2/22/2018

For 5 trading days SPY has been stuck at the QR1. Similarly, QQQ has tried to clear its FebP for the last 4 days and failed. It seems the door is open for more serious selling, but there hasn't been much damage.

VIX, while above all pivots, had some rejection from YR2 which does help the bull case for stocks

I've mentioned this already, but thin leadership and very different markets than 2017. Only items I track above all pivots are VIX, EWZ, RSX and KWEB. QQQ and XBI keep trying but failing.

SPY, QQQ and VIX below. 

2/21/2018

Though the pivotal momentum leaders are the same as yesterday - only things I track above all pivots are EWZ, RSX, KWEB and VIX - today was much more bearish for risk and especially USA indexes. 

QQQ, current USA main index leader, QR2 rejection; attempt and fail at recovering FebP
SPY QR1 rejection, D20MA and D50MA fail, FebS1 fail
DIA FebS1 fail, D20 and D50 fail
IWM D20 and D50 fail, also up more than 1% to finish back in negative territory YTD (red line on chart below)

XBI, also up 2% intraday but had significant pro selling to push it back under FebP and HR1

From the most recent Total market view: "If long, then it is time to exercise more caution via risk management, exposure levels, or willingness to re-enter short hedges. If this idea is right we are going to see more struggles around highs as pros start to distribute to lessen their exposure."

It's happening folks. People have gotten used to stocks going up and up. But pros are lightening up. The quarterly charts on USA main indexes are still ~6 weeks from close, but look as toppy now as 2009 Q1 bar looked like a low. 

NYA is a good institutional tell. As futures are lower as I type this will probably be testing QP tomorrow. If that breaks then the path of least resistance is lower. Remember - bonds are not cushioning this blow. 

SPY, QQQ, IWM and NYA below.

2/20/2018

Mixed bag today. Some concerns, but it could have been worse. 

Main index leader QQQ could not rally above FebP despite trying; not rejection yet but on guard. XBI one of the sector leaders also fell back under FebP after being above the last 2 trading days. And IWM back to negative territory on the year. 

But SPY looks like it held FebS1 as support and bars look like weak selling which is often the prelude to buying.

Currently EWZ, KWEB, RSX and VIX the only items I track above all pivots.  Metals hit by DXY rally.

VIX back to testing YR2; risk more of a concern if above that level near 21.

SPY and VIX below.
 

2/16/2018

Several indexes closed at resistance on Friday, and QQQ faded back under its FebP. This means no USA main indexes are above all pivots.

The pivotal leaders that are above all pivots: EWZ, RSX, XBI, GLD and of course, VIX.

Think about that - of main asset classes 2 of 5 of the leaders are risk off indicators. 

As usual more on the blog this weekend.

SPY and QQQ below. 

2/15/2018

Another win for bulls as indexes added to gains. Aggressive buys and short hedge covers from last n Friday have done very well; and adding longs yesterday per VIX under 25 so far doing fine. 

USA main index leader QQQ closed above all pivots(fractionally but still). This is bullish for the market. Others above all pivots are EWZ, RSX and XBI, and on the safe haven side, GLD. 

Despite the strength it is likely that several divergences will form on the next move towards highs. Tech strength helps, but so far it is 1 of 5 USA mains back above all pivots. Contrast this to 2017, when all 5 USA main indexes were above all pivots for most trading days of the year. Interesting days ahead. 

SPY and QQQ below. 

2/14/2018

Wow! The latest Total market view said that YTD +% would act as a kind of pivot. And once SPX got back into positive that spurred additional buying.

Some of the recent recommendations from the weekend buy watch list, notably XBI and EWZ, have led on the way up with both knocking on the door of FebPs. 

If there was any doubt about the pre-market shuffle a quick look at VIX settled the issue, finally dropping under YR3. While still above all pivots, I have mentioned the last several Daily comments that I'd like to see VIX confirming buy setups with at least getting under this level.

DXY back in melt-down juicing global stocks and commodities. 

