Monthly charts

5 trading days from end of month and quarter, so I will probably post some long term charts again soon. For now, 3 main index monthly charts for consideration.

NDX
2 gray lines are 2015 price high and monthly close high; red line 2000 price high (*the top*). After brief pullback and some shuffle around that 2000 high 4816 NDX has jumped back above the level. This is very bullish. Pushing outside the monthly Bollinger band a bit; RSI not yet overbought. 

SPX
Same idea on gray lines, the 2015 price and monthly close highs. This has basically backtested previous high area and so far holding - bullish. We don't know where the monthly bar will close, and a lot can happen in 5 days, but if it finished here it would look ready to zoom higher, ie 2 small red bars (weak selling) in overall uptrend often continues direction of larger trend.

INDU
The weakest of the 3 - below 2015 price high. So far holding the close high though. If back under that level 18132 then it would look much more threatening. 

Quarterly and Monthly charts II

Nearing the quarter close it is an especially good time to remind ourselves of the larger moves and trends by checking quarterly and monthly charts. I covered the USA mains here, included these charts for oil in today's post, and here are some other USA ETFs I like to watch. 

Sum
IBB Q chart 2 bars with RSI 90 - an incredible parabolic move that had to have a dramatic end. This sector probably in a very long consolidation period, but M chart suggests bounce.
SOXX looks good especially above the M 20MA; another reason to hold longs.
XLF congested (between rising and falling MAs on both charts) but still relatively weaker index on many levels; another reason to keep on short candidate list. 
XLE bounced off M 200MA but 10MA still pushing down and looks to me like it could drop back down to form some higher low. 

IBB Q chart here. This had an amazing run and led the rally for years. 2 quarterly closes with RSI above 90! That is a parabolic move and anyone holding without any profit protection plan at that point was just delusional. A very long consolidation is due. 

This might be setting up for a bounce. Small red bar on the lower BB and just above a nicely rising 50MA. But I don't think the quarterly chart will zoom back up to highs anytime soon. 

SOXX Q chart looks pretty good with higher close (at current level) and RSI room to go up.

SOXX M above the 20MA which is another reason to be holding the long positions. 

XLF Q held 20MA but below flat or slightly falling 50MA. Glaring lower high compared to 2007 of course. 

XLF M held rising 50MA but stuck under 10, 20, and 200MAs.

XLE Q chart held the lower BB but under a rising 50MA.

And there is a bounce from a M 200MA with classic RSI and BB divergence too. But 10MA still pushing down and this may have to form some higher low. 

Quarterly and Monthly charts

3 days left in Q1 so an interesting time to check quarterly and monthly charts. For today let's check the USA mains and I'll try to include others of interest (TLT, GLD, oil, emerging markets) in the next few days. 

On all charts:
Standard Bollinger bands and simple moving averages
10MA = light blue
20MA = orange
50MA = purple
200MA = black

Sum
SPY Q chart bullish but possible RSI divergence, M chart better above 20MA
QQQ bullish with resistance at 2000 quarterly close high, Q chart RSI still overbought!
DIA looks best (and not just saying that due to earlier buys; already nicely above M chart 20MA and RSIs more room to move up)
IWM Q chart does not look bad, M chart some question
NYA Q chart could be stronger, overall better above 2007 close high, M chart congested

SPY Q chart held low areas of 2014 Q2, 2014 Q4, and 2015 Q3 which looks good for a move to the top of the range at least. Also holding a nicely rising 10MA as support, in fact 1 close near the level and otherwise above on close. All this looks bullish.

But the concern here is the clear divergence on RSI. RSI was 75.5 on the 2014 Q4 bar and 75.7 on the 2015 Q1 quarterly close high. 2015 Q4 was 69 for the clear lower high and with 3 trading days to go it is 68.6. Will RSI rocket to overbought territory again, or will there be sellers into any further strength? Something to keep in mind in the weeks ahead. I'm not sure how many SPY points it would take to get RSI from 68.6 to 70, but it isn't that much. 

SPY M chart reached RSI 50 buy area on the lows and currently testing its 20MA. Very simple, in addition to the pivots we like to consider, it is more bullish above that level but bearish if the bounce stops here. See May 2008 for a bearish example, and July 2010, November and December 2011, June 2012 for several bullish examples. 

