5/8/2017

No change to USA main index pivot status, with all 5 above all pivots as IWM held MayP again. SPX is right in key resistance area of 2400-2407 and so far weak selling gives edge to bulls. 

VIX collapsed under Q2S1 slightly, and appears 1HS1 is doable. XIV reached next target zone of MayR1 to 1HR3. TLT, AGG and GLD all weaker as well. All this is bullish for risk assets.

But a few items of concern:
SPY still stalled at 3/1 close high.
ES1 continuous contract some selling from YR1 (it is pesky to have slight variations in cash, ETF and futures levels but that's how it goes being thorough).
DXY strength, potentially jeapardizing global overweight - better for DXY to stay under YP.
China weakness via FXI and SHComp, could drag EEM down.
INDA slight break of MayP.
Advance-decline volume difference negative on daily & weekly charts.
Average true range on SPY on daily and weekly charts places where correction more likely (more on this soon in a blog post).

Despite these concerns I think the thing to do is hold again and take action if more pivots speak - ie, if IWM breaks MayP that will be a reduction. If VIX or XIV has a bearish conclusion for risk, then that would be an additional point to reduce. I will hold INDA one more day. 

If you are more bearish and are looking for shorts, start with indexes below Q2Ps: XLF, FXI, EWZ. SHC and XLE are below all pivots, as well as USO, but shorts on the latter are simply late. (Ps, these shorts are not counting as portfolio recommendations).

SPX, SPY and ES1 below. 

5/5/2017

Cannot argue with holds on RSX and EEM, so taking off those hedges puts portfolio back to 120%. Market hasn't gotten politics right so hesitating to add further even though it looks like market wants to break out up. 

As usual a lot more coming up on the blog. SPY, RSX and EEM below. 

5/4/2017

What an odd day. Oil semi-crashed, yet safe havens were down. Some global stocks dropped, but SPY finished +.12%. 

The two portfolio changes yesterday helped, with 1 unit EEM hedged and RSX short catching a -2% drop and a break of the 1HP, now an easy hold below that level.

Although IWM closed just below its MayP, decent hold of Q2P so that is still alive. The entry was a judgment call on long (vs QQQ or SMH) and while it looked great for a few days, gains faded when I elected to hold for higher targets after test of Q2R1. A decent jobs report could get this moving again. Also - other data providers show IWM closing above its MayP on 5/3.

China via SHComp testing YP and FXI testing Q2P interesting to watch.

We'll see what happens tomorrow. SPY, IWM, RSX below.

Note: SPY has stalled in May below the close highs but no serious selling yet. I don't think the sell in May move will be that easy. I am still pulling for higher targets and may even add longs soon.

5/3/2017

Today I count more +s on the bull side than the bear.

USA main indexes still above all pivots
IWM held MayP (could have broken)

TLT and AGG below MayPs (could have recovered)
GLD hammered (and GDX below all pivots FWIW)
VIX & XIV no change

However, global indexes were hit as $DXY firmed and even closed above its YP slightly. Portfolio currently is overweight global stocks via EEM, INDA and KWEB, and DXY strength threatens this trend. EEM and KWEB have pivot resistance rejections as well, EEM from 1HR2 and KWEB from Q2R1.

Portfolio is 120% long, and I may have missed the exit on IWM. However, right now IWM just held and global stocks look more vulnerable, so I think the thing to do is: hedge out 1 EEM unit and short 1 RSX. This will allow to keep the leaders yet be a little less exposed. We'll see how it works out.

EEM hedge valid below 1HR2; RSX short/hedge valid below Q2P.

SPY, IWM, EEM, KWEB, RSX below. 

5/2/2017

Not much change to markets today. Happy with EEM and INDA; IWM disappointing compared to loading up on QQQ. 

All USA mains above all pivots; no change to VIX and XIV; other safe havens GLD, TLT and AGG remain below monthly pivots.

This is not the day to adjust anything. 

