8/28/2017

Markets promise to be interesting tomorrow - keep an open mind and rely on technicals. Remember, election night started with a semi-crash too.

But it does seem like USA stocks already primed for a drop, and this may be the spark. GLD and TLT, as repeated numerous times, have both been speaking loudly for weeks. The last Total market view noted that AugP was starting to be resistance for SPY for several trading days, and that some of these incidences turn into real deal declines like August 2015 and December 2015. 

Following The Pivotal Perspective you are quite comfortable - GLD soaring, adds on GDX and maybe a small SLV last week delivering, and long TLT; still cautious on USA equities, yet likely losing some recent gains on China or more recent adds on EEM / INDA. Really this is quite fine.

If VIX jumps above 12.23 then it usually pays to be defensive first and ask questions, read headlines, etc, later. As of 8/11 I was thinking 5-6% for SPX 2340-65 with a milder possibility at 2405.

SPY, GLD, GDX and SLV below.

8/25/2017

AugP has been resistance for SPY for 3 days in a row. This does not guarantee a bearish outcome; SPY could rally above next week. But some significant drops have started this way - when a pivot level starts acting as resistance, it is a warning. 

As usual a lot more coming up on the blog over the weekend. 

8/24/2017

Markets are a bit confused. SPY rejected AugP, but QQQ held. VIX bang on 2HP / Q3P combo for 2 days without any definitive move. We'll see what happens. 

SPY, QQQ and VIX below.

8/23/2017

I choose my language carefully. In Tuesday's daily comment, though said placing bets with bulls with VIX below critical levels, also wrote, "Given valuation and seasonality, it is also possible that the market will not trend as it did earlier in the year." Correct take so far.

The market is inviting sellers for Thursday via weak up bar on SPY under the AugP and D20MA. VIX also is right back at the critical zone of 12.23; and so far it has paid to err on side of caution with VIX above this level twice this month alone.

VIX TBD and XIV still decent hold of Q3P, but TLT above YP (above all pivots!) and GLD above all pivots from 7/27 on mean it is not all signals go for risk. Also, consider that only DIA and QQQ are above all pivots on USA mains. 

Global indexes continue to lead with notable China strength, INDA back above all pivots, and RSX and EWZ (both already above all pivots) breaking out higher. I'm also watching oil via USO, with another try above the Q3P and AugP combo.

SPY, VIX, TLT and USO below.

8/22/2017

8/21/2017 Daily comment: "SPY tested and held AugS1 today, though the bounce for session seemed weak. But factor in moving averages, Bollinger bands and RSI, one has to conclude a 'maybe' low. In addition, this is happening as sentiment via standard put-call near highs for the year and CNN Fear & Greed Index at major lows."

Maybe indeed. With DIA and QQQ leading above their AugPs (and D50MAs) market got going. SPY jumped all the way from AugS1 back to AugP, and VTI nearly maybe the same move. IWM also put in respectable bounce from 2HS1.

As this was happening, VIX dropped *below* the crisis level that I've been pointing to all quarter at 12.23 (2HP & Q3P). XIV jumped above Q3P. TLT faded under its YP, and GLD struggling at Q3R1 area.

In sum a strong win for the bulls. Was it appropriate to jump on QQQ or DIA longs early? Yup, with VIX below 12.23 and both of these above all pivots. Was it appropriate to add on SPY at close? I don't think so - SPX bang on AugP. 

A review of weekly charts shows many indexes declined to 10 or 20MAs, some of which hadn't tagged in several bars. Given the year, VIX and sentiment it is possible that 8/21 low was a decent pullback low. Given valuation and seasonality, it is also possible that the market will not trend as it did earlier in the year.

My bets are with stock bulls with VIX below 12.23. Now let's see how things unfold. 

SPX (showing cash here to emphasize AugP, a key level to watch tomorrow), QQQ, TLT and VIX below.

8/21/2017

SPY tested and held AugS1 today, though the bounce for session seemed weak. But factor in moving averages, Bollinger bands and RSI, one has to conclude a 'maybe' low. For SPY, this was the nearest test of D100MA since the election; also, a close back inside the Bollinger band after 2 closes outside; as RSI near lows for 2017. In addition, this is happening as sentiment via standard put-call near highs for the year and CNN Fear & Greed Index at major lows.

