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Mostly bullish signals for session, with SPY closing a fraction above the Q3R1 that has been resistance the last two days. In addition, IWM could have broken its AugP but held. DIA soared to 2HR1 and dropped a bit from there. Also, XIV slightly above YR3.
But TLT massive buying is typically not the thing you see if stocks are about to launch a major leg upward.
SPY, IWM, XIV and TLT below.
One the of main reasons for caution in the latest Total market view was that 4 of 5 USA main indexes were struggling at Q3R1s, and XIV looked to be having trouble at YR3. No change to any of this today.
After hours seems to be making a move but we'll see what happens.
IWM and VTI are TBD, but currently SPY, QQQ and DIA will open well above new AugPs per the futures contract levels.
SPY and XIV below.
PS - no longer recording each portfolio entry and exit per most recent Positioning post.
Less damage than I expected, but SPY, QQQ and VTI under Q3R1s means risk of lower early next week. DIA suddenly emerging as leader, and IWM continues as main index laggard for 2017.
As usual a lot more coming up on the blog over the weekend.
All hands on deck! Low vol dream has ended - i think. But at the same time, don't fall in love with the downside - this could have been a one day bear wonder.
As I have been doing earlier this week, let's consider the +s, ?s, and -s on the USA main indexes, safe havens, and some other sectors and global indexes:
+s:
All USA main indexes above all pivots (period!)
4 of 5 (SPY QQQ DIA VTI) closed above all moving averages (10, 20, 50, 100, 200, 400) - only IWM slightly below 10, but held 20
NYA still holding YR1 as support
VIX below all pivots, and below all MAs except 10
XIV could have had massive rejection from YR3, but inside made massive intraday rally to finish near the level; along the way, held JulR1 and Q3R1 as support!
TLT below 2HP (ie no demand for safe haven asset)
INDA, 2017 global leader, held YR2 as support
In addition, several indexes held rising moving averages as support - including IWM, XLF, and many others
?s
DIA testing Q3R1
-s
QQQ slight break of Q3R1, and sliding after hours due to AMZN*
VTI also slight break of Q3R1, and below JulR1
IWM JulR1 rejection
SMH Q3R1 near tag and fail; JulR1 fail
EEM YR2 near tag and rejection; 2HR1 and Q3R1 also resistance
GLD above all pivots (demand for safe haven asset)
So far it still seems +s outweigh the -s, but there is a major * footnote to all this. Undoubtedly the intraday rally was in part due to hope of AMZN earnings which was dashed after hours. As such, NQ futures are back near intraday lows as I type. Anything back under the June 2017 highs in QQQ / NQ would be bearish.
I think today is one of the tougher judgment calls of the year. With all USA main indexes above all pivots, VIX below all pivots, and XIV above all pivots, I just have to give the bullish trend the benefit of the doubt. And yet this does feel different with VIX awakening after being in a coma the last few weeks and the major level rejections that are happening after hours.
Often I am in favor of hedging and did some of that, but also raising cash:
Coming into today
2 SPYs are still OK
3 QQQ - 2 valid above the Q3R1, so 2 are gone
1 SMH - don't like today's reversal bar, out
EEM has 3 resistance levels in play here - YR2, Q3R2 and 1HR2. That is a lot, with daily chart RSI overbought for much of the last 2 weeks. Holding 2 INDA, but may reduce further on Friday. Judgment call whether to take the IWM shorts as mentioned in yesterday's daily note. Since cutting, thought additional hedges too much.
2 SPY
1 QQQ
2 INDA
1 EEM
2 GLD
80% total exposure, 60% net long.
SPY, QQQ, INDA, EEM, XIV below.
Great day for The Pivotal Perspective - you could say the portfolio is dollar bearish with significant portion in INDA, EEM and GLD.
