Proactive Market Timing Archive

Monday, September 10, 2018, 1000ET
Market Bias for Issue #257

Our current Market Bias with Timer Digest is SHORT SPX as of AUG 27 at 2897
Our previous Market Bias was FLAT SPX as of AUG 21 at 2862

Here are the trade parameters for this week:

SPX Money Management Stop for 100% of our position = 2900
SPX BreakEven Stop (Today's Open) for last 20% of our position = 2881
SPX Primary Profit Target for first 80% of our position = 2840
SPX Secondary Profit Target for last 20% of our position = 2825

Action Asset Expiration Strike Option

BUY SPY Friday SEP 28 287 Puts

SELL SHORT SPY Friday SEP 28 282 Puts

You need to execute both legs and hold it as a Put-Spread.

Note A: Once the Primary Profit Target has been reached, traders are advised to close 80% of their position in order to lock in profits. The remaining balance can be carried over with a BreakEven STOP, based on the SPX level at the time of entry, in order to make the trade a zero-risk trade with the final position running to reach the Secondary Profit Target. Once either Secondary Profit or Money Management (BreakEven STOP after the 80% peel-off) is hit, our Option/ETF trade for that week is over. Go to Cash and wait for the next PMT Issue.

Note B: When we change our Market Bias with Timer Digest, You need to go FLAT asap. With PMT Pro, that is before the Close that day and with the basic PMT, at the open of the next day. The following trading day, we will issue new SPX targets and a new SPY options trade, as long our new market bias with Timer Digest is NOT flat.

Fari Hamzei

Saturday, September 8th, 2018, 1800ET
Market Timing Charts, Analysis & Commentary for Issue #257

Timer Charts of S&P-500 Cash Index (SPX) + NASDAQ-100 Cash Index (NDX)

Most recent S&P-500 Cash Index (SPX): 2872 down -30 (down -1%) for the week ending on Friday, September 7, 2018, which closed about its zero sigma.

DJIA ALL TIME INTRADAY HIGH = 26617 (reached on Friday, January 26, 2018)
TRAN ALL TIME INTRADAY HIGH = 11475 (reached on Tuesday, August 28, 2018)
SPX ALL TIME INTRADAY HIGH = 2916 (reached on Wednesday, August 29, 2018)
NDX ALL TIME INTRADAY HIGH = 7691 (reached on Thursday, August 30, 2018)
RUT ALL TIME INTRADAY HIGH = 1742 (reached on Friday, August 31, 2018)

Current DAILY +2 Sigma SPX = 2924 with WEEKLY +2 Sigma = 2914
Current DAILY 0 Sigma SPX = 2868 with WEEKLY 0 Sigma = 2781
Current DAILY -2 Sigma SPX = 2813 with WEEKLY -2 Sigma = 2647

NYSE McClellan Oscillator = -133 (-150 is start of the O/S area; around -275 to -300 area or lower, we go into the �launch-pad� mode; over +150, we are in O/B area)
NYSE Breadth Thrust = 46.9 (40 is considered as oversold and 65 as overbought)

First [solid] RED weekly bar for SPX in 4 weeks and 2nd RED in 10 weeks......

Canaries [in the Coal Mine] Chart for DJ TRAN & RUT Indices

200-Day MA DJ TRAN = 10,685 or 6.2% below DJ TRAN (max observed in last 7 yrs = 20.2%, min = -20.3%)
200-Day MA RUT = 1602 or 6.9% below RUT (max observed in last 7 yrs = 21.3%, min = -22.6%)

DJ Transportation Index (proxy for economic conditions 6 to 9 months hence) had a number of high range daily bars, but, by end of the week, ended going nowhere fast.

Russell 2000 Small Caps Index (proxy for Risk ON/OFF) sold off for most of the week, but, RISK is still ON, ioho

DeTrenders Charts for SPX, NDX, TRAN & RUT Indices

50-Day MA SPX = 2827 or 1.6% below SPX (max observed in last 7 yrs = +8.6%, min = -9.3%)
200-Day MA SPX = 2736 or 4.9% below SPX (max observed in last 7 yrs = 15.2%, min = -14%)

ALL of our EIGHT DeTrenders are in POSITIVE territory. The DeTrenders for DJ Tran & RUT will continue to be harbingers of future price behavior in broad indices.

HA_SP1_Momo Chart

WEEKLY Timing Model = on a BUY Signal since Friday, June 15, 2018 CLOSE at 2779
DAILY Timing Model = on a SELL Signal since Friday, September 7, 2018 CLOSE at 2872
Max SPX 52wk-highs reading last week = 54 (over 120-140, the local maxima is in)
Max SPX 52wk-Lows reading last week = 16 (over 40-60, the local minima is in)
HA_SP1 closed just above its zero sigma channels
HA_Momo = -3 (reversals most likely occur above +10 or below -10)

Vol of the Vols Chart

Spot VIX currently stands at 14.9, right above its +1.5 sigma (remember it's the VIX volatility pattern aka "its sigma channels" that matters, and not the level of VIX itself (this is per Dr. Robert Whaley, a great mentor and inventor of original VIX, now called VXO). VIX usually peaks around a test of its +4 sigma).

VIX has risen every day this week, but, we are yet to see contango in its VX Futures Term Structure (translation: short-term market bottom is not in, yet).

5-day TRIN & TRINQ Charts

Both NYSE 5-day TRIN & TRINQ (for NASDAQ) continue to remain in NEUTRAL & near SELL zones, respectively.

Components of SPX above their respective 200day MA Chart

On Wednesday, this scoring indicator dropped sharply this week to 65%. Next level to watch is 64. A break below that is not a good omen for this market.

SPX SKEW (Tail Risk) Chart

On Friday, SPX SKEW (Tail Risk) closed near 146, a tad above its zero sigma (normal = 120-125, range 100-150).

Is all quiet on the Eastern & Mid-Western Fronts? Our beloved @Capt_Tiko still says "maybe."

How to interpret the value of SPX SKEW? (from CBOE white paper on SKEW)

3-month VIX Futures Spread(VX) Chart

This popular timing indicator, (long Sep, & short Deez VIX Futures) is at -1. This reading is still NEUTRAL.

HA_SP2 Chart

HA_SP2 = 32 (Buy signal <= 25, Sell Signal >= 75)

We are so proud of our coveted SP2 prop indicator. It has dropped seven sessions in a row. We will be watching for its cross below 25 (OverSold zone).

US Treasury T-Notes & T-Bonds Yields Chart

On Friday, the rapid rise in YTMs for the Notes & Bonds, [post Aug-NFP release with good AHE components) was celebrated in all corners of the Bond Market. Our beloved Mr & Mrs Maury were seen cartwheeling on Rodeo Drive (she has CapEx catching up to do LOL).

Fari Hamzei