11/10/2016

Fascinating. Markets are almost never boring - frustrating at times, elating at others, but (usually) not dull. 

We are seeing major shifts due to anticipation of policies under new leadership. Consider the TLT and XLF move that I posted about pre-open today. TLT just sank through its YP on without any attempt at bounce! Now I happen to think that a bounce is more likely in the works soon, but anything that stays below that YP level is still weak. 

Also consider Dow new all time high, and NDX/QQQ down! That is a change from the usual - perhaps not so odd this year 2016, but certainly 2009-2015 when tech was the leader nearly every time.

So much to say, but in interests of brevity, several major levels already in play:

SPX set YR1 area - so far pause not rejection, potentially very bullish to clear.
Tech set Q4P - needs to hold for the better bullish scenario. If lower this would be the second break, and possibly alter the market leadership for some time to come.
INDU set YR1 - finally made it! I've been looking for this level every since March when the YP cleared and then when the YP held again after Brexit. The highs in August came with 100 points and boy was that frustrating. I didn't quite expect the YR1 tag to happen in this fashion, but hey, DIA clearly above all pivots on 11/8 so the choice to enter was there. 
RUT set also back to YR1.
VTI back to YR1.

These days of multiple USA main indexes all on yearly levels are fairly rare. Add in TLT 1 day break of YP, and GLD nearly testing 2HP. 

Basic bullish is QQQ holding and the others clearing their YR1s.
Basic bearish is QQQ break and safe haven rebound.

Also, I noted yesterday that "EEM/FXI noticeably weaker however, both under Q4Ps as all 5 USA mains held or recovered." If you took that cue you cut EEM longs or even considered a short, as recent qualifications for a good entry were all met.

SPY, QQQ, DIA, IWM, VTI and EEM below. 

11/9/2016

If today doesn't prove the value of a rules based technical analysis system then I don't know what does. Consider, with the higher prospect of a Trump presidency markets were down 9 days in a row. Then with Trump actuality, most main indexes were down -4-5% overnight, then recovered in early pre-market for a not terrible open, and the SPX finished up +1%. Amazing!

How can one make sense of this? Answer: you can't, so don't try. Ignore the news and any attempt to figure out why, and just focus on charts - what is holding, what is breaking, what is rallying from support, what is falling from resistance. 

Principal technical rules I am referring to are:

VIX pivot rejection means hold or enter stock longs
Stock index pivot clear or hold on test means hold or enter longs

So, DIA started fractionally below the Q4P and jumped above in the first 15 minutes. VIX started a bit above 2HP and collapsed all day. The Pivotal Perspective is clear. We don't know what will happen tomorrow, but for now, the markets are quite fine. (I suggest keeping an eye on VIX Q4P from here).

SPY above all pivots (YR1 level to watch)
QQQ fractionally above all pivots
DIA above all pivots and on verge of new highs
IWM above all pivots
VTI above all pivots (NYA bang on Q4P)

VIX collapse from 2HP and below all pivots
XIV above all pivots

Sectors of note: XLF/IYF new market sector leaders; XBI/IBB massive jump. EEM/FXI noticeably weaker however, both under Q4Ps as all 5 USA mains held or recovered. 

Oh yeah, TLT. I'll save that for a special post on the blog. 

SPY, DIA, VIX below. 




 

 

 

11/8/2016

USA-X-IT? 

Similar to Brexit, VIX looked fine and markets strong the night of the election. As I type, it is going the other way.

The way it closed 11/8:

SPY at Q4P
DIA above all pivots
VIX below 2HP

So far quite different after hours. We'll see what happens. 
 

11/7/2016

Everyone back in the pool! 

From the 11/5 Total market view: "I will start sounding more bullish on the market when we see Tech set recover above its Q4P (QQQ 114.83), RUT set recover its YP (IWM 116.23), NYA above its YP (10302), and then SPX above Q4S1, VTI above Q4S1, all with VIX and XIV constructive for risk. Until then, cash on sidelines is quite fine."

Amazingly, not even the pros could get in (unless catching the falling knife last Thursday-Friday) with a monster gap even in globex. Everything checks out - Tech jumped above its Q4P, RUT/IWM back above YP, NYA huge jump above its YP; SPX & VTI above Q4S1, and DIA amazingly above all pivots! VIX confirmed with decent looking reversal bar below the 2HP, and XIV had huge hold of YP as well. 