+s
SPY maintains above Q3R1 and JulR2 for the 2nd day in a row
QQQ also above Q3R1 for the 3rd day, and higher after hours
NYA same, above Q3R1 for the 2nd day
XIV still maintaining above YR3 (barely but still)
?s
DIA testing Q3R1 with near tag
-s
IWM Q3R1 target fail and rejection
VTI Q3R1 slight break
GLD above all pivots!
TLT 2HP hold
VIX reversal bar
So all that is about even. Keep in mind that recent sentiment measures have been extended, and this increases the risk of a slowdown or shakeout. It looks as if Trump trade IWM and XLF will lead the way if that happens.
Adjustments today - out of XLF. It seemed to be perking up end of June as bond rates took off, but it has stalled. Don't like the reaction of high test. Out of SPY hedges taken 7/24 for small loss. Portfolio is still 2 SPY, 2 INDA, 1 QQQ, 1 SMH, 2 EEM, 2 GLD for 100% total exposure and 80% net long. Not sure if correct but going with QQQ for the additional 2 units, valid above the Q3R1.
So still 100% net long stocks, making $ on the GLD position, and keeping a sharp eye on XIV! Also, IWM is now a leading short hedge candidate.
PS: I think VIX may have bottomed today (on the 7/26 timing date FWIW), or near a bottom soon. I don't know if VIX will go lower to its Q3S1 or start moving up from today's low; the corresponding move in XIV would be a rally to its 2HR1, or simply slide under its YR3 tomorrow. But at the same time, even if today was the VIX low & XIV high, I don't think those betting for a huge move in VIX via calls in the near term will make much money. This has been a massive trend with smart $ players, and they should distribute first. This would mean a subdued period of higher lows in VIX as stocks go higher. Then, possibly in a few weeks or months, a real move higher in VIX. I still will be watching UVXY and perhaps VIX calls for opportunities.
SPY, QQQ, IWM, XLF, INDA, EEM, GLD, VIX and XIV below.
Odds for a melt up just increased.
SPY above Q3R1, and above JulR1 as well
QQQ also above Q3R1 fractionally, but could have broken
DIA above JulR1
IWM powering up above JulR1 to near tag of Q3R1
VTI above Q3R1 as well
Safe havens crushed!
TLT whacked, massive rejection of JulP and Q3P, along with D20 and D50. 2HP key from here.
GLD back under Q3P fractionally
XIV above YR3, barely - but watching this very carefully per this post!
Holding on to GLD longs (but tightening stop) and SPY hedges one more day (partly due to ES futures levels).
Also, watching for XIV under YR3 for a possible counter-trend trade.
Thus far market seems to be dealing with sentiment extremes by rotation - IWM, XLF, XLE, USO, all the 2017 laggards, among the leaders today.
SPY, TLT and XIV below.
Inconclusive day with a lot of mixed signals.
+s
QQQ cleared Q3R1, but weakened after hours
NYA still holding YR1 as support
XIV cleared YR3 (!)
TLT JulP rejection
-s
DIA & IWM continued to drift under JulR1s
?s
SPY & VTI under Q3R1s but pause, no rejection.
GLD JulP resistance, but above YP, 2HP and Q3P
So this is a bit more in the + column although there are still ingredients for a top. But if the markets wanted to top here, or at least have a tradable down move, XIV should have stayed under YR3 and it cleared. Also, TLT could have rallied further but didn't. So, bulls benefit of the doubt.
As noted in the recent Total market view, some sentiment readings have become quite bullish. This definitely increases the risk of a shakeout. On the other hand, August 2015 and seasonals seem quite in mind in a lot of commentary, and corrections don't tend to happen when a lot of people are expecting them. How can these both resolve? A lot of sideways. Or a minor one day bear wonder and recovery.
For now, hedging out 2 SPYs with very low cost position, valid with SPY below the Q3R1. Might think about a very counter-trend UVXY if XIV fades below YR3 or tags 2HR1. Lastly, if GLD weaker short on GDX could work too.
