Proactive Market Timing Archive

Monday, January 14, 2019, 0940ET
Market Bias for Issue #275

Our current Market Bias with Timer Digest is SHORT SPX as of JAN 10 at 2597
Our previous Market Bias was LONG SPX as of JAN 4 at 2531

Here are the trade parameters for this week:

SPX Money Management Stop for 100% of our position = 2595
SPX BreakEven Stop (Current Price) for last 20% of our position = 2571
SPX Primary Profit Target for first 80% of our position = 2515
SPX Secondary Profit Target for last 20% of our position = 2500

Action Asset Expiration Strike Option

BUY SPY Friday FEB 1 256 Puts

SELL SHORT SPY Friday FEB 1 251 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, January 13, 2019, 1840ET
Market Timing Charts, Analysis & Commentary for Issue #275

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

Most recent S&P-500 Cash Index (SPX): 2596 up +64 (up +2.5%) for the week ending on Friday, January 11, 2019, which closed about its +1 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 = 2661 with WEEKLY +2 Sigma = 3021
Current DAILY 0 Sigma SPX = 2521 with WEEKLY 0 Sigma = 2725
Current DAILY -2 Sigma SPX = 2382 with WEEKLY -2 Sigma = 2428

NYSE McClellan Oscillator = +309 (-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 = 70 (40 is considered as oversold and 65 as overbought)

Looking at McClellan Osc + Breadth Thrust, it is very clear that we are OVERBOUGHT territory. Charts are saying we are poised for a negative catalyst to start a pull back. How far, it is hard to tell at this moment but we would be on the lookout.

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

200-Day MA DJ TRAN = 10,601 or 9.2% ABOVE DJ TRAN (max observed in last 7 yrs = 20.2%, min = -20.3%)
200-Day MA RUT = 1593 or 9.2% 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) rose a tad this past week. No signal here.

Russell 2000 Small Caps Index (proxy for Risk ON/OFF) rose a tad too but RISK is still OFF for now.

DeTrenders Charts for SPX, NDX, TRAN & RUT Indices

50-Day MA SPX = 2635 or 1.5% ABOVE SPX (max observed in last 7 yrs = +8.6%, min = -9.3%)
200-Day MA SPX = 2740 or 5.3% ABOVE SPX (max observed in last 7 yrs = 15.2%, min = -14%)

All EIGHT out of EIGHT of our DeTrenders still remain in the NEGATIVE 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 SELL Signal since Friday, November 16, 2018 CLOSE at 2736
DAILY Timing Model = on a BUY Signal since Wednesday, January 2, 2019 CLOSE at 2510
Max SPX 52wk-highs reading last week = N/A (over 120-140, the local maxima is in)
Max SPX 52wk-Lows reading last week = N/A (over 40-60, the local minima is in)
HA_SP1 closed near its +1.5 sigma channels
HA_Momo = +9.94 (reversals most likely occur above +10 or below -10)

Vol of the Vols Chart

Spot VIX currently stands at 18.2, at about 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 continued to sink (moderately) this past week.

5-day TRIN & TRINQ Charts

Both NYSE & NASDAQ 5-day TRINs continue to be in NEUTRAL zones.

Components of SPX above their respective 200day MA Chart

This scoring indicator rallied to 30.7% area. This move is encouraging. We need to see it cross 35% (its 50day MA).

SPX SKEW (Tail Risk) Chart

On Friday, SPX SKEW (Tail Risk) closed near 119, still about its zero sigma (normal = 120-125, range 100-150).

All quiet on the Eastern & Mid-Western Fronts, again? YES but our beloved @Capt_Tiko abstained this weekend on this vote.....

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, (now long FEB19, & short MAY19 VIX Futures) closed at -0.11 which says SPX is NEUTRAL.

HA_SP2 Chart

HA_SP2 = 72.6 (Buy signal <= 25, Sell Signal >= 75)

Our coveted SP2 prop indicator is nearing OVERBOUGHT zone.

US Treasury T-Notes & T-Bonds Yields Chart

This week the YTMs went nowhere fast. Maury is still upset. Mrs Maury paid for (via HIS credit card) five therapy sessions!!

Fari Hamzei