Proactive Market Timing Archive

Monday, October 29, 2018, 1115ET
Market Bias for Issue #264

Our current Market Bias with Timer Digest is SHORT SPX as of OCT 25 at 2705
Our previous Market Bias was LONG SPX as of OCT 23 at 2740

Here are the trade parameters for this week:

SPX Money Management Stop for 100% of our position = 2705
SPX BreakEven Stop (Today's Open) for last 20% of our position = 2682
SPX Primary Profit Target for first 80% of our position = 2640
SPX Secondary Profit Target for last 20% of our position = 2620

Action Asset Expiration Strike Option

BUY SPY Friday NOV 9 267 Puts

SELL SHORT SPY Friday NOV 9 262 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, October 27, 2018, 1845ET
Market Timing Charts, Analysis & Commentary for Issue #264

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

Most recent S&P-500 Cash Index (SPX): 2658 down -110 (down -3.97%) for the week ending on Friday, October 26, 2018, which closed just about its -1.5 sigma.

DJIA ALL TIME INTRADAY HIGH = 26951 (reached on Wednesday, October 3, 2018)
DJ TRAN ALL TIME INTRADAY HIGH = 11623 (reached on Friday, September 14, 2018)
SPX ALL TIME INTRADAY HIGH = 2941 (reached on Friday, September 21, 2018)
NDX ALL TIME INTRADAY HIGH = 7700 (reached on Thursday, October 1, 2018)
RUT ALL TIME INTRADAY HIGH = 1742 (reached on Friday, August 31, 2018)

Current DAILY +2 Sigma SPX = 2971 with WEEKLY +2 Sigma = 2962
Current DAILY 0 Sigma SPX = 2802 with WEEKLY 0 Sigma = 2822
Current DAILY -2 Sigma SPX = 2632 with WEEKLY -2 Sigma = 2682

NYSE McClellan Oscillator = -117 (-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 = 43.8 (40 is considered as oversold and 65 as overbought)

Wednesday & Friday were two big negative days last week. In addition to political terrorism unleashed by an ardent & down-and-out Grumpino supporter, Alphabet & Amazon revenue misses dampened the investors' mood. Now all eyes are on Nov 1st when AAPL reports. All others things being equal, most likely, we will stay short this coming week and we should even take out last February lowest Close of SPX at 2619. In that event, the next SPX target could be the 2540-2470 area.

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

200-Day MA DJ TRAN = 10,785 or 7.6% ABOVE DJ TRAN (max observed in last 7 yrs = 20.2%, min = -20.3%)
200-Day MA RUT = 1618 or 8.3% ABOVE 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 another horrible week.

Russell 2000 Small Caps Index (proxy for Risk ON/OFF) did even worse. Wednesday was a very bad for both of these indices. RISK is OFF.

DeTrenders Charts for SPX, NDX, TRAN & RUT Indices

50-Day MA SPX = 2856 or 6.9% ABOVE SPX (max observed in last 7 yrs = +8.6%, min = -9.3%)
200-Day MA SPX = 2767 or 3.9% ABOVE SPX (max observed in last 7 yrs = 15.2%, min = -14%)

NONE 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 Thursday, October 4, 2018 CLOSE at 2901
Max SPX 52wk-highs reading last week = 14 (over 120-140, the local maxima is in)
Max SPX 52wk-Lows reading last week = 86 (over 40-60, the local minima is in)
HA_SP1 closed at its -1.5 sigma channels
HA_Momo = -7.3 (reversals most likely occur above +10 or below -10)

Vol of the Vols Chart

Spot VIX currently stands at 24.16, again right about its +1 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 & VXN both rose this past week fairly orderly (now in +1 to +2 sigma channels), and imho, it is saying the current leg of the move down is NOT complete yet.

5-day TRIN & TRINQ Charts

NYSE 5-day TRIN is in BUY zone while NASDAQ 5-day TRINQ is in the NEUTRAL zone.

Components of SPX above their respective 200day MA Chart

This scoring indicator collapsed this week down to 35 area.

SPX SKEW (Tail Risk) Chart

On Friday, SPX SKEW (Tail Risk) closed near 121.7, right about its -2 sigma (normal = 120-125, range 100-150).

Is all quiet on the Eastern & Mid-Western Fronts? Our beloved @Capt_Tiko now says he is not sure....

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 NOV18, & short FEB19 VIX Futures) closed at +1.4 which is bullish here.

HA_SP2 Chart

HA_SP2 = 27.85 (Buy signal <= 25, Sell Signal >= 75)

Our coveted SP2 prop indicator is now searching for a possible tradable bottom, [soon?].

US Treasury T-Notes & T-Bonds Yields Chart

This past week the YTMs for T-Notes & T-Bonds pulled back while T-Bills EBYs rose somewhat.

Fari Hamzei