Markets have been wrong on political events before but right now clearly "buying the rumor" for H win. 

Assets I track above all pivots: DIA, SOXX, IYF, XLF, EWZ, DXY; with EEM and FXI not far behind, just a shade under NovPs. 

SPY, QQQ, IWM, NYA, VIX and XIV below. 

11/4/2016

Everyone is talking about the daily 200 moving average on SPX, but The Pivotal Perspective is already bearish. 

SPX set broke Q4S1 with the level even acting resistance. Of course 9 days in a row and RSI fully oversold means everyone looking for the bounce (including me earlier this week), but so far it is not happening. 

Also:
NDX set could have recovered Q4P, but didn't
INDU broke NovS1
RUT could have recovered YP, but didn't
NYA broke its YP; VTI Q4S1 also acting as resistance

Also, VIX 2HP acted as support!

All this is quite bearish for stocks. Things could change with the election news so we'll sort it all out later this weekend. Since a lot of charts coming up later this weekend, just SPY and VIX for now. 

11/3/2016

Wow, that was ugly. For the last two days, when we tallied what had held and what broke, the bulls were far ahead. Not today. 

SPX set broke Q4S1s
NDX set broke Q4P (very key for market)
INDU slightly under NovS1
RUT continues below YP (!) (also key for market)
NYA testing YP, VTI broke Q4S1

VIX soared above the 2HP (very very key) and this means trouble. Even though it is still under the YP, to see a huge lift above the 2HP is the worst VIX move on a long term level (YP or HP) this year. Any partial aggressive buys yesterday are off based on this. Due to the election, perhaps VIX stays elevated since any sane person holding longs will likely want some put protection for 11/8.

VIX was initially fooled by Brexit, meaning that it looked very bullish for stocks on 6/23, but then was clear trouble early 6/24. Yet 6/27-28 were very good tells for the rally that followed. My point here is that I like technicals on VIX very much, but perhaps with a massive wildcard like an election it may not be as reliable as usual. That said I will heed the message and won't take any further long stabs until i see a clear reversal under 2HP 20.07, or we see real panic and up near, but not above, 27.46.

If you are waiting for a proper buy signal then consider what is holding up better than others: SOXX just a small drop below NovPs, all above Q4P; EWZ similar; XLF holding up very well just a bit under NovP and will be first to recover status of above all pivots; EEM fractional break of Q4P, IYF (another financial index ETF) similar, just a shade below the Q4P. Note I don't count DIA in this category even though it has been quite stable, because it has been below Q4P since 10/11.

SPY, QQQ, IWM and VIX below. 

 

 

11/2/2016

In these times of market turmoil I am writing more than usual because it is at these points that The Pivotal Perspective becomes most interesting.

Remember I issued a "trouble alert" on 10/27 and pointed out that it was one of the most technically threatening days of the year. That caution has been warranted. If you are a long term & long only investor and following this site, you have raised cash from mid August and now can comfortably decide whether to be buying. If you are more active and capable of hedging, then you could have had short trades or puts into this drop especially from Thursday or Friday - I don't issue trouble alerts often! Traders could have been short from "one of the most technically threatening days of the year." Now what?

I listed several key levels to watch in yesterday's extended post. Basically these are all 5 of the USA mains (note, NYA & VTI together count as '1' sorry if that is logically inconsistent it is just how I have been doing it) and then VIX & XIV as well. 

Of these:
SPX set so far holding Q4S1s, potentially bullish
Tech set held Q4P for session, broke after close, now trying to rally as I type - inconclusive
INDU set staying quite firm with just a mild pullback to the NovS1, bullish
RUT set broke the YP, bearish
NYA held its YP and VTI held Q4P, both bullish

Meanwhile:
VIX below 2HP with small range up bar sets stage for reveral, bullish
XIV holding Q4P, bullish

So really we have one that looks OK for session but due to after hours we have to mark that as a question; one definitely bearish break; and the rest looking potentially bullish. I say potentially because we need liftoff from these levels and VIX reversal bar to have a buy signal to counter-act the trouble alert from 10/27. If VIX goes above 20.07, QQQ & XIV break their Q4Ps, then that's bearish and there is nothing yet to buy or cover hedges or shorts. 