Even if this low idea plays out, though, safe havens - TLT and GLD above all pivots, HYG* below 2HP, VIX above 2HP, XIV below Q3P - still signaling caution.

A more bullish scenario for Tuesday would be more indexes showing bullish action on pivots like DIA and QQQ reclaiming AugPs as safe havens fail (TLT below YP, GLD Q3R1 rejection, etc). As long as VIX is above 2HP / Q3P combo at 12.23, stock bulls have to prove themselves and I will keep a defensive stance. However, VIX below that level as XIV recovers Q3P would definitively be bullish. 

SPY, SPY with other indicators, and VIX below.

* I am starting to include HYG in the safe haven category as an inverse indicator like XIV - ie, HYG up is bullish for risk, and HYG weakness is bearish for risk. 

8/18/2017

Mostly bearish action. Though SPY holding above AugS1, QQQ could have recovered AugP but didn't, DIA broke AugP slightly for the first time this month, IWM stayed under Q3S1 and VTI pressing down from YR1. 

In addition, TLT above YP again for the second trading day in a row, and the second period this year. Falling long term rates was just not in the Wall Street script this year and TLT above its YP increases the chances of a more sizable drop in stocks. 

For those hopeful (I tend not to hope with VIX above a long term pivot and both TLT and GLD above all pivots), it would not take too much for current USA leaders DIA and QQQ to regain AugPs.

Blog posting limited this weekend, but may have time to put up some charts on 8/20. 

SPY, DIA and TLT below.

8/17/2017

The latest Total market view from 8/13/2017 was clearly bearish. On Monday I put bearishness on hold with 4 of 5 main indexes recovering above AugPs, and XIV bouncing massively from 2HP and climbing back above Q3P as well.

On Tuesday, markets seemed to confirm the bullish view with VIX dropping under its 2HP / Q3P combo at 12.23.

Due to travel I did not have time to post on Wednesday. Wednesday was not too glaring, though SPY faded slightly under its Q3R1, DIA from AugR1, and perhaps the clearest signal, NYA faded from its YR1 / AugP combo. Yet none of these moves were enough to say definite rejection, and VIX stayed under 12.23.

Thursday saw VIX moving above its critical level early in the day and big trouble from there. 

SPY & QQQ Q3R1 rejection and AugP break
DIA 2HR1 rejection
IWM failed at 2HP on the bounce, continuing to lead down as called, and today broke D200MA
NYA with the best tell - YR1 rejection

VIX and XIV confirming trouble - VIX above 2HP / Q3P from early in the day as mentioned, and XIV down below 2HP. TLT fractionally above all pivots, and GLD slightly disappointing as a safe haven but above all pivots, back to the Q3R1 without any rejection. 

If there is any doubt about risk-on or risk-off I always check the VIX - and it was very easy to return to my bearish view soon after open.

Also, I will write more about this soon in a dedicated post, but my Timing work is on a roll. Consider the following dates for August (first posted at the end of July):

8/2
8/8
8/11
8/16
8/21
8/25
8/30

At the time I thought jeez, too many dates this month to be of much use. However:

8/2 not much event
8/8 key high
8/11 key low
8/16 key high
8/21 key low? 

Alas no direction on these in advance, though that was my specialty while at a hedge fund for 3 years that had world beating returns in 2013. 

SPY, NYA and VIX below.

8/15/2017

SPY and QQQ stopped at Q3R1s today, but it is difficult to say whether it was pause or rejection.

Safe havens seem to point to bullish resolution for stocks - VIX below 2HP / Q3P, TLT YP rejection, and GLD dropping further from Q3R1.

Global indexes less than zippy, likely due to DXY strength. Watch AugP at 94.08. If DXY above that, then global indexes likely laggy compared to others. Also, DXY strength would pressure GDX in risk-on scenario, and/or oil in risk-off.

SPY, QQQ, TLT, VIX, and DXY below.

8/14/2017

I've had a string of correct Total market views - most recently from shifting bullish early in July loading up on tech and global indexes, and then back to defensive towards the end of the month including a still pretty good trade in UVXY.

