Total market view

8/4/2018 Total market view: "Bottom line the earliest longs on RUT IWM and XBI were out on a profit taking move. Thankfully the next index longs on SPY QQQ then XLF and INDA are doing well. There is really no reason to not be fully long with all 5 USA mains above all pivots; SPY above YR1 is a good risk/reward level for later longs."

8/7/2018 Daily comment: "Sure daily bars look a bit toppy today. Short term charts (2H ETF session only) reached overbought again on all but IWM. Pushing outside daily Bollinger bands is fairly rare, and in August, that is just not likely to maintain."

8/8/2018 Daily comment: It is August so the market may not move too much. I am expecting some give back on this rally we have had from 8/2 open. But with current configurations, I still think this is a minor shuffle before another move higher. Also, VXX is near key support so if I am right about a near term shuffle this is now a good candidate for a hedging trade. The other thing to watch is very oversold gold which via GLD on HS1 and GC Z on YS1 is holding key support.

8/9/2018 Daily comment: "VXX bottomed today on the AugS1. Stock indexes had a minor reversal bar. As long as VIX remains under its YP I will keep to the view that SPX will test its high. That said a pullback to moving averages, and potentially a down week indexes, would be very normal at this stage. ... Minor pullback in stocks should be the next move."

Result - Pullback happened in the context of an uptrend, and VXX worked as a hedge as I nailed the low (and first volatility trade recommendation in months). However, VIX closing above its YP means the next pullback might inflict more damage than originally anticipated. 

Last week indexes fell back from a near high test on SPX and NDX, as DJI and NYA made new multi month highs. Though a pullback was expected from daily comments as I recommend a volatility hedge via VXX which worked well, I had been expecting SPX to fully test its 2018 high.

That still may yet happen, but VIX back above the YP makes me less sure. Basically, leaders NDX and RUT fell back from important resistance clusters. It is August so let's not read too much into this; in fact a pullback in a range would be more likely than a huge breakout. I tend to think the Turkey selloff will be a one day bear wonder. If this is right idea then VIX will drop back under its YP early next week as SPX holds its YR1 as support. If this plays out the leaders NDX and RUT should try again to make new highs.

However, if VIX remains above its YP perhaps there will be a larger pullback. Should this happen then DJI will likely lead lower among USA indexes.

Tech via NDX has been the 2018 main index leader with RUT in 2nd. But with recent dollar strength along with XBI and SMH weakness, I'm thinking that RUT IWM may resume leadership. If this idea is correct then we'll soon see RUT IWM above YR2. 

I'm in the monitoring phase of other longs recommended early in Q3 - XLF and INDA. XLF needs to hold its HP MP combo; INDA should stay above its D200MA and HP. Although I expect DXY strength to maintain, and therefore not allocating much to international indexes, due to the success of the XLF and INDA YP buys I'm also watching KWEB as it nears its YP.

Bottom line - Risk trends are up. Events like Turkey tend to be one day bear wonders. Anyone remember the great Cypress sell-off of 2013? Didn't think so - and yet this was a real headline at the time. Last week SPX had a simple pullback to YR1 & WP support, as well as rising 10 & 20 D MAs. Usually a bounce is the next move. That said, if VIX is above its YP then I'm less sure SPX will test its 2018 high. Given seasonality, there might be more weeks of range-bound congestion before another move higher. If this happens then DJI DIA likely to lead down given DXY strength. Also, as noted above, both biotechs and semi-conductors (XBI and SMH) are a bit weaker, which makes it less likely that NDX QQQ will power up above its YR2. Therefore, along with DXY strength, I'm thinking that RUT IWM will have the best chance at the next leadership move.

USA main indexes - SPX holding YR1 as support so far. RUT stuck under YR2 for weeks. NDX resistance cluster YR2 HR1 QR1 not likely to blast through in summer trading. 

Sectors of note - XBI below MP and SMH could be having trouble again at the 2000 top. 

Developed - DAX back down to QP test after clearing above all pivots just 2 days ago. Nikkei comparatively better with a pullback to HP support, but it did break its MP and D200MA.

Emerging - DXY strength causing weakness in emerging market indexes I track. More on this here. It is interesting that currency is the real issue with say Brazil's Bovespa nearly flat for the year but EWZ -19%. Answer is all currency with USDBRL +20% YTD. That said given success of other recent XLF and INDA YP longs, I'm watching KWEB as it nears its YP for a buy.

Safe havens - VIX and VXX bottomed on AugS1s last week. VXX did not move as much as VIX according to pivots. If VIX drops back under its YP then there will be a clear answer - one day bear wonder. TLT popped up above YS1 and QP MP last week as some shorts covered on this crowded trade. Long term indicators are still negative so I'm expecting a move back down. Lastly, how worthless is gold if it cannot rally during a currency crisis? It is trying to hold YS1 area but GDX and SLV have already caved.

Currency - DXY above 95.70 YP looks for good. 

Commodity - Despite DXY strength oil was able to rally back above HP on both USO and CL(U) current contract. Watching this as maybe long, although nothing was triggered last week as USO could not clear its MP.

Crypto - BTCUSD Under all pivots. Rally to 8000+ was rather short lived excitement. For many months thinking 3-4K area, although 5K might do this quarter.

NDX has closed outside its quarterly Bollinger band the last 4 quarters in a row and working on #5. The 90s had a few that were close like this, with 1995-96 run of 7, then 2, then a pullback, then 2, then a pause, then 6, and that was IT. This time its quarterly RSI is above 90. Point here is not time to be complacent especially with 2 second half highs bang on HR1.

Interesting that SPX cannot seem to power through to 17X forward earnings (green line below) again. But this could be a seasonal thing. 

Not too toppy last week on the high, and put-call moving rapidly higher. It would be nice to see another move up to higher highs on SPX accompanied by much more bullish sentiment. 

This section is quietly at the bottom of every total market view. I don't make a big deal about it. But jeez I've been nailing thins here. 

August dates (posted 7/22 Total market view)
8/2 - Stock pullback low
8/6-8 strong - "Seems like setting up for high"

8/6-8 had SPY price and close high 8/7, QQQ close high 8/8, DIA top 8/7, VXX close low 8/8.