SPY and VIX below. 

PS: Very few asset classes above all pivots. VIX, still, and GLD exploded back above all pivots today. 

2/13/2018

Somewhat hesitant bounce continued, but there are still many signs of caution. The market may not need to make a new low, but we might need a day or two of weak selling before a larger advance. 

SPY above Q1P but still negative YTD (most recent Total market view said that level could act as pivot)
QQQ leading is healthy but rallied to FebS1 twice without going higher
NYA - often reliable - still under Q1P
And must crucially, VIX still above YR3. If smart money was convinced pullback was over then VIX would not be this high.

That said IWM held its YP for two days and several other global indexes held levels that could have broken, like EWJ Q1P, FXI Q1P, etc. 

My best guess here is a little higher then a move down. The magnitude of that drop will be telling. 

SPY, NYA and VIX below.

2/12/2018

Bulls got some of what they wanted today - follow through from Friday, SPX & VTI above Q1Ps, RUT/IWM recovering YP, NDX rebounding decently in to positive territory for the year, and tech leading in general.

However, VIX just refuses to calm down, remaining above YR3. Also, despite 2 days of strong gains SPY hasn't even tested the high of the big selling bar and remains clearly negative YTD.

This is still a toss up whether the low that matters is really in. 

SPY and VIX below.

2/9/2017

Are you not entertained? After more than a year of nearly non-stop (bur boring) up, volatility has returned with a vengeance in the last week. Long term investors may be experiencing a level of fear not experienced in 2 years, or perhaps significantly longer, as bonds are not cushioning this blow. 

Skilled traders had the opportunity to make a fortune in the first 6 weeks of the year, if they were on the right side of the markets. The Pivotal Perspective *has* been on the right side of markets, expecting a strong start from late December, then turning decisively defensive on the YR1 rejections 1/29 and expecting further downside on 2/1. (Please see Featured Posts if you doubt this.) And tweets have played the market like a song this week, expecting a furious bounce as of 2/6 open that would then fail and drop into 2/9 key low. Ding ding ding! 

Now what? Many indexes reached critical levels. You hear this a lot in some technical analysis, like 'major support at 2750, then 2725, 2715, 2700, 2695' etc. But in this system the most critical level of all is the yearly pivot - the average of last year's high, low and close. Above this and the market is generally trending up. Below and it isn't. Simple. 

The virtues of a simple system were quite evident on days like today, where it is likely than some people panicked and bailed just before before a massive 100 SPX point rally. 

Let's assess:

+s
SPX YP hold; plus D200MA hold, weekly and daily both in RSI buy areas; massive daily hammer candle
NDX Q1P hold, plus D100MA and most of the other technicals
INDU Q1P hold, plus D100MA recovery and etc
RUT YP slight recovery, plus D200MA hold
NYA YP and D200MA hold

These are major levels and markets had a major league response today midday with serious institutional buying.

However, not in the clear!

-s
SPX Q1P resistance, plus no real divergence lows on RSI or BBs on daily chart with 4 of 5 day lows outside daily Bollinger band; D100MA resistance
INDU also 4 out of 5 days lows outside BB and no real RSI divergence
NDX similar other technical concerns
RUT bang on YP level - still could go either way
VTI like SPX, YP hold but under Q1P; NYA same

VIX still above YR3
SVXY under YS2

Simply stated while this was an impressive bounce from major levels, and certainly worth taking a shot on whatever held Q1Ps, it would be more convincing with SPX above Q1P and VIX lower. Bullish scenario would be SPX above Q1P next week and VIX decently lower. Bearish would be Q1P resistance and another move down, which could threaten break of YPs on SPX, NYA/VTI, and likely RUT/IWM that has already had one day's close below the YP.
 

2/8/2018

Market playing out per tweet from Tuesday 2/6 7:35 EST: Since vol extended past 2/2, think instability in general through 2/15, & 2/9 looking like key date. With YPs along with D200MAs testing and holding on both ES and YM near term move most likely furious bounce that then fails and sets up lower or divergence lows into 2/9.

