Partial TLT exit?

Entries are easy, exits are tough. If you decide to hold everything, you risk losing decent gains. If you take profits too soon, you can be right on a phenomenal move and watch the train from afar without you. So, I prefer taking some profits on a target and holding the rest. Of course, judgment depends on the market. 

Here's the daily TLT pivot only chart - meaning it shows yearly, half-year, quarterly, and monthly pivots only, without any support or resistance levels. This makes entry decisions very easy. You can see most of 2015 second half was quite mixed; it could not sustain any more above the 2HP, but the YP held has support several times. As of 12/30/2015, TLT was below 3 of 4 pivots and appeared it would open below all pivots for 2016; but a lot changed between 12/30 and 1/4 in the markets. On 1/6/2016, the status changed to above 3 of 4 pivots! It is this kind of status change near big levels you want to see for an entry. (And if you had any shorts from late December, these were clearly cut.) On 1/6/2016 TLT changed status on one long term and two short term levels all clustered for a great risk-reward. That said, it was below the most important YP so this would be a partial position. 

Then we were watching to see how the YP acted. No problem; one day partial pause and after that held as support. That was your place to add 1/22-28 up to a full position. This has moved nicely and now the question is when to take some profits.  

Let's look at the resistance levels. TLT cleared 1QR1 (smaller red crosses) without any trouble, and it quickly acted as support. There was more of a rejection at the 1HR1 (red dots) but crucially the YP held as support. Once it cleared the 1HR1 again, that level held. Now it has jumped above the Q1R2. The YR1 near 135, which seemed way out of reach when I mentioned it as possible back on 1/15, now looks very doable! The simple answer would be: TLT move catching everyone by surprise, very strong trend, hold for that. 

That said, RSI is the highest in a year on both daily and weekly charts, and that is why we should at least consider locking in some gain especially on the recent add. Here's the weekly chart with more standard tech indicators and MAs. I suppose I am a bit concerned about pro selling coming in with the high RSIs, as that can happen - although it was with stocks in a bull market.

Lastly, here is the pivotal reason for my exit consideration. The futures are giving very clear signals, and ZB reached at YR2; and ZN at Q2R2 showing some rejection. We could also use resistance levels that have already cleared as possible support; ZB 1HR2 and ZN MR1.

OK, for now:

1. Watch reaction from ZB and ZN resistance and support levels mentioned above; on TLT next up is the FebR1 area.

2. Watch how stocks react to their YS1 levels; several broke the last few days and may recover (which would probably be bearish for bonds.)

3. To be clear, only taking about a partial exit consideration at this point. Entry near 1/6 I believe best to hold until at least one pivot (probably monthly) breaks as support. But the adds taken 1/22-28 are a judgment call here. Let's see what happens. 

2/10/2016 12:40 EST update

Looks like a TLT hold. TLT pushing the FebR1 with no sign of rejection and may close above. ZB may close above the YR2 level, very bullish; ZN also right on the level with no sign of rejection. Meanwhile, SPY & ES could have reclaimed their YS1s but didn't; bearish action in stocks today. On a weekly basis, TLT is flying and looks like it could even go for the highs!

2/11 9:35 EST update: YR1 tag! Probably a partial take, but let's watch how it responds and the volume. This was target first mentioned from 1/13 with simple logic: if TLT started trading above the YP we could see YR1. Did not look likely at 124 and change but lo and behold 134.42 has tagged!


2/11 4:00 pm EST update: YR1 tag and high volume selling. Tough call here, not really a reversal since well above yesterday's low. But volume selling at 1HR2 / YR1 combo. When I mentioned this target on 1/13 it seemed far away - only 1 month! Anyway, from here you could:
1. hold all and go for higher levels
2. hold all until monthly pivot breaks
3. hold at least half (1/2, 2/3, 3/4, up to you); and sell if weekly pivot breaks
4. hold at least half (1/2, 2/3, 3/4, up to you); and sell portion near this YR1 / 1HR2 combo

Tough call here. On the stock side, RTY held its YS2, but INDU broke YS1 and VIX cleared its YP. 2/3 bearish. So, probably hold all. Like I said earlier, exits always tricky. 

2/12 12:20 EST update. Looks a bit different now doesn't it. Even if portion out with TLT back under its FebR1 , decent gains from entries 1/22-28. TLT weekly (long term levels only) and daily charts (usual setup) below.


Another reason I like pivots so much is that this tool is working on all asset classes: stock indexes and individual stocks (especially higher volume stocks), bonds, currencies and commodities. Let's look at bonds. Depending on your focus you might be looking at TLT, the actual interest rate vehicles like TYX and TNX, or the bond futures ZB and ZN. Let's check them all!

To start here's a weekly chart with long term pivots only (year and half year). After droping sharply in 2013 with the rejection of the 1HP and YP in early May, TLT first recovered a long term pivot level in early 2014 and rallied from there. Eventually it recovered its YP and had a huge run all the way to 1HR2 top in early 2015. Although the YP broke for about 4 weeks, it was able to recover and hold a few more times. 

