10/1/2017 Total market view: "Bottom line - SPY and VTI just broke out above long term resistance as TLT fell back under its YP and GLD continued to fail from its breakout attempt. In addition, weekly charts on many global indexes look similar to USA indexes in August - in other words, a normal pullback in an uptrend. Stock bulls have the ball."
USA indexes powered up and many global indexes raced back to highs as well.
Q4 has started with a bang but all 5 USA main indexes have reached major resistance (quarterly or higher), with NDX, RUT and NYA at long term levels. This is enough for some top.
Given other technicals, the usual move would be some pullback or quick shakeout, then another move up to test highs. So I'm not calling for a big drop yet, and given the trend it is likely that we will see higher prices by year end. But all 5 USA indexes on major resistance levels, RSIs overbought across the board (Q, M, W and D charts for most USA indexes, excepting QQQ W & D and IWM W just about there), Bollinger band overthrows, and a more important timing date than many, I'm locking in some gains and may play some vehicles for a quick drop.
Bottom line - Agile traders with margin can lock in some gains at these levels by holding longs and taking some hedging positions on the same vehicles against the longs. For me this is actually easier to do than sell and re-enter long, because the stop on the hedge can be very tight for minimal cost to account if wrong on the fade idea.
In Q3 a lot of people were expecting a pullback and this did occur on the IWM but SPY stayed under -3% so let's just say not much happened. At this point a lot of people think Q4 will continue to soar up and up but I'm preparing for a more volatile period than most are expecting.
USA main indexes - the list of major pivot resistance:
SPX at Q4R1 2556, with YR1 2576 likely to trade by year end.
NDX at 2HR1 now, bang on 6068.
INDU at Q4R1 22789, slightly above 2HR 222711 with YR2 22937 above.
RUT at YR1 1518.
NYA at 2HR1 12307; VTI at Q3R1.
Safe havens - VIX and XIV saying all clear, with TLT and GLD in places that usually would bounce.
Sectors of note - XLF so far trading above its YR1 with decent breakout above all week.
Global indexes - Several of the global indexes I track had pullback bars last week and indeed jumped back to highs last week. Yet at the same time, a few of these dropped off those highs too. I would not be surprised at more downside ahead.
Currency and commodity - USO back under all pivots. Not sure how much the hurricane was impacting but charts look terrible again. This could also pressure EWZ and RSX as they have rallied along with oil from June lows.
New highs and new lows very impressive for maintaining gains even if market fades somewhat as planned in the coming week.
Also, here's a long term investing plan with technicals. It is my version of an improvement over a Meb Faber method that uses the monthly 10MA exclusively. Also, if considering higher yielding assets, one MUST use total return for these types of decisions!
Valuation and fundamentals
The last 2 weeks are the first time since I've been tracking that have closed above the 10 week average of 18X forward earnings.
ISEE spike high early last week but their site is having problems so not sure how much to rely on that. CNN Fear Greed is tossed around a lot on Twitter and this is some toppy consideration. The problem with it is some of the measures are actual positives and not merely sentiment extremes. For example, strong new high vs new low values are indeed positive for the market and not a top indicator by itself.
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 - stock high?