And here we are. If you have been following recommendations you are comfortably in significant amounts of cash or hedged from 1/29 exit and further reduction 2/1-2, and now the question becomes when to add back longs or lift hedges.

But perhaps some buy and hold types may be wondering - what do I do now? If you are tempted to sell after a 10% drop (as market approaches key support fyi) and buy back on new highs then you might want to run a backtest on that - likely severe underperformance. 

That said, let's look at the key levels that 'should' hold to keep the overall bull market alive. Very simple:

SPX, INDU, NDX, NYA/VTI YPs that are conveniently very near the D200MAs on most of these. 

Personally I think we are near a low. Smart money knows that -20% declines without a recession are rare. We have already seen 10%. But whether the low is today or next week a bit lower is a tough call. Taking it day by day. 

The damage:
SPX / SPY 1HP slight break (ES1 and ESH both holding though) 
NDX / QQQ Q1P test - still holding so far
INDU / DIA Q1P slight break - 1HP and YP very key levels to watch if lower
NYA YP test, VTI 1HP slight break

RUT / IWM - YP break!

VIX push above YR3 outside Bollinger band - not reversing
SVXY / XIV below YS2s - not bounce

If market lower, then it will set up YP tests on SPX, INDU and VTI, and likely 1HP on NDX. So far NDX is holding up best which is a consideration on buys.

Lastly, as of the open the sector that had the best chance of recovering above all pivots today was XBI - and that was destroyed today -5%. 

SPX, NDX, INDU, NYA and IWM below (RUT chart not cooperating tonight) - all pivots only for clarity along with moving averages and Bollinger bands. It would be nice to see divergence lows on RSI & BBs along with MCO for a real low as well. 

SPX - arrows at 1HP and YP
NDX - arrow at Q1P
INDU - arrow at Q1P
NYA - arrow at YP
IWM - arrow at YP

2/7/2018

Market moving per tweet from 2/6 7:35 EST: "Since vol extended past 2/2, think instability in general through 2/15, & 2/9 looking like key date. With YPs along with D200MAs testing and holding on both ES and YM near term move most likely furious bounce that then fails and sets up lower or divergence lows into 2/9."

That was written about ES 2600 and since then rally to 2725 and now back down near 2650. 

It is still time to be cautious. Many reasons:

VIX held both YR2 and YR3 as support for the last 2 days. What needs to happen is a small advance especially that stays within the upper Bollinger band, then a collapse under YR2. Similarly, SVXY (my replacement for XIV) is so far gone - but we could say better to be above YS2 before any stock buys.

USA mains are mostly below FebPs but above Q1Ps - except IWM which is under Q1P as well (and was first choice for main index shorts btw, mentioned near the top). It would be better to buy near a test of a level (if you wanted to try something quick, 2/6 open bang on the 2HP worked) but right now based on daily closes they are in between. If anything adding to shorts on IWM warranted given the Q1P pivot fail.

Leaders are failing. There is nothing I track that is above all pivots. As of yesterday's close a few things were knocking on the door of clearing FebP - XBI, FXI, RSX, EWZ, USO. And let's review what happened with these today:

XBI resistance at FebP - still a contender for buy
FXI -5% slam
RSX, EWZ and USO all slammed today with FebP rejections

It looks like more indexes will want to test Q1Ps. From there we can decide if there are enough signs to warrant a move to shift more long. 

In addition to VIX and SVXY as noted above, other helpful signs would be a higher low in MCO (McClellan) / Advance Declines, higher put-call ratio (this move has blindsided many people since put-call well under early January and far under mid November). 

SPX and VIX below. 

2/6/2018

First a pre-market tweet: "Since vol extended past 2/2, think instability in general through 2/15, & 2/9 looking like key date. With YPs along with D200MAs testing and holding on both ES and YM near term move most likely furious bounce that then fails and sets up lower or divergence lows into 2/9."

