6/29/2018

With a lot of cash and watching setups what is the next move? 

Indexes are in mixed condition which I'll more to say about on the blog this weekend. But for SPX, it is set to open above 2HP and Q3P but below the JulP. According to my calculations the July pivot is 2728, only 10 points above. But the new HP and QP will cluster at 2707 and 2687 respectively. 

Translation - resistance just above, support just below. Best - wait, at least for any position here.

VIX held MP which is a sign of caution but putting in divergence high and could not really launch above YR1. 

There is a potential bullish resolution, but barring a huge gap it only takes 10 points to find out who wins for real.

SPX (with lines at these new pivot estimates) and VIX below. 

6/28/2018

In yesterday's daily comment I suggested that the markets could be close to a near term bounce but ultimately would go lower. I keep to that view.

Hourly and daily charts are set up for a bounce - SPY 2H RSI oversold with nice divergence that came close, but did not tag, the MP QP support zone. And similar setups on other USA mains with IWM and QQQ reaching WS3s after trading mostly above WPs for the last several weeks.

Several daily charts are at the lower Bollinger bands, and both leaders QQQ and IWM are above rising D50MAs - both places were markets often bounce.

However, the quarterly and monthly chart configurations to me look quite threatening. I'll have more to say about this over the weekend. 

SPY 2H, QQQ D and DIA Q below. 

6/27/2018

Market risk is getting real! But dedicated readers of The Pivotal Perspective should be quite comfortable and if you are really listening then quite green this week.

Consider -

Throughout Q2 I have been pointing to weakness in most of the international indexes I track; these have been avoids or shorts (SComp, FXI, EEM, KWEB, INDA, RSX, EWZ, ACWI). Therefore you have been spared EWZ / FXI / EEM meltdown or better caught some on shorts. 

TPP emphatically urged to take profits on IWM the week of 6/17 if we saw a HR2 / YR2 tag, and even mentioned a speculative short. (YR2 near exact on the high.)

I tweeted on 6/19 that momentum trades such as IWM and FAANG would be sideways at best 6/26 to August and more likely down, and added potential for a significant market drop. So far key high 6/20. 

Daily comment mentioned a VIX hedge for the first time in months on 6/20.

6/21 Daily comment recognized the threats - "That is quite a lot in the bear column and not much in the bull side. Although Friday could be a sideways day or limited bounce, my conclusion here is that today is not the low and more downside to come."

Other recent recommendations - TLT long as early as 5/23 and again emphasized last week; speculative short on SMH one day from the high; IWM speculative short near the high; raising cash in general, and most recent trend trade rec from the last Total market view was XLF short (along with TLT long).

There have been times when I have been defensive and wrong and such as October 2017 or May 2018 but in these weeks the small dings on hedges are made up for quite significantly when risk gets real such as the recent turn, and this time I have been more vocally urging the speculative shorts and not just hedges. 

OK now what? Are risk assets near a bounce or are they going lower? 

Actually, I think both. Likely near to some short term bounce, in the bigger picture going lower.

SPY heading towards QP MP and D200MA test; but on track to open below 2HP! If that happens and 2HP continues to act as resistance then that is long term weakness.

QQQ leading lower, on track to open below JulP.

DIA decisive rejection of MP and D200MA today - bearish. On track to open below 2HP, Q3P, and JulP. 

IWM biggest main index loser today, and that tells you the move is not all about China trade. It is about the unwind of momentum. Now also on track to open below JulP.

NYA HP break along with D200MA rejection - bearish.

TLT exploded above QP. VIX higher close, but an argument for the bounce is not higher in price than Monday.

XLF is testing its YP as TLT is set to open above 2HP, Q3P and JulP - the market is NOT prepared for this. 

All that said, it is possible that we could see some bounce if SPY tests and holds the QP / D200A area in the next 1-2 days. 

SPY, IWM, XLF and TLT below. 

6/26/2018

Mild bounce today, but not much change in pivot status. In fact, the two weaker indexes DIA and NYA, tried to recover pivots but didn't. This is usually bearish when pivots act as resistance.

Also, VIX tested and held its MP as support.

The few things adding to the bounce case are that VXX closed back under all pivots, TLT has been anemic this week, and GLD has been getting killed under all pivots.

If smart money was really concerned about a trade war and/or currency devaluation, don't you think TLT and GLD would be higher? 

So at this point I think more downside to stocks, but we could be nearing a decent bounce. And if lower daily Bollinger bands continue to hold as support, then this becomes even more likely. 

