Last week: "Was that it? Hm. A big scary event - threat of rate increase - but actually hasn't happened yet, with equally bullish conclusion (promise of QE4). Sounds more like Brexit low than big stock high. All stock indexes above all pivots. VIX just mild concern. I ran my market top checklist again and my answer was more likely stock pause than major high. If this view is correct we'll see VIX below all pivots on Monday and a rebound."
Result: Market did rebound Monday 8/29, only to revisit lows later in the week and rebound again. So far pause rather than high more correct with SPX just -1.6% from highs on the pullback low.
I have to be bullish here with all USA indexes above all pivots, safe havens all flashing green light for stocks, sentiment not at extremes. And yet I remain in "upside limited" camp and expecting significant resistance if we see a tag of these target areas:
SPX SepR1 to 2HR1 - 2193 to 2209
NDX SepR1 - 4842
INDU SepR1 to YR1 - 18630 to 18727
RUT SepR1 / Q3R2 / 2HR1 / YR1 - all 1247 to 1261 in zone
VTI YR1 to 2HR1 - 112.46 to 113.53 also tagged zone
If Friday turns out to be a bull trap the first thing we will see is INDU set below SepP, VIX above and GLD likely above.
USA mains & other - Of 5 USA mains indexes, 4 held SepPs on Thursday. The one below, INDU / Dow, jumped above on Friday. As long as these levels hold looking for SepR1s. Market leader SOXX / SMH near key resistance 2HR2.
Safe havens - All flashing green light for stocks. TLT and GLD below SepPs, VIX one day above SepP then back below.
Global & other - 2016 weak links DAX and NKY above SepPs too. China via FXI jumping, and EEM moving along. Despite oil's drop, EWZ and RSX quickly back up towards highs. Oil is the markets weakest asset class, the only thing I know of below all pivots on USO, though CL1 is more definitive and mixed below YP yet above 2HP.
NDX 4816 2000 top level to watch. I've mentioned the quarterly chart RSI picture a few times in this section - INDU quarterly RSI 69.92 is not coincidence. It would be more bullish for the market for that to join SPX and NDX above 70, but I don't think this will happen. Otherwise not even 1 hour charts are overbought.
Valuation & fundamentals
Valuation on the higher side, but what else is new. According to Thomson Reuters data, SPX 17x forward earnings basically held as support last week. Fundamentals weaker with Citigroup Economic Surprise Index fading back to the zero line adds to my "upside limited" perspective.
After reaching extremes across the board in mid August, markets have tested highs and had a mild pullback. Now put-call has moved higher, ISEE hasn't spiked up on daily close, NAAIM managers have faded a bit, and AAII individuals less bullish too. Ideally we see all these move back towards bull extremes for a key high area.
An ongoing work in progress. Some of these areas listed in weeks in advance have gotten key turns. Sometimes they are misses, non evens, or in tight range it can be hard to immediately tell if high or low.
8/29-9/2 - admittedly wide; so far stock pullback low and TLT high