IWM and IBB short ideas 3/12

OK this was not hard and not a standout call compared to the many others here. But what would you rather own - or crucially, not own, or perhaps short - today? 

From 3/12 strategy sum:

"If stocks fade then it is simple to reduce some recent longs from the last two weeks, or can hedge out via shorts on weaker vehicles so that means is still below most pivots ie Q1P, 1HP and YP. Right now on USA that means IWM, then IBB, XLF and XLE though oil has been on tear so careful with the latter."

DIA +.13%
SPY -.16%

IWM -1.55%
IBB -3.81%
 

Hold TLT above 126.33 - 127.87 from 3/3

From 3/3 update on the safe havens.

"So, if in [TLT] from early January I think at this point hold portion above this area, 126.33-127.87. Any recent reduction below the MarP could be put back on if stocks indexes fail their major pivot area and we want to rotate back to more defensive. But if stocks clear their YPs and hold as support, we will be reducing safe havens further."

Actual low 127.76.

Bounce scenario on from 2/25

This was actually a quote from 2/24, but it applied to 2/25:

"...if we see SPY maintain above its FebP, ES above 1925 and SPX above 1930 (cash index not yet) then that will be bullish. ... As of yesterday I went mostly back to bear playbook from the bounce idea, but the market may force the bounce plan yet again. If so then way to do it is reduce on full safe haven positions if they show rejections from major resistance and put into the USA leaders DIA and SPY that are above the FebPs..."

Possible low of year call 2/12

Not quite nailed due to that pesky bias comment, but still worth a mention...

"My bias is this isn't the final low for the year, but when we do have it it will be something like multiple yearly or perhaps half year levels testing and holding like potentially today."

Entire post discussing INDU YS1, RTY YS2, oil levels and more here. 

Bearish USDJPY from 2/5

Original post here. Also, I pointed to 110-111 area if 115 broke and that is exactly where it went. 

"USDJPY was in the news this week. It has been completely above its yearly pivot since late 2012! But this week the YP broke for a second time, and that should be definitive this year. If YS1 / 1HS1 combo near 115 breaks, then next major support is 110-111."

BTCUSD buy from 2/16

OK, it might have been nicer to catch this earlier but honestly I had not glanced at bitcoin in months. But when I did it was very easy to see above all pivots for the first time in weeks as of 2/14, and the level acting as support on 2/16. Here's the original post with BTCUSD at 407:

"So, recent pivot status change to above all pivots! There is not many vehicles that qualify for this designation. Hold above the FebP and Q1P, cut on daily close below."

And here it is now, jumping!

Hold GLD 114 area from 2/16

The Pivotal Perspective has been all over the gold move, and if you search in FAQ you will see many many posts about it starting from 1/27. 

On 2/16 addressing the management of adds, I wrote:

"On the daily view, you can see the drop under YR1 thick red crosses 118.98, but let's look at levels that could act as support. FebR3 is at 114.53 which would also be a possible gap support. Even though FebR3 is a resistance level, it has convincingly cleared and the nearest medium term level that might be support. 

Zooming into short term levels, GLD has been entirely above its weekly pivot since 1/20  to today - quite a run. One week holding the weekly S1 at 114 area would not be too bad. Let's see what happens."

The 2/16 low was 114.74 and up from there, especially today. As I type GLD is reclaiming its YR1 at 118.98, a potentially very bullish development. Why? Although the odds of YR1 > YR2 are not nearly as good as YP > YR1, still, the first step to thinking about YR2 is YR1 acting as support. That isn't the case today quite yet, but let's see if GLD can climb above the YR1 to start. 

INDU / DIA speculative buy from 2/12

While I'm generally in favor of buying above pivots, sometimes you get a good setup. From the 2/12 post early in the morning and well before the close.

