4/6/2017

Quite a fake-out yesterday, with VIX not following through above the Q2P, and IWM healthy rebound which hurt on the hedge. At least INDA up!

Congestion is the theme here:

SPY, DIA and VTI above Q2P but resistance at AprP; also, all 3 above D50 but below D20 MAs.

VIX closed fractionally below all pivots again which removes the semi trouble alert, but move lower is not clear rejection enough to be fully bullish. That said, XIV looks ready to get slammed with clear resistance on the YR2 level - this would be bearish for stocks. 

I don't know whether Friday will be up or down for stocks, but rationale for QQQ hedge was huge outperformance in Q1 and so I was thinking rebalance might hurt. It hasn't and remains 2017 USA main index leader above all pivots. Taking off hedge goes to 10 longs 4 short hedges 60% net. The IWM is tough but below the Q2P so I will hold it. 

ps: One sentiment measure is surprisingly bearish here, considering stability of market. More on that this weekend on the blog. 

SPY, VIX and XIV below. 

4/5/2017

Heads up! While not a full fledged caution/trouble alert, we have a semi-one today, with VIX close above the Q2P. I don't mess around with VIX breaking out to upside! 

In headline news, the FOMC unleashed the elephant in the room of the 4.5T and given the technicals I think this more than a one day drop.

Yesterday the +s and -s seems about mixed, with slight edge to bulls. Today, however:

-s
SPY, DIA, & VTI rejection of AprP
IWM rejection of Q2P
XLF, popular trade of 2017, also rejection of Q2P
GLD above all pivots
TLT above a quarterly pivot (3rd day in a row) first time since 2016 Q3
VIX above Q2P! (last but not least)
Global indexes - all 7 that I track - all above all pivots yesterday, today ACWI below AprP (and rejection of YR1 on top of that), EEM YR1 rejection, EWZ slightly below AprP 

+s
SPY, DIA & VTI still above Q2Ps
QQQ above AprP - key level to watch!
XIV also above AprP - another key level for Thurs

Today the -s clearly outweigh the +s and it is time to take some action. That said we want to hold what has best chance of rebound. 

EWZ last add was debate compared to RSX and I chose incorrectly; that's out below the Q2P / AprP combo, but may buy back if somehow market rebounds.
Don't like EEM YR1 rejection but still like idea of global out-performance, so will hedge on 2 units. 
IWM 2017 lagger clear rejection of Q2P, short hedging 2 units. 

This takes portfolio to:

10 longs, 5 hedges, 50% net. 

I will change opinion with VIX back under Q2P. If XIV and QQQ cave on AprPs, it may be correct to be even less long. 

SPY, EEM, IWM and VIX below. 

4/4/2017

Markets seem mixed with both positive and negative clues. While I would give the slight edge to risk assets based on QQQ, VIX & XIV, it is still a tough call. Things could change tomorrow, but this is how The Pivotal Perspective tallies things:

-s
SPY, DIA and NYA/VTI below monthly pivots for the first time since November; opens door to test monthly S1s
IWM below Q2P; ie, a main USA index below quarterly pivot
XLF, very popular trade for 2017, also below Q2P
GLD, safe haven asset, above all pivots
TLT, safe haven asset, above quarterly pivot first time since 2016 Q3

+s
2017 USA main index leader QQQ remains above all pivots - key!*
SPY, DIA, NYA/VTI holding Q2Ps
VIX clear rejection from Q2P / AprP combo
XIV clear hold of AprP
All global indexes that I track - ACWI EEM FXI SHCOMP INDA RSX EWZ - above all pivots

?s
EEM 2017 rising star above all pivots, but at YR1 resistance

* When leader holds, trend is usually alive.

As stated above, QQQ, VIX and XIV are saying green light for risk assets despite what other things you may see. And whether it has been Ebola, Grexit, Brexit or many others, when the leader holds the trend remains. Also, considering 2017 other performers global stocks are ALL above all pivots, I give edge to risk assets and not safe havens.

I thought there might be re-balancing out Q1 leader QQQ which is why I put on the hedge. So far still doing fine but if I take it off the exposure is a bit longer than I'd like considering the valid -s in play. Rather than another shuffle I'll just hold one more day.

