1/10/2017

Nice hold of JanP by IWM, and QQQ higher. This is bullish. DIA faded, SPY & VTI flat. Mixed action and I don't have a clear read for Wednesday. If betting on VIX & XIV, then still slight edge to the stock bulls - but it wouldn't take much to undo it. 

But what I do think is that the re-balancing moves we have seen thus far: TLT and GLD up, global stocks up, tech notably outperforming - are about done at 6-9 trading days into the new year and quarter. This means I am thinking safe haven high here already in or soon. Let's see.

SPY, IWM, GLD below. 

1/9/2017

SPY and VTI moving lower after the JanR1 tags on Friday. Post election stars IWM and XLF continue to fade, while hot money is moving into QQQ and XBI. 

No change to portfolio but if any lower IWM will be first to reduce. XBI long mentioned 1/4/17 and while only 1 unit it is doing well. 

SPY, IWM and XBI below. 

1/6/2017

Can't complain despite seeing FXI drop back down as nearly everything else is up. The most recent add, XBI, delivering. I was questioning things yesterday with all the safe haven and global stock rallies, but today glad to be in the USA market leaders.

A lot more coming up this weekend on the blog.

SPY and SPX below. Note SPY looks like it should rally further, but SPX tagged its JanR1 exact.

1/5/2017

The market is showing some rotation - sectors that did the best in 2016 Q4 haven't done much, while those that underperformed especially since 11/9/2016 have been stronger. For USA mains it means QQQ up while IWM weaker; among sectors XLF lower a bit, with XBI big up; and most global stocks have jumped while DXY is down. TLT and GLD which had bloodbaths in 2016 Q4 are up too.

Although portfolio went back to fully long as of 1/3, I didn't really catch these moves. Decision to go into SPY better than IWM (wary of exactly what we saw today) but I'd be better off with some global longs or maybe EFA which gave a decent enough buy signal on 1/3 (oh well).

Have to cut the FXI short with a close above the Q1P, so rapidly above all pivots and that is just a sigh... gave back gains but still made some on the position.

Entered week 90% long with 30% short hedges for 60% net long; taking off 2 hedges made that 80% net long; buying 2 SPY longs meant net 100%, added XBI for 110%; but now without FXI short it is 120% net, ie, 12 longs and no shorts. I am a bit wary of this and may have to cut something tomorrow - whatever breaks a monthly pivot will be a candidate to reduce.

SPY and DXY (below monthly pivot first time in two months) below.

1/4/2017

Very healthy action continues with all USA main indexes above all pivots and nothing at resistance yet.

For tomorrow I will be watching VIX JanS1, but I suspect that even if there is some reaction from this level (ie bearish for stocks) it will not be an important stock index high until we see at least monthly resistance on those indexes.

Biotechs via XBI have the most long term strength in quite some time today, above all pivots. This is the first day to meet that criterion since 7/31/2015. Every day since then was below Q3P or 2HP; and all of 2016 was below the YP. This is good enough for a buy but let's say one unit since short term charts are already overbought.

Global indexes have outperformed the most this year so far. Mistake to get out of RSX. Brazil is flying too but entries outside daily Bollinger bands usually suffer too much heat. EEM and FXI are still below pivots. INDA is just above but heading into a sharply falling D50MA so will pass.

Holding FXI short below the 2HP and falling D20MA combo, with last chance stop with daily close above the Q1P. It still will gain as a position at that level, just not as much as a better exit.

Meanwhile 100% net long seems light but oh well. Last year I calculated all the pivots and how they would open in January 2016 and all plans foiled by massive gap. This year I decided to just wait and see, but the obvious move was to be more long for 1/3/2016. 1 XBI takes portfolio to 110% net.

SPY, XBI, FXI and VIX below.

1/3/2017

All USA main indexes above all pivots. XIV above all pivots and VIX below. The only drag is TLT and GLD recovering JanPs, showing some mild pivot status improvement.

Still, this is very bullish action for USA main indexes despite the lack of intraday follow through, and the portfolio 'should be' longer.

