2/19/2017 Total market view: "Levels to watch this week are DIA 1HR1 area, slightly exceeded last week, along with VIX FebP and XIV 1HR2. Thus far any maneuvering out of fully long (or better leveraged long) in 2017 has cost gains, but this won't be the case forever. As strength begets strength and 3 of 5 USA mains above long term levels, we can start eyeing higher targets. This means SPY YR1, QQQ 1HR2 (almost there already) and VTI YR1."
DIA continued to rally above 1HR1. QQQ reached 1HR2 and so far this is the top.
Amazing rally in February - straight up despite RSIs overbought on every timeframe on most USA main indexes. Usually, multiple indexes will reach major resistance for a significant high. As of last week, QQQ had zoomed above YR1 and reached 1HR2; none of the other indexes are at resistance.
Momentum is so strong that any first pullback likely bought. And yet, TLT has not dropped further this year and GLD is above all pivots. In a sense these are questioning the rally. So far VIX and XIV have supported stocks, as VIX clearly rejected from FebP several times this month. Even VIX above a monthly pivot would not be such a big deal in the scheme of things, as my official "trouble alert" comes when VIX closes above a QP, and SPY closed below a QP.
So, bullish scenario from here is VIX remaining below all pivots as tech continues to lead and other indexes make it to major resistance for a top. A more bearish scenario is QQQ rejection of 1HR2 as VIX jumps above its FebP.
Stocks have been incredibly strong, and with VIX below all pivots it has been best to hold risk assets. With market leader QQQ at major resistance there is a level worth watching, but probably best to err on the side of holding longs until multiple indexes are at resistance, divergence is clear and both VIX & XIV along with other safe havens are showing signs of trouble.
USA main indexes - Watching QQQ 1HR2 this week.
Sectors of note - XLE below 3 of 4 pivots for the second time this month as of 2/16.
Safe havens - GLD strong above all pivots, soon testing D200MA. Reaction to this may be a tell for stocks. VIX also better to stay under its FebP until MarchPs take over.
Global indexes - Hard to say "Trump rally" when Brazil, EEM, etc are flying in 2017.
Currencies and commodities - DXY low of the year bang on YP on 2/2. Back above all pivots, but upside seems like struggle. Oil mostly sideways this year so far, but maintaining above all pivots on CL1 continuous contract.
Strength begets strength in USA stock indexes with RSIs overbought in every timeframe. This is not as uncommon as one might think in strong bull markets.
Extremes of December not yet matched in 2017.
Valuation and fundamentals
SPX within 1% of longstanding 18x forward earnings target. Price may continue to increase based on increasing earnings, but ultimately I think the markets will make a significant top with SPX in 18x-19x range.
Timing (Proprietary experimental work in progress model)
Feb dates published 1/28
2/6 - Non event
2/10 - Non event
2/21 - Looked like a top, then markets back up on 2/24.
2/24-26 (call it 2/27 as 2/26 is Sunday) - TBD