SPY continues its pause under 2HR1 without any serious damage yet. To my eyes, weak down looks more bullish than weak up. Although I expect chop and more selling attempts into the end of the month, it is time to start thinking about the new quarter - and that means new quarterly & monthly bars, new Q4 and Oct pivots, and most important, often definitive moves as institutions position.
More on that in daily comments and blog posts to come.
Right now, best guess for stocks this week - upside limited, downside fairly limited, although I'd kinda like to see more of a shakeout before another leg up. If that happens we should see gains in TLT which is remaining above its YP this week so far.
September and August are historically the weakest months for stocks. SPX/SPY so far merely -2.9%, RUT/IWM -7% in August but raced back to highs in September, and now NDX/QQQ putting in a one of the few down month bars since 7/2016. At this point (subject to change) I am expecting a risk on move to begin Q4 as safe havens drop. But at the same time, I am not expecting Q4 to be as easy for the bulls as many people think looking at historical trends for this entire period.
One more quick note - at this point, it is very difficult to find an asset class / index / sector under all pivots. For most of 2017, $USD/DXY and oil were clearly the weakest performers. We know what has happened with oil, and DXY is above a monthly pivot for the first time in months. However, there is something else - SLV.
If correct about risk on into Q4 as the first main move and a bit more to $DXY rally, then SLV could take it on the chin. It is already far weaker than GLD and GDX, and higher timeframe charts look terrible. And to mention again - just about the only thing I monitor currently below all pivots.
Other than that, some of the global names are dropping along with DXY rally and while i think these could go further this week, some shorts are late and i wouldn't be surprised to see dips being bought soon enough. I pointed out INDA weakness over the weekend on the blog, and so far downward follow through. Alas, no inverse ETFs like most of the others I track. EWZ is on my list for a possible quick trade into the end of the week with risk defined at the YR1 SepR2 combo.
SPY, TLT, SLV and EWZ below.
