11/20 Total market view: "Risk on has been the clear choice from 11/9 on. VIX gave screaming buy as all USA main indexes recovered or cleared pivots, as other safe havens TLT and GLD collapsed through long term support 11/10-11. But a move from near NovS2 to NovR2 on SPY in about two weeks is quite a lot, and the most likely thing from there is digestion and consolidation. With multiple indexes on monthly levels, sentiment getting toppy and the timing window 11/18-21 we may see some trading high here (trading meaning a turn that holds for 1-4 weeks). At the same time, I don't think this is a major top which I would define as definitive for the quarter or beyond.
Bottom line - If you have caught the move in the current leaders of USA small caps and financials, then I think likely best to hold those as they are likely to benefit from year end positioning. Given monthly levels, sentiment and timing, I will look to reduce or hedge other index longs if we see more weakness early this week."
Not quite bullish enough! No weakness from 11/21 and best move has been to simply hold.
If you bought into the rally & breakouts after 11/9-15+, with minimal or no exposure to TLT/GLD, and shifted out of global leaders into financials and USA small caps due to interest rates and dollar strength, then you are doing great. From here the question is how long to hold, or take gains. In a power move such as this, patience usually best - but anything could happen, especially if we see more signs of euphoria in the coming week.
Bottom line - In a momentum move, especially at this time of year, we 'should' see signs of euphoria in the market. We are seeing 1 of 4 readings at extremes but that is not enough. Until more people get crazy bullish, usually best to hold. Even then, with momentum very high, often best to wait instead of trying to avoid a small pullback that quickly comes back.
I will sound more bearish on the market if: SPX rejects 2HR1 2209, RUT rejects 2HR1 1342 and INDU rejects Q3R2 19185 along with some trouble on VIX or XIV. Even so, until we see sentiment extreme as above I think most likely move is pullback that is bought. Even if we see some shuffle around these levels - which would be normal - with moving averages rising with impressive slopes one could err on the side of holding and then use DecPs as a guide from there.
New dedicated post.
USA mains - From here levels to watch are SPX set 2HR1 / Q4R1 combo, RUT set 2HR1 / Q4R1, and INDU Q4R2.
Safe havens - TLT chart trying to stabilize for a bounce, but under all pivots means avoid. The only reason to possibly try a TLT long here is a hedge against financial longs.
Global and other - Interesting to see if some of the sectors that broke Q4Ps after the election continue to recover, namely FXI and EEM. INDA is having macro related issues and had the biggest drop of risk assets.
Currency & commodity - EURUSD at the bottom of an 18 month range, but hasn't broken down yet. To watch. Oil neutral here; recently strong but gave back a long of gains.
Leaders like IWM, DIA and XLF are pushing outside Bollinger bands on monthly and weekly charts. This is very bullish and sets stage to hold for divergence. More on this soon with a review of monthly charts when bars close.
Valuation and fundamentals
Currently a mild positive as the Citigroup Economic Surprise Index back above zero and SPX forward P/E not pushing 17x according to recent data.
AAII is at a bull extreme now, so the question will be if others follow. NAAIM toppy but not extreme, especially considering seasonality; put-call not really extreme, especially on weekly view; ISEE no daily spikes yet.
Timing (proprietary timing model)
November dates (published 10/29)
11/1 - non event, middle of drop (major low 11/4 not close enough)
11/18-21 - thought this might be a turn but another non-event