In addition, smaller range and slightly less volume selling bars, most daily RSI measures among the lows for the year. The aggressive partial buy was today. Technically this is roughly equivalent to 6/27 although I don't know if the results will be the same. You could also wait to see if market delivers a 6/28 move - clear high volume lift above pivots on USA mains indexes, holding key rising moving averages to boot, and VIX reversal - to add significantly more on the long side. If QQQ and IWM stay under pivots tomorrow and VIX is higher, that will look like serious trouble. We'll see what happens, but due to all the points for the bulls when I go through USA mains and VIX/XIV, I'm thinking the low is in or very close. 

All 6 USA main charts along with VIX and XIV. 

11/1/2016

Aren't you glad you are reading this site? 

10/29 Total market view: "SPY Q4P rejection move 10/27 was accompanied by VIX moving above its Q4P. Hence, "official trouble alert" on 10/27 Daily SPY comment. Perhaps we will see another bounce, but technically a move like 10/27 with clear rejection of quarterly pivots, resistance from falling MAs (moving averages) and VIX confirming is fairly rare and ought to be respected with reduction of longs and/or putting on hedges. Sometimes you may have frustration of seeing market come right back, but just as often you have the relief of avoiding a significant drop like last summer in oil and global stocks, 1/6/2016+ in USA stocks, and most recently 10/3+ in TLT and GLD, etc. More important it completely avoids the "hope it bounces so I can sell" mindset that takes over when one should have sold already."

And

"Bottom line - SPY & VIX "trouble alert" issued 10/27 via SPY clear rejection of Q4P and VIX move above its Q4P. Consider previous incidences this year: 1/4-6, 1/29-2/2, 6/24, 10/11. 10/11 not much damage before the next alert issued, and 6/24 turned out quick buy 6/27+, but that was not the case on the first two. Until we see lower levels on stock indexes (ie SPY Q4S1) or recovery and end of alarm I think cautious positioning warranted. This means reduction of longs, more cash, perhaps short hedges though as mentioned DIA shorts have been frustrating."

So if you heeded this advice you have skirted this drop by being hedged, have more cash and less long exposure, or more shorts, depending on your trading / investing style. Now what?

I don't have a crystal ball but these are the kinds of days that can be the key lows. Of course the market could plunge right through levels and keep dropping but when you have multiple USA mains on various kinds of support, VIX higher but holding under long term resistance, and several RSIs near extremes, this is where these turns happen. Although if i had to guess, i'd say small bounce that fails, then lower for the turn. 

Here the key levels to watch from here:

SPX Q4S1 2096 tested and held, along with NovS1 2104
SPY Q4S1 209.04 not quite yet, along with NovS1 210.27
ESZ Q4S1 2084 not yet, along with NovS1 2097

You will notice that the cash version tagged, while the Q4S1 on the ETF and futures are a bit lower.

NDX Q4P 4715 *very key level for market* USA leader still holding Q4P!
QQQ Q4P 114.83 also very near tag
NQZ Q4P 4706 near tag

INDU NovS1 only only right now, 17934
DIA NovS1 179.11

RUT YP 1170 *very key level for market*
IWM 116.23 so far .05 from the low

NYA Q4S1 10364, then YP 10302
VTI Q4S1 107.21, along with NovS1 107.76

Got all that? We have SPX set Q4S1s, Tech set Q4Ps, INDU NovS1s only, RUT YP (!), and Q4S1s on both NYA and VTI. You can count these kinds of critical days in most years on two hands. Ding ding ding! This is a turn, or things are about to get very ugly. 

Last but not least, VIX 2HP 20.07 - very very key as above that means real panic not just heavy selling! And with XIV QP too at 34.17.

Simply stated if you see markets below some of these levels and VIX higher (& XIV lower), that is bearish and you should hold on to hedges and don't buy anything yet. But if levels are holding and VIX dropping, this could be a decent buy.

Right now the things that are holding Q4Ps are most of what I have been pointing out the last several weeks: Tech, Financials, global indexes, XIV.

SPY, QQQ, DIA, IWM, VTI, VIX and XIV all below. 