SPY and XIV below.
A pause but so far not rejection on SPY. As usual a lot more coming up on the blog.
Interesting tests of Q3R1s on several USA mains: SPY, QQQ, and VTI/NYA (VTI & NYA are different indexes, but I count them together as broad USA benchmarks). Sentiment is increasingly a factor, with the 3rd very high ISEE reading in just over a week; and a very different AAII reading as well. Safe havens continue showing strength, with TLT threatening XLF especially, though GLD could have been stronger with the very weak $DXY. Add timing with key date 7/21 (something these are +/- 1), and there are ingredients for a top here.
That said, so far the levels do not look like rejection, and VIX and XIV still saying all clear.
Portfolio has 10 stock longs and 2 GLD longs (counting those as safe havens / hedges) so 80% net. A reduction in stocks or other hedge is worth considering. But given look of move so far, I think this is premature. This could easily change tomorrow. Stay tuned. Probably XLF first to cut if any weakness tomorrow along with TLT strength.
SPY, SPX and ESU below, plus XIV. Note the difference in conclusions.
SPY fractionally above Q3R1 level, bullish, but still under JulR2;
SPX under both, more threatening though does not look like reversal;
ESU, looks like reversal about to hit.
We'll see what happens.
PS - if XIV tags YR3 or fades under Q3R1, I may buy puts.
From the latest Total market view: " SPY & DIA should see Q3R1s at minimum." SPY reached the Q3R1 today. DIA is a little shy, but QQQ is at its Q3R1, and VTI almost there too.
It has been many months since I've brought out the TPP top checklist.
1. Multiple USA main indexes on major pivot level resistance, then rejection?
Two directly on resistance, the others close; no sign of rejection yet.
2. VIX and XIV confirmation?
XIV at level, no rejection yet. VIX very mild divergence.
3. Other technicals like RSI overbought and/or divergence, or higher timeframe issues?
Most RSIs are overbought but no clear divergence yet.
4. High tested with at least one lower high?
Not really. QQQ and IWM fractionally higher today. SPY, DIA and VTI new highs.
5. Safe havens showing concern?
Somewhat, yes. TLT above Q3P for 2 trading days. GLD held Y, then recovered 2HP and D200MA in last several trading days.
6. Breadth or volume divergence?
Not really. Advance decline volume difference on weekly & daily charts both strong. Advance-decline issues doing fine.
7. Sentiment extremes reached?
Yes, on ISEE only - last week and again today. Not yet on AAII, NAIIM or standard CBOE put-call ratios. More than ISEE joining in sentiment extreme would definitely increase chance of a top.
8. Valuation concerns? Fundamentals weaker?
Kinda, but these have been the case for several weeks.
9. Timing?
Possible - 7/21 listed as date from beginning of the month.
10. E-wave idea?
I've thought we were seeing wave 5 subdivision of larger wave 3 earlier, but this still could be in process. When this ends, what is left to move is larger weekly chart wave 4 pullback, then wave 5, then finito!
So while top is possible here due to levels, timing proximity and the high ISEE reading, not a lock yet. What to do? A premature exit can cost - for example, SPY on 2/10 reached Q1R1 / 1HR1 combo, and i was thinking pullback. Instead market zoomed above for a February melt up to a 3/1 high. Check the SPY chart below - basically we are deciding if this week is more likely to make a move like February, or a move like March against the quarterly resistance level. Also note May, that had a very tricky 2 day bear wonder that recovered for a great rally.
Basically we want to see how price reacts to these levels, namely SPY Q3R1 and QQQ Q3R1. Any higher is very bullish. A pause or weak selling is also likely bullish. A full rejection along with VIX / XIV confirming the move, with safe haven strength, is bearish.