SPY below. 

5/1/2017

SPX, IWM and VTI all having trouble at the 2017 close high levels, but today is still a win for the bulls due to the pivot status of safe havens.

GLD under monthly pivot first time since 3/20, ending multi-week stretch of above all pivots.
TLT & AGG also under MayPs, ending condition of above monthly pivot that was in play for April.

QQQ still flying and just being overweight tech was the easy way to outperform this year - alas, I did not take best advantage of this move. QQQ hit Q2R1 today and YR2 is just above. Ideal high looks doable here, SPY YR1, QQQ YR2, DIA YR1, and VTI YR1, or some combination of these. 

SPX, SPY, QQQ, IWM, GLD and TLT below. 

4/28/2017

A positive close for risk assets in April is better than things looked for a while, but today left several things to be desired if you are in the bull camp:

VIX reversal bar, from AprS1 and 2014 lows
SPX set double top rejection (see today's blog post)
IWM smash!

In addition:
ISEE highest reading since 10/2016 was yesterday 4/27, right before biggest drop in months

I'll try to figure it all out on the blog this weekend.

SPY, IWM and VIX below. 
 

4/27/2017

Markets doing fine - I like seeing weak selling when fully (and now leveraged) long. VIX seems intent on reaching the 9s.

There is some noise about Democratic gov't shutdown which does give me some concern on the leverage, so I may take that off tomorrow.

SPY and VIX below.

4/26/2017

Today was a trickier day than most to call. All five USA main indexes are above all pivots, yet there was some selling from a few resistance levels and previous close highs. We also know that by valuation 2398 SPX (18x forward earnings measured by 10 week MA) is going to be tough to get through. In addition, safe havens were up.

There is a legitimate case for taking the leverage off, but given lack of bullish sentiment and lack of daily RSI overbought readings I'm going to chance it and hold.

If you think differently, here are the -s:
SPX 1HR2 & 2017 close high rejection (SPX within 10 points of key target level today of YR1 2407)
INDU AprR1 test and fade
RUT Q2R1 resistance (not rejection yet though)
VTI AprR1 near tag

VIX reversal bar from key low area
GLD & TLT strength

+s
In addition to USA mains above all pivots, where bulls have earned benefit of doubt - 
VIX below all pivots, XIV above all pivots and holding above YR2
Daily RSIs not overbought
No bullish extremes in sentiment yet  

I'd just rather see all those YR1s on more bullish sentiment for a better top. See the blog for details.

SPX, SPY, VIX and XIV below. 

 

4/25/2017

Portfolio looking good here and leverage so far the right way. I think we can see SPY retest of YR1 area. Risk is now the AprP - great r/r setup.

SPY & VIX below. 

4/24/2017

Somehow 4/21 post didn't make it to publish stage but no matter - no change to positions that day.

The Pivotal Perspective delivers again! The VIX 1HP rejection and multiple Q2P holds last week, in addition to EUR chart looking fine especially compared to DXY, gave me confidence to be fully long. Current portfolio already 100% in and the global indexes all did great with DXY down. 

Now I think there is the case for some leverage:
VIX below all pivots
XIV above all pivots
TLT Q2R1 rejection, AGG YP/1HP rejection
(ps, GLD continues to lead among the safe havens and despite the % drop today the intraday rally mitigates the "look of rejection"; that said, high on Q2R1)

USA main stock indexes above all pivots across the board, including NYA. That's right, 5 for 5! Dow/DIA just barely but still.

A lot of other sector & global indexes above all pivots as well.

So what shall we chose? 