But my bearish bias of the 8/13 Total market view is so far very wrong. Gains lost on the UVXY, though cutting near open was still 20%+ from 8/4 closing price.

As usual let's run through the +s and -s to assess correct positioning.

+s
SPY, QQQ, DIA and VTI back above all pivots. 
XIV held 2HP and bounce back above Q3P.
TLT YP semi-rejection.
GLD under Q3R1.

-s / ?s
DIA back to 2HR1, major resistance.
SPY & QQQ back to Q3R1s, levels to watch.
NYA back to YR1, IWM back to 2HP, levels to watch.
VIX above 2HP / Q3P, 12.23, did not confirm rally yet.

So far after hours pointing to bulls. With VIX above 2HP, risk could return anytime. But given pivotal strength of USA main indexes, and safe haven TLT and GLD failure (at YP and Q3R1 respectively), right to be more long. Probably not fully or leveraged long yet.

Regarding positioning, the global indexes looked less zippy today, likely due to $DXY strength. Simple criteria - what is above all pivots and MAs (and not yet overbought)?
SPY still resistance at falling 10 & 20MAs, and Q3R1
QQQ above flatish 10 & 20MAs, still facing Q3R1 though
DIA on 10MA, above rising 20MA, but bang on 2HR1 and not as much gain today
IWM below 2HP, forget it
VTI not really my trading vehicle, though i do like to watch it for market breadth

SMH above all pivots and MAs, not at resistance
IYF / XLF fractionally above AugPs and stuck near 20MAs; not best but could consider adding
XBI under D50MA and AugP, forget it

Anyway, I went with QQQ and SMH longs and may add further if VIX confirms tomorrow. Also, USO back under all pivots already, short candidate. 

N Korea could change risk in a hurry so holding longs with VIX above the 2HP means acknowledging major risk. Yet with stocks in uptrends, not taking a jump back above all pivots for 4 of 5 USA main indexes seems wrong as well. If bombs drop, GLD and TLT likely to rally so no hurry to get rid of those still profitable positions. SPY may not drop as much as people think in a war; it is the China trade issue that matters here. 

SPY, QQQ, SMH, USO, VIX, XIV below.
 

8/11/2017

Weak bounce after massacre is not typically the end of the decline. Tech strong but not much else. SPY clear resistance at the AugP.

Additionally, VIX still looks threatening for stocks, XIV lower, GLD above resistance, and TLT no rejection from resistance.

As usual a lot more coming up on the blog but as of now it is still time to be careful. 

SPY and XIV below. Oh yeah - UVXY +44% on the week!

8/10/2017

There is a lot to say but let's start with this: I so nailed this move.

I have been pounding table about VIX and XIV since 7/25, and pointing out again and again that the market may be making a critical turn in a seemingly unending trend.

7/29/2017 Safe havens: "We could have just seen the major turn in XIV for the year. If you think this is too much a stretch then please review the charts towards the end of this review (posted 7/25!) and see if you are convinced that seemingly unstoppable trends can and do end on yearly levels. Next move critical for XIV. Any weak up that is still under YR3 could invite a big drop." 

7/28/2017 Featured posts: "So if you are not getting the point about XIV being on YR3 with me pointing out GDX major high, China multi-decade high, GLD all time high, SPY & QQQ multi-decade highs, I cannot really help you."

OK, i know, yesterday's news. Now what? Risk management means acting in early stages of trouble, not after the train has left the station. Any doubts of whether selling was real this morning only had to check the critical VIX 2HP / Q3P 12.28 that I have been pointing to all quarter. Of course, a lot depends in your time horizon and flexibility of account. 

The key questions from here - far will it drop? And is this another false move like 4/13 and 5/17? 

Answering the latter question first - no, I don't think it is a false break. Why? Because VIX and other safe havens are much stronger this time. Because all indexes are breaking down, including the global leaders. How far? Tough to say in advance, I'll take it day by day and week by week. After so many months of low vol, and a nearly 3 week distribution for SPY, and 6 month distribution for IWM, we might have more than a few days down. 

