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POW! YS1s finally put in a decent bounce after holding the last several days. The lows of the past few days on ES at 1864.50, 1866.25, and 1865.75 told you YS1 at 1866 was being bought.
In addition, NQ could have broken after the news from AMZN, but it too found support on its YS1 with the low of 4129 just 1 point (!) from its YS1 level 4130. BTW, if you haven't seen already, I've been talking about these levels for days.
Stay tuned for the likely test of the February pivots.
SPY looks OK above the YS1, but due to AMZN after hours the NQ is again approaching its YS1 level at 4130 respectively. Currently ES is still a bit more above its YS1 at 1866. These levels have clearly held as support the last few days. Let's see what happens.
Maybe yesterday looked better with ES clearly holding YS1 support, but today SPY rejected from Q1S1 and another test of the YS1 area underway. The SPY level at is a bit lower 186.25 than ES at 1866 due to those 8/24/2015 spike lows. As of the close, ES and NQ are still (barely) holding their YS1s. Yearly levels are a big deal! As usual more bullish above and bearish below, and definitely bearish below on a close. If the YS1 area breaks then we have to start thinking Q1S2 at SPY 179.01 at minimum, but for today, yearly support is holding.
A bit more positive today as SPY / ES continue to hold YS1 as support. Although SPY didn't tag the level during session, ES did and has a very clear look of support. That said, the basic designation of below all pivots remains and I think the real test on any bounce will be whether anything can clear the soon to be in play February pivots.
No change to SPY pivot status, but looks like another test of YS1 186.25 coming up. As usual, I don't know what will happen but things look more bullish above (as in holding a yearly S level and establishing a higher low) and definitely bearish below (as in 2nd break of major support and then potentially lower lows). On the ES, the YS1 level is 1866 which is close to testing as I type. We'll see what happens.
In the meantime, check out the blog for posts on oil levels to hold and QQQ showing why the bounce wasn't a buy yet.
Healthy rebound from SPY YS1 level. Yesterday at close ES was still below its YS1 at 1866, but recovered overnight and launched. Gaps are pesky. The real tell on this rebound was how many yearly levels were in play the last few days. See this blog post for more.
So with this many yearly levels holding, is this the low of for the year? Anything is possible, but I will continue to focus on buying what is above pivots and shorting, hedging or avoiding what is below. If you followed that strategy, you were taking healthy profits on shorts or taking off hedges over the last 3 days. And sure it is a speculative trading buy (as I mentioned on the futures setup, if ES and NQ both rallied above their YS1s) but I don't think this is a big investment buy. Why? Read this detailed blog post.
But if QQQ recovers its YP next week on a close, then I will say buy some and use that as a stop area.
FWIW, both SPY, QQQ, and even futures didn't get the best level on the turn. What really nailed it was the NDX YS1. SPY, ES and NDX below.
From the blog on when to buy: "For traders, then as I wrote in the SPY daily post yesterday, ES above 1866 and NQ above 4130 could trigger a speculative buy, but whether that gives 1 day bounce or 1 week or is low of the year, who knows. If trying that first I'd want to see an hourly bar with volume close above and then quickly reclaim its weekly pivot."
Well that is exactly what did NOT happen. SPY and ES tried to rally but faded yet again. Not one of the main USA indexes was able to clear its WP (weekly pivot), with SPY hourly chart below. While SPY was able to hang on to the YS1 level on close, ES didn't. In my view ES chart with a close below 1866 looks especially bad.
First, a quote from 1/19: "SPY and for that matter, ES, NQ, the Nasdaq Comp cash index are all trying to hold the YS1s. If those continue to hold, better bounce coming up. If break, then that will look really ugly and invite a flush below the August 2015 lows." Levels broke and SPY / ES / NQ flushed below the August 2015 lows.
OK, everyone knows that today "looks like" a low. But the pivots don't confirm yet! Despite the recovery, SPY was unable to hold on to YS1 186.25 as support, and ditto for the ES YS1 at 1866. Similar on the NQ YS1 at 4130 as well.