Taking off 2 remaining IWM hedges for successful position, recommended in 12/11 Total market view and confirmed 12/12 Daily comment. So starting today with 90% longs and -30% shorts, adjusting to -10% short, equals 80% long. Doesn't seem enough with all USA mains above all pivots, so adding 2 SPY longs to come up to 110% long, -10% short, net 100% long, total exposure 120%.

SPY and SPX below. Note The Pivotal Promise: SPX above YP of 2108 means target likely to be reached is YR1 2407. Between that 2197-2200 at the 1HP and Q1P is strong support.

12/29/2016

While USA mains flat-lined, there was interesting action in the $USD and emerging markets. This gets me thinking about basic scenarios for early 2017:

Recent leaders like USA financials, small caps and $USD take off up again, while safe havens and emerging markets are weaker (of course I'd be happy with this one, and most market participants at this point would be too);

OR, slightly frustrating, safe havens get asset allocation re-balance support for a bit, and the recent leaders pullback more (manageable);

OR, more painful for most, $USD drops, EURUSD rallies and everything that has done very badly recently - like China, India and emerging markets all rally, while USA stocks are sideways at best and possible lower (annoying).

I have no idea what will happen. Currently long the leaders and somewhat hedged, and again losing gains on FXI short. Using typical new entry criteria, very few things qualify among the ETFs I track. The contenders are:

EFA as a short
INDA as a small long, almost (needs more gain above 2HP)
EWZ as a small long (on 12/28)
GLD as a long (not great setup, no rising MAs)

For today I will wait and do nothing. I may take off hedges and go more long tomorrow. Just a hunch on 2016 in reverse. If wrong, then I'll suffer with the market. It will also free more capital up for new positions. 

SPY as usual, then EFA, INDA, EWZ, GLD below, all in new entry chart format with pivots only (no support or resistance levels). 

12/28/2016

Yearly resistance strikes! Yesterday, I "guessed" that markets would break out up. This was wrong! But key point - I did not adjust positioning. This means portfolio still net 70% long, although the 1 FXI short trade lost some gains today. 20% hedged (IWM) means the portfolio has avoided some of the pain on the drop compared to market weight.

Multiple USA main indexes were rejected from major pivot resistance, with XIV also dropping from a key level. So it is a valid question to reduce long exposure further. Tough call, as things could easily rebound soon enough and maybe most of the damage already done.  

I don't know if this is right but thinking semi-conductors have had a huge run and might be subject to more tax related selling pressure in the new year. If we take the gain on that remaining position that will leave the portfolio with a bit more cash. This will help if things drop further, but could harm if the market rebounds and semi's jump yet again. Based on weekly and monthly charts I think this is the right move to take the gain. 

SPY, INDU cash, SMH, XIV below.

PS: SPY YP currently 2212 and YR1 2414. 1HP 2200, Q1P 2203. 

 

 

 

 

12/27/2016

Most USA main indexes still under major resistance levels but if I had to guess it looks like breakout up in very near future. NDX closed above YR1 the first time this year, bullish. 

SPY, then SPX, NDX, INDU and RUT below. 

No change to positioning. Keeping 2 IWM short hedges until daily close above YR2, and still in 1 FXI short. 

12/23/2016

Quiet consolidation continues. While this is more likely to be ultimately bullish, I am wondering if we will see a bit more shakeout before we see Dow 20K. Some people think this levels matters, some don't. Did SPX 2000 matter? It did at times... especially when a half-year or yearly pivot level (support or resistance) was nearby. Given that Dow YR2 is 20029, we can see 20K tag and still be under the more important resistance. That is the area to watch next week. A lot more coming up this weekend on the blog. 

SPY daily, SPX weekly (with 2000 in red) and INDU W all below. 

No change to positioning; 70% net long includes 2 remaining IWM shorts and 1 FXI short. 

12/22/2016

Per the latest Total market view from 12/17, "I think likely that Santa has already delivered and next move sideways or some drop." But if you are following my recommendations, you are getting extra presents via IWM hedge (stop level adjust to daily close above YR2 which did not occur, therefore still in) and especially the FXI short, the worst performing index this week!

Taking 1 of the 3 IWM hedges off here on the rising D20 and near pivot support, meaning portfolio now 70% net long up from 60% yesterday. 

