1/7/2017 Total market view: "Bottom line - If indexes are higher then it will be easy to hold. If lower then IWM likely to break its JanP before others and portfolio can come back down to market weight or lower but reducing on those positions."
Result was IWM held JanP three times and there were no adjustments to portfolio.
USA indexes continue strong above all pivots. SPY and VTI have had a very moderate reaction lower from JanR1 tag or near tag. IWM has lagged in 2017 thus far, but has held JanP as support 4 trading day this month. Basically, everything is above pivots and not much is at major resistance. 2017 leader QQQ reached Q1R1 but easily lifted above. All this is bullish and one could make a simple case for continuing to hold all longs above monthly pivots.
Safe havens are still mostly weaker, although GLD closed above its Q1P slightly and currently testing its YP. VIX and XIV are at places where reversals are more likely to happen. In most USA indexes a range has developed which I think favors the sellers. So we could also argue to reduce somewhat and take some gains off the table. This would give more buying power if we saw a dip, but would cost in relative performance if market zoomed higher.
The Pivotal Perspective is not about planning in advance 1 month from now what to do. It is about an ongoing decision making process that leads to a better risk adjusted result. If a safe haven ie GLD reclaims a yearly pivot when it looked like it should been rejected, that is telling us something about the market. If that happens, especially along with VIX / XIV reversal bars, I think the right thing to do is reduce down to market weight at least (ie take gains on 2 units) and possibly down to 80-90% long.
If everything resolves bullish on Tuesday (ie, stocks higher, GLD YP rejected, no problems from VIX or XIV), then I'll hold for higher targets.
Portfolio is 120% long and there is ongoing decision to hold or reduce. Based on GLD, VIX and XIV and other technicals I am ready to take some gains off the table, but will still be willing to hold long if GLD YP gets clearly rejected next week.
Dedicated post and tag here. Adjustments are mentioned in the daily comments after close.
USA main indexes - All 5 USA mains above all pivots. If we saw a top on 1/6, then it was merely SPX JanR1 and VTI near JanR1. 2 monthly resistance levels is usually a minor trading high in the scheme of things.
Sectors of note - XLF trouble to higher despite the JPM earnings on Friday. Like IWM it has held JanP a few times, and came close to reaching JanR1 on Friday. Biotechs XBI have done well.
Safe havens - GLD closed above Q1P slightly and testing its YP. Whether this clears or gets rejected is an important message about stock indexes.
Currency and commodities - DXY has falled below its JanP for the second time this month, and the second time has been definitive. Yet a quick drop to near Q1P has recovered. DXY down is allowing global indexes to rally. Anything that holds the Q1P as support in addition to being above YP and 1HP is still longer term bullish.
Global indexes - Benchmark ACWI is quite strong, and EEM, FXI and INDA have rallied quite sharply up from December lows. EWZ above all pivots all year, and RSX also above all pivots but hasn't done much. SHComp made a short move above all pivots into a 1/9 high, but has already broken JanP and Q1P and now testing YP & 1HP. If any risk asset were to change pivot status in a significantly bearish manner it looks to be SHComp.
Selling at close high levels and diminishing average true range are signs of distribution. We may see more of a shakeout before going higher.
Valuation and fundamentals
Moderate positive for the market. If earnings are going up then any dip will be bought.
Extremes reached mid December have effectively halted the rally, but markets have dealt with this in a bullish manner thus far by an extended sideways consolidation.
Timing (Proprietary experimental work in progress model)
January dates published 1/1
1/4 (strong) - 1/3 DXY high
1/6-9 - 1/6 high for SPY, DIA and VTI
1/17-18 - TBD