That said, DIA tagged its YS1 for the first time this year, and IWM came within a fraction of YS2 - enough to count. Lastly, TLT reached 1HR1. These are all the levels to watch for tomorrow. Simply stated, if ES can climb above 1866 along with NQ clearing 4130 again, then bounce on; and probably DIA and IWM will be holding their yearly levels as well as TLT drops. But below 1866 and 4130, free-fall & semi-crash continues.
Another bounce off support, another fade. SPY and for that matter, ES, NQ, the Nasdaq Comp cash index are all trying to hold the YS1s. If those continue to hold, better bounce coming up. If break, then that will look really ugly and invite a flush below the August 2015 lows.
From The Pivotal Perspective, SPY has held YS1, 1HS1 and JanS3 for 2 days. But if this area breaks - meaning SPY 186.25 and ES 1866 - the next support level is Q1S2 at 179 and 1776 respectively. Both charts below.
SPY and ES both broke YPs on 1/6 and from there the Yearly Pivot Promise (not guaranteed, but a very good bet) was a move to S1, and that's exactly how it played out. Pretty quickly, with the high probability move happening in just 8 trading days. The S1s officially tagged today and held, which gives a chance for a bounce early next week.
That said, I've been very clear that the "bear is for real below NDX YP 4373" (see the blog) and until the market can climb above at least one major pivot (Y, H, Q) then trend is down and market is vulnerable to further declines.
SPY, ES and NDX below.
SPY bounced from JanS3 today and put in the best rally of the year so far. Is this it? Again, I don't know what will happen tomorrow but can offer two basic guidelines:
1. As long as stock indexes, ETFs and futures are *below all pivots* the trend is down and markets are vulnerable. So, the indexes which will recover pivots first are QQQ YP at 104.11 and especially NDX 4373. So far this hasn't happened. I am prioritizing the cash index because the QQQ level is lower due to the massive 8/24 spike low. Adventurous traders / investors can add tech back with a daily close above the QQQ YP, but you'd want to see the NDX YP clear quickly and then hold as support.
I'm the first to admit the discrepancy between the cash indexes and ETFs is quite pesky for the pivot technique this year; best I can do is monitor and see which vehicle gives the best signals. Last fall on the lows it was the futures contracts on ES & NQ that gave the best signals (better than cash indexes or ETFs) which may have also happened today.
2. The more yearly levels that test and hold on a low, the more chance of a significant turn. Today we saw:
SPX YS1 1896 break and recover; ES YS1 at 1866 test within 5 points and hold
COMPQ YS1 4455 nearly test and hold; NQ YS1 4130 near the exact low of the day, only 6 NQ points
NYA YS1 9350 test and hold near exact
In addition, the TLT YP that cleared yesterday slightly was rejected today.
So, despite my blog post of yesterday, bounce has a shot here - but as long as market leader TECH is below YP on every index & vehicle (NDX & COMPQ cash indexes, QQQ ETF and NQ futs), it is still a bearish environment.
Sometimes the market just doesn't give a clear answer on one side or the other and we come back the next day. As of 1/14 close, both conditions 1 (bearish) and 2 (bullish) were met. Let's see what happens tomorrow. SPY, ES and NQ charts below.
Well folks, it is real trouble out there.
From 1/12, discussing whether bounce was "real" or not: "Conversely, if this is just an oversold move to head lower (quite a few big gaps this year), then NDX will not clear its YP and TLT could gap up above its YP. TLT YP is an especially big level; TLT is already above the 1HP, Q1P and JanP so if it clears the YP that will mean it is the only thing in a decent uptrend (excepting inverse ETFs)."
And that's how it played out, except TLT rallied above the YP during session and not a gap. NDX failed near its YP, along with QQQ weekly pivot, also mentioned yesterday; and TLT rallied and closed above its YP. So you have every stock index I am tracking below all pivots, except TLT which is now above all pivots.
NDX the market leader could have recovered its YP but didn't; and the last chance QQQ YP (lower than NDX due to 8/24 spike low) also failed today. SPY, NDX, QQQ and TLT charts below.
From 1/11: "The point here is that per The Pivotal Perspective, the market is set up for a decent bounce. This is what a lot of lows look like - all 5 indexes holding major levels."
And also from 1/11: "This means QQQ is best choice for longs, but watch the NDX cash YP and NQ YP if playing the bounce."