So today we saw the furious bounce, and the open was a good place to cover some short hedges and/or volatility plays. I think there is too much going on for a pure V low and race back to highs; however, there were some notable major level holds in the last 24 hours. Also, whatever asset class stays positive YTD has an edge over what doesn't. 

SPY 1HP massive hold, plus D100MA; ES YP and D200MA tested after hours
QQQ D100MA, plus Q1P after hours
DIA 1HP near test, plus Q1P and D100MA; YM YP and D200MA tested after hours
RUT/IWM bounced big from YP and D200MA
NYA 1HP and Q1P big hold, VTI 1HP hold

So that is a fair number of YPs and 1HP testing and holding. But due to structure of lows outside Bollinger bands, we may need a test of sorts before a better rally. VIX is just not confirming the rally yet. 

XIV is dead; long live VIX. VIX while lower is not really given a buy signal. What we want to see is a small advance inside daily Bollinger bands and under YR3. Until then, caution.

Now, the leaders - what is closest to reclaiming status of above all pivots?

XBI, FXI, RSX, EWZ, USO - these are the buy list. 

SPY, ES and VIX below. 

2/5/2018

Wow. I must say the acceleration down was faster and sharper than I thought was likely over the weekend. The latest Total market view post was thinking S1s for most USA mains and Q1P for IWM, and a decent bounce after 4-7% drop. Most major indexes are already down 7-8% and significantly lower after hours as I type.

SPY near Q1 tag, substantially lower after hours, ES(1) con't contract testing YP
QQQ FebS1 break, NQ(1) con't contract testing Q1P
DIA Q1P test, YM(1) contract testing YP
IWM YP near testing
NYA Q1P slight break, VTI Q1P test

But if you had any thoughts of buying, VIX explosion higher and XIV break under all pivots both said no way!

This is the fastest move from YR1s to YPs (on the futures) that i can recall. Maybe I lost some readers when sounding cautious last year with SPX & INDU YR2 tests that just melted up, but have to tell you, feels great to have made significant long exits on 1/29, add a UVXY hedge, and further reduce longs and add UVXY on 2/1 (for the record, i did cut the UVXY add on 2/2 - oh well). 

If you followed these recommendations you should be up despite the bloodbath because UVXY has moved so much and is poised for a massive move up tomorrow. 

PS: Many indexes negative YTD!!

SPY, VIX and XIV below.

2/2/2018

What can I say? While I am not perfect The Pivotal Perspective is often very good at this. 

1/29/2018 Daily comment: "Today met criteria for taking partial profits per Daily comment of last week. ... Basically taking partial profits, reducing risk while adding to $UVXY is doing great."

2/1/2018 Daily comment: "Stalemate continues with YR1s threatening on 4 of 5 USA main indexes but without serious damage. In particular, YR1s on SPY, QQQ and VTI look like very clear resistance with a weak advance and tag of the level. Usually this means the next move is down. In addition, though XIV held Q1P, clear resistance on the FebP. Combining this with VIX above all pivots adds to bearish conclusion for risk."

Everything down except volatility and $DXY. Nowhere to hide. According to Bloomberg, today was the biggest drop for an SPY / TLT combo since January 2009. I'm guessing they did 60/40 but it wasn't specified. Still, after years of bonds and stocks going up, now we have the opposite. Duh, QE & QE unwind. Not the end of this move, not by a long shot.

That said, per special timing tweet on 1/24 - volatility cycles picking up 1/25-2/2, we probably just saw the biggest drop for the time being. This doesn't mean the trading low is in. 

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

SPY and VIX below. 

2/1/2018

Stalemate continues with YR1s threatening on 4 of 5 USA main indexes but without serious damage. 

In particular, YR1s on SPY, QQQ and VTI look like very clear resistance with a weak advance and tag of the level. Usually this means the next move is down. 

In addition, though XIV held Q1P, clear resistance on the FebP. Combining this with VIX above all pivots adds to bearish conclusion for risk. 

