1/24/2018

YR1s strike! Yesterday I noted how many indexes were simultaneously reaching YR1s and that the last time I remembered this many on the same day was Jan-Feb 2016 (the last big low in the market). We have seen many one day wonders but I think downside risks have significantly increased. But this would be much more so if VIX stayed convincingly above levels and XIV did not bounce so much off lows. It is a time to be watching carefully especially if one has been seduced to buying recently at these lofty levels. 

What to do, especially if VIX is above its Q1P and JanP tomorrow? And then even more so when it lifts above its YP and doesn't look back - something we haven't seen since 8/2015.

  • Take gains on longs that are having clear rejections from resistance levels.
  • Bonds are not working as safe havens this year, so avoid.
  • GLD & GLD are popping on these days especially with $DXY down - watch for these setups or add (site recommended GDX 12/13 then cut mid Jan; GLD from 12/26, still holding personally).
  • UVXY - I've already had one great trade this year and started talking about this yesterday on the site and twitter. I think this will be a favorite setup this year as VIX low is the 2nd trading day of the year and XIV high is not far after on 1/11.

SPX YR1 hold so far
QQQ YR1 semi-rejection
IWM 1HR1 (& near tag YR1) rejection

SPX and VIX below.

24 5 SPX D.png

1/23/2018

There are so many indexes on or near YR1s the situation calls Jan-Feb 2016 to mind, as the only difference was that they were on YS1s. Both years started with a directional bang, reached yearly levels, and then... we shall see.

That is our task now, to assess the chances of a turn here. Given momentum i think any drop will be temporary and come back - but given that i am quite leveraged long with GLD on top of that i do not want to see negative reactions from all these yearly levels. 

Keep in mind that YR1 status is not a percentage gain indicator - it is a reflection of this year's movement compared to the average of last year's high, low and close. An asset class in a tight range could reach YR1 fairly easily but that is saying something - breakout. It is amazing that FXI had such an amazing year and already above its YR1 for 3 trading days. 

USA mains
SPY - just above (YR1, same for all the others, YR2s are not in play)
QQQ - testing near exact
DIA - not there yet
IWM - testing near exact (looks good as short hedge candidate)
NYA & VTI - NYA above and VTI testing near exact

So you could say 4/5 USA mains testing YR1s.

Sectors that i track
SMH - not there yet but testing 1HR1
XBI - exact tag
XLF - not there yet but testing 1HR1
XLE - nearly there

Global
ACWI - testing near exact
SHComp - decently above for 2 trading days
FXI - decently above for 3 trading days
EEM - not there yet
KWEB - not there yet
INDA - not there yet
EWZ - 1HR1 fail
RSX - above for 4 trading days

Developed
EFA - testing near exact
EWG - testing near exact
EWJ - above slightly for 1 trading day

This my friends is a slew of YR1s in play (all bolded). I suspect a shakeout, but then think we will see a comeback. As long as VIX is below all pivots I will continue with leveraged longs plus GLD. That said, i may jump into UVXY again for a quick hedge. If Wednesday seems like rejections of levels with VIX higher, then i may make another decision.

SPY, QQQ and VIX below. 

23 2 QQQ D.png
23 3 VIX D.png

1/22/2018

That was fast! SPX reached YR1 target today! From 1/3 daily comment: "Let's consider the big picture - SPX above JanP 2658, Q1P 2629, 1HP 2592 and YP 2537. Assuming JanR1 is not an important top, then we can aim for Q1R1 2738, 1HR1 2776 and YR1 2830. Reaching YR2 would take SPX to 2987."

Ding! VTI nearly reached YR1 as well, and normally reliable NYA closed above YR1! INDU/DIA and NDX/QQQ have a bit further to go, only because the wider range in 2017 meant they had further to travel to reach their resistance levels.

Today felt especially bullish for tech with QQQ leading, semiconductor SOX index recently above 2000 top, and today XBI blasting off above its 2015 high in a massive way.

Last fall as INDU and SPX approached YR2s, i thought there was decent case for pause and pullback. I was wrong about that, though it didn't cost me too much in terms of trading capital. When we look at the chart of DIA, there was not one day of selling. Indexes looked a bit different on the 3/1 top with clear resistance and rejection the next day. 