USO was rather exciting - again - jumping above all pivots for a major launch. Classic late cycle, behavior, as oil outperformed SPX significantly in 2007 as well. The only difference today is that commonly available technology (hello TSLA) already makes oil obsolete - so the current out-performance is only a matter of time. 

I'm also starting to track the pending new 2HP, Q3P and July pivots.

Currently IWM remains in the lead, above all projected pivots based on the 6/26 close. But after that, at least according to the main indexes, the situation is mixed. DIA remains weak, and on track to open below HP, QP and MP - significantly weak. This is also the case with XLF.

It is hard to imaging a bullish Q3 with both Dow and financials on track to start the quarter below 3 of 4 major pivots. 

SPY and VIX below. 

6/25/2018

Again, from 6/17/2018 Total market view: "Bottom line - If markets go higher it is likely the leaders will have another push up to reach IWM HR2 / YR2 area and QQQ JunR2. If lower then likely international names leading down, and one could have already have a partial short position on anything below Q2Ps. Until VIX & VXX confirm trouble the bull trend of risk on gets benefit of the doubt. At the same time the combination of crazy momentum on IWM, quarter end re-balancing soon in play, frothy sentiment and the HR2 / YR2 combo make this an ideal area for a decent reversal."

And that was spot on, with the high coming on 6/20 fractionally above YR2 on IWM and near enough on JunR2 for QQQ. Speculative shorts - SMH, IWM, possibly QQQ and/or FAANG - all made a killing today. 

6/21/2018 Daily comment: "That is quite a lot in the bear column and not much in the bull side. Although Friday could be a sideways day or limited bounce, my conclusion here is that today is not the low and more downside to come. Coordinated action on USA mains with VIX confirmation is usually a reliable signal."

It is very gratifying to recommend SMH long on 5/4 and then turn around short on 6/7. It has been fantastic to be long IWM from early May, and turn around short last week. This is The Pivotal Perspective. What next?

First let's tally the damage:

SPY HR1 rejection in process, hold of near test of QP and JunP
QQQ HR2 & QR1 rejection, but hold of YR1 as support
DIA QP rejection in process, today break of JunP and D200MA
IWM YR2 / HR2 rejection in process
NYA QP rejection in process, but hold of HP

VIX launch from YP the last 3 days, but high on JunR1
VXX close above HP and slightly above JunP

So that is a lot of bearish action - a few in the +s but far outweighed by the -s. 

The mixed scenario that I thought could happen per the Total market view didn't happen today but still could; EEM fractional break of YP but decent comeback, FXI YP hold, INDA also still above YP, and RSX YP hold too. 

It was interesting today that TLT and GLD were still rather weak despite the stock bloodbath. If really risk off, these should have done better. That said, having a few speculative shorts on SMH, IWM and tech stocks, and possibly VIX long per 6/20 Daily comment, adding shorts on XLF per recent Total market view, is sitting pretty. 

SPY, QQQ, IWM and VIX below. 

6/22/2018

Interestingly, the weaker NYA and DIA bounced, and the overall Q2 leaders IWM and QQQ were weaker, and SPY was in between. I have been thinking about end of quarter re-balancing which is why I so emphatically said to take IWM profits in the YR2 / HR2 area in the latest Total market view. That looked like it could be wrong on Wednesday, but not today!

As usual more on the blog over the weekend. 

SPY and IWM below. 

6/21/2018

Serious selling today, but is it one day bear wonder or start of something larger?

SPY HR1 rejection (note high of year on HR2)
QQQ JunR1 rejection (JunR1 exact high on NQ futs and NDX so counting this even though QQQ didn't quite reach level during session)
DIA QP rejection
IWM YR2 rejection (as expected in the latest Total market view)
NYA D200MA break but MP hold

VIX launch from YP, although still under MP
VXX jump back above Juns1

That is quite a lot in the bear column and not much in the bull side. Although Friday could be a sideways day or limited bounce, my conclusion here is that today is not the low and more downside to come. Coordinated action on USA mains with VIX confirmation is usually a reliable signal. If VIX clears its MP anytime soon then it will be even more clear to play defense!

SPY, NDX, IWM and VIX below. 

