8/27/2017 Total market view: "Main question from here is whether the 8/21 low and -2.95% decline for SPX was 'it.' There are indications of at least maybe: weekly charts of USA main indexes have had typical pullback to rising moving averages, sentiment picture has changed sufficiently, and VIX at 15+ has been the two other primary buying opportunities this year. ... Bottom line - Until SPY and VTI clear the monthly pivot, and VIX drops below its monthly pivot, stocks are not yet in the clear. While it paid to be buying back some positions on 8/21, it is not yet full green light for 100% risk and certainly not the place for leverage yet."
8/21 low essentially tested and held 8/29, with SPY and VTI clearing monthly pivots on 8/30, and it was appropriate to be adding positions.
As of 9/1 close, all USA main indexes are back above all pivots. This hasn't been the case since 8/1 due to IWM weakness in August. In addition, all global indexes I track are above all pivots as well, and held up quite nicely through August. VIX is back under all pivots. But... TLT and GLD are above all pivots as well, and XIV showed some bearish divergence on 9/1 by not reclaiming all pivots. As of 9/1 close, mostly long risk seemed appropriate, but perhaps not fully long and definitely not leverage with safe havens so concerned about the market.
This is a Pivotal momentum strategy. Though once in an extreme while I will recommend a counter-trend trade (ie shorting what is above pivots on resistance levels, or buying what is below pivots on support levels); or occasionally recommend a yearly pivot buy or sell with the chance of a definitive move (like GLD 7/11, or SLV 8/22); nearly every recommendation is buying what is above all pivots or holds up best on a general market decline.
With that in mind, current positions would be heavily overweight global names especially China, DIA and QQQ / SMH, recent additions back in EEM, INDA; GLD, GDX and maybe SLV, and TLT went on buy late July.
Bottom line - a blend of global indexes, DIA and USA tech via QQQ and SMH, GLD, GDX is doing fine here. Next decision will be to hold or increase risk positions and take profits in safe havens, or reduce risk while holding or adding safe havens. SepPs will make this relatively easy process.
USA main indexes - All 5 USA mains back above all pivots on 9/1 close. Current overnight action again weaker but so far SepP holding on a relatively mild pullback.
Safe havens - VIX below all pivots, but XIV could not make the same move. There have been several critical turns where XIV has been a tell.
Sectors of note - IYF and XLF not joining the party, still below AugP and SepPs.
Global indexes - Tracking ACWI, FXI, SHComp, KWEB, EEM, INDA, RSX, EWZ - all above all pivots! FXI, KWEB, RSX and EWZ all above all pivots throughout August weakness. ACWI, SHcomp, EEM and INDA slight breaks of AugPs and recovery (somewhat like QQQ).
Currency and commodity - DXY trying to stabilize but still under all pivots as I type. Even if it can bounce a little, anything below SepR1 is still a downtrend in larger scheme of things.
New highs new lows back in bulls favor. In addition, note all the weekly moving averages that I pointed out in the last Total market view which have so far been good for a bounce towards highs.
"SPY pullback to weekly 20MA
QQQ pullback to weekly 10MA and now near 20MA
DIA pullback to weekly 10MA
IWM pullback to weekly 50MA and lower weekly BB
VTI pullback to weekly 20MA"
VALUATION AND FUNDAMENTALS
18X forward P/E resistance several times this year - currently 10 week moving average is 2486. New project: FAANG equal weight forward P/E, 54.3.
Recent bearish extremes on daily put-call measures near 8/21. AAII currently bearish enough with second bull-bear spread of the year last week.
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.