3/29/2016

From 3/28 SPY post: "Nothing wrong with SPY here; light volume selling. Red line is 2015 close, so further moves above that may generate more buying." 

So SPY went green and this prompted further buying / short covering in IWM as well. It was also a big deal for NDX / QQQ to have a huge day, because that means bullish launch from the cash index YP. This very successfully re-tested in the last 3 trading days. 

GLD / GDX also benefited from Yellen's ulta-dovish speech today - possibility of QE4! So idea to hold GLD above the MarP worked out. GLD should remain above the YR1 from here.

The only thing to temper the bullishness is the stealth rally in TLT. It is back above all pivots and remains the strongest overall trend in the market. 

SPY, NDX and GLD below. 

3/28/2016

Nothing wrong with SPY here; light volume selling. Red line is 2015 close, so further moves above that may generate more buying.

But DIA stuck at MarR2 and mild weakness in QQQ/NDX are some concerns. NDX needs to hold its YP 4373 for the more bullish scenario for USA stocks. If NDX breaks, then it will be 3 mains below leaving only INDU and SPX above, making those more vulnerable to a fade. 

3/24/2016

Bullish action today, with SPY holding test of Q1P and recovering nicely on the short term 1H chart with a simple drop to WS1 that was bought. In addition, IWM recovered, RVX confirmed strength on IWM, TLT gave back gains, and oil could have been worse. 

As I said in the weekly strategy sum, idea was to play defense for a 1-2 day drop then see about next week. VIJ6 or VIX ETF nice gain. XLF short was a gain, IWM short chance for gain if you rotated to that, TLT question of entry. Seems that stock indexes mostly still bullish to me (remember, INDU leader and above all pivots so as long as that remains), so from here watching to see if SPX and NYA can get green on the year again, and especially action on Tech set (NDX COMPQ QQQ NQ) yearly pivots and NYA 1HP & YP. 

I think mostly long (via DIA and SOXX of course), maybe holding half the XLF shorts is a good place to be right now. But don't see much edge to holding recent IWM short given price action of today. TLT is a question of entry; not the best price action today either if playing the long side. And VIX trade should be out as there is just too much short term deterioration for that to hold given the response today. It did the job however. If holding EEM long then hedge with FXI short and we can see how Q2 moves. Given oil's rejection from Cl1 Q1P thought best to lock in most gains on oil or oil related ETFs EWZ & RSX, but perhaps some runner portions OK to hold above Q2P. GLD/GDX holding above MarP but any lower may force us out.

It is OK if you have some cash on the sideline as we head into Q2 as we will surely have new setups on those pivots soon enough. 

3/23/2016

From yesterday: "I still think some 1-2 day drop is the more likely move...." 

There was some genuine damage today, as SPX had rejection under its MarR2 level, DIA & YM fell back under MarR2s as well, and NYA does look more like rejection from 2HP and Q1P level. The latter is the more bearish development, because both SPX and INDU vehicles remain above all pivots. NYA however, tried to reclaim long term pivots and so far failed.

So what to do? If you were following along you might have come into today with a starter short on XLF (or ready to enter) and a speculative long on VIJ6 which did quite nicely today and helped limit the damage. As of yesterday I thought bearish sentiment too thick to really press shorts/hedges and maybe that was incorrect. Depending on your agility in the market, you could have decided to reduce long exposure from the open today, although often it can save headaches to wait for the close for signals. 

Buy TLT? 1st hour bar above WP, and unlike 3/22 not stalled on a daily level. Sure, TLT still above 3 pivots, only below monthly. Admittedly tougher decision at the close since moved from 1HR1 support to Q1R2 resistance. 
Sell DIA? Eh, just a minor fade from MarR2! Better to short / hedge on weakness and hold the winners imho. 
Sell SOXX? Same idea, above all pivots!
Short NDX? No, better was adding shorts via IWM below 3 of 4 pivots and first to drop under its WP from near the open today. Or add to XLF short from yesterday. 
Sell EEM? Tough call, rejection from 1HP but still above Q1P. Could have hedged the open via weaker FXI.
Sell oil / EWZ / RSX? If in from 2/12 hopefully you already had some gains locked in before coming into today. Oil CL1 contract Q1P rejection and still below 3/4 pivots, so that is err on the side of taking gains (opposite from DIA & SOXX positions). EWZ 2nd failure at YP; caution warranted. RSX first failure at YP, but high volume rejection that looks valid. Look, if you take all or most of the gains on the oil and related ETFs at this point it has been a very nice ride and soon we will be sure to see more other entry chances on the Q2Ps. 