OK! Market bounced with QQQ leading, and all the levels I mentioned in yesterdays post again tested and held today. Is this for real? Hard to say. I don't know what will happen tomorrow. But here are two interesting levels to watch. If real, then NDX cash will recover and hold its YP at 4373; and probably TLT will continue to be rejected from its YP (nearly tagged today) at 124.65.
Conversely, if this is just an oversold move to head lower (quite a few big gaps this year), then NDX will not clear its YP and TLT could gap up above its YP. TLT YP is an especially big level; TLT is already above the 1HP, Q1P and JanP so if it clears the YP that will mean it is the only thing in a decent uptrend (excepting inverse ETFs).
Lastly, in these kinds of short term decisions, let's say you were buying yesterday or today and deciding how much to keep holding, you can also use the weekly pivots as a guide as well. I usually don't mention these as the weekly and daily pivots are too short term unless you are trading the hourly chart, and the status can and will change often; but if USA leaders QQQ SPY and DIA cannot even clear their weekly pivots (WPs) then it isn't too much of a bounce. But if they do and TLT is falling, rally continues!
On Friday I mentioned major levels (to me this means quarterly, half-year, or yearly) on 5 main USA indexes: SPY, QQQ, DIA, IWM and NYA. Four out of five tested these levels and held today. The one that was lower, NYA, actually tested and held a 1HS1. The point here is that per The Pivotal Perspective, the market is set up for a decent bounce. This is what a lot of lows look like - all 5 indexes holding major levels. Charts for all 5 below.
SPY held Q1S1
QQQ held Q1S1 and YP (see note above)
DIA held Q1S1
IWM held YS1 despite dipping below intraday
NYA held 1HS1
Fittingly, the 3 leaders held quarterly levels, and the weaker indexes IWM and NYA are already under their Q1S1s and on YS1 and 1HS1 respectively.
That said, only QQQ is above any pivot, and even that is a bit suspect since the NQ futs and NDX cash are below well below their YPs. This pesky discrepancy in pivots this year is due to the 8/24 spike low on the ETFs, so we'll just have to watch and deal with it. To avoid losing money, it is usually best to be long above pivots and flat / hedged / short when the asset is below all pivots. When conditions are mixed, ie above 2 pivots and below 2, then often best to be lightly positioned or use other indicators for an edge.
This means QQQ is best choice for longs, but watch the NDX cash YP and NQ YP if playing the bounce. After such a drop a bounce is the more likely possibility, then we'll have to see how far it gets and any damage done on the next drop. It will take quite a rally for other indexes to get above any pivot this month. SPY will need to clear and hold the 1/6 high just above 200 to do that.
What a week. SPY started with a massive gap down and instead of starting just under the JanP as it appeared on 12/31, it was already below the Q1P as well. After 2 days of holding the YP / 1HP combo, on Wednesday the market opened lower and these levels acted as resistance. Then you knew it was real trouble. Just 2 days later, SPY has already reached Q1S1 as did a lot of other indexes today. But as I have said many times below the YP targets the YS1 on the year which is 186.25. This is very good bet to make, historically speaking, unless the YP changes status.
QQQ near its YP (although NDX and NQ are already well under YPs; this is aberration due to 8/24 spike). DIA on Q1S1, IWM already on YS1. That was fast and those at screens on 12/31 or simply seeing trouble this week had decent hedge or short on that. NYA isn't quite down to its YS1 yet but getting close. Still, with this many indexes on major support levels (ie Q, 1H, Y) better shot at short term bounce.
SPY Q1S1
QQQ YP, not sure how much this counts
DIA Q1S1
IWM YS1
NYA JanS2, already below Q1S1 but above 1HS1 / YS1
On 1/5 I recorded a video blog post about the basic big picture move for SPY in 2016. Above the YP means the YR1; below the YP means the YS1. The very next day the YP at 200.01 broke and worse was clear resistance. This started to target YS1 186.25, about -6.8% below the pivot. Quite a bit of that was done already today, with another sharp drop. At this point it is difficult to imagine NOT seeing the YS1 and the real question is whether that will be it for this year.
