3/4/2018 Total market view: "Bottom line here is indexes do seem to be a in a bit of trouble. But 2 of 5 USA mains are above all pivots so let's not get carried away on bearish scenarios just yet. Sentiment per put-call is also quite high, highest since 11/2016 - and this may especially help a mid March rally into OE week 3/12-16. Stay nimble, and if hedging or shorting isn't your thing then you can always raise cash and focus on the few relative leaders and avoiding damage in the volatility. For this week its all about the reaction from SPY MarP."
Result - SPY started 3/5 under its MarP but rallied all day to close well above; ES version also tested and held its MP 3/7, and launch from there.
Quick version this week - no links to charts.
Last week the market tested and held key levels. Leader QQQ never in doubt, remaining above all pivots from 2/23 on and holding its MP (monthly pivot) and daily 50MA at the 3/1-2 lows. IWM also recovered above all pivots on 3/2 after moving below its QP 2/28-3/1. But SPY was still below its MP 3/1-2, DIA well under its MP with closes under the level 3/1-7, and NYA below QP down to test HP. Interestingly, all 5 USA mains above their MPs for the first time in several weeks on the 3/8 close was the tip for launch on 3/9.
Tech is crushing it, with QQQ new highs, SMH rocketing, XBI participating and KWEB moving back towards 2017 highs as well. Sentiment per put-call remains doubtful of this rally; heading into OE week and those puts will be obliterated.
Perhaps overbought short term charts will give some pause, but generally markets should go higher before another major top. Like the 1/26-29 high and then 2/26-27 move, typically there are multiple main indexes on resistance levels at the key turns. That isn't the case as of Friday's close, with only QQQ already zooming to HR2.
VIX test and rejection of YR3 while coming down to close under YR2 on 3/2 also worked well as a confirming signal for stock buys. VIX nearing 1/29 breakout level and YP, HP and QP so keep an eye on that with the week ahead.
Bonds remain glaringly weak and the asset class to avoid, as I have consistently said all year. Aside from volatility plays, only GLD acting as a safe haven, and it spent one day above all pivots in March and failed the next day.
Bottom line bulls have the ball and QQQ made a new high above its YR1 on Friday. While I still think "resistance matters" is a theme that we will see in 2018, for now it is a "go with" move most especially in tech. As EWZ and RSX seem to be cooling off it would help for USO to power above its MP as well. If adding to risk positions last week, sudden strength in small caps (IWM or KRE) were other options.
USA main indexes - All 5 USA main indexes closed above all pivots on 3/8. Sometimes it pays to have a simple method.
Sectors of note - SMH new high on 3/6 paved way for QQQ to follow 3/9. Both SMH and XBI testing YR1s with QQQ above its YR1.
Global - Some recovery last week as well, with SHComp back above YP, HP and MP (not QP). Benchmark ACWI fractionally above all pivots 3/5, then tested and held its MP on 3/7. FXI recovered above all pivots on Friday as well. EWZ and RSX cooling off and seeming to have trouble to really launch above YR1s. If USO can continue above its MP then I expect these to go higher in weeks ahead.
Safe havens - Of the bond vehicles I track only HYG above its MP, others below all pivots. At some point there may be a bounce but the headache to try to catch that is not worth the missed opportunities in what is going up. Also, I'd rather be long risk / financials than short bonds despite the obvious weakness due to event risk. VIX and related vehicles has moved well this year so a test of the YP area if we see signs of slowing momentum in stocks could be worth another trade. At this rate, however, it seems more likely that VIX will return under all pivots before another big spike.
Commodities - USO fractionally above MP, above the others. DBA backtesting its YP, above all pivots. DBC also above all pivots.
Currency and cryptos - BTCUSD YP area was the definitive wall before a big drop. ETH just testing key pivot cluster that needs to hold for any crypto rally this year.
New high new low indicator signaling to side with bulls again.
SPX back near the 10 week avg of 18X forward P/E; the slope of that level is rising rapidly.
Seemingly a lot of warnings about corrections in recent weeks. Didn't we just have one?
Tweet from 1/24: volatility window 1/25-2/2 and perhaps extending through 2/15
Tweet from 2/6: "Since vol extended past 2/2, think instability in general through 2/15, & 2/9 looking like a key date. With YPs along with D200MAs testing and holding on both ES and YM near term move most likely furious bounce that then fails and sets up lower or divergence lows into 2/9." Ding! And that was pre-open!
2/2 - middle of drop
2/9 - added per tweet maybe low
2/12 - middle of move
2/15 - end of volatility window per above; so far TLT, AGG, LQD lows all 2/14 (-1)
Didn't have 2/26 unfortunately or 3/2
3/6 (minor) - minor pullback low
3/8-9 (strong) - big up