I point out these histories to understand the long term motion of the market using pivots. TLT started the first week of 2016 with a clear lift from the 1HP. Stocks were looking ugly and this was clearly the only thing that was giving any decent buy signal (except inverse stock ETFs). The next week the 1HP held as support, and jumped above the YP. Although it had a possibly toppy reaction from the 1HR1 in red dots, the YP held as support and as I type TLT will likely close higher. 

Now here's the daily chart view with all pivots. 

Don't say the market didn't give you a chance to get in. There 5 days in early January there TLT was clearly above the Q1P and 1HP combo with the YP much higher as resistance. This was a good risk reward entry because you had 3 pivots all just below as support and the first real resistance considerably higher. 

Let's just say if you are a long term investor without using leverage, I would look at weekly charts once a week on the weekend and focus on the closing bar. This meant a buy after the close of the first week, ie open on 1/11.

If you are going more trades and watching the daily chart, you could have been buying on 1/6 at the close, the first day above 3 pivots. Both could have been adding as the YP held as support although admittedly there was concern with the rejection from the 1HR1. If not adding though, definitely a hold above the YP because you could start thinking YR1 which is much higher. 

Now, more quickly, do the other vehicles confirm these entry and hold decisions? 

TYX below 3 pivots on 1/6 but no clear rejection; some red the next day. 

TNX clear sell bar on 1/6 (ie TLT buy). 

ZB congested for 2 days and clear buy on 1/6 and nice smooth trend up. The only selling was the JanR1 on 1/11 which was quickly answered the next day with a big rally. The discrepancy with the futures is that it already reached its YR1 level were TLT and TYX / TNX are nowhere close to yearly R1 / S1s respectively. This is because the futures aren't looking back for the full year; this is annoying discrepancy of the method but programs are still positioning off these levels. 

ZN also jumped above 3 pivots on 1/6, and you had a chance to buy there or the next few days. 

Back to TLT. TLT already has a high on 1HR1 exact on 1/20 which was the date of the stock low. That is a major resistance level and important to watch. But if the YP continues to hold as support, that is even more bullish because it will mean TLT is above all pivots. Trust me, there is not much to buy right now that is in that category (ie above all pivots). Maybe we will see Q1R2 at 129.80, or even what would surprise everyone is a big bond rally back near the 2015 highs to YR1 area at 134.42.

Big levels

The amount of indexes or ETFs that turned from long term levels - by this I mean yearly or half-year pivots - is rather amazing. These weeks are rare. The odds favor more on the bounce, but how far it gets we shall see - and use the shorter term pivots, especially the FebPs which will be in play in about a week - to gauge the strength. Of course all the levels below that broke and recovered by the weekly close will have to hold.

All charts weekly with year and half-year levels only (no quarterly or monthly). Listing comments first, then the charts. If you get confused to which is which, look for the light grey watermark of sorts identifying the index / ETF.

This post has gotten quite long, and I still didn't cover two categories - currencies and commodities namely, oil. I will do another post on that soon, but check the recent blog post on oil that pointed to the key level YS1 a day before the low!

USA mains stock indexes & ETFs
SPX / SPY / ES - all broke YS1s & 1HS1s, but recovered on close (hard to see 1HS1 on chart b/c so close to YS1)

NDX / QQQ / NQ - low on NDX near exact, QQQ disparate structure ie not on YS1, NQ more like ES

INDU / DIA - lows on YS1 & 1HS1 combo

RTY / IWM held YS2 / 1HS2 combo area. (Note: these two charts added on 1/27.)

NYA - recovered YS1, but still a fraction under 1HS1

USA additional stock indexes & ETFs
IBB - weaker bounce off YS1

SOXX - better move up from 1HS1. The Pivotal Perspective prefers SOXX over IBB here.

XLE - also YS1 low and recovery of 1HS1 

XLF - I don't know what to make of pivots this year due to massive 8/24 spike, so not showing here

Safe havens & risk indicators
TYX - just slightly below its YP; recovery would put in back in congestion zone above YP but below 1HP; below YP remains bearish yield and bullish bonds. 

TNX - rebounded from 1HS1

TLT - high on 1HR1 near exact

ZB - high on YR1 / 1HR1 combo, but could be pause and not rejection.

ZN - also high on YR1 / 1HR1 combo, but also perhaps pause and not rejection.

HYG - low on 1HS1

VIX - poked above, but did not close above, the YP for the last 2 weeks. decent reversal from the YP although some may point to closing below the low of last week as confirmation, which hasn't happened yet.

XIV - near test of YS1, no official tag however

GLD - rather awful that GLD could not climb above 1HP in all the turmoil

Global stock ETFs
EWJ - held YS1 and 1HS1

EWG - held YS1 and 1HS1

FXI - holding 1HS1 but not much green 

EEM - similar to FXI

PIN - low on 1HS1 exact

RSX - low on YS1 and decent bounce along with oil

ACWI - global benchmark ETF, also low on YS1 & 1HS1 combo