The rundown - 
SPY Q3R1 rejection, and break of AugP and D50MA
QQQ same as SPY
DIA 2HR1 rejection
IWM 2HP / Q3P rejection!
VTI AugP & D50MA break; NYA YR1 rejection!

VIX soaring above 2HP / Q3P combo; above Q3R1
XIV plunge, testing Q3P
GLD above all pivots, testing Q3R1
TLT testing YP

If pivots recover on risk assets - ie SPY, QQQ, VTI reclaim AugPs as safe havens fade, that would be bullish but I am doubting this. More bearish would be stocks lower, XIV Q3P break, TLT above YP. 

Good luck out there - and if you didn't make money on UVXY hopefully regular readers at least knew to avoid some losses. 

8/6/2017 Total market view: "Bottom line - Larger trends for stocks intact. But with safe havens strengthening, VIX divergence and XIV bang on YR3 it is time to pay attention to risk management."

SPY, IWM, TLT, VIX, XIV below. 
 

8/10/2017 pre-market

VIX appeared to have decent rejection from 2HP / Q3P along with D200MA yesterday but so far this morning the reversal has been reversed and it is back at critical levels. Zone to watch here is D200MA 11.96, 2HP / Q3P combo 12.28, then last chance high AugR1 12.59. After that things get real.

Although media will be talking about Korea all day let's not forget IWM leading down from 7/25 top, GLD solidly above Q3P from 7/26, and TLT holding 2HP from 7/28. 

8/9/2017

Stage was set for a clear bearish move - and it i just didn't happen. VIX put in a massive rejection of 2HP / Q3P, and XIV held AugP to remain above all pivots. 

However, SPX is still stuck on its Q3R1 - SPY looked like it cleared fractionally, but SPX stopped bang on level and futures under too. QQQ also on Q3R1. So these are levels to watch Thursday. On the plus side, IWM held 2HP (barely but still) and NYA held YR1 as support.

Not sure which way this goes - I thought stage set for real deal VIX launch but instead high near pivots and down most of the day. Cash can be a position too. GLD (originally mentioned as rec when doing detailed positioning posts 7/11, still doing very well. 

I think today's market is very much reminiscent of October 2014 Ebola drop. In hindsight it is easy to wonder what were people so worked up about for a fast 10% drop. Um, economy tanking from a dreaded incurable disease, that's what. Very similar now. After a huge rally, with VIX and average true range at historic / multi year lows, the market may need a scare to reset. How far that drops the indexes, not sure. I'd prefer to see something similar, but cannot fall in love with bear side when 4 of 5 indexes are above all pivots, and even SPY hanging around Q3R1 for weeks without going higher cannot muster a decent rejection. 

SPY, SPX, VIX and XIV below. 

PS: What is the risk of the two craziest leaders of the 21st century having a nuclear pissing contest? Seems like it should be more than a few %s for SPX.

8/9/2017 pre-market

So far no panic. VIX 2HP and Q3P both at 12.28. But above that and things will get wild. I'lll also be watching that D200MA.

TLT and GLD are also up significantly. IWM will be testing 2HP 138.74 and Q3P 139.16.

8/8/2017

Well now. USA main indexes were not that much changed from the previous close, but there was a decent intraday reversal to finish red.

Even more important, XIV YR3 rejection. I have been talking quite a lot recently about VIX and XIV, similar to just about a year and a month ago when I was bringing up TLT and TYX several times and thinking about a big turn. 

7/25 VIX and XIV blog post
7/26 daily comment: "I think VIX may have bottomed today..."
8/5 Safe havens blog post: "XIV is seeing resistance at YR3. This could be a critical turn..."
8/6 XIV, again blog post

In addition to other notes in the same vein in daily comments and blog posts.

One day bear wonder? Or start of real deal? As always, The Pivotal Perspective:

If risk assets hold pivots, that is bullish; if they break, that's bearish. So far all USA mains except IWM above all pivots. IWM still holding 2HP and Q3P combo. These are important levels to watch.

VIX rallied above its AugP today, so if higher then 2HP / Q3P combo key to watch. XIV YR3 rejection, but still above all pivots (YP, 2HP, Q3P, AugP). 

Safe havens TLT and GLD are above Q3Ps... this has been some tell and I have been totally on top of it. 