Bottom line market was at a place where a pause was more likely, and I recommended VIJ6 at the YS1 as a hedge and was focusing on weaker indexes to hedge the leaders DIA and SOXX. XLF dropped but quick glance at hourly charts and short term levels screamed add hedges on IWM. 

SPY, DIA, XLF, VIJ6 and TLT below.

 

 

 

3/22/2016

Markets continue in bullish fashion, maintaining gains and ignoring RSI overbought readings. We saw a minor fade from MarR2 on SPX as I pointed out was likely even in the bullish scenario in the weekly strategy sum: "Even if we get this, I'll be watching SPX / SPY / ES MarR2s for resistance" at SPX 2054, SPY 206.03 and ES 2056. High today SPX 2056 and a close below. 

I still think some 1-2 day drop is the more likely move, but so do a lot of other people if the ISEE reading closes where it was near 3:30 today. It was actually at a level more commonly found near major stock lows, not highs. 

If you took a DAX short based on MarR1 resistance then you saw it close fractionally above today for a quick cut. XLF looks like a maybe short, small position only if taking since there isn't any rejection yet. IBB out obviously. TLT, which I thought would bounce if stocks paused, did not meet criteria specified for the second day in a row. Sentiment seems quite bearish; stocks are strong; quarter end approaches. This is the recipe for a minor dip and another move up.

Still, the VIJ6 idea could work as long as it lifts up from 16.85. This is a situation similar to the ES short idea at 1988, although this situation officially "speculative" as we are buying support (ie, speculative buy = something below all pivots). Depending on your agility you can simply wait for a clear reversal and enter there, or watch the hourly chart and buy with any lift from the same level, or could have entered speculatively at the close today in smaller size with trade valid above 16.85 from here. Of course the more time passes the more volume will shift into the K contract with different levels. 

3/21/2016

Market continues to consolidate in a healthy fashion. DIA and YM actually closed above their MarR2s. But the SPY small advance invites selling so we'll see what happens tomorrow. 

So far of the possible short term defensive trades suggested in the recent weekly stragegy most just have not triggered: TLT rejected at its weekly pivot today, VIH6 plunged through Q1S1 but has not yet tagged YS1 16.85, XLF stayed above its YP, IBB bounced, NKY was closed; leaving only DAX as a possible short. Clear resistance at MarR1 on that one. 

3/18/2016

SPY faded a bit before reaching its MarR2, but DIA & INDU actually closed above with YM bang on the level. 

Of the 5 main USA indexes, SPY reached RSI high of 68, QQQ under-performing, DIA the leader at 72 today, IWM tagged 69.8 on 3/7 and again up to 64 with NYA reaching 67 today. So DIA fully overbought (above 70) with IWM already reached this status and SPY getting up there. This was during an extra dovish surprise by the FOMC during an options expiration week. I believe pause or consolidation is the next likely move, likely accompanied by more bounce in TLT.

SPY and DIA below. Red lines are 2015 close. 

 

 

 

3/17/2016

Wow! SPY and DIA green for the year! Who would have thought? 

I certainly didn't, not even when recommending a buy a DIA buy and a possible buy on oil, both on 2/12. Or when suggesting RSX, EWZ and EEM just after that. I did say shuffle the bounce scenario back to bearish a few days after, but went with the bounce again with another move above the FebPs on 2/24-25.

See, pivots keep my "bias" from being on the wrong side of the market. Again I thought we would see some reaction down from larger levels, but it only lasted 1-3 days depending on the index. Again even if you tried a small short for that reason with ES looking like rejection, you knew to quickly cut or add longs via DIA the next day to balance it out.

Also, SOXX was the first thing I saw to reclaim a longer term level, and I mentioned that on 3/1 and well as pointing out day after day last week that DIA was holding its YP and that was bullish. From last week, if trying any shorts to see if the big levels rejected (ie what I mentioned in the weekly strategy and FOMC simplified, SPX 2014-16 and NDX 4373) then 2 of the 4 mentioned, IWM and IBB, actually had chance for small gains while DIA and SPY continued their melt up.

This is a pretty good strategy! 

