10/22/2017 Total market view: "Bottom line - INDU powering up above YR2 and then above Q4R2 was very bullish. Safe havens are weak. Bulls get benefit of doubt; but still watching SPX/SPY YR2, RUT/IWM YR1, and QQQ Q4R1." "TNX on the move; to my eyes, looks like TLT breakdown / TNX TYX breakout up is next move. If correct, GLD and other metals likely down as well."
SPX dropped from its YR2 area for a few days, then indexes came back powerfully on Friday. Safe havens (TLT GLD GDX SLV) all broke major pivot levels last week.
Over the past few weeks I've been expecting some near term selling from INDU/DIA YR2 and/or SPX/SPY YR2. Dow simply soared above its level without one day of pause; but SPX/SPY did drop from YR2 for a few days last week. And then it erased 3 days of losses in 1 day.
At this point I'm starting to think it may get through it, although I'll still be watching the resistance cluster of YR2 / 2HR1 at 2576-2582, with equivalent SPY levels 258.02-258.61.
After all, several indexes are already above YR2s: QQQ SMH EFA EWG EWJ FXI EEM INDA and of course, KWEB.
I don't really have a bias for the next move. Often there is some temporary weakness near the end of the month, but this week is also FOMC which usually rallies into the meeting.
DXY had a nice pop but YS1 currently looks like resistance. Any fade in DXY would quickly get the global leaders FXI EEM INDA back in gear. I've been pointing to these throughout the year especially since March. In particular China was the clear leader in August with FXI above all pivots as all USA mains broke at least a monthly level. Notably, SMH held its AugP as well and has continued strong performance since then. INDA had a deeper drop (blog post warned of trouble) but the low was Q3P exact and quickly rallied back above all pivots in early October.
USA main indexes - SPX/SPY at resistance cluster. If markets go higher this week, IWM will be near its YR1 as well.
Safe havens - VIX lifted above its monthly pivot for a few days, but 2HP held on daily close and then Q4P turned into resistance as well. Another score for VIX! Other safe havens TLT GLD GDX SLV all broke major pivot levels as expected last week.
Sectors of note - XBI just had RSI lowest in a year while recovering YR2 and Q4P. Watch for a trade. XLF looking tired as QQQ got back in gear (recommended XLF as a way to add longs 9/18-19 and that has played out well, but some pullback or sideways looking more likely from here).
Global indexes - At some point mentioned EWZ and RSX most likely to break levels and that played out on EWZ. Global indexes have taken a breather with $DXY rally, but appears INDA, FXI, EEM are moving again. KWEB having a shakeout but hey after near 75% YTD what do you expect?
Currency and commodity - Oil catching a huge bid with USO lifting above its YP for the first time in months on Friday.
New highs new lows and MCO on daily level both suggesting a bit more chance of selling at the SPX/SPY YR2 area.
VALUATION AND FUNDAMENTALS
SPX above 18X forward earnings on both real time and moving average basis the last 2-3 weeks.
Not as toppy as one might think Standard Put-call and Equity put-call not near any major low area. High value on AAII bears. But ISEE did have spike high on Friday and these tend to limit upside in the the near term.
As it turned out, 7 dates provided for August. 2 were the high and low of the month. 2 were the second high and second low of the month. 2 were milder turns. 1 was non event.
9/4-5 - 9/4 mild pullback low
9/13 - QQQ high and TLT low
9/22 (+/-1) - stock index high 9/20 (miss)
9/26 - stock pullback low 9/25 (-1)
9/29 - non event
October dates (listed from 10/1)
10/6-9 - 10/9 mild pullback low
10/19 - pullback low
10/23-26 - tough to say with 10/23-24H and 10/25L
11/19-20 risk off
11/22 risk on