"INDU is reclaiming 2 long term levels, YS1 15746 and 1HS1 15817. VXD poked above its YP 26.79 and 1HP 27.14 and as I type back below. All the other yearly levels I have been mentioning the last two days here and here and here and here as I type are all resolving in bullish fashion. INDU is the only index of the main USA 5 to hold its YS1 (SPX, NDX, COMPQ, RTY) all broke. 

So if INDU holds its YS1 and 1HS1 into the close, along with VXD remaining below levels, i think a decent speculative buy setup."

RSX & EWZ long ideas from 2/13

In the weekly strategy sum, I noted that RSX and EWZ were the closer to regaining the Feb Pivots compared to USA indexes, and if any further gains in oil, RSX "will pop" and EWZ "could be squeezy."

From Weekly strategy sum written on 2/13:

"3. Interesting vehicles to watch are anything that is poking above a monthly pivot. This is far from the case in any USA main or supplemental index, although if oil continues XLE will have the first shot. In world indexes, RSX will also pop on the oil trade and is just barely below its FebP as of 2/13 close, and selling in EWZ seems to have dried up with a much higher low forming and EWZ above its FebP on 2/13 close. That is probably more currency effect and DXY weakness, but could be squeezy."

Here are pivots only charts (without S or R levels) for clarity. RSX +4% today and EWZ +5%. XLE is just recovering its pivot today, so actually RSX and EWZ beat out on the buys. I also added EEM as speculative buy for the same reason yesterday.

TLT target 134.42 from 1/13 video

Yup! This video which addressed yearly pivots on NDX, QQQ and TLT, I essentially said if TLT holds the YP at 124.65 as support, not quite yet but if it does, then we could see YR1 at 134.42. Seemed like crazy call at the time with TLT at 124.99, but 4 weeks later, and after the YP held as support on 1/22+, it delivered!

 

Here is idea in chart form. Above the YP means good chance to see YR1. The first day TLT cleared its YP was 1/13 when I made the video. It didn't quite have the "look of support" when I wrote that, but it definitely did from 1/22 on. Here's the chart with yearly levels only.


Bear for real from 1/7

Tooting a bit but also explaining why I wrote that early January in this post. Seems like a simple statement, and several weeks later the answer seems obvious, but wasn't then. Here's the original idea from the blog on 1/7 about NDX and its yearly pivot:

"Since 7/14/2009, only 3 trading days have closed below the NDX yearly pivot: 8/19/2011,  8/22/2011, 1/7/2016. Is this a key low or is the bear for real? Bear for real below the 2016 YP at 4373."

Both 8/19/2011 and 8/22/2011 closed fractionally below the level, but not enough to look like resistance. 

Compare that to 2016:

So, with all this in mind:

1. NDX has been the major leader in this bull market from 2009. OK sure, biotechs did even better but I'm viewing that as a sector within NDX. In 2009 NDX made a clear double bottom while SPX, INDU and RTY all made lower lows. COMPQ made a fractionally lower low. NDX was also the first to reclaim any longer term pivot (1HP) in June 2009; other indexes cleared HPs in July. More important, NDX was the first to reclaim its YP, also in June 2009. SPX did not clear its YP until September 2009, and INDU not until November 2009.

2. NDX has saved the market at several other crisis points by holding pivots. 2011 as noted above, 2 days of slight break then recovery; October 2014 by holding 2HP exact; then August 2015, NDX appears like a break but in fact not one hourly bar closed below the YP! At the time I considered the NDX yearly pivot of 3999 the bull market do or die line, and it held.

3. Years that start with a break or rejection of the YPs in the first week, after being above for years, can be major trouble - like 2001 & 2008. I know this because I've looked at major pivot structures on all the indexes, for the INDU going back to 1925! If the year starts below the YP after a big drop, like 2009, well then that is a different situation. Of course, by 1/6 SPY and DIA had also broken their YPs. 