Anyway, I think indexes back above D200MAs and positive for the year puts pressure on fund managers. Even though DIA is fully overbought and reached our first target above the Q1P level, usually after a move like this the first dip is bought. 

SPY ideally sees its MarR1, the level that DIA reached today. Both charts below. Red line is 2015 close. 

3/16/2016

"Simply stated, bullish if SPX remains above 2016 and better if NDX reclaims its YP at 4373."

SPX close of 2027 and NDX 4404, so these two join INDU and nearly all ETF / futures variation above all pivots! (Of these 3 vehicles, cash index & ETF & futs so 9 total, only 1 below YP is NQ futs). This is the 4th day of seeing only blue bars above all pivots on SPY. We should see some kind of pivot resistance before a larger drop. Right now that is MarR2 at 206.03.

ES especially has the "look of support" from Q1P.

3/15/2016

The market (aside from VRX and IBB) is clearly waiting for the FOMC. For today nothing wrong with SPY action as it remains above all pivots, and could have broken down. ES in particular has "look of support." SPX is hanging on to its YP by literally half a point. 

DIA also remains healthy and above all pivots, but volume today again extremely low. So how much to weight 3 days of follow through above all pivots when 2 of those days are the lowest volume days of the year? Not sure, but we should get more volume and a more definite answer tomorrow. 

Simply stated, bullish if SPX remains above 2016 and better if NDX reclaims its YP at 4373. Anything under that and we're back to the ETF and futures support levels. 

2 of 4 USA short ideas in the weekly strategy sum had decent drops today. 


3/14/2016

Bullish, but... 

So far current pivot leader INDU/DIA continues to advance above all pivots. SPX stayed above its pivot cluster of 2014-16, while NDX remains below its YP 4373. So of the big cash index levels I pointed out in the weekly strategy sum, so far 2 of 3 are maintaining bullish. 

But, volume. SPY D chart below with a red horizontal line on today's volume 117M. Note just a few days in the past year has been below this and 3 of the 4 I see were right around Thanksgiving and Christmas holidays. So this is a very non-enthusiastic follow through above Q1P (and D200 if you are watching that) so far. 

3/11/2016

Don't say I didn't warn you. 

3/9/2016: "SPY still under the 1HP / YP combo, and I did think we would see more of a drop from this crucial level, but there are a few reasons to not be too bearish here." " DIA has held its YP as support for 4 consecutive days; YM has been above its YP for 3 days. There is still a shuffle going on with the Q1P and MarR1, but any daily close above the most important YP is bullish."

3/10/2016: "DIA, pivot leader from 2/11-12 low,  continues to trade above its YP (5 days now), so that is bullish. Same on YM, but the cash index is still just under its YP 17048 so that will be the real clear in my opinion. Basically we could be seeing rejections here, but aside from 3/8, we aren't seeing much red. The longer this goes on, the more likely other levels will clear."

And POW, SPY, ES and SPX all above all pivots for the first time since 12/16/2015! DIA,  YM and INDU the same above all pivots the first time since 12/29/2015!

3/10/2016

Yesterday I said that despite SPY being under levels there were a few reasons to not be too bearish, and we can say the same today. There was some selling from SPY and DIA Q1Ps, but indexes came back from the lows. 

DIA, pivot leader from 2/11-12 low,  continues to trade above its YP (5 days now), so that is bullish. Same on YM, but the cash index is still just under its YP 17048 so that will be the real clear in my opinion. 

Basically we could be seeing rejections here, but aside from 3/8, we aren't seeing much red. The longer this goes on, the more likely other levels will clear. SPY, ES new M contract, and DIA below. 

ES new M contract levels are:
Q1P 1997
MarR1 1988
YP & 1HP combo both 1984

3/9/2016

SPY still under the 1HP / YP combo, and I did think we would see more of a drop from this crucial level, but there are a few reasons to not be too bearish here. 

First, as I type, ES flirting with its 1HP / YP both at 1988, so back to the level despite the rejection of yesterday. Second, VIX remains under the Q1P, so below all pivots, bullish for stocks. Or to put it another way, VIX is not confirming the short set-up. Third, INDU / DIA / YM has been the pivot leader from 2/11-12 lows and is still doing well. DIA has held its YP as support for 4 consecutive days; YM has been above its YP for 3 days. There is still a shuffle going on with the Q1P and MarR1, but any daily close above the most important YP is bullish. 