For now with portfolio already benefitting from the 2 GLD longs, I don't think reduction is warranted. If on leverage, it may have been a good place to take that off. The other option is an SPY hedge based on Q3R1. A huge gap up is very unlikely. This is a low cost hedge. I haven't done it yet, but might tomorrow. I am not quite sure how to hedge INDA and EEM. FXI has been stronger of late, which is dangerous; and oil up, which makes EWZ or RSX hedge unwise. May stick with SPY and possibly IWM for USA, and shorts directly on INDA for EEM if wanting to hedge.
SPY, QQQ, INDA and XIV below.
When levels hold that could have broken, that is bullish when we're looking at risk assets. Today, SPY, DIA (fractionally), QQQ (solidly) and VTI all held JulR1 as support. Several reasons to stay bullish.
That said, I don't like to see strength in safe havens TLT (above Q3P and back above D50MA) and another big up day for GLD. I can say this while being long GLD, because portfolio is fully long (100%) risk assets and only 20% long GLD. More directly TLT strength is jeopardizing the XLF positions which have not participated in recent stock rally, with their high on 7/3 and drifting lower from there. Due to congestion in TLT, I am willing to give this a bit more time before changing out. If TLT dropped, XLF would likely push to highs in a hurry.
INDA also fell a bit from YR2 but the breakout above May and June highs looks for real and willing to let this play out, considering INDA among market leaders this year. (I know, Greece, Turkey, Poland, etc are above INDA in return, but these were extremely beat up coming into 2017; they are functioning as this year's EWZ and RSX). The base indexes on India stocks, NIFTY and SENSEX, are just off new all time highs.
Still considering some hedging play but only after sure that other indexes are topping. Given strength in USA mains, I think an additional hedge would be premature though certainly glad to have played GLD despite my doubts. Hindsight always 20/20 but no need for reluctance when $DXY keeps dropping like a rock - plunged through YS1 without any attempt at bounce.
SPY, INDA, TLT, GLD, DXY below.
Not much change to pivot status. Safe havens were a bit stronger. NYA is testing its YR1 and would be the last of all the main indexes I track to clear (SPX/SPY, NDX/QQQ, INDU/DIA, RUT/IWM, VTI, NYA).
I am keeping to bullish view until the market forces me to change mind. Still think we will see SPY Q3R1 at minimum. GLD position from 7/11 to my surprise is working well. I may try a short hedge on RSX to try to lock in some gains on EEM and INDA, but not yet. Given health care news overnight, IWM also might be a hedging trade against SPY positions despite its strength today.
SPY, NYA and GLD below.
Well it was just a fantastic week for The Pivotal Perspective and it is times like these that make all the homework worthwhile. INDA, QQQ, SMH and EEM (half the current portfolio) among the leaders in gains. And while many people, including some very smart names like Gundlach and Kolanovic, were calling for correction; I opted for bullish resolution, positioned that way, and got it.
Keep in mind that I am maintaining this project in about 15 minutes a day and a couple hours on weekends, and if you review actual recommendations the results are on par with many professional commentators and services. (I have done this sort of thing professionally after all, and a lot more possible if more time available - individual stocks, currencies, etc.) In addition, calculating returns beats most hedge funds and even most quant funds this year. All this while maintaining a fierce protection of capital to have the security of knowing that the chance if a sizeable drawdown is extremely slim, as it would take an out of the blue black swan event to not be out of positions or hedged. If the in and out is too much for you, then a simple solution, just use weekly charts and long term levels. But I view flexibility as a feature not a bug and so don't mind drilling down to the daily level.
As usual I'll try to figure out the next most likely move with full analysis on the blog this weekend. If you don't understand my charts and lingo, then just read the Sum section in the the Total market view posted each weekend. For example the latest version, as clear as i can be, while explaining my line of thinking (also, please see FAQ tab for abbreviations):
"Basically with VIX dropping from 2HP / Q3P, yearly levels threatening break yet recovering, pivot holds or recoveries on SPY, QQQ, DIA, IWM, VTI, VIX and XIV all (!) on 7/7, I'm going with idea of near term bullish resolution. .... Based on safe havens and larger trends for stocks without any recent bullish sentiment extreme, I think ball in bull's court."
