Proactive Market Timing Archive

Monday, November 5, 2018, 1025ET
Market Bias for Issue #265

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 = 2740
SPX BreakEven Stop (Today's Open) for last 20% of our position = 2726
SPX Primary Profit Target for first 80% of our position = 2680
SPX Secondary Profit Target for last 20% of our position = 2650

Action Asset Expiration Strike Option

BUY SPY Friday NOV 16 271 Puts

SELL SHORT SPY Friday NOV 16 265 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

Sunday, November 4, 2018, 2115ET
Market Timing Charts, Analysis & Commentary for Issue #265

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

Most recent S&P-500 Cash Index (SPX): 2723 up +65 (up +2.45%) for the week ending on Friday, November 2, 2018, which closed just about its zero 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 = 2877 with WEEKLY +2 Sigma = 2964
Current DAILY 0 Sigma SPX = 2748 with WEEKLY 0 Sigma = 2819
Current DAILY -2 Sigma SPX = 2620 with WEEKLY -2 Sigma = 2673

NYSE McClellan Oscillator = +82 (-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 = 48.3 (40 is considered as oversold and 65 as overbought)

Last Feb Closing low was taken out last Monday then we rallied (juiced up) into AAPL EPS. As we had predicted in our OTF Chatrooms, that was a negative surprise, and on Friday, even with an awesome October Job Report, US Markets sold hard, and they are negative tonight (on Globex) also. Note: on Friday, SPX, NDX and DJIA each put in outside bar reversals.

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

200-Day MA DJ TRAN = 10,758 or 3.6% ABOVE DJ TRAN (max observed in last 7 yrs = 20.2%, min = -20.3%)
200-Day MA RUT = 1617 or 4.3% 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) bounced hard off of its Monday lows.

Russell 2000 Small Caps Index (proxy for Risk ON/OFF) performed the same way. RISK is trying a comeback.

DeTrenders Charts for SPX, NDX, TRAN & RUT Indices

50-Day MA SPX = 2840 or 4.1% ABOVE SPX (max observed in last 7 yrs = +8.6%, min = -9.3%)
200-Day MA SPX = 2764 or 1.5% ABOVE SPX (max observed in last 7 yrs = 15.2%, min = -14%)

For the second week in the row, 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 = 13 (over 120-140, the local maxima is in)
Max SPX 52wk-Lows reading last week = 65 (over 40-60, the local minima is in)
HA_SP1 closed at its zero sigma channels
HA_Momo = +2 (reversals most likely occur above +10 or below -10)

Vol of the Vols Chart

Spot VIX currently stands at 19.5, right about its -0.5 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 & VXN both pulled back this past week to below their respective zero sigmas.

5-day TRIN & TRINQ Charts

Both NYSE 5-day TRIN & NASDAQ 5-day TRINQ are in the NEUTRAL zone.

Components of SPX above their respective 200day MA Chart

This scoring indicator retested last week low's at 34% area and then closed at 44% on Friday. We need to see this reading cross first its 20-day and then its 50-day MAs soon.

SPX SKEW (Tail Risk) Chart

On Friday, SPX SKEW (Tail Risk) closed near 115.7, still 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 MAYBE (no soup for you, come back next week)....

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 +0.3 which is somewhat bullish.

HA_SP2 Chart

HA_SP2 = 53 (Buy signal <= 25, Sell Signal >= 75)

Our coveted SP2 prop indicator rallied from 25 to 60 and then settled at 53 on Friday. This is a NEUTRAL reading.

US Treasury T-Notes & T-Bonds Yields Chart

On Friday, the YTMs for T-Notes & T-Bonds rallied hard. Mr & Mrs Maury are uber happy again.......

Fari Hamzei