With put-call at multi-year lows i have to be open to at least the possibility of a pause and/or pullback at these levels or maybe with DIA and QQQ reaching their YR1s. But right now doesn't seem like anything is stopping this move. Staying bullish. 

SPX, SPY, VTI, NYA all below, plus XBI weekly.

1/19/2018

Seems like VIX was expecting a deal or limited consequences of shutdown with close back under all pivots. 

In addition - 
SPY above Q1R2
DIA holding 1HR1 as support
IWM back above Q1R1
VTI holding 1HR1 as support

We'll see what happens.

SPY and VIX below.

 

20 2 VIX D.png

1/18/2018

Curious day. Main indexes looked more like pause than rejection with exception of IWM. 

VIX pushed higher but notably stopped on the YP / 1HP combo. I think if pros believed in real trouble ahead then VIX would have closed above these levels. I think decently long is still the way to be; INDA exit a bit less painful given today's drop, and GDX exit while not the exact top also proving to be better to lock in gains.

I'll change my mind and significantly reduce and/or put on real short hedges if VIX closes above its YP tomorrow.

PS: SOX index breaking out to new all time highs above its 2000 top.

SPY, VIX and SOX monthly chart below. 

18 3 SOX M.png

1/17/2018

Wow. I don't recall seeing anything like this. VIX up and markets crazy up. SMH +3!% Great for portfolio, i just cannot help but sense the market is a bit out of control. 

Painful to finally cut INDA after holding for more than 1 month and seeing it lag in 2018, only to jet the next day. Oh well. GDX also had massive rejection from Q1R1 and given strength of indexes thought better to take the gains on that (entry 12/14, still +8+%). Holding GLD a bit more though. 

SPY holding 1HR1 as support, very bullish, testing Q1R2
DIA lifting above 1HR1, very bullish
QQQ holding 1HR1 as support, very bullish
IWM back above Q1R1
VTI lifting above 1HR1, bullish; near Q1R2

In sum the long term levels that looked like decent resistance yesterday all resolved in a bullish fashion today. This despite VIX higher and above Q1P and JanP. Amazing!

SPY and VIX below.

 

1/16/2018

The recent Total market view nailed this VIX, XIV and UVXY trade setup. First 15 minute bar was above the weekly pivot, entering around 8.95, close 9.75, nice 9% on the day for that position. If you went aggressively then you have units to hold for more. 

Interesting day. VIX reached its yearly pivot - the first trading day since 2/12/2016 that this has happened! That is rather amazing since that was the last major correction buy of the past several years. But VIX closed above its Q1P and JanP, so not quite in the clear. Key level to watch for tomorrow.

Of course there had to be a shakeout after this kind of momentum. But at the end of the day there wasn't that much damage. I think the market is entering a consolidation phase, and may yet go lower this month, but longer term the YR1 targets are still very much in play.

I don't want to be as fully long with VIX above its QP, and though INDA outperformed in December it has been laggy in '18, so reduced on that. 

The main index damage:
SPY Q1R2 top, testing 1HR1
QQQ Q1R1 top, testing 1HR1
DIA 1HR1 top
IWM JanR2 top, fade under Q1R1
VTI Q1R2 top, below 1HR1 as well

So you can see 4 long term levels in play, the 1HR1s. VIX is above Q1P. Reduction warranted, but if you jumped on the UVXY idea as highlighted in the last Total market view you were up on the day. I love it when that happens - a sea of red on indexes but portfolio higher. Also, GDX helping too :)

SPY, VIX and XIV below. 

 

16 12 XIV D.png

1/12/2018

And just like that SPY above long term resistance in 9 trading days, and testing JanR2. Wow! It seems like a safe bet to keep to YR1 target when 1HR1 has been reached this quickly. As usual more coming up on the blog. 

13 1 SPY D.png

1/11/2018

This is really quite stunning. Monthly and weekly RSIs on SPX are matching levels seen only a few times in the 1990s.