QQQ is holding a sharply rising 10MA as support but fell back under the 2000 quarterly close high. Note this level has been resistance for 4 quarters of the last 5. Bulls have a shot, but stronger above that level. Quarterly RSI still overbought but trending lower.

QQQ M chart broke the 20MA but bottomed on the lower Bollinger band twice. More bullish above the 20MA.

DIA Q chart nearly tested its 20MA twice. RSI only 66 which has more room to move up. This chart looks pretty good. 

DIA M is above its 20MA and that is another reason to hold the longs that were purchased below that level. 

IWM Q chart looks pretty good too, holding its rising 20MA and RSI near uptrend buy area at 56. If lower then 2007 & 2011-12 high areas along with 50MA next big support area. 

IWM M chart back above rising 50MA, but lows that far outside the BB may have to test. 

NYA Q chart is holding the 20MA but would look better with a higher close than last quarter. Possible resistance at the 2007 close high area. 

NYA M chart in congestion zone between rising 50MA and falling 20MA. 

Where is market going from here?

Wouldn't we all like to know that!? 

Major USA indexes above YPs
INDU, SPX, NDX (NDX barely)

Minor USA indexes above YPs (there are others that I am not tracking)
SOXX

Global indexes above YPs (again there maybe country specific ETFs that I am not tracking)
zero
(EWZ and RSX were above recently for a few days then fell back under)

Safe haven assets above YPs
TLT, GLD, GDX

VIX and related VXN, VXD, VXR, VBEM (emerging mkts VIX index)
Under all long and medium term pivots!

Conversely
Major USA indexes below YPs
COMPQ, RTY, NYA

Minor USA indexes below YPs
IBB, XLF, XLE, HYG, USO/CL, XIV

Global indexes below YPs
DAX,/EWG, NKY/EWJ, SHC (Shanghai), FXI, EEM, Nifty/PIN, RSX, EWZ (see note above)

OK, so bull case is safe havens continuing to fade from YR1 levels, stocks joining VIX on the rally with more indexes clearing long term levels. If this happens NDX will clearly hold YP and COMPQ will join NDX above the level, and NYA clears 1HP at least. Globally EWZ, RSX and then EEM likely to clear long term levels first. 

Bear case is a return of safe haven trade, VIX up, and a fade of the the few indexes that are above YPs. If this happens NDX will break down, NYA look like rejection, and likely oil down that will drag down RSX and EWZ as well. 

Right now the thing that strikes me as most odd is how low all the VIX vehicles have gotten while safe havens still up there and most stock indexes still long term downtrends. I feel like this should resolve in one way or the other in coming weeks, ie VIX jump as stocks drop or fade in safe havens as stocks rally. I should also add that I like VIX very much as an indicator and right now it looks quite healthy ie, pointing to further stock rally. 

 

Comparing bear market rallies to today

Using the 5 main cash indexes, let's look at 2008 and then 2001-02. I'm doing this to add to context of "bull vs bear" idea first posted here.

2008 Sum
In 2008, NDX, INDU and NYA backtested and tagged YP and/or 1HPs and clearly failed very near the level. NDX alone exceeded YP slightly, but with 1HP just above and still resistance and never achieving YP "look of support." INDU and NYA crystal clear rejections at their YPs. So maybe this is an obvious point right now, in 2016, but 2 major indexes are above YPs so as long as this is the case we are not in a 2008 type of scenario.

Ultimate lows in 2008-09 were at SPX 2009 1HS1, INDU 2009 YS1, RTY YS1 near test, and NYA YS1 near test. 

2001-02 Sum
While SPX and NDX stayed completely below YP levels, INDU, RTY and NYA exceeded YPs for several weeks both in 2001 and in 2002. In 2002, the RTY was above its YP for the entire first half! But eventually all 5 did break down and go lower.

Ultimate lows were SPX 2002 2HS2, NDX 2002 YS1, INDU 2002 2HS2 break and recovery along with 2003 1HS1 near test, RTY 2002 YS2 near test, and NYA 2002 YS2 near exact. 

