Proactive Market Timing Archive

Monday, March 25, 2019, 1005ET
Market Bias for Issue #284

Our current Market Bias with Timer Digest is SHORT SPX as of MAR 6 at 2771
Our previous Market Bias was LONG SPX as of FEB 22 at 2792

Here are the trade parameters for this week:

SPX Money Management Stop for 100% of our position = 2825
SPX BreakEven Stop (Current Price) for last 20% of our position = 2790
SPX Primary Profit Target for first 80% of our position = 2770
SPX Secondary Profit Target for last 20% of our position = 2755

Action Asset Expiration Strike Option

BUY SPY Friday APR 12 278 Puts

SELL SHORT SPY Friday APR 12 273 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

Monday, March 25, 2019, 0700ET
Market Timing Charts, Analysis & Commentary for Issue #285

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

Most recent S&P-500 Cash Index (SPX): 2801 down -21 (down -0.7%) for the week ending on Friday, March 22, 2019, which closed below 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 = 2852 with WEEKLY +2 Sigma = 2904
Current DAILY 0 Sigma SPX = 2799 with WEEKLY 0 Sigma = 2683
Current DAILY -2 Sigma SPX = 2746 with WEEKLY -2 Sigma = 2462

NYSE McClellan Oscillator = -104 (-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 = 55.3 (40 is considered as oversold and 65 as overbought)

Both SPX and NDX had a wild week with a big move on Friday. Worth noting is the BEARISH DIVERGENCE between SPX & its CI Indicator, put in last Thursday as we saw the 5-month index high of 2860.

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

200-Day MA DJ TRAN = 10,524 or 4.5% ABOVE DJ TRAN (max observed in last 7 yrs = 20.2%, min = -20.3%)
200-Day MA RUT = 1581 or 4.8% 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 tough week with a big sell off on Friday.

Russell 2000 Small Caps Index (proxy for Risk ON/OFF) went sideways first and then sold off hard on Friday. Is RISK still ON?

DeTrenders Charts for SPX, NDX, TRAN & RUT Indices

50-Day MA SPX = 2734 or 2.4% BELOW SPX (max observed in last 7 yrs = +8.6%, min = -9.3%)
200-Day MA SPX = 2755 or 1.6% BELOW SPX (max observed in last 7 yrs = 15.2%, min = -14%)

FOUR out of EIGHT of our DeTrenders are now in the 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, March 8, 2019 CLOSE at 2743
DAILY Timing Model = on a BUY Signal since Thursday, March 14, 2019 CLOSE at 2808
Max SPX 52wk-highs reading last week = 59 (over 120-140, the local maxima is in)
Max SPX 52wk-Lows reading last week = 3 (over 40-60, the local minima is in)
HA_SP1 closed near its +0.5 sigma channels
HA_Momo = -3.03 (reversals most likely occur above +10 or below -10)

Vol of the Vols Chart

Spot VIX currently stands at 16.48, at about its +2 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 was fairly quiet till Friday when it ran up to +3 sigma.

5-day TRIN & TRINQ Charts

5-day TRIN for NYSE is NEUTRAL while 5-day TRINQ for NASDAQ is still very near its SELL zone.

Components of SPX above their respective 200day MA Chart

This scoring indicator eased off to almost 54%, with the 50% level as next key area to watch for.

SPX SKEW (Tail Risk) Chart

On Friday, SPX SKEW (Tail Risk) closed near 117.5, now about its -2 sigma (normal = 120-125, range 100-150).

All quiet on the Eastern & Mid-Western Fronts? YES, this is according to our beloved HRH Capt Tiko, KCPE....

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 APR19, & short JUL19 VIX Futures) crossed the zero line on Friday and closed at -0.5 which is very near OVERSOLD here.

HA_SP2 Chart

HA_SP2 = 41 (Buy signal <= 25, Sell Signal >= 75)

Our coveted SP2 prop indicator went from 81 to 41 on Friday. We are staying short SPX at least 1 more day, may be 2.

US Treasury T-Notes & T-Bonds Yields Chart

The front end of the Yield Curve eased off a tad this past week while the long end eased off quite a bit. Maury is very upset now.

Fari Hamzei