Big picture first - USA main indexes will open above 2017 yearly pivots. Safe havens TLT and GLD likely to open below yearly pivots. This is bullish for risk assets and points to YR1s (and possibly higher) for stock indexes and YS1s (and possibly lower) for safe havens.
SPX YP 2116, YR1 2423
NDX YP 4597, YR1 5306
INDU YP 18456, YR1 21463
RUT YP 1235, YR1 1527
Also, due to the 2016 low in first half, the 2017 1H pivots will be decently higher than the YPs. For example SPX 1HP is on track to be 2207. This will also be the Q1P because the low for the 2nd half was also in Q4. This will be solid support. 1HR1 & Q1R1 will be 2332, a nice and very attainable target.
Scenarios from here:
Most bullish - USA indexes jump above yearly 2016 levels, continue melt up without any touch of 2017 Q1 pivots (though JanP tests could provide buying chances). Strategy would be out of hedges, hold all long positions and look to add leverage back in.
Bullish - USA indexes continue fade from current yearly resistance, test new JanPs and head off up. In this case current positioning is fine and we can just wait to cover remaining hedges and add longs.
Mixed - A test of Q1P now at 2207 implies a 4.5% correction on SPX. This is about the same as the pre-election drop from August highs to November lows. Seems a bit much. But if this happens, we might want to be a bit less long.
Bearish - Any sharp selling into year end or early January that changes basic pivot status of USA indexes above pivots and safe havens below. At this point seems unlikely.
So what will it be? Will big institutions re-balance in the new year, thus giving a bounce to bonds and pullback for stocks? Or will promise of tax cuts and FOMC rate hikes lead to re-allocations supportive of risk assets? Will we see any rotations into what has been most beaten up? At this point, both India and China look terrible! Brazil and gold both looked terrible at the end of 2016 too. While I am aware of all these questions, my simple solution is The Pivotal Perspective. We are long the leaders above pivots, and avoid, hedge or short what is below pivots. But we are also very keen to watch the moves that start near the beginnings of new quarters, as there often is a pivot setup and a definitive new move.