SPY, INDA, QQQ, SMH and EEM below - after SPY, all recent buy recommendations from 7/5-10 so caught the blast-off this week!
PS - Nice pick on GLD too (7/11 buy rec, one day off multi month low).
Portfolio delivering despite being 100% stocks minus a break-even GLD position. Now the key question is - where is the top? And if we are near a top, what is the best plan?
The ideal high happens with widespread bullish sentiment. Two days ago, ISEE had the 3rd highest reading of the decade. That qualifies! However, the ISEE moving averages are middling; put-call data on both daily and weekly charts is elevated; AAII readings more bearish than bullish the last 3 weeks; and NAIIM exposure readings backing off from higher levels. In short, the ISEE may have been a one day bullish wonder.
More importantly, the ideal high happens on multiple pivot resistance levels with other technical divergence, along with VIX/XIV confirmation. The pivot levels in play are:
SPY JulR1
DIA JulR1
NYA JulR1 + YR1 just above
Typically it would take more than monthly levels for a key high, but I'd say a bit more likely in summer months. If those monthly levels clear, then we can start aiming for Q3R1s and above.
The other thing we would probably see at highs is RSI overbought on multiple timeframes. Currently, on SPY, weekly RSI 68.5 (close but not quite), daily 58.3 and hourly SPY has not been fully overbought (70+) since 6/5. In other words, RSI room to go up.
Lastly, I think we would also see safe haven strength via VIX / XIV divergence, or TLT & GLD strength. This isn't happening yet.
Is a trading top possible here? Yes, I guess, based on the 3 monthly levels, and the one sentiment reading. But compared to other key highs like 3/1, arguments for a high here are weak. But I'll revisit the TPP top checklist over the weekend on the blog.
No change to positioning.
SPY & DIA below.
Wow. In the last Total market view I thought ball in bull's court and positioning for bullish resolution would be the better move. Yesterday, after seeing the 3rd highest ISEE reading this decade, opted for safe haven GLD instead of adding leveraged longs. Oh well. But at least recent purchases a lot of the right moves - first XLF 6/28, INDA 7/5, QQQ & SMH 7/7 and most recently EEM 7/10 (shifting from IWM). XLF a little laggy but the others are delivering!
Stock indexes are popping and daily charts have a ways to go before becoming overbought. Watching for high tests but otherwise long and strong. But now, should I add further leverage after the move? Near the open would have been a consideration for some, but don't like it on close.
Holding GLD but with breakeven stop. This is really 80% net long if counting GLD as a hedge. Almost any index would have been better, but at least not a loss.
Now we can focus attention on where the top is and what would be a good way to lock in gains or hedge. Given daily candle on IWM that might be a short but holding off. Probably more risk assets should reach levels before a high. Also, though ISEE was ridiculous yesterday, other measures are not there. Still, high ISEE readings have been near several key highs. Playing this game means there is not really a time we can not pay attention.
SPY, INDA, EEM and IWM below.
Very odd day.
+s
SPY held YR1 as support
DIA held YR1 and JulP on exact tag
IWM back above all pivots
NYA above all pivots
SMH also above all pivots
INDA, FXI, EEM, KWEB above all pivots
XIV above all pivots
-s
SPY JulR1 resistance
QQQ also still under JulR1
VTI under YR1 and JulP
ISEE 216! 3rd highest this decade!
Luckily put-call and other recent sentiment meters are not at extremes, but even so, this is really worth watching. The highest reading of the decade of December 2010 a non event; but #2 on 5/14/2015 was just 4-5 trading days away from a major trading top! The high made on 5/20-21 (5/20 price high, 5/21 close high) held until 7/2016 with a real deal correction in the middle of that period!
In addition, daily range has been increasing in recent weeks. Increased volatility with market near highs is more usually prelude to a larger drop.