SPY, QQQ, VIX below.

4/3/2017

An interesting day from The Pivotal Perspective.

USA main indexes were mostly weaker, yet held more important support. By this I mean SPY, DIA and VTI all under monthly pivots for the first time since early November 2016; but on the same day, tests or near tests of Q2Ps were successful. On the plus side, QQQ held AprP. On the negative side, IWM broke Q2P.

Crucially, VIX & XIV did not confirm weakness in stocks. VIX could have closed above the monthly or Q2P, but didn't, and stayed below all pivots. XIV held AprP as support, and so remained above all pivots. Both of these tend to be bullish for stocks.

However, GLD is above all pivots, and TLT is above a quarterly pivot for the first time since the election.

Global stocks - ACWI, EEM, FXI, INDA, RSX and EWZ - all above all pivots. In this sense, conclusions reached in quarterly and monthly chart analysis exactly on track. "I think institutions and technicals agree - global stocks are the place to be, and right now INDA is leading the pack followed by EEM."

So, with portfolio 100% net long and 30% global, what is right allocation and setup here? I don't want to reduce below 100% until VIX and XIV confirm; but at the same time, it is possible to swap things that are below a monthly pivot for what is above. Thus, I think the best move is to cut XLF (below Q2P and AprP), and swap out for EEM (above all pivots); and then cut 1 SPY (below monthly pivot) and swap out for EWZ (above all pivots).

QQQ held its AprP but will hold the hedge one more day.

SPY, EEM and VIX below. I'll try to get full chart workup on the blog soon. 

3/31/2017

Stocks down a bit but no change to pivot status.

FXI short hedge against EEM long was right idea but wrong cover point, sigh. 

Hedging out QQQ just to come back to 100% for the start of Q2. A lot more coming up this weekend on the blog!

SPY below.

3/30/2017

Heading into Q1 end and most USA mains are looking good.

Traders will be watching the 61% fib from the highs - if bears are to make some stand it will be here. See the futures for the reaction on the exact tick. 

There will be a lengthy series of posts coming up this weekend to try to figure out the next big move. 

SPY and ES futures below.

3/29/2017

No change to USA main stock index pivot status, although TLT did reclaim MarP. 

INDA doing well. 

I can't believe mutual fund are so pathetic to think that "owning the winners" at the end of the quarter makes them look good, but so it seems. QQQ and other 2017 Q1 winners leading into the end of March, sigh. 

SPY & INDA below. 

3/28/2017

Cannot really argue with days like today:

SPY lift-off from MarP and D50MA (although heading into falling 10 and 20MAs, OK)
DIA same move as SPY
VTI & NYA recovery of MarP
QQQ 2017 leader didn't even touch MarP and back at highs!
IWM brining up the rear, under MarP, along with XLF

VIX back under all pivots; XIV jumped back above YR2; TLT back under all pivots as well.

Once in a while these can be fake-outs, but for now it is nearly all green lights for risk. 

Portfolio moves - 
Cover FXI hedge against EEM long, scratch or small gain depending on entry
This take portfolio up to 9 longs and no shorts for 90% net.

And now comes the trickier part. By pure momentum leaders the choice should be QQQ and INDA. I am just concerned about quarter end moves which would imply both of these doing well this week then hit next week (assuming some re-balacing out of tech and maybe INDA). 

I'll go with INDA because I think theme of global market out-performance continues, but admittedly don't like this buy point (seems like some chase). This is 10 longs or 100%. I'll also add an SPY for 110%, valid above MarP. 

SPY, INDA and VIX below. 

3/27/2017

Somehow SPY managed to hold the MarP - barely but still. DIA held too.

But VIX didn't confirm the move (ie still above MarP), and TLT is above its MarP too. 

No change to portfolio.

SPY and VIX below

3/24/2017

SPY holding MarP despite opportunity to break. Bullish and taking off hedge again. 

A lot more coming up on the blog this weekend. 

