12/12/2016

12/11 Total market view: "...this week I'd suggest watching reaction from RUT YR2 1387 which is an amazing accomplishment with lows of year on YS2. The market has surprised me with strength and I suppose that could continue, but I 'think' the next move is sideways or some drop."

So high of the day was 1388 and down from there. 

Yet SPY did not suffer much and DIA even higher. VIX 2nd recent reversal bar is some minor concern, but XIV looks fine. Translation - market likely settling into range. 

Positioning was 120% long (not counting currency & commodity trades) coming into the week, and per Total market view could have had a quick reduction of 3 hedges on IWM as suggested near open and 1 FXI short on close based on the Q4P, taking total longs to 80%. with a partial hedge & short of -40%. Seems about right. I'd like to hold SMH into year end, and the FXI hedges RSX somewhat while being a valid position in itself. Remember, QQQ only valid above the DecP and that extra late long won't lose too much.

If you are more bearish, then XBI also below YP, Q4P and DecP. One could also adjust positioning to have 2 IWM shorts, 1 XBI short and 1 FXI short for same total exposure. 

SPY, IWM and FXI below. 

12/8/2016

I think we can start running the TPP top checklist now... :)

Although I am bullish for 2017 since risk assets will likely open above yearly pivots, and safe havens below yearly pivots - both pointing to YR1s and YS1s respectively - market has reached a point here a trading turn is possible. This one is much better than the Thanksgiving high because it is on much more frothy sentiment. 

Basics of top checklist are:
1) Multiple USA mains on pivot resistance, then rejection? Yes to part a, not yet to part b.
2) VIX and XIV confirmation? VIX sounding some alarm, XIV still OK.
3) Other technicals like RSI overbought and/or divergence, or higher timeframe issues? RSI overbought but sign of strength to be above 70 on most USA main indexes; some are running into weekly overbought conditions. I think other technicals are mixed as there are many signs of strength, and it possible that real high we will see more divergence.
4) High tested with at least one lower high? Not really - only tech set weaker.
5) Safe havens showing concern? No.
6) Breadth or volume divergence? No.
7) Sentiment extremes reached? Much more so 12/8 than previous minor high of 11/25.
8) Valuation concerns? Average of last 20 weeks of 17.5 SPX forward P/E is 2241. 18x would be up to 2305. So yes I would say valuation resistance here.
9) Timing? A few dates in December. 12/1-2 clear pullback low. Next is 12/7-8 but +1 would be acceptable. 

So there are enough Yes's to keep an eye out. More on sentiment shortly. 

Levels in play (all charts below)
SPY DecR1
DIA DecR1 & Q4R3 just above
IWM YR2 (!)
VTI Q4R2

XIV YR1 still holding as support; VIX reversal bars but well under all pivots. 

12/7/2016

Wow. Today was an amazing move after an already amazing move. Maybe it is idea of ECB QE, maybe tax cuts, whatever, but I think the real answer is in the NDX 2000 top. There has been quite a shuffle around this area since August. We have seen selling from 4816 four separate times. But again the market has come back with strength above the level. This is very bullish.

I am mostly happy with recommendations 11/9+. I had already said accumulate financials and that they were the best looking asset class in Q4 *before* the election! I noted DIA strength on 11/8, IWM strength on 11/11, SPY strength on 11/15. Safe havens TLT and GLD crumbled 11/10-11, setting the stage for max long positions in USA indexes which were mostly above all pivots.

But I said take off leverage longs 11/30, and even hedged somewhat on weaker indexes - these moves cost a bit. Everything is easier in hindsight, but it would have been better to run leverage above the DecPs and/or rising 20MAs which weren't even touched on the primary USA main longs of IWM, DIA and XLF/IYF. But consider a 150% long position from 11/15 to 11/28 - not bad. After that was just down to 100% long; and somewhat below that on 12/1, and then back to 100% long over the last couple of days. In fact, if you wanted to add leverage here I would say on QQQ based on the idea that 4th time is the charm above 4816. 

SPY has launched from resistance and so we should see major resistance above for a significant top. This means 225-226 and then perhaps we will really get the party going with YR2 231 by year end. If not on SPY, then IWM YR2 appears very doable. 

SPY, NDX and IWM below. 

12/6/2016

Trump party continues. SPY and IWM fractionally above resistance, DIA and VTI more clearly above. And financials continue melt-up. 

QQQ pennies above DecP but NDX below so jury is still out for tech sector. 

SPY, DIA and VTI below. 

12/5/2016

Bulls winning - back towards highs after mild pullback on most USA main indexes. 