I am now back in the skeptical camp.
Portfolio is 100% long, yesterday shifting out of IWM into EEM which did pay off today. IWM back above all pivots, but not adding leverage on day after such a high call reading. Instead I think will add +2 GLD, and may add GDX if that clears its YP tomorrow. This is an interesting low cost hedge against political turmoil with clearly defined risk reward (daily clsoe below GLD YP).
Given that sentiment reading I am ready to further reduce longs, revisit UVXY, or add to GDX if above its YP as mentioned.
SPY, QQQ, IWM, GLD, GDX below.
Mixed signals today. If risk assets hold support that could have broken, that's bullish. Conversely, when resistance holds that could have cleared, that's a bit bearish. With that in mind:
SPY above YP, 2HP, Q3P; did not quite clear JulP (OK, SPY looks fractionally above but SPX cash, ESU current and ES1 continuous all did not)
QQQ above YP, 2HP and Q3P; did not clear JulP
VTI above YP, 2HP and Q3P; did not clear JulP
(no change to DIA, above all pivots)
So all of these are decent - above the more important pivots - just could have been a little stronger. Maybe JulP will clear tomorrow, or maybe markets will go down. No real edge, though sentiment still in favor of the bulls. Also, QQQ cleared YR2 that could have been resistance so that is a definite point in the bull column.
IWM fell back under JulP, yet another disappointment. This presents a question in positioning - once again better to go all tech. In fact, IWM closest of all USA mains to turn into a real short (if below Q3P & 2HP - not yet).
When scanning positions this morning, was regretting being out of EEM but then saw INDA - nice! But right now EEM is back above all pivots, and it is hard to find indexes that meet this criteria, at least today. IWM qualified last week, but not now. If markets go a little higher Tuesday there will be plenty of choices: SPY, (DIA already there), more QQQ, SMH, KWEB... as for today, switching out IWM for EEM again.
Also keeping an eye on GLD & GDX, both near YPs. In real risk on scenario GLD should be breaking down.
SPY, SPX, QQQ, IWM, SMH, INDA, EEM, XIV, GLD, GDX below.
From yesterday's post on a weekly chart pullback: "That said, if VIX falls back under its 2HP / Q3P combo and major indexes reclaim levels tomorrow, I'll have to be buying in."
Also, from yesterday, "I will probably cut the UVXY tomorrow unless VIX continues to launch above its 2HP and XIV breaks the Q3P."
VIX fell back under 2HP / Q3P in pre-market and did not look back. So it was easy to cut the UVXY on open.
Next decision: is 60% long enough? Not on a day when VIX finishes with 2HP rejection, several USA mains hold or reclaim pivots, and DIA & SPY hold YR1 as support!
Yes, I cut yesterday. Was that right? Who knows, we could have opened to a 1% gap down. At some point, VIX above long term pivots that will happen! But today - again - it was a false alarm. I don't mind being out of SPY positions because there was ample cash to buy the best looking indexes. I admit, this was the toughest part of the day - what to buy?
QQQ reclaimed Q3P for the second time
SMH reclaimed Q3P and YR1
IWM lift above 2HP, Q3P and JulP all on the same day!
My solution was to do 2 of tech with one each QQQ and SMH, and 2 of IWM. This takes portfolio to 100% long. I really don't know if this is right - IWM has been sideways for months and could be in major distribution. However, it is above all pivots when QQQ and IWM are not. So, opted for both.
Key safe havens are weak for the first time in months so I am starting to think about a summer melt up. Ready to add further on Monday.
SPY, QQQ, IWM, SHM, VIX and XIV below.
And now things are getting very interesting! Fortunately my homework and pre-market post paid off despite coming into today leveraged long!
7/1/2017: "UVXY is a deathtrap, but maybe worth looking at in weeks ahead."