Main point for coming weeks
As much as we'd all like to know for certain, the market is unpredictable. For positioning purposes, the more main indexes above YPs the more bullish. If indexes fail at YPs then that will be clear and one can adjust the other way. Right now INDU and SPX remain above, NDX / COMPQ mixed and testing, NYA nearing a test, and RTY well below.

Obviously, if NDX holds YP as support and COMPQ joins above the YP, and NYA rallies at least above its 1HP and eventually clears its YP, then that will be 4 indexes above instead of 2. Conversely, NDX could fail leaving only INDU and SPX above, and NYA have clearer rejection. We'll see what happens. 

Keep in mind we've already seen YS1s on SPX, NDX, INDU, and NYA, and YS2 on RTY and there has been a tremendous recovery since then. 

2008

SPX dropped to YS2, rallied back to near YP but didn't even tag, then crumbled. Eventual bottom near 2009 1HS1.

20160326 1 SPX W.png

NDX broke and recovered YS1, and rallied all the way back to YP / 1HP area. 2 weeks did close above YP but the 1HP was just above and stuck as resistance. 2nd time under the 2HP led to waterfall drop. COMPQ (not shown) remained completely below both YP and 1HP without even tagging the levels.

INDU also backtested its YP but failed bang on the level. INDU eventually bottomed on 2009 YS1 near exact. 

RTY did not even tag the YP on the rally. Breakdown of 2HP started the massive drop. 

NYA backtested YP and had clear rejection. 

2001-02

Back to SPX for 2001-02 charts. SPX failed bang on YP & 1HP combo early in 2001, and stopped fractionally above the level without achieving "look of support" in March 2004 followed by a clear failure. 

NDX was leading the drop and stayed completely under YPs after breaking down in November 2000 until finally recovering in May 2003.

INDU W exceeded its YP both in 2001 and 2002. In 2001, after recovering its YS1 / 1HS1 combo, INDU rallied and then was above its YP for 6 weeks. 2 of those weeks were up, 1 was a pause, 1 down, 2 not much movement, then a breakdown. After backtesting the level from underneath and failing a larger drop followed. In 2002, INDU held 1HP support and stayed above the YP for 16 weeks (!) before eventually breaking down. 

RTY stayed completely under the YP with clear resistance in 2001, but also stayed above the YP / 1HP combo for the entire first half in 2002, breaking down only at the start of the second half. 

NYA also spent several weeks above its YP both in 2001 and 2002. 

What about individual stocks?

Do pivots work on individual stocks? Yes! 

See below for the simplest possible pivot analysis, long term yearly pivots and half year pivots only (no support or resistance) on weekly charts for: AAPL, FB, AMZN, NFLX, GOOGL, TSLA, VRX, BABA, TWTR, YHOO, GPRO.

So whether you are a big fund or managing your own account for retirement, pivots can help with the position. This requires a more active management but hey we all want to ride the next AMZN and avoid the next VRX. 

The method below may even seem too simple to accept. Sell or hold FB this year? GOOGL or AAPL? When do I buy BABA? You could rack you brain with these types of questions, but if you are an individual or agile fund there are very easy answers all below. If you are a larger fund, then still there are overweight / underweight and hedging possibilities at signs of trouble. 

Here are weekly charts with long term levels only meaning yearly and half-year pivots. So only 2 levels to consider and the price. To make things crystal clear I am showing only pivots and not the usual red resistance or green support levels. 

Bullish above both
Mixed above one not the other; i guess if we had to weight one in importance just a bit, it would be the yearly
Bearish below both

AAPL notice bug run early 2012, break of 2HP late 2012 was first sign of trouble; then opened below both in 2013 so there is your underweight, hedge, reduce or cut. You were buying above the 2HP again in July, then crystal clear launch April 2014. Break of 2HP in August like the market first warning sign, and though YP held on first test, very key tell in Q4 with failure to recover that 2HP. Again under all pivots, no reason for big longs here.

Long term investors in FB have an easy job since buying with the jump above both pivots on huge volume in July 2013. Since then it looks to be just 1 fractional weekly close below long term support which came back the next week. Amazing buy and hold!