3/8/2016

Recent SPY daily commentary has been bullish because we had not yet seen any selling from this crucial pivot area. Although I did suggest short setups to watch here and here because I thought this tag of of pivots would be first met with a drop.

The fewer trade and less headache version of this system waits for a clear signal on a daily bar; ideally confirmed with VIX, volume and other technical studies. We got that today on SPY / ES, but not DIA / YM. 

The more frequent trade and moderate headache version will be quicker to buy or sell levels, with the understanding that if wrong, quick out. In which case you might have been starting to scale in shorts from 3/3 on, but you had to give a bit of room or try again 3/4-7 on the MarR1s on ES.

Anyway, the bars shown below on SPY and ES look like clear rejections. Volume is moderate, so no reason to nix. No RSI divergence on SPY daily chart yet, but back under D200MA. If a key major high is in here at these crucial levels, then it is not a lot to risk. At every least, clear rejections mean lightening longs, adding safe havens and/or VIX vehicles and possibly adding shorts. I won't be able to do a full portfolio suggestion all the time, which depends a lot on your circumstances anyway. Perhaps it shifts back to more long tomorrow; or perhaps this is the start of a big drop. 

It all depends on whether there is any follow through tomorrow. Anything could happen, including a comeback and clear of levels. But right now we have major rejection on SPY / ES; DIA / YM still holding up; no status change on QQQ / NQ; IWM got clocked and faded under MarR1; and VTI clear stall and rejection at both long term levels. So, 1 of 5 holding on, 2 of 5 clearly bearish from big levels, 2 not much difference. 

As of today bears have the ball again. Let's see what happens. 

3/7/2016

SPY closed above the YP 1HP combo which is bullish. Going by the clear signal idea, there is no reason to be lightening up longs or putting on shorts yet. Let's see what happens. 

3/4/2016

Wow, from FebS1 when it looked like the world was ending to FebP, then shuffle, now to MarR1! And along the way positive developments at the YP / 1HP combo ie no rejection so far!

Clear resistance at the Q1Ps today on both SPY and ES below (the smaller orange crosses). The YP / 1HP combo is the key level from here; if that holds, bull market back, but if breaks then could be trouble again. Stay tuned!


3/3/2016

Still quite bullish, confidently approaching resistance although with slightly declining volume. The first sign of strength is ES above 1988-89. SPY nearing its YP. The move up from 2/11 lows is now as fast as the drop. Wow! 

3/2/2016

Bullish, market confidently approaching the big levels mentioned today in the blog. No sign of any rejection from DIA levels that tagged today. SPY, ES and DIA below.

After hours update - slightly different look now, posting charts below.


After hours charts below, pause or rejection so far, we'll see. 


3/1/2016

Wow. Going back to bounce scenario (ie trimmed safe havens, adding longs DIA & SPY above their FebPs) last week not a mistake!

As I noted in the blog today in 2 separate posts, TLT literally the only asset class below its MarP. So better to reduce on that somewhat. Then easiest way to shift more bullish was to cut FXI shorts, add on SOXX above its 1HP and possibly QQQ above its YP, although that level is a bit suspect.

2 TLT long, still lots of gains on these entries
3 GLD long, ditto; hold above 115.61
3 DIA long from 2/12, great buy
5 DIA SPY longs from last week, right idea! 
2 SOXX or QQQ longs today, buying leaders above major pivots, SOXX long valid above 1HP
1 bitcoin from 2/16, doing fine
1 DXY long or EUR short valid above / below all pivots 

25% safe havens (down from 30%), 0 shorts (down from 10%), 50% long (up from 40%), 2 mostly uncorrelated currency trades at 10%, 3 units open. Too bad I cut the EEM vehicles and added back strictly on USA indexes (because VTI above its FebP and ACWI not) but I'll keep those in mind going forward.

DIA tagged its 1HP today, and soon some indexes will be testing very crucial areas that will tell us whether correction over and bull market can advance on its merry way, or if defensive positioning is still warranted. 

INDU / DIA / YM 1HP YP combo (DIA will test first)
SPX / SPY / ES 1HP / YP combo (again SPY will test first with ES not far behind)
I'll do a separate blog post on this tomorrow. 

Note, if markets lower the first to break its MarP and return to status of "below all pivots" and thus first choice short will be oil.