so tight stop on that. Still in the smaller counter-trend plays from Monday, long 1 USO and short 1 SMH. 120% net long. This is underweight tech which I think it is right, but may shift some of the SPYs into QQQs or SMHs in near future.

And yes, of course I wonder about a fake-out, but when 4 different yearly levels turn into support for USA mains, there really is no choice but to follow along for the ride.

SPY, DIA, VTI, QQQ, IWM, XLF below.