SPY, IWM and FXI below. 

 

 

12/21/2016

Several yearly resistance levels still in play on SPX set, Tech set, INDU and RUT - then add to that NYA 2015 high. We are seeing some RSI divergences on daily charts as well. Yet I could also say the market is acting like it will get through resistance levels at some point. Maybe there will be a stall or scare before that happens. 

Positioning
I added a DIA long yesterday so that if hedges were taken out, portfolio would be back to 100% long (ie market weight). I don't know if that was correct - most people know trading is not a perfection game but a series of "mostly" right moves. In the past few weeks I have lost a bit on defensive strategies after 11/28 but have gained everywhere else, and reduced leverage right on highs and have done well with FXI shorts. 

Current positioning
3 IWM, 2 DIA
3 XLF, 1 SMH
1 QQQ
10 longs = 100%

3 IWM Short hedges from 12/12 near open, stop is daily close above YR2
1 FXI short (from 12/12)
4 hedges / shorts = -40%

Net long 60% 

SPY, SPX, NDX, INDU, RUT and NYA weekly all below. 

12/20/2016

It is good to be a bull these days with stock index leaders IWM and XLF back to highs after a very brief and very mild pullback, safe havens crumbling, and VIX collapsing with no signs of selling pressure. 

IWM is still below YR2 but just by a bit. 

Perhaps I will miss out on some gains but I cannot return to leveraged long with USA leaders outside monthly and weekly Bollinger bands and sentiment in a top zone. But probably I should be market weight here, which means to add on the long side. Adding 1 DIA above the 2HR1 which is slightly above the price where I took it off last week.

In spite of lower net long exposure though, IWM hedge will not cost much and FXI was right choice. 

SPY, DIA, FXI below. 

12/19/2016

SPY and other USA main indexes are still under recent resistance, but on the other hand, no follow through to drop that started last week. VIX and XIV in particular are making the case for a breakout above. I'd believe that a bit more if sentiment wasn't so high.

Adjustments - currently quite defensive and gains from IWM hedge are about gone. As a hedge, however, we're more concerned with downside protection than trading gains - the best hedge is one that doesn't cost too much. At this point I'll just say continue as long as IWM is below its YR2 on daily close (see chart below). 

Short FXI is working but a small down bar on the D200 is a partial take. This may or may not be correct, who knows - but this locks in some gain and shifts portfolio a bit more long.

At the same time I really don't like holding the RSX long given the weekly chart. Let's take the gain on that. 

Heading into today:
3 IWM, 1 DIA
3 XLF, 1 SMH
1 RSX, 1 QQQ
= 10 units or 100% long

3 IWM short hedges from 12/12, stop is daily close above YR2
2 FXI shorts from 12/12 & 12/14
= 5 hedges / shorts = -50% short

After adjustments:
3 IWM, 1 DIA
3 XLF, 1 SMH
1 QQQ (watching to add)
9 longs = 90%

3 IWM Short hedges from 12/12 near open, stop is daily close above YR2
1 FXI short (taking gains from later entry)
4 hedges / shorts = -40%

Still 50% net long. As soon as hedges come off it will be back to more long. We'll see. 

SPY, IWM, FXI and RSX weekly below 

12/16/2016

SPY dropped from resistance as hinted at yesterday, but this time results not as bad as it looks since cash index and futures were more stable. This is normal for the ex-dividend move. A lot more coming up on the blog. 

12/15/2016

USA main indexes rallied but things are not as strong as they seem according to The Pivotal Perspective. SPY, DIA, QQQ clearly closed under resistance. 

VIX and XIV are quite fine here so I don't want to be too bearish but I don't see a reason to change positioning yet. USA longs working, IWM hedge working, FXI shorts working. 

PS - DXY longs doing well!

SPY, DIA and FXI below. 

 

 

 

Currencies

Big levels in USD and EURUSD in play.

DXY is breaking out above its 61% retracement from 2001 top to 2007 low. This site is about pivots but I don't ignore other long term levels like multi-year price highs and lows, quarterly and monthly close highs and lows, and you could add a big Fib level like this to this type of consideration.