I concluded that if the NDX pivot caved this time, selling was for real, not a dip, and serious trouble for the market. As I type NQ futures have dropped -18% from the 12/2/2014 high peak to trough. Maybe some people will quibble - not %20 yet. Bear market assessment was made with NDX down -9.1% from highs, and today it will be about double that. So what was the right thing to do? Hold on believing in correction (correct in August)? Or sell, reduce, hedge, short. Whether the market stops at -18% or -25% or more, I believe the answer is now obvious. It wasn't then, unless you were using pivots and the history as outlined above. 

SPY to 186.25 from 1/6

From 1/6 on the SPY daily: "SPY below all pivots with clear resistance at the YP / 1HP combo 200.01 / 199.81 respectively. The close was near a JanS1 at 198.80. The next support on this chart is JanS2 at 193.70. More importantly, below the YP so early in the year substantially increases the chance we will see YS1 at 186.25."

Yup, that was written on 1/6 with SPY at 198.82. The result was straight down to YS1, a 6+% drop, in days. 

Soon I'll do a little more detail on reasoning behind "bear market for real" with NDX below 4373 made on 1/7. 

Turn but not a big buy from 1/22

Detailed analysis of why I thought the markets had probably put in a low on 1/20, but at the same time, why that wasn't a big buy, written on the blog on 1/22. 

"I'm writing this post to clear up any confusion from the last two posts. Here, I said best to not be thinking buy, because everything is still below all pivots; and then more recently, pointed to all the YS levels on the turn. I'll admit this sounds contradictory. 

First point: if you are going to try to catch a turn, a day where you see multiple main indexes testing and holding, or breaking and recovering, yearly levels is one of the best ways to try. That said, although quite tempting to catch the bounce if you have money on the sidelines (hence the term, speculative buy), I think there is a better way of using pivots and that is to stay with the larger trend. Here are a few nifty chart examples to drive home this point."

If you like the 1/22 post you might also like the short note on 1/21 Thoughts on when to buy.

Point: Looking like the correct assessment so far! 1/20 was a decent low but... not looking like a buy right now. 

GLD posts 1/27 & 2/1

From 1/27 on the blog: "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."

YP Tested and clearing as of 2/4/2016. 

And then from 2/1 on the blog: "Last week I noted on the blog that GLD might be putting one of the best weekly bars in quite some time." "But it did clear the 1HP (orange dots) and that is potentially a big deal, because it has been below major pivots for so long." "Ah ha! Now we see the current FebP at 105.78. This means 3 pivots are in the 105 area: 1HP 105.22, Q1P also 105.22 and the Feb P. Easy hold above that support cluster at 105. Next would be to watch reaction at resistance at the YP."

The second time above 105 off to the races and didn't look back.

The daily pivot buy was 1/25 (ie close above Q1P), although admittedly a buy with the same method on 1/7 was cut on 1/11 for a small loss. A longer term weekly chart partial buy was triggered the close of the 1/25 bar (ie 1/29) or for those reviewing charts on the weekend the open on 2/1.

This is a simple pivot trend following strategy that means buying was is above pivots and not owning, hedging or shorting what is below pivots. 

TLT buy from 1/6/2016

Selection on TLT from 1/6/2016 below. TLT closed at 122.59 that day, and as I type is above 127. 

"Correspondingly, TLT was actually below all pivots yesterday but jumped above its JanP, Q1P and 1HP today. That means suddenly TLT is above 3 out of 4 pivots! Wouldn't it be funny for TLT to put in the best rally just after FOMC finally raises rates? Back under the Q1P / 1HP combo will scratch this idea, and TLT is still under its YP, but hey, with stocks trading this nasty TLT may continue to catch a bid."

New! Featured Posts

This section will link and comment on few posts I think warrant a highlight. 

Starting with the very first blog post: Ringing the bell from 9/30/2015. As in the bottom here, not a top! The 9/29 turn was a key re-test for most main USA stock indexes / ETFs. 

A summary of Key calls from the first two months.

Oil low for 2015 called here. 

Bear for real declared 1/7/2016 with NDX under its yearly pivot at 4373.

Another oil turn on levels here. 

And then, the chance of a big turn right on 1/20/2016.