SPY, NYA and XIV W and XIV D below. Note NYA near tag of 2HR1 and reversal. This week's total market view said: "Lastly, I don't mention NYA much but it almost never lets me down as an indicator (for new readers I view this along with VTI as broad indexes). While it has cleared YR1, 2HR1 is not far above. This is an important area to watch at 12034." Actual high 12019. 
 

8/7/2017

The Pivotal Perspective was mostly bullish today, except for one thing - much of it doesn't really count. Past studies have showed the setups are more likely to fail if:

- bar moves through level fractionally, without having the "look of support / resistance"
- very low volume

Today the market has several of both of these.

SPY lift above Q3R1 - good, but, lowest volume of the year so... vulnerable to fake-out.
DIA up but AugR1 tag with RSI very high, mixed.
QQQ up through Q3R1 level yet without look of support; still i will count this as some positive.
IWM appearing to hold Q3P but again, lowest volume of the year and weak up at that, so let's call that a scratch.
VTI still under Q3R1, potential negative. 

XIV above YR3 fractionally, so without look of support and oh yeah, lowest volume of the year.

Even EEM, rallying above Q3R1 and testing YR2 - lowest volume of the year and RSI fully overbought. I am not confident EEM will clear YR2 in this kind of move. 

FWIW TLT and GLD Q3P holds were also weak advances on low volume too.

Cannot conclude much from today, though market seems to defy any caution once again. We'll see tomorrow. SPY, XIV, EEM and GDX below. 

8/4/2017

SPY back above Q3R1 today which is bullish. In addition, VIX stayed under all pivots and XIV move looks more like pause than rejection on the weekly close. As usual a lot more over the weekend on the blog. 

SPY daily and XIV weekly below. 

8/3/2017

Although 4 of 5 USA main indexes remain above all pivots, and VIX below all pivots with XIV above all pivots (ie larger uptrends very intact), there were several serious negatives that increase risk to downside:

- SPY broke Q3R1 slightly. This is the 3rd time below the level; none look like rejection yet, but inability to hold is more bearish.
- INDU higher, but 2 weaker up bars under major resistance at 2HR1 invites selling.
- QQQ drifting lower from Q3R1.
- VTI also driftin glower under Q3R1.
- IWM leading down (as called btw), below AugP and testing major support area (another day down of similar magnitude would be the first long term weakness in months).

- TLT huge jump with very significant buying the last few days as the major indexes are going sideways. This is not what typically happens when stocks are about to break out up.
- XIV YR3 rejection, potentially the start of a big deal!

So about this last point - I wrote a special mid-week post on the blog on VIX and XIV on 7/25. That turned out to be the day before the price lows in VIX and highs in XIV, both on 7/26 thus far. You have to read all the way to the end to get the real point - that several seemingly unstoppable market trends have indeed ended on yearly levels, like QQQ in 2000, SPY in 2007, GLD in 2011, SHComp in 2015. And now - potentially - XIV on YR3 in 2017. However, there are many incidences of seemingly stretched trends testing yearly levels and having no adverse reaction, or a minor reaction that quickly recovers and the trend continues on its merry way. That could also happen here. But a XIV rejection from YR3 may indeed be the start of something big. 

And that is what happened today. 

Look - until more USA main indexes are below quarterly pivots and VIX above, I am not going to get too excited about the bear side. As if the TLT move was not clear already, it is simply a time for caution and risk management on the long side. That is all.

SPY, INDU, IWM, TLT, XIV below (purposely showing INDU cash index tonight over DIA).

8/2/2017

Curious day. SPY held Q3R1 as support, and VIX AugP was rejected. Typically these are bullish signs. But stopped cold at 2HR1 tag, QQQ fell under Q3R1 and and VTI a bit under Q3R1 as well. IWM leading down as called, below AugP. Additionally, XIV fractionally under YR3 - not enough to be rejection, but still. Anything under YR3 means high of the year in XIV (ie low in VIX) could be in - and this implies down for risk assets.

If markets are in real trouble then we will see more risk indexes below monthly pivots - so far only IWM and XBI - as safe havens continue to strengthen. 

SPY, IWM and XIV below.