When I first created a sort of positioning scale I included DXY longs in the total exposure level and quickly realized this was a mistake. If I took gains on currency then I'd be less than 100% long on USA stocks in a bull stampede market. So that is why I switched to currencies & commodities on a separate scale. But really '2' doesn't reflect my real opinion as comments have been massively bullish $USD since early October, and this was repeated several times (please check tag). 

Anyway, last night I mentioned that YR1 is a "partial take" but The Pivotal Perspective is a clear hold above the level. 

EURUSD is breaking down out of the 18 month range as I thought it would. This is happening several weeks after USD but there it goes. A false break would visit below, suck in shorts, and quickly reverse. This doesn't appear to be false and anyway with DXY above YR1 then it is long and strong DXY and avoid / hedge / short what is negatively influenced by DXY strength. 

Red line is the 2015 low. Below that no pivot support until 1.01-02.

12/14/2016

12/13/2016: "I am bullish for 2017 based on the Yearly Pivot Promise but jeez, multiple index YR levels, option expiration, FOMC and sentiment would make an ideal trading high."

So there you have it. I'm not sure how far the market drops from here but so far this was the right take. For positioning I'm pretty happy with the -30% IWM hedge and -10% FXI short both mentioned in the weekend Total market view and specifically recommended in 12/12 SPY Daily.

Per yesterday's positioning note, we said take some gains off the table to further reduce on the long side if yearly levels looked like resistance. The decision of when to remove hedges and cover shorts will be the tough call. The market may rebound Thursday - opposite of FOMC day move is common - but given political risk of Electoral College I may sleep better being only partially long into 12/19.

Positioning coming into today
3 IWM, 2 DIA
3 XLF, 1 SMH
1 RSX
1 QQQ from 12/7
= 110% long

3 IWM short hedges from 12/12
1 FXI short from 12/12
= -40% short

For 70% net long and 150% total exposure. (Not including 2 DXY long and 1 oil long which is a separate 1-5 scale.) 

Per yesterday's note, if market reacted negatively from yearly levels I mentioned taking gains on DIA. If out 1 then 100% long and the shorts & hedges adjust to for 60% net long. Adding 1 FXI short with Q4P and DecP resistance, below all daily MAs except D200, for -50% short and maintaining 150% exposure. RSX was down a lot and that probably should be the next to go based on weekly chart technicals. 

SPY, IWM, FXI (pivots only chart) and RSX (weekly with standard technicals) below. 

PS: DXY tagged YR1 today. That is a partial take. In 2017 I will do more on the 1-5 scale for commodities & currencies if time permits. 


 

 

12/13/2016

It wasn't a bad day to have recent longs on QQQ and hedged via IWM per suggestion in Total market view. But FXI short so far a mistake, as the Q4P didn't really have "look of resistance" and 2 hour charts already oversold. 

I am bullish for 2017 based on the Yearly Pivot Promise but jeez, multiple index YR levels, option expiration, FOMC and sentiment would make an ideal trading high. 

SPX YR2 near tag, INDU YR2 near tag, RUT YR2 already tagging and resistance, NDX YR1 tag, as well as recent sector leader IXM (S&P Financial Select Index) on YR3. Put-call 10MA on both daily and weekly has collapsed to extreme low levels. It is really all set up here for a trading top.  We'll see what happens.

SPY not on yearly level due to 8/24/15 spike; otherwise, check out all the YR1/2/3 resistance below.

For positioning, if we think market is making a top here we want to lock in gains by taking profits, hedging or shorting. My preference is for hedging because even if this is a trading high I don't think it is a final high - we'll look to pivot resistance in 2017+ for that.

As of yesterday stock index recommendations were 120% long, 30% hedge & 10% short for 80% long total. 1 unit (10%) of that cost on FXI but recent QQQ longs have done well. Given NDX 100 tag, I think take 1 gain on that, dropping longs to 110% and total exposure 70%, and if FXI is visibly above DecP tomorrow then out.

If we do see selling Wednesday and want to further reduce, then XBI remains short option but maybe the thing to do is take some gains near INDU YR2, skip the shorts, and have some cash for a low key & restful holiday season. 

Plus bonus put-call daily view with 10MA... 

And weekly...