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9/10/2017 Total market view: "4 of 5 USA main indexes remain above all pivots, and 5 are off recent 8/21 lows as weekly moving averages held as support. However, safe havens have been speaking loudly for weeks and the volume of their message just continues to increase. Should VIX move above its critical 2HP / Q3P level of 12.28 and then close above 12.46, they will practically be shouting - trouble for risk assets! ... Bottom line - 4 of 5 USA main indexes are above all pivots so I cannot be too bearish; however, the message of safe havens and monthly charts to me tilt the scales to a defensive view. This view will be proven correct and even more actionable if SPY, QQQ and VTI break under their SepPs this week."
My cautious stance incorrect as the safe haven alarm faded, and indexes jumped sharply from their monthly pivots from 9/11 and then added to gains the rest of the week.
All 5 USA main indexes back above all pivots on 9/11, and both XIV and VIX together confirmed risk on for the first time since 8/10 on that day as well. Bulls have the ball. As daily indexes approach overbought and sentiment gets toppy we can consider the possibility of trading highs, but these are more likely to occur when multiple USA indexes are at resistance levels. Currently, only SPX and VTI are testing 2HR1s.
Using a Pivotal Momentum strategy to be exposed to strength, recent emphasis has been on FXI, KWEB, possibly EWZ and RSX, then SHcomp, EEM, SMH, DIA (in August, but out and back in again, and QQQ. GLD worked well from 7/11 buy but daily comments this past week suggested taking gains with look of weekly chart and YR1 rejection. The model shifted to a more bullish stance with additional risk positions on 9/11.
Bottom line - 6 weeks into the seasonal weaker months of August and September, and SPX had a minor dip of -2.95% and raced back to highs. IWM took the brunt of the hit at -7%. I'm going with the trend until price action forces defensive moves the other way, meaning VIX above 2HP / Q3P, and at least some USA indexes showing rejections of resistance levels and breaking monthly pivots. The questions from here are the global emphasis given their run up and potential $USD stabilization, tech suddenly a bit laggy, and which way TLT moves on its yearly pivot.
USA main indexes - All 5 back above all pivots so now the question is what is happening at resistance levels. SPX and VTI testing 2HR1s and SepR1s.
Safe havens - Have to say VIX had it correct by dropping under all pivots on 8/22 and staying under each daily close from there. XIV regained status of above all pivots on 9/11. GLD fading somewhat from its YR1 but still above all pivots; TLT testing its YP will also be an interesting tell for the week. If TLT drops back under its YP, and XLF regains SepP, then XLF could be a choice for additional longs.
Sectors of note - I haven't been watching XBI too carefully but probably should be with 41% YTD well above SMH. XLE perking up along with oil.
Global indexes - All USA indexes spent at least a few days under AugP. 4 of the 8 global indexes I track remained above all pivots throughout - KWEB, FXI, EWZ and RSX. SHComp and EEM almost there with a 1-2 day breaks and quick recoveries.
Currency and commodity - DXY has dropped enough to no longer be "screaming bearish" as I was in May but until it clears at least a monthly pivot I'm not so concerned about strength impacting the global positions. Oil via USO and CL1 both showing a certain long term strength that has been rare this year - USO trying to lift above its 2HP.
Monthly chart RSIs at 20 year highs for SPX and INDU, but if there was going to be a drop things seemed to be set up a week ago and yet they raced back to highs instead.
Starting to include analysis of new highs and new lows on weekly blog rotation.
While debating the GLD exit this week, I had a few comments on BABA. When to hold through a strong trend and when to take gains is a very tricky matter. Some thoughts here on the BABA post.
VALUATION AND FUNDAMENTALS
SPX back at 18X forward earnings - but still no weekly close above according to a smoothed 10 moving average system of Thomson Reuters data. Citigroup Economic Surprise Index on the verge of flipping back positive. Though USA stocks ignored the weakness, $DXY and $TNX both did not. Thus, a move back into positive should be bullish for yields and the sector most likely to move on that is XLF.
Currently mixed. Put-call remains elevated, but Equity only has dropped down towards lows. AAII 3rd highest reading of bulls for the year, somewhat balanced by NAAIM at relative lows.
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.
September dates (editing from last week)
9/4-5 - 9/4 mild pullback low
9/13 - QQQ high and TLT low
9/26 - looks bullish for risk
9/29 (adding this) - bearish for risk