Must be above all pivots; if not, then not leading
Don't like vehicles already outside monthly Bollinger bands - this may not be right, but nixes QQQ, XIV, EFA, INDA, KWEB
Don't want vehicles where daily RSI is already overbought or near overbought - again QQQ, EFA
Don't want vehicle to be too far from pivot already - EFA
Don't want vehicle to be running into pivot resistance and am somewhat leery of vehicle already at double top

So I'm just going to stick with SPY 2 units valid above the AprP. If the market comes back and tests that level with weak selling as safe havens continue to fade, I may add even more. I don't think this leg of rally will equal post election into 12/13/2016 highs, or 12/30/2016 low to 3/1 highs, but I'd be happy with a double top on SPY. From that view, risk reward is good for a leverage add.

SPY and VIX below.

4/20/2017

What a difference a day makes. Yesterday I thought the markets were hanging by a thread - but SPY Q2P held in convincing fashion. A lot of items in the bull column today:

+s
SPY & VTI liftoff from Q2Ps
DIA Q2P recovery
QQQ & IWM both above all pivots!

SMH above all pivots
EEM above all pivots
FXI Q2P recovery

XIV Q2P recovery
AGG YP / 1HP rejection
LQD 2 days above all pivots but today fade under 1HP
MUB YP / 1HP rejection

-s
SPY did not recover AprP
VIX still above Q2P and AprP
GLD still above all pivots

Hey, I'll take it. IWM USA small caps are especially interesting here, first time above all pivots since 3/21, a month ago. Tech and semiconductors both back above all pivots as AGG has faded. This is very bullish, and given daily RSIs and long term levels it is possible that some safe havens (AGG, LQD, MUB) just made a very key turn for the year. 

Portfolio has been chopped a bit with plunge last week, recovery, weakness and recovery again but I'll go back to 100% here. IWM is no brainer, 2 units; also need to decently weight tech, so that's usually a choice of QQQ, SMH or XBI. But I'm going to throw a curve ball here and say KWEB, China tech. I first called attention to this ETF last December - and it has outperformed QQQ since then and dramatically so this year. More in a blog post soon.

SPY, IWM and KWEB below.
 

4/19/2017

Ugh. Bounce seems to have failed and markets hanging by a thread. On Monday I said judgment call on how long to go, and I erred on the higher side - now looking like indeed error. Not mistake after election or early January 2017 fwiw.

Odd day - TLT and GLD down, VIX up. XLF down despite TLT move, IWM up despite most indexes red.

+s
SPY & VTI holding Q2Ps, barely

-s
DIA, IWM and NYA Q2P rejections
VIX another lift above Q2P
XIV Q2P break
EEM 2017 leader AprP break
EWZ, FXI Q2P, SHComp rejections
RSX 1HP break
oil

?s
QQQ almost (!) back above all pivots - could have, but didn't. 
GLD Q2R1 rejection, but held monthly level as support
TLT gave back gains, but above level too

Lastly, above all pivots list keeps thinning:

risk
INDA (that's it! - of what I track)

safe havens
GLD
AGG, barely
CIU
LQD
HYG, barely
HYS
(a selection of key diverse bond ETFs)

Pivots are going to make this decision easy. DIA below Q2P, cut both. EWZ Q2P rejection, cut. Portfolio back to 70% long which may be too high.

SPY has held Q2P 5 of last six trading days. The one day that broke was Thursday before long weekend with N Korea nuclear noise. But only 2 of those days that held were encouraging. It feels like there could be a flush. My system prevents me from exiting directly above support, but I am prepared to quickly cut if indexes and safe havens agree on Thursday. An active individual investor could have near expiry puts; a fund could be ready to trade the other way with ES under 2329. 

SPY, DIA and VIX below. 

4/18/2017

I don't regret buying yesterday because the days that multiple indexes hold or recover pivots along with VIX screaming confirmation have just been too many fantastic buys over the past few years. But I'll admit that Tuesday did not deliver everything I wanted to see in terms of follow through.