 

 

 

10/31/2016

VIX up, TLT up, GLD up... USA main indexes flat. Hmm. So that is bullish that stocks can shrug off warning signals, or bearish if the warnings are correct.

We'll have new NovPs tomorrow and I'll let those decide.

SPY & VIX below. 

10/28/2016

SPY continues the decline from yesterday and closed slightly below the OctS1. This low area has been in play since the 9/12 low and tested several times. Will it hold or break down? I'll try to figure it out with the posts coming up this weekend on the blog.

10/27/2016

Official trouble alert today, with SPY clear rejection from Q4P and VIX confirming risk above its Q4P. 

About 2 weeks ago I wrote up a post called "Looks like resistance" because it was one of the few times we had seen SPY being pushed down from a quarterly, half-year or yearly pivot this year. I thought technically that Friday 10/14 was the 2nd most threatening day of the year when both pivots and moving averages were considered (after 1/6). Just because the market has chopped sideways since then doesn't diminish the threat when the technical configurations that produced this alert are repeated, as they were today. 

If you doubt the potential risk of a clear quarterly pivot rejection in a market that has already had a good run up, try sitting on longs in GLD or TLT from 10/3/2016+, or SPY from 1/6/2016+, or USO from 7/2/2015+, etc. 

Perhaps we see a recovery tomorrow but when VIX sounds alarm, it usually pays to listen. 

ps: The list of assets that I track above all pivots is diminishing. Still there:

QQQ
SOXX/SMH, XLF
XIV
EWZ

Falling off the list today: EEM
Falling off the list this week: IYF (another financial ETF), FXI, PIN, RSX

Tech needs to hold or we'll probably see several Q4S1s for a decent low.

SPY & VIX below.

10/26/2016

More points for the bears today, but still markets remain in mixed condition as has been the case for most of September and October. Meaning, many indexes not above all pivots, but a few holding; for stock indexes that have been below pivots, only moves to monthly support (ie not quarterly, yet). 

+s
USA main index leader Tech (QQQ etc) above all pivots
SOXX / SMH (2016 USA sector leader) above all pivots
XLF and some (not all) other financial ETFs above all pivots
VIX below all pivots with Q4P resistance, XIV above all pivots
EWZ, EEM both global leaders above all pivots

-s
SPY Q4P rejection, 2nd move below Q4P
DIA remains under Q4P since 10/11
IWM Q4P break, also 2nd move below Q4P
VTI Q4P break and 2nd move below, NYA continues below Q4P with clear resistance on 10/24

So my view is that this tug of war, though about even, is more tilted to the bears with negatives on 4 of 5 USA main indexes. Also consider that IWM and NYA/VTI together with bearish conclusions means market breadth is weak. But until a main index leader cracks and VIX/XIV confirms it often pays to give the trend the benefit of the doubt (Brexit, Ebola, the list goes on). But if your view is more bearish, then simple, trim some gains on leaders or slap on some more SPY short hedges. 

SPY, VIX, IWM below. 

10/25/2016

Yesterday's bullish developments were quickly undone by a drop back under Q4P on SPY and VTI. 

Per the latest Total market view  from 10/22 on the blog: "Therefore, I think some bounce attempt is the next move. Even if SPY, DIA and VTI can clear Q4Ps - which would be a bullish development, basically taking away the Q4S1 targets for now - I still expect upside limited to OctPs."

The way this played out was bounce above SPY Q4P, with a high on the related variation ESZ contract OctP. So the sum above turning out pretty well. 

Back under Q4P on SPY and VTI again puts Q4S1s in play. IWM is back testing the level near exact, so this will be an important tell for Wednesday in addition to ESZ Q4P at 2134.

SPY, ESZ and IWM below.

10/24/2016

Bullish developments. SPX set back above Q4P after trading under for 9 straight straight trading days. The decline was limited to Oct S1. Still under OctP though, but with only 5 more trading days in the month, the Q4P is the more important level. Tech set continues to lead and looks great - going for YR1 area target. RUT also lifted from its Q4P after barely recovering on Friday. And lastly, VTI reclaimed Q4P.

But INDU set remains the weak link under Q4P, and NYA not matching VTI as well. Still, the overall pivot status changes today were bullish as safe havens continue quite weak.