SPY just under resistance, as well as VTI; DIA slightly above; IWM again nearing levels; QQQ still below DecP. The strongest market would have all USA main indexes above all pivots, so that Tech set DecP is the level to watch from here.

XIV helping reduce caution by blasting above YR1 level. Based on this move and VIX, I think right to reduce some  hedge even though EEM and QQQ still below levels (YP and DecP respectively) that made the hedge ideas valid.

SPY, QQQ and XIV below. 

12/1/2016

I have been sounding more bearish in the SPY daily comments since Monday. In yesterday's Monthly charts post on the blog, I noted tech sector weakness compared to the other Main USA indexes. And today we saw most indexes down today with tech leading. 

If you wanted to hold current winners IWM, DIA and XLF yet be less long, then a QQQ short was the best choice among USA mains - the only one under the DecP. This is in addition to the ES futures hedge I mentioned yesterday as a liquid vehicle for the pros at funds. Yesterday's SPY Daily comment also said be ready to add hedges on weakness below weekly or daily pivots. 

Due to XIV move from YR1 area, chances now have increased that we just saw a more important high. I would have preferred it to occur on more bullish sentiment. It could also be a totally textbook working off of overbought conditions with a move back up towards highs in the near future. We'll see what happens. 

Regardless, much better to own current leaders IWM, DIA and XLF over prior leaders QQQ and EWZ. 

SPY, QQQ and XIV below. 

PS - Due to election night, Dec pivots on futures are much different than cash indexes and ETFs. More on that this weekend. 

 

 

11/30/2016

11/28: "Today is the first day with any bearish conclusions for USA main indexes since early November 11/3-4."

11/29: "Re-test of high area under resistance gives bears a shot tomorrow."

So again we see selling from key resistance areas on 4/5 USA main indexes. So the big question is whether this is for real, or simply some end of month profit taking that will jump back up tomorrow. I'm not sure and will be watching new December pivots as well as weekly and daily pivots tomorrow. 

+s
SPY, DIA,VTI above rising 10MAs that could act as support; rising 20MA not far below for QQQ.
4 / 5 USA mains above all pivots and likely to open with that status for Dec (QQQ TBD).
Stall at resistance does not always mean drop; consider 9/10 to 10/10 on SPX, 6 times clear selling from YR1 but kept coming back. #7 was -5% drop from highs before key low 11/4. 
Last but not least, VIX still below all pivots and XIV stall at YR1 but cannot say rejection yet. VIX & XIV together tend to be very right on markets and right now they are saying pause not rejection. This makes for an important decision regarding positioning going forward.

-s
Clear selling from SPY 2HR1 / Q4R1 combo, DIA Q4R2, IWM 2HR2 / Q4R2 combo, and VTI fading a bit under Q4R1 as well. This means we may have seen an important high.
These moves are coming just after RSI fully overbought conditions. 

To watch
One cannot be too bearish if all USA mains open above all pivots on Thursday. That said, if more sentiment measures look extreme and/or XIV looks more like YR1 rejection, then more items on the TPP top checklist are ticking off. 

If I were running a fund, then the solution would be easy; a partial ES futures based portfolio hedge is on based on reaction from Q4R1 at 2210 today. Even if limit order not in bang on the level then 2200-2205 cost basis very doable. This is a low cost (ie 10-15 points, or up to 25 points if giving more room) partial hedge. This locks in some gains on the long side while maintaining long positions. 

If not a fund and/or access to 24 hour futures market, I already recommended on Monday to go from leveraged long to simply fully long. We can also consider a hedging trade here - watch the open tomorrow. I'd be more bearish if it wasn't the last day of the month and start of a new month with this environment could easily be up. That said, there is more political risk ahead in Europe and if EURUSD collapses through an 18 month low, DXY will shoot higher, and this will likely mean drop in the Dow. 

SPY below, ESZ and SPX below... all look like selling. Let's see what happens in the new month. 

11/28/2016

Well it had to happen at some point, especially as more indexes reached official daily RSI overbought territory. Today is the first day with any bearish conclusions for USA main indexes since early November 11/3-4. 

From 11/26 Total market view: "I will sound more bearish on the market if: SPX rejects 2HR1 2209, RUT rejects 2HR1 1342 and INDU rejects Q3R2 19185 along with some trouble on VIX or XIV."

SPY 2HR1 & Q4R1 rejection
IWM 2HR2 & Q4R2 rejection
XIV slight pause under YR1

Also:
QQQ NovR1 rejection
NDU Q4R2 pause
VTI fade under Q4R1, still above 2HR1
IXM (finanicial index) YR2 & Q4R3 break

Yet VIX & XIV don't look like trouble, sentiment is bearish, and indexes after fresh highs will often test before a larger drop. If very long, ie leveraged, I'd come back to simply long here. 

