All hands on deck! Low vol dream has ended - i think. But at the same time, don't fall in love with the downside - this could have been a one day bear wonder.
As I have been doing earlier this week, let's consider the +s, ?s, and -s on the USA main indexes, safe havens, and some other sectors and global indexes:
+s:
All USA main indexes above all pivots (period!)
4 of 5 (SPY QQQ DIA VTI) closed above all moving averages (10, 20, 50, 100, 200, 400) - only IWM slightly below 10, but held 20
NYA still holding YR1 as support
VIX below all pivots, and below all MAs except 10
XIV could have had massive rejection from YR3, but inside made massive intraday rally to finish near the level; along the way, held JulR1 and Q3R1 as support!
TLT below 2HP (ie no demand for safe haven asset)
INDA, 2017 global leader, held YR2 as support
In addition, several indexes held rising moving averages as support - including IWM, XLF, and many others
?s
DIA testing Q3R1
-s
QQQ slight break of Q3R1, and sliding after hours due to AMZN*
VTI also slight break of Q3R1, and below JulR1
IWM JulR1 rejection
SMH Q3R1 near tag and fail; JulR1 fail
EEM YR2 near tag and rejection; 2HR1 and Q3R1 also resistance
GLD above all pivots (demand for safe haven asset)
So far it still seems +s outweigh the -s, but there is a major * footnote to all this. Undoubtedly the intraday rally was in part due to hope of AMZN earnings which was dashed after hours. As such, NQ futures are back near intraday lows as I type. Anything back under the June 2017 highs in QQQ / NQ would be bearish.
I think today is one of the tougher judgment calls of the year. With all USA main indexes above all pivots, VIX below all pivots, and XIV above all pivots, I just have to give the bullish trend the benefit of the doubt. And yet this does feel different with VIX awakening after being in a coma the last few weeks and the major level rejections that are happening after hours.
Often I am in favor of hedging and did some of that, but also raising cash:
Coming into today
2 SPYs are still OK
3 QQQ - 2 valid above the Q3R1, so 2 are gone
1 SMH - don't like today's reversal bar, out
EEM has 3 resistance levels in play here - YR2, Q3R2 and 1HR2. That is a lot, with daily chart RSI overbought for much of the last 2 weeks. Holding 2 INDA, but may reduce further on Friday. Judgment call whether to take the IWM shorts as mentioned in yesterday's daily note. Since cutting, thought additional hedges too much.
2 SPY
1 QQQ
2 INDA
1 EEM
2 GLD
80% total exposure, 60% net long.
SPY, QQQ, INDA, EEM, XIV below.