7/6/2017 pre-market comment: "If VIX moves and stays above its 2HP / Q3P combo at 12.28 I will be de-risking. VXX / UVXY are death traps but as mentioned in latest Total market view it may be time to give them a look. XIV likely opening below its JulP 81.56 and then more support underneath at Q3P 77.76 and then 3HP 73.15. UVXY JulP is 10.14 and as it turns out weekly pivot exactly there so a jump above has a defined r/r [risk-reward] level."
If you are a regular reader of this site you know that pre-market comments are extremely rare.
UVXY open today 10.32, close 10.95, so taking out the gap was about 5.8% assuming some slippage on the open. 5.8% on 2 positions took care of the damage that would have incurred today. Do the math. 2 positions for 11+% gain made up for 12 positions that averaged less than 1% loss. Recent adds on XLF and INDA held up better than most other indexes that I track.
So on to markets. Today was one of those days that happen a handful of times in the year. What do I mean by that?
SPY YR1 break and JulP resistance - still above Q3P
QQQ YR2 rejection and below Q3P
DIA YR1 break!! Just fractional however, and still above JulP and other pivots
IWM slam - testing Q3P and 2HP
VTI YR1 rejection and JulP resistance - still above Q3P; ps, I haven't mentioned this one in a while, but NYA near YR1 tag on 7/3 and since then DOWN. NYA continues to be a very reliable confirmation on both sides of the trade.
VIX above 2HP, Q3P and JulP
XIV JulP break, still above Q3P
In sum, bearish action on 4 (!) yearly levels (i am still kinda counting VTI & NYA together as broad indexes) and VIX jumping above a long term pivot. Market may bounce tomorrow but this is the environment to *protect capital* not hope for a bounce!
TLT and GLD were down as well, and seeing this in pre-market led to conclusion that VIX had to explode - hence the timely UXVY call. The way I played it - put on 2 UVXYs for the open, then decided to see if VIX finished the day above 2HP or not. Since it did, de-risked as called.
Keeping: 2 INDA and 2 XLF, 2 SPYs, 1 UVXY
Cut: 4 SPY, 2 EEM, 1 UVXY on close for healthy gain
Portfolio 120% long yesterday, today 50% net long although that UVXY has likely more % move than just 1 unit. I will probably cut the UVXY tomorrow unless VIX continues to launch above its 2HP and XIV breaks the Q3P.
Are there any +s?
Not much, but a few:
DIA within striking range of reclaiming YR1, and still above all pivots
VIX within striking range of falling back under 2HP / Q3P
TLT and GLD down - money has to go somewhere, potentially bullish for risk especially XLF
Maybe this is junior varsity selling and the pros will come back and buy next week. Possible! But for now, I rarely regret taking defensive action when VIX is jumping above long term pivots. Other notable examples include days like 8/20/2015 and 10/9/2014. Check the charts and you'll see. But when those VIX levels turn into resistance again, I'll be a buyer.
In fact, 7/6/2017 is the first day since 11/4/2016 that VIX has closed above a long term pivot! And since I have gone on and on about Dow YR1 for the last several weeks, a break of this could be HUGE with any follow through tomorrow.
SPY, QQQ, DIA, VIX, XIV and UVXY below. Arrows on the yearly levels that are so crucial from here.
Special pre-market post. Sea of red today and this is the second time recently that apparent bullish moves have turned around the next day. Portfolio is out of tech so spared the worst but in a surprise to me TLT nor GLD are up - making VIX the possible safe haven of choice.
If VIX moves and stays above its 2HP / Q3P combo at 12.28 I will be de-risking. VXX / UVXY are death traps but as mentioned in latest Total market view it may be time to give them a look. XIV likely opening below its JulP 81.56 and then more support underneath at Q3P 77.76 and then 3HP 73.15.
UVXY JulP is 10.14 and as it turns out weekly pivot exactly there so a jump above has a defined r/r level - barring of course, another big gap the other way on Friday.