Proactive Market Timing Archive

Monday, September 24, 2018, 1005ET
Market Bias for Issue #259

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 = 2935
SPX BreakEven Stop (Today's Open) for last 20% of our position = 2922
SPX Primary Profit Target for first 80% of our position = 2900
SPX Secondary Profit Target for last 20% of our position = 2890

Action Asset Expiration Strike Option

BUY SPY Friday OCT 12 292 Puts

SELL SHORT SPY Friday OCT 12 288 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, September 23rd, 2018, 2230ET
Market Timing Charts, Analysis & Commentary for Issue #259

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

Most recent S&P-500 Cash Index (SPX): 2929 up +25 (up +1.1%) for the week ending on Friday, September 21, 2018, which closed at its +2 sigma.

DJIA ALL TIME INTRADAY HIGH = 26743 (reached on Friday, September 21, 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 = 7691 (reached on Thursday, August 30, 2018)
RUT ALL TIME INTRADAY HIGH = 1742 (reached on Friday, August 31, 2018)

Current DAILY +2 Sigma SPX = 2929 with WEEKLY +2 Sigma = 2939
Current DAILY 0 Sigma SPX = 2897 with WEEKLY 0 Sigma = 2806
Current DAILY -2 Sigma SPX = 2866 with WEEKLY -2 Sigma = 2673

NYSE McClellan Oscillator = -12 (-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 = 52.7 (40 is considered as oversold and 65 as overbought)

Major market indices made many new all-time-highs this week, one after another. All Must Be Well in This Side of Paradise. Our beloved Capt Tiko thinks otherwise.... we shall see who is right soon.

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

200-Day MA DJ TRAN = 10,764 or 7.1% below DJ TRAN (max observed in last 7 yrs = 20.2%, min = -20.3%)
200-Day MA RUT = 1611 or 6.3% 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) went nowhere fast this week.

Russell 2000 Small Caps Index (proxy for Risk ON/OFF) sold off a tad, but, RISK is still ON, ioho.

DeTrenders Charts for SPX, NDX, TRAN & RUT Indices

50-Day MA SPX = 2857 or 2.5% below SPX (max observed in last 7 yrs = +8.6%, min = -9.3%)
200-Day MA SPX = 2750 or 6.5% 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 BUY Signal since Friday, September 14, 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 = 2 (over 40-60, the local minima is in)
HA_SP1 closed at its +2 sigma channels
HA_Momo = +3.2 (reversals most likely occur above +10 or below -10)

Vol of the Vols Chart

Spot VIX currently stands at 11.7, 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 continued to drop this past week......look for a test of Spot VIX at 10.

5-day TRIN & TRINQ Charts

NYSE 5-day TRIN is in **uber** OverBought zone while TRINQ (for NASDAQ) continue to remain in NEUTRAL.

Components of SPX above their respective 200day MA Chart

This scoring indicator exploded up this week and rose to close over 73%. ALL ABOARD???

SPX SKEW (Tail Risk) Chart

On Friday, SPX SKEW (Tail Risk) closed near 141.6, a tad below its -1 sigma (normal = 120-125, range 100-150).

Is all quiet on the Eastern & Mid-Western Fronts? Our beloved @Capt_Tiko now 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 OCT18, & short JAN19 VIX Futures) closed at -1.55. This reading is NEUTRAL.

HA_SP2 Chart

HA_SP2 = 77.4 (Buy signal <= 25, Sell Signal >= 75)

Our coveted SP2 prop indicator has now entered its OverBought zone. We are on the lookout for divergences here.

US Treasury T-Notes & T-Bonds Yields Chart

This past week all YTMs rose. Worth noting is 5yr (a benchmark for capital leases) and 10yr Treasuries (a benchmark for mortgages). They are both now at 7 year highs.

Fari Hamzei