1/1/2017 Total market view Sum: "Heading into the new year, quarter and month, the question is whether the market continues the larger moves since election (USA stocks up especially DIA, IWM and XLF, $USD up, rates up, safe havens TLT and GLD down, global stocks mixed) or if we see some re-balancing move. Re-balancing would imply pullbacks on what currently looks best and buying on what looks the worst. I don't know what will happen but will let pivots guide decisions."
The result was that we did see some re-balancing moves with IWM weaker and QQQ strong, TLT and GLD bounce, global stocks up and DXY down. But at the same time, all 5 USA main indexes are above all pivots and that is the place to be.
All USA main indexes are above all pivots, with long term resistance much higher. Tech looked weaker in comparison to the others at the end of December 2016 and it has jumped the most to start the new year. Safe havens TLT and GLD did get some bounce and recaptured JanPs, but still below YPs, 1HPs and Q1Ps. VIX is below all pivots. This is a bullish configuration for stocks.
Obviously a lot of people with buying power on Wall Street have been very happy about the Trump win. Even though I saw one post saying "buy election sell inauguration" I think the more likely move is follow through buying after 1/20. There is nothing to stop the Republicans from doing everything they want to do, and I expect the first reaction will be cheering from Wall Street, not an immediate fade. If this idea correct, then holding longs will be the right move.
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.
Each adjustment was recommended in advance as a setup or stop or day of in daily comments based on pivot action that day. Back to market weight long on 1/3 then even longer through the rest of the week.
USA main indexes - Above all pivots, with QQQ on Q1R1 already, SPX and NYA/VTI both on JanR1s.
Sectors of note - XBI above all pivots for the first time since 7/2015, hence the buy recommendation on 1/4. (Too bad I didn't apply same idea to EFA on 1/3 in daily comments as well.) XLF not down despite massive run up after election and perfect hold of JanP thus far.
Safe havens - TLT and GLD above JanP but below everything else. VIX below all pivots and even under JanS1. XIV a bit more toppy at Q1R1.
Global indexes - EFA above all pivots for the first time since 8/2015 as of 1/3/2017 means developed markets bullish. RSX, EWZ and EWZ above all pivots; FXI below Q1P but above 3 others; INDA mixed below 1HP and Q1P, but above YP and JanP.
Currency & commodity - DXY 1 day break of JanP and recovery above all pivots. EURUSD same but below (ie 1 day above JanP and immediately back under all pivots). CL1 (oil continuous contract) above all pivots.
Does Dow 20K matter?
Valuation and fundamentals
Currently a moderate positive with 18x-20x target range 2360-2622 which nicely lines up with SPX YR1 at 2407.
Extremes reached near 12/8, but thus far backing off without much damage to price.
January dates published 1/1
1/4 (strong) - so far 1/3 DXY high and that's it
1/6-9 - TBD