AMZN nice runs 2012-2013, then a stall. Clear jump again on high volume early 2015; recent weakness and recovery above the YP. So there is a bit of chop here, if you reduced (or hedged) that first weekly bar below the 1HP, then really cut down the bar that broke the YP, you would be buying back. 

NFLX also almost worry free from early 2013, though late Q4 2014 was reduce and buying back early 2015. Similar to AMZN, first a break of 1HP then a break of YP that is trying to recover. 

GOOGL holding both levels and no trouble in 2016 at all.

Compare to TSLA. Massive run mid 2013 with huge volume breakout and all above both long term pivots except one non threatening bar first week of 2014, until early 2015. Another jump above, but lower high, and since then weaker. 

VRX caused a lot of pain for big funds. It looked so steady and strong, but the first sign of trouble was the 9/21 week with the break of the 1HP on high (at the time) volume. At least some reduction or hedge there would have helped, but the fact is one week slam through the YP was a lot of forced selling and not much to do to avoid that rush for the exits.

BABA had all the hype on its IPO but really no reason to own this at all with a quick glance after January 2015, below both long term levels entirely since then. 

A few weeks of hope for TWTR in 2015, but just no way after that big massive volume break in April 2015. 

YHOO also nearly worry free ride from late 2012 to early 2015, but look how that YP and HP combo changed into resistance early 2015. This one was very friendly and gave you plenty of time to get out. 

GPRO also crystal clear avoid for most of 2015. 

If you took YPs seriously on XOM, you had  bit more shuffle but at least you avoided the big drop from 96 to below 70, and recently been buying back in. 

USA main indexes

Intro note: If you are new to my terminology please see the FAQ page and especially the video posted there.

The must read summary of the big indexes. 

SPX / SPY / ES
SPX needs to reclaim YS1 / 1HS1 combo
SPY level is lower due to 8/24 spike, and in fact 2/12 closed slightly above
ES also below but within striking distance of level 1866

NDX / COMPQ / QQQ / NQ
NDX YS1 actually hasn't broken on weekly close yet; big level to watch considering 2009-15? tech led bull market. 
COMPQ well below however
QQQ perhaps not best guide this year with big discrepancy in structure due to 8/24/15 spike
NQ well under YS1 

INDU / DIA / YM
All 3 of these clearly holding YS1s. Read this blog post for the importance of the INDU yearly levels. Holding here sets up bounce possibility, which is why I wrote about this speculative buy. 

RTY / IWM / TF
All of these are on YS2s. As RTY etc has led the USA market down, obviously the YS2s need to hold for USA stock bounce.
 

NYA / VTI
These are not exactly the same but similar broad composite cash index & ETF. NYA bit under YS1s, VTI more easily recovered. Watch these also to gauge strength of bounce if it happens. 


USA main indexes

Weekly charts and long term levels (yearly & half year) only:

SPX / SPY / ES
COMPQ / NDX / QQQ / NQ
INDU / DIA / YM
RTY / IWM / TF
NYA

Sum: The more of these that trade below YS1s, the more likely we will see a batch of YS2s on the low that counts. Considering some current YS1 breaks that we are seeing after the market stabilized for a few weeks, that's bearish. 

SPX broke YS1 last week, SPY still above, ES breaking this morning as I type. Bearish to break the YS1s as many YS1s tried to hold the market for the last few weeks. On the long term level, next support is far below ie YS2 / 1HS2 combo at 1748 SPX.

COMPQ broke YS1 last week, NDX on the level, QQQ well above (discrepancy due to 8/24 spike), NQ break. Barring big recovery today (anything is possible) likes like both cash indexes and the futures will be below YS1s, bearish.

Interesting, INDU and DIA well above YS1s, with YM testing this morning. So this type of relative out-performance over SPX and NDX makes INDU/DIA for now, first on watch for any bounces. This is especially true if YM continues to hold YS1. Conversely, if you are short (as one would be following this method, along with TLT and GLD longs), one could use DIA as hedge if you wanted to keep more gains on stock bounces. 

RTY / IWM / TF stopped at YS1 on the bounce, making visit to 1HS2 / YS2 area likely.

NYA broke its YS1 on close for 1 week, recovered, bounce, down but held, and looks likely to open below this morning.