+s
SPY, DIA, VTI all held Q2Ps - could have broken
ES held Q2P exact FWIW
IWM held + for 2017 (not pivotal but still)
VIX lower!
XIV recovered Q2P

-s
EEM & INDA slammed
small up bars on SPY & VTI suggest weak buying, vulnerable
TLT big up above Q2R1, AGG above YP / 1HP above all pivots! I don't think any benchmark bond index was supposed to be above all pivots in 2017 ;)
GLD higher too

So this is a mixed bag. But the main idea for the returning fully long was USA indexes recovering Q2Ps and VIX massive rejection of 1HP. Those haven't changed, though NYA didn't deliver I'll attribute that to global component. EWZ did close slightly under its Q2P but I'm going to hold it one more day. Not thrilled with EEM, who would be? Did best on the market drop thus far, on the verge of clearing YR1 and today whacked. But still above all pivots so have to hold. But that YR1 was one of the reasons I opted for EWZ add yesterday instead of a 3rd EEM.

SPY, ES M, VIX, EEM below. 

4/17/2017

Per the recent Total market view, stage was set for a bounce and markets delivered. "VIX closing just under its 1HP of 15.99, and some SPX and INDU variations within striking distance of recovering Q2Ps, make a bounce a possibility. Should this happen with VIX reversing lower from 1HP, the portfolio will return more long..."

Let's count bullish developments:
SPY recovered Q2P with decent lift-off (in other words, no weak buying)
DIA & VTI same
IWM back to positive for the year (not pivotal but still)
QQQ rallied back to AprP, now key tell for follow through

Safe havens all confirming:
VIX massive rejection from 1HP - you will see that these days of VIX collapsing from levels are the days to put money to work (see arrows on VIX chart below)
XIV above Q2P fractionally, also key tell for follow through
GLD & TLT mild rejections from Q2R1s
AGG mild rejection of YP / 1HP area

Since our sentiment studies indicated enough bearish sentiment over the past 2 weeks, easy to jump back in here with all this pivot action happening simultaneously and VIX below 16 for session and dropping hard all day. 

2 IWM short covers
+ 1 DIA just take it back to 2
+ 1 EWZ valid above Q2P + AprP only, ie if lower close tomorrow may cut.
+ 2 SPY 

This takes portfolio to fast 100% long. 

If SPY & DIA break Q2Ps again, I will reduce again. Based on the look of the VIX, there is no justification for not entering. It is judgment call here of 70-100% but I think the days that so many key indexes say the same thing are the days to take meaningful action. I'd rather go fully long here and then perhaps leverage if we get back into situation of more stock indexes above all pivots and safe havens weaker than currently. 

SPY & VIX below. Portfolio is 50% global now, so DXY needs to stay weak. I'll confess major risk of France vote could be $DXY strength which would likely be good for IWM and maybe XLF, but bad for the global stocks. I'm willing to buy IWM and XLF above their Q2Ps. I'll have to think about portfolio hedge heading into next week. 

PS - again from Total market view: "Though I have designed this site for the active ETF investor/trader, there is another way to use levels and that would be on high leverage under certain circumstances - meaning when several of these elements combine to produce a high likelihood of a turn. A fund with nimbleness and leverage could choose to "go big" during these times. A recent example would have been shorting the 3/1 highs with SPX YR1 and valuation levels reached, in addition to several RSI and BB extremes that were not likely to last. Another example could be long this week, if Q2Ps recover and VIX drops from 1HP."

That would have been buying size ES 2130+ with only 10 point stop. See ES 2 hour chart below. Not low tick but considering 3/1 sell and 4/17 buy, not bad. Now can rest easy with break-even stop and check for follow through items above on Tuesday to decide to take partial gains or let run. 

4/13/2017

Don't say I didn't warn you. Portfolio has been only 50-60% long since 4/5, when I issued a 'semi-trouble alert.' This is the first time I have spoken in these terms since before the election. 

But is clear that rather than reducing long exposure through hedges and shorts, it would have been better to expand options to be long safe havens. This would mean VIX calls or VXX / UVXY, GLD and TLT, all of which have been on buys in recent weeks or days. 

