Proactive Market Timing Archive

Monday, January 8, 2018, 0955ET
Market Bias for Issue #223

Our current Market Bias with Timer Digest is SHORT SPX as of Tuesday DEC 19 at 2681.47
Our previous Market Bias was NEUTRAL SPX as of Friday DEC 15 at 2675.81

Here are the trade parameters for this week:

SPX Money Management Stop for 100% of our position = 2760
SPX BreakEven Stop (Last Open) for last 20% of our position = 2742
SPX Primary Profit Target for first 80% of our position = 2710
SPX Secondary Profit Target for last 20% of our position = 2685

Action Asset Expiration Strike Option

BUY SPY Friday FEB 2 273 Puts

SELL SHORT SPY Friday FEB 2 269 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.

Fari Hamzei

Sunday, January 7, 2018, 1145ET
Market Timing Charts, Analysis & Commentary for Issue #223

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

Most recent S&P-500 Cash Index (SPX): 2743.15 up +69.54 (up 2.6%) for the week ending on Friday, January 5, 2018, which closed above its +2.5 sigma.

SPX ALL TIME INTRADAY HIGH = 2743.45 (reached on Friday, Jan 5, 2018)
SPX ALL TIME CLOSING HIGH = 2743.15 (reached on Monday, Jan 5, 2018)

Current DAILY +2 Sigma SPX = 2730 with WEEKLY +2 Sigma = 2735
Current DAILY 0 Sigma (20 day MA) SPX = 2681 with WEEKLY 0 Sigma = 2579
Current DAILY -2 Sigma SPX = 2632 with WEEKLY -2 Sigma = 2420

NYSE McClellan Oscillator = +75.9 (-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 = 57.1(40 is considered as oversold and 65 as overbought)

First week of Jan and SPX went up 2.6%.... BIG OUCH for the shorts (including yours truly). We will stay short one more day (the day after a strong move due to NFP, we get a pullback) and then we need re-calibrate.

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

200-Day MA DJ TRAN = 9546 or 14.3% above DJ TRAN (max observed in last 7 yrs = 20.2%, min = -20.3%)
200-Day MA RUT = 1439 or 8.4% 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) rallied hard and we saw several new ATHs as we had discussed here before.

Russell 2000 Small Caps Index (proxy for Risk ON/OFF) also had a strong weeek and put in a new ATH. RISK is definitely ON.

DeTrenders Charts for SPX, NDX, TRAN & RUT Indices

50-Day MA SPX = 2629 or 4.3% below SPX (max observed in last 7 yrs = +8.6%, min = -9.3%)
200-Day MA SPX = 2489 or 10.2% 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 12/16/16 CLOSE at 2258
DAILY Timing Model = on a BUY Signal since Wednesday 1/3/18 CLOSE at 2713
Max SPX 52wk-highs reading last week = 98 (over 120-140, the local maxima is in)
Max SPX 52wk-Lows reading last week = 5 (over 40-60, the local minima is in)
HA_SP1 closed over its +2 sigma channels
HA_Momo = +3.4 (reversals most likely occur above +10 or below -10)

Vol of the Vols Chart

VIX currently stands at 9.22, at 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).

5-day TRIN & TRINQ Charts

Both NYSE 5-day TRIN & TRINQ are in the NEUTRAL zones. NO SIGNAL HERE.

Components of SPX above their respective 200day MA Chart

This scoring indicator rose a tad to close at 79.8. We are a bit surprised here by the early divergence here with price (SPX).

SPX SKEW (Tail Risk) Chart

Last week SPX SKEW (Tail Risk) closed at ~127, or about its -3 sigma (normal = 120-125, range 100-150).

Is all quiet on the Eastern & Mid-Western Fronts? Smart Money says 'YES.'

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 closed at -2.8. Equity markets are in overbought zones again.

HA_SP2 Chart

HA_SP2 = 87.3 (Buy signal <= 25, Sell Signal >= 75)

This coveted timing indicator now says we are back in overbought zone (but we can stay in OB for a while).

US Treasury T-Notes & T-Bonds Yields Chart

During this past week, Treasury Bills rallied but rest of T-Curve sold off as thier YTMs rose modestly. NO SIGNAL HERE.

Fari Hamzei