6/20/2018

Mixed markets continued with the same recent trends:

IWM led with surprising strength, closing above YR2! So far proving my latest Total market view wrong as I really thought there would be some reaction in this area. 
QQQ also up for high test, though some fade from near JunR2 tag

SPY did not do much, still under HR1

DIA closed below Q2P! Futures held on, but cash also below, so that's 2 out of 3. This is now the 3rd time that DIA has moved below the Q2P after being above. 
NYA continued below its QP as well

With 2 of 5 USA mains closing below QPs, it was surprising to see IWM soar above its YR2 without any damage at all. But I guess that is all the more reason to be long strength and short weakness, though these trends often reverse near quarter end. 

VIX steadied above the YP, but GLD broke under its YP. I weight VIX in over all risk on / risk off though. TLT was also weaker.

At this point it seems like better odds of leaders going higher than DIA continuing to break down, but things are basically a toss up here. I'm watching VIX and that could be a decent hedge instead of taking anything off from IWM. Back under the YR2 would be an entirely different story.

IWM, DIA and VIX below.

6/19/2018

Once again things could have been worse. If you are long small caps and tech you are probably feeling pretty good the last few days. International indexes melting down, DIA cracking, and what looks like a bad rally rallies to a new high (in IWM at least).

SPY could have rejected from HR1, but didn't; well below the level, but not really rejection
QQQ held above HR2 as support, and QR1 & JunR1 as well
DIA could have broken Q2P, but didn't; and when you consider cash index and futures so far that QP is holding
IWM new price and close high!*
NYA QP rejection which shows trouble internationally, but this isn't new (I have been pointing out all the global indexes below QP for months now) and anyway, so far D200MA hold

So all this is rather bullish. But:

VIX is back above YP, some warning
VXX slightly above JunS1, but this isn't a huge level
TLT again above MP
GLD holding near YP test

So the safe havens are picking up a bit. The next stage in typical topping process would be increase in new lows as new highs fall off. We have the latter but not much of the former. We already have sentiment extremes. There are enough major levels in play here. All we need is a move that drops and does not come back. 

* I maintain decent trading top anytime now from IWM HR2 to IWM YR2. Given international troubles, everyone is piling into the Russell. 

SPY, DJI (cash), IWM below. 

6/18/2018

Once again the daily bar could have been far worse, but wasn't. Usually this is bullish.

SPX rallied back to HR1 - key level to watch
IWM testing HR2 - another key level and reaching target zone where I emphatically emphasized the likelihood of reversal in the latest Total market view
NYA fell under QP but doesn't have the "look of rejection"

VIX traded above the YP but without the "look of support"

In sum while I still believe we are likely to soon see a decent trading top based on IWM YR2 HR2 area, there was just not enough today to have a major adjustment in positioning. 

TLT held MP FWIW, so that remains a counter-trend possibility / institutional rebalancing trade idea. 

SMH short from last week was the right idea, though QQQ was already cut and XBI continues to hold above the YR1. Probably easier to just stick with shorting weakness - there have been several key indexes below QPs and continue to go lower - XLF, EFA, EWG, EWJ, SHComp, EEM, INDA, EWZ, RSX. 

SPY, IWM and VIX below. 

6/15/2018

Market could have dropped further but didn't. Usually that's bullish for the next move.

SPX held above HR1 with JunR1 also acting as support
ES (U) could have had rejection from YR1 but looks more like pause
SPY looks different due to ex-dividend move but it too held above HR1

VIX closed below its YP and thus below all pivots for the 5th time in the last 8 days. 

As usual more on the blog this weekend. 

6/14/2018

One would think there would be bearish conclusions from a day with a massive DXY rally and TLT up .7%, but actually, aside from financials ie XLF KRE, there really wasn't. 

SPY not at resistance; although ES U contract could have a more bearish interpretation
QQQ powering up and not yet at resistance
DIA closed above JunR1; surprising strength considering DXY
IWM pushing up, above JuneR1
NYA only main index to have a pivot resistance level rejection

VIX closed below its YP, and thus below all pivots, for the 4th time in the last 7 trading days; and VXX closed under its Juns1 as well.

I don't mention my timing work often but it is at the end of each Total market view. 6/13-14 was listed as a "strong" timing date. Thus far ES put in a price high on 6/13 but also could be pullback low on 6/14. Admittedly this is a bit frustrating as I don't have the time to pursue all the research required for direction on on these days. 

But given the absence of bearish conclusions on the list above, I'm thinking this date was a low and market is heading up into the next strong date window of 6/20-21.

SPY
ES (U) - needs to clear YR1 for any bullish scenario, worth watching
QQQ - current leader and should go to pivot resistance before a trading top
VIX Below

6/13/2018

We have seen a run-up in front of FOMC and sell-off after plenty of times. Was this a key turn?