Gold

As most market observers know, gold put in a phenomenal rally from 2002 to 2011. GC1 futures data shows about a 650% rally low to high. But since then a lot has been given back, about 50%.  In this ever more digital age, will gold ever regain its luster? (Sorry.) Using pivots we don't have to guess. Let's look at the long term levels when gold was in a decent uptrend versus the last few years. 

To make it simple I am showing only the YP (yearly pivot) and HPs (half-year pivots) without any support or resistance lines on the GLD weekly chart. As you can see 2009 to 2011 was all above pivots with each touch a perfect buy chance or hold. 

Then something changed in 2012 and that was a break of both the HP and YP. It was able to recover, but then put in a lower high. The start of 2013 showed trouble from the start with a clear rejection of both the 1HP and YP. This is often (not always) a bearish sign in the market, and sure enough 2013 had a big drop. 

Even if you thought bankers were destroying currency and wanted to own gold, pivots showed to be less allocated or better out of any asset that is below all pivots. If you restricted your buying attempts to weeks above a long term pivot, then 2013 in and out, 2014 and 2015 a few tries that would not have cost much.

There hasn't been any buy signal at all in more than a year, as GLD has been completely below long term pivots from February 2015 to recently. 

GLD did close a bit above 1HP the first week of the year, but not with a look of support. Also, the futures failed so given the trend there were two reasons to wait. With 3 trading days left in the week, it is possible that gold is giving the best looking long term buy bar in about a year. 

Very simple: if the move is for real then gold stays above the 1HP and will then clear the YP. If the YP smacks it down and it breaks the 1HP, then the trend is still down. It could stay congested between the YP  and HP for a while, although that is a tight range which will break one way or the other at some point. 

Now let's zoom into the daily chart with all pivots. Look at at the October bounce. If you bought 10/2 , the first day above a quarterly pivot in months, then you had a chance for gain or the worst case small loss when exiting early November. Note I am not even qualifying this as a long term buy, because GLD was not above a half year or yearly level at the time. 

GLD has been above the JanP after being below monthly pivots for 2 months straight, and now this is the 2nd time above the 1HP / Q1P combo (hard to see because same level) at 105.22. Above that is bullish because now a market that was very beat up is suddenly above 3 pivots. Then the all important YP is not far and may test.

SPX yearly pivot - 2016, 2011, 2008, 2001

From The Pivotal Perspective, the 2015 SPX high was near enough to 2HR1 and the low below the YP on 2HS1. 2016 has started with a massive break of the YP and very fast move to the YS1. Although SPY and ES are just above, SPX looks like break. So the big question for now - is this it?

With exception of parts of August and September 2015, SPX has been above its YP since the 2011 correction which was close enough to YS1. In fact, reducing exposure and/or hedging during the 7/25/2011 week with the rejection of 2011 YR1 and break of 2HP, then buying the YS1, was about the best possible move that year. 

However, when we look at 2008 and 2001, both the first years to break the YP after long runs above, SPX reached YS2, bounced big, then went even lower. This means buying the YS1 was a loser. Buying YS2 would not have lost, but only gained if out before the breakdown. 

Which will it be? YS1 save and higher? Fast move to YS2 for a key low? We will see. 

Yearly pivot promise

In December I participated in the TSAA-SF Annual Round Up and gave a talk on pivots. One of the key points was: if above the yearly pivot, there is a very good chance of reaching YR1. If below the yearly pivot, then there is a very good chance of seeing YS1. In fact, using the Dow cash index or $INDU, only 4 years since 1950 have *NOT* seen either the YS1 or the YR1 within 1%. 

So just 1 week into 2016 and this has already occurred for:

SPX cash, below YP 2015 on 1/6 (for session and close, 1/5 closed 1 point above) and already nearly tagged YS1 within 5 points. 5 SPX points is .25%, so I am going to say *close enough!*

IWM, below YP from 2016 open and tagged YS1 exact today 1/11. 

NYA, below YP from 2016 open and came within .9% of YS1 today. 

Last year, nearly every asset ETF available met this fundamental yearly pivot promise - so far of the ones I track 3 in the first week. What others will fulfill the yearly pivot promise too?