3/23/2017

Not much change to pivot status but weak bounce for stocks does not look good. VIX and XIV in particular sounding alarm in a way they haven't in a while. VIX above monthly pivot and clear lift-off; while 2/28 was a fake-out we haven't seen another bar like this since 10/28/16 which was not. That said, 10/28 was a lift above both quarterly and monthly pivots, and here we have just monthly. 

I think things will get interesting in Q2 because several asset classes will likely test quarterly levels, which we haven't seen on most USA main indexes since early November. For now, putting on SPY hedge again for 9 longs, 2 short hedges and 70% net.

SPY and VIX below. 

3/22/2017

Edge to bulls. SPY held its MarP, and let's not forget DIA above and QQQ well above. That means 3 of 5 above all pivots. IWM broke its MarP for the 2nd time yesterday and had fast trip down to below MarS1, so this is back to 2017 USA lagger. VTI held and NYA mananged to hold by two hairs. Still, most USA main indexes above all pivots (all means monthly, quarterly, half-year and yearly, not daily/weekly). Still - not that bearish. 

But VIX is clearly above its MarP and that is a warning sign, along with XIV below its YR2. 

Anecdotally, it seemed like a lot of vocal bears out there.

The last Total weekly view: "Upside for stocks likely limited, but pullbacks will be bought. This has been the view all of March."

Setups today are a bit tough with the mixed signals. Not clear enough to go fully long, but maybe good to buy this dip. Taking off SPY hedge (put on 3/2) for a nice alpha move, leaving 9 longs and 1 short hedge for 80% net. 

SPY and VIX below.

3/21/2017

Whoa! In the first hour of trading, XIV broke YR2, GLD lifted above all pivots and XLF broke its MarP. And it took only 30 minutes for IWM to smash through its MarP. The markets did not look back. 

If you came into the week prepared to hedge or reduce exposure on weakness, then the first indexes to break pivots were the easy choices - XLF and IWM. 

3/19 Total market view Bottom line: "Upside for stocks likely limited, but pullbacks will be bought. This has been the view all of March. Yet portfolio is back to 100% net long via 11 longs and 1 short hedge. If next week plays out more bearish I may reduce to 70-80% long via XLF or other exit, or hedge. If stocks higher then easy to hold current positions. The 1 SPY hedge is valid under the YR1."

3/19 Positioning - "Thoughts from here - Given moves in both stock indexes and safe havens I think index drop is the next move, but this is not something to play heavily since all indexes dropping onto support. Anything not above all pivots is candidate for take (so if IWM drops back down under MarP, that would be a quick out). Anything rejected from major levels or below levels is also a candidate to take gains or hedge."

-1 IWM recent long (only valid above the MarP) was out
-1 XLF, breaking MarP early in the day
-1 FXI hedge for EEM long, FXI YR1 rejection

That makes 9 longs and 2 hedges for 70% net long. 

Now what? SPX set MarP is key. Remember, this decline started on the 3/1 top with rejection of major resistance cluster on the SPX set of YR1 / 1HR2 / Q1R2. Given all the months above pivots I would not be surprised to see some S1s. Also, if VIX stays above its MarP tomorrow then trouble is more for real. 

SPY, IWM, XLF, EEM, FXI, XIV and VIX below. 
 

3/20/2017

Mild pullback continues. EEM doing great above YR1 and other March long INDA continuing higher as well. Trimming 1 of 3 XLF on 3/16 looking even better as a partial exit. Recent IWM long not delivering but above MarP so will hold. 

Hope the data providers take care of XLF bad tick - otherwise Q2 and AprP pivots will be invalid. 

SPY, EEM, XLF and IWM below. 

3/16/2017

Regular readers know of the "Yearly Pivotal Promise". Like most promises, it is not kept all of the time, but generally the odds are very good. For example, on the INDU since 1950, there have only been 4 years that have NOT made it to trade a YS1 or YR1. (If price reaches within 1%, I consider that close enough.)

So this is the basic point - most asset classes will reach a YS1 or YR1 during the year. It is a very good bet to make. And the YP is the dividing line on what we are expecting to see. Obviously, an asset cannot reach a YS1 without below below the YP first. So very simply - above the YP means shooting for YR1; below the YP means shooting for YS1, until the YP pivot status changes. 

