There is a lot to say but let's start with this: I so nailed this move.
I have been pounding table about VIX and XIV since 7/25, and pointing out again and again that the market may be making a critical turn in a seemingly unending trend.
7/29/2017 Safe havens: "We could have just seen the major turn in XIV for the year. If you think this is too much a stretch then please review the charts towards the end of this review (posted 7/25!) and see if you are convinced that seemingly unstoppable trends can and do end on yearly levels. Next move critical for XIV. Any weak up that is still under YR3 could invite a big drop."
7/28/2017 Featured posts: "So if you are not getting the point about XIV being on YR3 with me pointing out GDX major high, China multi-decade high, GLD all time high, SPY & QQQ multi-decade highs, I cannot really help you."
OK, i know, yesterday's news. Now what? Risk management means acting in early stages of trouble, not after the train has left the station. Any doubts of whether selling was real this morning only had to check the critical VIX 2HP / Q3P 12.28 that I have been pointing to all quarter. Of course, a lot depends in your time horizon and flexibility of account.
The key questions from here - far will it drop? And is this another false move like 4/13 and 5/17?
Answering the latter question first - no, I don't think it is a false break. Why? Because VIX and other safe havens are much stronger this time. Because all indexes are breaking down, including the global leaders. How far? Tough to say in advance, I'll take it day by day and week by week. After so many months of low vol, and a nearly 3 week distribution for SPY, and 6 month distribution for IWM, we might have more than a few days down.
The rundown -
SPY Q3R1 rejection, and break of AugP and D50MA
QQQ same as SPY
DIA 2HR1 rejection
IWM 2HP / Q3P rejection!
VTI AugP & D50MA break; NYA YR1 rejection!
VIX soaring above 2HP / Q3P combo; above Q3R1
XIV plunge, testing Q3P
GLD above all pivots, testing Q3R1
TLT testing YP
If pivots recover on risk assets - ie SPY, QQQ, VTI reclaim AugPs as safe havens fade, that would be bullish but I am doubting this. More bearish would be stocks lower, XIV Q3P break, TLT above YP.
Good luck out there - and if you didn't make money on UVXY hopefully regular readers at least knew to avoid some losses.
8/6/2017 Total market view: "Bottom line - Larger trends for stocks intact. But with safe havens strengthening, VIX divergence and XIV bang on YR3 it is time to pay attention to risk management."
SPY, IWM, TLT, VIX, XIV below.