SPY, QQQ and DIA below.

Long QQQ and hedged via short DIA (and other leaders per the latest Total market view on the blog) although DIA close above Q4P would mean significant reduction of that hedge. 

10/21/2016

A good day to be long tech, financials, selected global indexes and oil - also $USD if you are playing currencies - yet not all in and hedged with INDU / DIA shorts. One does wonder when $USD strength will whack the increasingly popular emerging markets trade. As always a lot more coming up on the blog!

SPY, QQQ and DIA below. 

10/20/2016

Despite the move lower in VIX, SPY, DIA and VTI just cannot get it going as all three remain below Q4Ps. QQQ held its OctP again and higher after hours. If you are long, you just don't want to see USA mains being sold on a QP day after day. Keep hedges, and be ready to add. DXY strength is likely putting a cap on things, and that may soon undo the global stock strength as well. 

SPY and VIX below.

10/19/2016

One more improvement, but not the clear bullish signal we want if looking to take off hedges and go back to being leveraged long. VIX dropped under all pivots, so one "should be" more long. But SPY, DIA and VTI still clear resistance at Q4Ps. 

I always say buy leaders and run through a mental list daily - what is above all pivots? What held on recent low that others broke? The last time I did a specific blog post on this was 10/8. There has been a stock index drop and some recovery since then, but main points remain.

Would you rather be long tech QQQ right now or DIA? Of course, QQQ long above all pivots and DIA hedge short below Q4P. EEM or FXI? Could be both, as both held Q4Ps exact on 10/13 low (thought I highlighted EEM as a buy rec on 8/3). But right now if adding longs then EEM is above all pivots and FXI is not. Easy.

I could go on quite a lot on this topic but wanted to give some examples about how I am thinking about positioning. Long tech, some financials, semi-conductors, global stocks via EWZ Brazil, EEM Emerging markets, perhaps some FXI China, RSX Russia, PIN India (in fact PIN back above all pivots as well); then also recently long oil and/or oil related as thoroughly emphasized in 10/1 Total market view; all while holding some DIA / SPY short hedges, while out of any TLT / GLD / GDX longs from the first half of 2016 (or short), is doing well. One could also be long XIV based on idea that it held near Q4P test and only spend one day below OctP, otherwise all above this month. There are not so many asset classes that can match that!

If the market drops tomorrow we want to add hedges on what is moving off key resistance - DIA, SPY. If higher and the USA mains close above Q4Ps, then we want to reduce our hedges and add on leaders. If we have a point where all 5 USA mains are above all pivots, then I'd say back to max long (that probably isn't tomorrow due to OctP on SPY). We'll see what happens.

SPY, EEM, XIV, VIX below. 

10/18/2016

Some improvements, but only a partial victory. 

+s
USA main index leader Tech (NDX, QQQ, NQ1, NQZ) back above all pivots across the board (note to file, both futures held their OctPs on the low on daily close this month)
IWM back above Q4P (though cash index not quite, and futures also mixed)
EEM Emerging markets and PIN India ETF back above all pivots
EWZ Brazil continues as 2016 global market leader up 10% *this month* - always best to go with the leaders, above OctP 

-s
SPY, DIA, VTI all still below Q4Ps with levels acting as clear resistance
VIX still above Q4P / OctP as well

Long the leaders as and hedged via DIA as suggested in 10/8 Total market view is still a very good position. If DIA clears Q4P then take off hedge. If VIX drops below Q4P then one 'should be' more long. Several global indexes recently gave chances to buy on Q4Ps which all hedge near exact - EEM, FXI, PIN. Shanghai Comp, despite sideways range for months, also looking interesting here. 

SPY, QQQ, VIX below.

10/17/2016

Bearish action for session as SPX set, INDU set and NYA/VTI all continue down from Q4Ps. Tech didn't help with a move below OctP and RUT/IWM dropped under Q4P as well.

Yet NQ futures (both continuous 1 contract and current Z contract) have held the OctP on daily close and making a move after hours. If Tech recovers the OctP for session Tuesday that would be a bullish development. Remember, whatever opinion you may have about where the market should be, when the leader holds / recovers then usually it is best to go with that move. 

SPY, QQQ and NQ Z below.