The damage today:

SPY broke Q2P, turning semi-trouble into real trouble (SPY below quarterly pivot, VIX above quarterly pivot)
DIA & NYA/VTI also broke Q2Ps
QQQ continued lower from AprP
IWM continued rejection from Q2P

All the safe havens continued up, with GLD & TLT both testing Q2R1s. 

How many asset classes are above all pivots now? The list has thinned quite a bit!

GLD obviously, and GDX
INDA
EEM
SHCOMP

It is hilarious that Trump 2016 Q4 faves IWM and XLF are negative YTD. 

Portfolio was forced out of some positions today. It may wind up buying back higher. That's OK, because I am not going to mess around with a genuine trouble alert. If SPX were at the pivot level VIX is now, that would be 2196, -5.6% from here.

- 2 SPY
- 1 DIA
QQQ short hedge cover

Just in case you have lost track, down to:
2 INDA
2 EEM
1 QQQ
1 DIA

-2 IWM short hedges 

40% net.

SPY, IWM, XLF & VIX below. '
 

4/12/2017

Several USA mains close to testing key levels as safe havens continue to power up. 

As these stock indexes test support, there are several things that could happen. Think of it like approaching resistance but in reverse:

a) plunge through, most bearish
b) pause or weak bounce then break, also bearish
c) decent bounce then back down, mixed
e) hold for key low, bullish
e) break that looks bearish, then recovery for bullish hold (this one is most pesky)

Right now we can focus our attention on SPX set and VIX because these will likely decide the market. SPX and SPY tagged the Q2P exact on 4/11 and are both back down near the level on 4/12. ES1 continuous contract also tagged exact; ESM was a few points shy.  

Likewise VIX tagged its 1HP at 15.99 but closed below, with RSI at the highest level since the election. I don't have a backtest on this, but I am quite sure that buying with VIX RSI at overbought gives far better returns than buying with VIX low - in a bull market that is. But VIX above this level would be quite bearish for stocks in my view. 

GLD and TLT strength is very concerning for any stock longs. If I believed these, I'd say VIX is about to move above 15.99 and SPX set break its Q2Ps. 

Portfolio -
SMH broke Q2P, have to cut; I did see the monthly pivot break but looked inconclusive, the next day above Q2P support, today break.
EEM holding monthly pivot for 2 days, one of the strongest asset classes, covering hedges.
Holding IWM shorts, although position thus far has cost despite being right idea to lessen long exposure last week. 
Putting QQQ hedge back on, valid below the AprP.
60% net long. 

Starting in Q3 or whenever is next appropriate, here is change in the portfolio long/short approach that once I think about it seems rather obvious. What has convinced me is the relatively strength of GLD, VIX and TLT vs IWM and EEM short hedges. I think from now on I will not recommend any uncorrelated hedges and focus more on safe haven longs and count them in the same way as short hedges. Originally I was trying to keep the portfolio tracking as a rough guide to my opinion of the strength of risk assets, and also limit the number of potential components of that portfolio. But it is often easier to make money on safe havens than shorts, so this approach was misguided. I will spell this out more in a blog post this weekend.

For now keep it very simple - If SPX set hold Q2P, if that happens, is bullish. VIX staying under 2HP is also bullish for risk assets. Anything lower for SPX set, or higher for VIX, is trouble. 

SPX 2336
SPY 233.31
ESM 2329
ES1 2332

VIX 15.99!

SPY, ESM and VIX below. 

4/11/2017

Fascinating day with lots of pivot action. First let's assess what happened, then we can decide what to do.

On USA mains, QQQ broke its AprP fractionally. If we really want to be thorough (as much as possible, given schedule, I try), we can check cash index NDX, current futures contract and continuous contract. Both futures closed on the level, but are lower after hours. So - USA leader breaking a monthly pivot. This is not a huge deal in the scheme of things, but if we remove QQQ from leader board then it is interesting to see what's left (hint: a few global indexes and GLD & GDX).