According to VIX, IWM, NYA and ES (U) contract, maybe. But not according to VXX, SPY, QQQ, or DIA.

Just because the post FOMC move often reverses the next day, I'm willing to take the afternoon sell-off with a grain of salt and see what happens the next day. Given the strength fo the trend, we need more confirming indicators of trouble - such as TLT and/or GLD above MPs. 

That said, it looks like upside on IWM will be limited as there is serious resistance ahead - JunR1, HR2, YR2, daily BB, weekly BB, monthly BB, and it is already well outside Q BB. This is happening as most timeframes are overbought on RSI as well. 

SPY, IWM and VIX below.

6/12/2018

Of the 5 USA main indexes, only 1 is at any pivot resistance level - IWM tagged JuneR1 today, with HR2 & YR2 not far above. 

Typically tops take multiple indexes on resistance, so this is a bullish sign for the market. I was watching the new U contract resistance because some funny things can happen on the rollover futures contracts (that don't align with the ETFs & cash indexes) but so far those are resolving in bullish fashion.

TLT and GLD are weak, below all pivots.

Only VIX - barely holding on to a close above a YP - suggests a possible top. This was partially canceled by VXX making a new low and closing under the JunS1. Seems like ball is still with the bulls. 

SPY, IWM, ES (U) and VIX below. 

6/11/2018

USA mains mildly higher today, but upside should be limited from here. SPY has closed outside its daily Bollinger band for 3 consecutive days and then closed back inside today. Another push outside would be the less likely move. Further, VIX held its YP today. 

But I don't think selling will be serious - after all, FOMC on Wednesday. 

SPY and VIX below.

6/8/2018

SPY pushed through HR1. QQQ held above HR2. VIX could have rallied above YP but didn't. Bulls have the ball. 

SPY and VIX below. 

6/7/2018

So far this looks to be a pause at resistance which commonly happens especially as some indexes reach overbought levels on daily charts.

SPX pause near HR1
QQQ 2 days above JunR1 then back to level
DIA near JunR1
RUT top on JunR1
NYA top on JunR1

Conveniently, VIX and VXX both bottomed on JunS1s. 

Today VIX had an opportunity to reclaim its YP (after just 1 day below all pivots) and TLT could have rallied above its MP (still below all pivots). Should we see those events soon then the outlook would be more bearish. Until then, just a little shakeout. 

Except - NQ new U contract testing YR2 after a classic double top, XBI in HR2 YR1 area, and SMH top on YR1 exact. I think it is time to be watching to lock in any tech gains from early May longs. This is especially the case as the last two weeks of June frequently see institutional re-balancing moves, which would put the best performers of the year at the most risk of a drop. Considering how far QQQ is outside its quarterly Bollinger band, the quarterly RSI on SOX index (88), and the divergences forming on XBI quarterly chart, it is really time to be watching these tech indexes closely if long. Intrepid traders could consider the short side here as well. 

SPX, NQ (U), XBI, SMH, VIX below.

6/6/2018

More signs of a bullish resolutions today as NYA cleared its QP to join the other 4 USA main indexes above all pivots, and VIX joined VXX below all pivots.

This was the first day of the year since 1/26 that all 5 USA mains were above all pivots with both VIX and VXX below all pivots. 

This doesn't mean I am implying an immediate move of 1/26 to 2/9; in fact the opposite. VIX below all pivots reduced the threat of that kind of move. 

This is also in context of most key bond indexes being below all pivots, and metals still mixed.

VIX below all pivots increases the chances of more indexes making new highs. For now the level to watch is SPY HR.

SPY, NYA and VIX below. 

6/5/2018

More wins for the bulls as QQQ continues for the 2nd day above HR2 and QR1, and DIA held QP on the support test. 

The bearish scenario could be back in play if DIA breaks its QP, but until then bulls in charge. 

VIX testing YP and given momentum of the move looks like that will soon break down.

QQQ and VIX below. 

6/4/2018

More points for the bulls today, as DIA reclaimed its QP. This means all USA mains except NYA are above all pivots. 

QQQ powering up and resuming leadership in a big way in the past week - jumped above HR2 without any trouble. Also above QR and already at JunR1. 

Bonds are back in trouble - TLT, AGG, LQD and HYG all below all long term and medium term pivots. 

VIX somehow still above its YP but that seems likely to give way soon. This will further increase the chance of higher highs in equities. 

SPY, QQQ and VIX below.