The Yearly Pivotal Promise has already been fulfilled on QQQ and INDA, and "close enough" on SPY. Today XIV and EEM joined the club. 

Things look very bullish for stock indexes here, but at the same time, SPY and XIV testing major resistance. My current expectation is for a range, but in this kind of momentum, we cannot rule out higher. Currently portfolio has 10 longs plus 1 short hedge for 90% net. IWM has not done well in 2017 but is lifting from weekly chart moving average support and recently reclaimed status of above all pivots. So, adding 1 IWM for 11 longs, valid with daily close above the MarP. 

SPY, IWM, XIV and EEM below. 

3/15/2017

Despite being only 90% long, I was rather happy to have cut IWM hedge yesterday for a small gain (today +1.55%), taken gains on 1 of 3 XLF longs (today -.16%) and kept recent EEM long (+2.61%)! Not to mention other March long INDA soaring too. 

Also keep in mind that the reason for 90% instead of 100% is a hedge - not a short which is a different perspective. The SPY hedge that remains is based off the YR1 / 1HR2 / Q1R2 cluster. I don't mind holding because I recommended it right off the highs and it won't cost much even if market goes higher.

To be honest, the $USD / DXY is how I thought stocks would move this year - weaker, and moving higher with struggle. So opinion was wrong, and my reluctance to be more leveraged has cost some gains. Q1 exposure has ranged from 70% long - 120% long, while in Q4 2016 was very comforable with max long at 150%. After February with GLD above its yearly pivot have limited to 100% long. In hindsight (which is always 20/20) that was too cautious.

Holding SPY hedge and 100% long, hard to find good buy setups today. No change to portfolio.

SPY, INDA and EEM below

 

 

3/14/2017

Still largely bullish action for USA main indexes, with no change to pivot status: 4 of 5 above all pivots, and only IWM below the MarP. IWM tagged its MarS1 today and looks like it could be some kind of trading range low.

But what is really bothering me this week is the VIX. VIX has been one of the most reliable tells on the market for years. I have stated many times on this site that the very best setups are when the 5 USA main index and VIX/XIV all (or nearly all) say the same thing. This kind of line up happens only a handful of days in the year, like last summer's Brexit low and day after, post election, January 3, etc. 

And yet, in the last few weeks, VIX has given more fake-outs than at any period I can recall. After the 2/3 VIX confirmation of stock buy signal, the next moves were: 2/28 VIX stock reduce signal, to be follow by big stock gap up; 3/2-3 VIX stock buy signal, to be followed by stocks lower; 3/9 VIX caution signal, to be followed by stock bounce; 3/13 VIX stock buy signal, to be followed by drop.

I can accept this as period of chop or conclude that something explosive is about to happen. I'm not sure. 

Portfolio was 110% long and 20% short for 90% net heading into today. IWM looks more like a low, but given VIX I don't want to be fully long. I think better to hold the recent EEM long even though entry not ideal. I'm opting for taking hedge on IWM off, leaving 100% net long; but also taking gains on 1 of 3 XLF, to reduce to 100% long and 1 short hedge remaining on SPY for 90% net long. 

SPY, IWM and VIX below. 

3/13/2017

If you force yourself to buy what is a relative leader, occasionally there is a nice surprise. I'm talking about the latest rec of INDA long from 3/3. Earlier in the year would have been better, sure, but when the real buy signal was given the portfolio was quite long already.

You win some, you (don't lose much, ideally) on some - like RSX which looked good for a few days then faded. But that was cut for a small gain and that left room for a rotation into strength which was INDA. Now INDA is an easy hold above the YR1. 

Portfolio heading into today was 10 longs, 2 short hedges for 80% net. GLD is holding its YP but the bounce looks weak. VIX gave a very clear signal that is is OK to be fully bullish on stocks. Think it is OK to add a bit leverage on  decent risk reward long above all pivots. Adding EEM, 1 unit; stop is daily close below the MarP for now. 

SPY, INDA and VIX below. 

3/10/2017

Bullish action for stocks as indexes rebounded and NYA clearly held its MarP over the last two days on this pullback. SPY and NYA below.