On the other hand, SPY, DIA, NYA/VTI all held Q2Ps! This is potentially bullish in spite of tech break. It was almost as if resting institutional buy orders were sitting at the Q2Ps - check SPY below, do you think? 

Lastly, IWM which had been 2017 laggard, rallied to near recovery of pivots. I am not thrilled with this move given positioning, but it is funny. IWM leads down all year and finally stock market starts showing signs of real risk and IWM rallies? Ha!

On the safe havens, GLD remains above all pivots - note there are not so many asset classes left in this category. GDX joined above all pivots today too FWIW. TLT continues above Q2P and AprP, but still below long term pivots, so GLD was the play here (weeks ago, not today). XIV *broke* Q2P and this is disturbing for any stock longs. VIX rallied to, but not above, the 2HP.

In global indexes - keep in mind as recently as the start of April all 7 were above all pivots - INDA well above al pivots current global leader in risk assets; SHComp rallied above its monthly pivot 4/5 and been above all pivots since; ACWI and EEM tested monthly pivots and held, still above all pivots; FXI broke AprP yesterday and lower today; EWZ broke Q2P 4/5 and still below; RSX also below Q2P from 4/7.

Clearly, stock exposure should not be 100% in this environment of safe haven strength. Current exposure is 60% net which was right idea but wrong vehicle as IWM hedge has cost. I go back and forth on this issue of moderately correlated hedges. Sometimes they work, like hedging EEM with FXI and getting more drop on FXI compared to EEM and successful. But here they didn't - right idea to be less long from last week, IWM worst choice vehicle. Sigh. 

Since IWM has rallied to but not above Q2P, holding one more day. What about EEM hedge? If I lift that doesn't seem right to be 100% long yet. 

Now - the question that everyone wants to know - was today 'it?' VIX and several USA main charts look possible. What I don't like is large VIX bar and XIV break, along with USA main leader QQQ break. I think this means more downside. If I had a video we could look at all the VIX explosions of the past few years and thoroughly analyze what worked as a buy bar and what didn't. For now let's say below the 1HP 15.99 and stocks have a shot at key low and rebound; above that and we do have some serious concerns in markets and stocks likely going lower. 

Still, for now, I think QQQ and XIV are the tells and I am not so bullish despite the SPY DIA & NYA/VTI Q2P hold. If on Wednesday QQQ recovers as IWM clears Q2P I may change my mind. 

SPY, VIX and XIV below. 

4/10/2017

Not much change to pivot status. USA mains stay the same - QQQ above all pivots, SPY DIA & NYA/VTI below AprPs but above Q2Ps, and IWM below Q2P.

Safe havens also the same - GLD above all pivots, VIX above Q2P for the first time since the election, XIV below a monthly pivot also since the election, and TLT below Q2P for the first time since September. VIX especially looks threatening here, clear liftoff above levels and above D200 to boot.

Given crowd bearishness mentioned in the last Sentiment analysis on the blog, it is possible that stocks jump higher as safe havens fade. However, I see no reason to change positioning as stocks may be set up to get slammed.

SPY and VIX below. 

4/7/2017

Everyone knows that USA stock indexes were very resilient today, with ES futures finishing ~16 points off overnight lows. Given double whammy of Syria and jobs, does that mean all is OK and Trump bull market can carry on for Q2?

No way! VIX and XIV have together sent the clearest warning signal this year, and SPY, DIA and VTI continue to have trouble at their AprPs while IWM is below its Q2P. Only QQQ holds. 

It will be quite an interesting week ahead, and as usual lots to sort out on the blog this weekend.

SPY, VIX and XIV below. 

SPY - 3 days in a row clear resistance at the AprP
VIX - clear support at Q2P and AprP combo
XIV - YR2 rejection and AprP break on same day - worst bar in months! In fact, only one other day below a monthly pivot since 11/4 was 3/1 and that was only by .02.