SPY, IWM and XIV below. 

11/25/2016

Still powering up. The charts I pointed out on Wednesday - SPY, IWM and XIV - are still in resistance areas, yet with no sign of pause or rejection. A lot more coming up soon on the blog. 

11/23/2016

Markets continue to power up. SPY approaching key resistance and RSI near overbought, but without other signs of euphoria.

Levels to watch from here: SPY 2HR1 / Q4R1 area, IWM 2HR2 and XIV YR1 / 2HR2 / Q4R1 combo. 

11/22/2016

SPX set is already approaching the next major target area of 2HR1 2209, SPY 220.99 and ES1 2205 after clearing YR1s at 2163 / 217.63 / 2169 respectively.

Despite the run up, we are not seeing signs of euphoria, and other USA main indexes are not on major resistance. This means the most likely scenario is tag of level, then higher or digestion. 

SPY, SPX and ES1 below.

11/21/2016

Amazing TrumpIt rally continues. SPY soaring above NovR2, DIA above 2HR1, QQQ above all pivots, and safe havens TLT and GLD continue to look weak. 

Despite my expectation of some digestion after the initial push of election week, markets just keep going up. After 11/9-11, later entry possibilities were QQQ (2nd hold of Q4P 11/15), SPY (clear of YR1 11/15), or oil (CL1 hold of 2HP 11/14, recovery of YP & Q4P 11/15 and hled Q4P from there). 

XIV nailed the market low and now approaching YR1 major resistance. Let's see if the party keeps going.

SPY and XIV below. 

11/18/2016

SPY faded a bit from NovR2 today. 

Overall action was mixed - QQQ slight rejection from NovP, and DIA back testing its YR1 area. But IWM continues to power up, and VTI is still above YR1 as well. 

If we allow VIX & XIV to settle the issue, then bulls still have the ball and this is more likely a pause that start of a big drop. I'll try to figure it all out on the blog.

SPY & VIX below. 

11/17/2016

Trump honeymoon continues with everything positive for USA stock indexes. SPY looks to be lifting from YR1 which is very bullish. It has run into Nov R2, but no sign of resistance thus far. In addition, all safe havens (TLT, GLD, VIX, XIV) bullish for risk assets. SPY below. 

11/16/2016

Though a stall sometimes precedes a drop, USA main indexes are quite fine today without much change from yesterday. No rejection from resistance, and the weak link Tech / QQQ continues to play catch up. 

SPY could have closed below the YR1 but didn't. Bulls still have the ball.

Of note: TLT looking better above the Q4S3. I got the high in July and pointed to decent shot at trading low over the weekend on 11/13. It remains to be seen how important a low this is, but so far, my attempts to get the turns in bonds have been spot on. Anyway else in media with the same record in bonds this year? Bullish 1/6 on, key high 2/11, one and only speculative short on the site from 7/8, bearish Q4, low likely near 11/11... I don't think anyone can match this!

SPY and TLT below. 

11/15/2016

The Pivotal Perspective is quite bullish today, because several key levels acted as support on the USA main indexes.

SPX set is lifting from its YR1 with the "look of support." See the weekly chart with long term levels below. Though the weekly bar hasn't closed yet, this is opening the door to the next long term resistance level at 2HR1 or 2209. 

The weak link NDX set recovered its Q4P, despite breaking fractionally yesterday.

INDU set is above its YR1 and testing 2HR1 - so, a level to watch for tomorrow. On the ETF DIA, it already looks to be clearing.

RUT set soared above its YR1 on 11/11, and has continued up, ignoring overbought readings. This cannot continue forever, but so far so good. After clearing the YR1 / 2HR1 area, it quickly moved up to Q4R1 / Nov R3 - no damage yet. If that goes we should see 2HR2 at 134. 

Lastly VTI is starting to poke above its YR1 and NYA lifted from its Q4P.

Ding! 5 of USA mains (I count VTI & NYA together as one) have bullish action on key levels. 

Safe havens TLT could not bounce above Q4S3, and VIX & XIV stay very constructive for the market. Perhaps tomorrow will be different but right now long and strong stocks is the right view. 

SPX cash (weekly chart) and SPY below. 

11/14/2016

Though QQQ broke Q4P slightly, everything else still looks quite bullish. SPY mild pause from YR1, but cannot say rejection when NovR1 holds as support.

Safe havens especially all saying risk on: TLT and GLD both broke Q4S3s, VIX below all pivots, XIV above all pivots. Oh yeah, financials, small-caps and biotech continue melt-up.

SPY, QQQ, IWM below.