SPY, QQQ, VTI and XIV below. 

1/31/2018

Today is a tough call. 4 of 5 USA main indexes are hanging around under YR1s (RUT/IWM already had made more of a drop). This means we could have just seen a trading top and real pullback is to follow.

That said, VIX dropped back under Q1R1 and XIV held Q1P exact which looks like a decent test. I think this last point is the tell and next move is stock bounce. 

Also, new monthly pivots for February - all USA mains will likely open above all pivots. The last day that SPY closed below a monthly pivot was 9/5 (by .01) and before that 8/28.

SPY and XIV below. 

1/30/2018

A lot of long term level rejections today, so it was rather pleasant to have taken major defensive action yesterday by significantly reducing longs and adding to UVXY hedge. 

So now the question - what is the correct exposure? When to lift hedges and add back more long? As usual I am assessing day by day. Let's consider:

+s
All USA mains above all pivots; with sharply rising moving averages
Some other levels appeared to act as support like DIA 1HR1 and IWM Q1R1

-s
SPX/SPY: Back under YR1 resistance
NDX/QQQ: Back under YR1 resistance
INDU/DIA: YR1 rejection
RUT/IWM: Lower from near YR1 tag
NYA & VTI: YR1 rejections

VIX: Above all pivots, 2 days outside daily Bollinger band, above Q1R1
XIV: Came back to close above Q1P and JanP; still above all pivots

Despite all the negatives listed, I cannot be too bearish with all the USA main indexes above all pivots. That said, I don't mess around with VIX moves like this combined with multiple YR1 rejections.

The XIV strength is quite pesky because a close under the Q1P would be been so clearly more bearish. So think best decision was to reduce UVXY; however, with all the yearly YR1s in play and VIX above all pivots it is still time to be cautious.

Best guess from here is some limited bounce, then lower. 

PS: Oil YR1 rejection too, and short mentioned last week making up for earlier attempt that didn't work. 

SPY, DIA, VIX and XIV below.

1/29/2018

Some of the bullish conclusions of Friday were undone today - most especially in VIX. I have rarely regretted taking defensive action with VIX exploding above all pivots. Today met criteria for taking partial profits per Daily comment of last week.

"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."

All seem like good steps except metals have since looked more toppy. UVXY was up 14% today, and although some of that was a gap there were still large intraday gains.

Today - 

SPX/SPY 1HR2 rejection
INDU/DIA back under YR1 / Q1R2 combo

But crucially, QQQ held YR1 as support and both NYA & VTI remain above YR1s as well. So not entirely bearish. 

There was pressure on global names with DXY bounce - 

FXI 1HR2 rejection
KWEB YR1 rejection
EEM back under YR1

EFA back under YR1
EWG already YR1 rejection
EWJ hanging on to YR1 by a thread

USO also back under YR1

Basically taking partial profits, reducing risk while adding to $UVXY is doing great. 

SPY, DIA, VIX and XIV below (especially watching XIV JanP and Q1P likely test for UVXY position and longs overall).

1/26/2018

Great rally continues with SPY well above YR1, and QQQ, DIA and VTI all closing above YR1s today after a couple days of stall. Given that door was open for selling with massively overbought conditions, many indexes, sectors, commodities, etc, on major yearly levels, this is an amazing accomplishment. 

Keep in mind that there has been a major turn on Dow yearly levels every year going back to 2005. So clearing YR1 today after the stall yesterday is quite a big deal. As usual more on the blog over the weekend.

SPY and DIA below.

1/25/2018

Stock indexes continue pause in YR1 area without much damage. SPY holding slightly above YR1, but QQQ clear resistance and DIA near exact tag.

VIX closed slightly above Q1P but not enough to be definitive. GLD fell but TLT rallied. Next move seems either way.

Recently I mentioned that oil was looking like a short and that didn't play out; but today with rejection from YR1 sure does look worth trying again.

SPY, QQQ, USO below.