Yesterday I wrote: "The next support on this chart is JanS2 at 193.70" which was near the low of the day at 193.59. Will this be good for a bounce? Perhaps, but if not the next support is Q1S1 at 191.44. Regardless, historical data shows a very good chance of seeing the YS1 unless SPY closes above 200.01.
It's ugly out there. SPY, DIA, IWM and NYA area all well below the YPs; only QQQ remains above its YP at 104.11. But some of that is the influence of the August 2015 spike low on the pivot level, as the NDX cash index and current NQ futs are below their YPs. Maybe QQQ has a shot, but this breakdown has been so brutal I doubt it can save the market like 2015 and 2011. A stable market would have held the NDX YP along with the ES and NQ YPs that broke down in a big way last night.
Meanwhile, the only ETFs I see above Q1Ps are TLT, GLD, and VIX. Ugh.
Just not what you want to see - unless you are short or hedged, which you might have been if you were around on 12/31 for the late dive. I suspect, however, many were not.
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. Sometimes levels can break and recover, and a weekly close back above the level would look a lot better, but things are bearish below the YP / 1HP until that changes.
In other news, QQQ continued lower under its Q1P, although still above YP / 1HP. DIA saved its 1HP but also closed under the YP. IWM and NYA are below all pivots at JanS1s. Not pretty when 4 of the 5 main USA indexes are below YPs on the 3rd trading day of the year and nowhere near any major support! Bulls need a recovery, and quick.
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.
The one positive is that NQ held its YP at 4432 and ES is still flirting with its YP at 1988. Last September, futures gave better signals on the turn than the cash indexes or ETFs. So for those crossing fingers or adding longs looking for a bounce, these are the levels to watch.
For the 2nd day of 2016, SPY held its YP (yearly pivot) at 200.01. The low of the day was 200.05 - not a coincidence! However, it is still stuck under the Q1P (first quarter pivot) at 201.55 and that will have to clear to get a better bounce.
I recorded a video today for a new blog post on 2016 so far. Here's the key point. If SPY can hold the YP 200.01, then there is still a good chance of seeing the YR1 (yearly resistance 1) 217.63 at some point in the year. That is a nearly 9% gain above the pivot. But if the YP breaks, the odds shift to YS1 (yearly support 1) at 186.25, or a nearly 7% drop. Look for the large crosses in the chart below - SPY is sitting on its YP the last two days, with all that room above to 217, and quite enough room below to 186 to get out of the way.
In other news, DIA slightly cleared its Q1P, but QQQ broke its Q1P (it had held yesterday) so that about evens out. No change to IWM and NYA pivot status.
Yikes! Just before New Year's Eve it looked like SPY, QQQ and DIA were on track to open above all pivots. Then the late dive on 12/31 took out the JanPs, and the horrendous gap on 1/4 did even more damage. On the first day of the year, SPY traded below the Q1P, 1HP and even YP for much of the day.
That said, Monday could have been worse! Why? SPY held the YP at 200.01 on the close! This level just has to hold for a bullish view for 2016, especially with the 1HP just below at 199.81. Remember, if the YP breaks I'll start to think YS1 which is just under the 9/30 low on SPY at 186.45. But even if the YP holds, SPY will need to clear the Q1P at 201.55 and then JanP at 204.90 to regain a stronger status.
DecP was solid resistance for SPY on 12/29 and then down from there.
More importantly, the late dive (barring a decent gap up on Monday) puts SPY above 3 pivots but below January.
2016 yearly (YP) 200.02, should open above
2016 first half (1HP) also 200.02, so should open above
2016 first quarter (Q1P) 201.50, SPY probably opens above
2016 January 204.90, should open below
QQQ and DIA are similar, above 3 pivots but probably opening below JanPs. IWM will open below all pivots however, making the downtrend stronger than any uptrend on a major index. NYA also opens below all pivots. Breadth is weak.
So the bullish scenario is that QQQ, SPY and DIA jump and reclaim the JanPs to establish status of above all pivots. Bearish scenario is staying below the JanPs on QQQ, DIA and SPY to test the Q1P and/or the YP / 1HP combos on the stronger indexes as the weaker indexes IWM and NYA lead lower. Then we'll see what happens from there.