Yesterday Q4R1s held as support for SPY and QQQ and today launched even more impressively with indexes racing to next level resistance. 

VIX, TLT and GLD all up would normally signal something, but in this kind of runaway bull stampede who knows. 

SPY below.

11 1 SPY D.png

1/10/2018

Many of the resistance levels yesterday - DIA JanR2, QQQ JanR2, IWM JanR1, VTI JanR2 all still in play today, but Q4R1s held as support on SPY and QQQ. In addition, VIX and XIV look more bullish for risk despite the threat yesterday. 

Sometimes weak ups below resistance mean down is the next move. DIA looks like this, but given VIX and XIV next day is a toss up. 

SPY and DIA below.

1/9/2018

A bit more trading toppy action - DIA, IWM, VTI/NYA all facing resistance at JanR2s; ESH and NQH are also on monthly resistance levels, JanR2 and JanR1 respectively.

In addition, large move up in VIX and reversal bar in XIV with indexes mostly flat both mean smart money believes in this trading top.

Other safe havens don't seem to be much help with TLT crumbling below all pivots and GLD fading from near Q1R1 test. 

ESH and DIA below.

9 2 DIA D.png

 

 

1/8/2018

Power move continues with SPY lifting above Q1R1. This looks very bullish, but SPX and ESH have both stopped bang on JanR2. Let's see if Q1R1s continue to hold as support. 

1/4/2018

Power move continues - Dow on JanR1 but others either above resistance or not yet to it. Mild divergence on VIX but until we see more indexes on levels chance of a trading top is slim.

1/3/2018

Markets continue power up move with SPY above JanR1 without any trouble. 

Let's consider the big picture - SPX above JanP 2658, Q1P 2629, 1HP 2592 and YP 2537. Assuming JanR1 is not an important top, then we can aim for Q1R1 2738, 1HR1 2776 and YR1 2830. Reaching YR2 would take SPX to 2987.

What an amazing run from August lows, just not stop power up with 2 key lows on NovP and DecP. 

1/2/2018

Markets starting strong as expected. All 5 USA main indexes above all pivots, VIX below all pivots, XIV above all pivots. 

Tech sectors strong with SMH and XBI having banner days. Only XLF not in a party mood.

Global names came back as well, with all 8 indexes I track above all pivots, and both KWEB and FXI having a massive start to the year. 

Strength in GLD and GDX are about the only thing to give some pause to risk assets, and that's great, because I pointed to GDX as a partial position the day its YP recovered on 12/13 and then emphasized GLD above all pivots on 12/26. 

Bond indexes weaker with several below major pivots (this 'should' help financials so not sure what the deal was with XLF today). 

While I didn't think January 2018 was going to be a repeat of 17 so far all systems go for stocks. 

SPY below.

 

 

12/29/2017

Finally SPY whacked from the DecR1. It is hard to know how much to read into such a move given the last day of the year and new pivots all around for 1/2/2018. VIX did not recover a pivot and XIV stayed above its Q4R3 in a similar range.

TLT and GLD have already been giving clues, however, above all pivots. GDX pick off the YP was the second time this year the site has had a great trade on a GLD or GDX YP.

SPY and XIV below. 

12/27/2017

Interesting day today - indexes stable but safe havens making a move. GLD above all pivots as of yesterday, and TLT roared back to reclaim DecP, Q4P and YP. XIV some rejection at 2HR3. But I think likely that the first day of 2018 will bring stock buyers.

SPY and TLT below.

27 2 TLT D.png

12/22/2017

Pause continues. NYA has maintained above YR2 all week. If this were going to be some real trading top we would likely see weakness in this index like the end of 2015 (NYA was actually below YP, 2HP and DecP before 2016 opened with another plunge).

SPY and NYA below. 

12/21/2017

Cryptos aside, another uneventful day without much change in pivot status. Pause at resistance but no worrisome rejection.

12/15 Daily comment suggested substantial exit in TLT, a profitable hedge. 

12/13 Tweet suggested partial position in GDX, my last rec, doing well.

Currently moderately long stocks and watching for setups to add expecting early January gains. 

SPY below.