Ready for a Pause?.....11.10.14

Another up day for the markets and a lot of the majors (now including XIV) have hit RSI@ high 90's readings...a cautionary indicator we've discussed before.  The SPY TrendX...right side panel>> is looking extended to the upside and we may be in store for a little sideways action to calm things down a bit and gain some bullish traction.
Our new M3 position in XIV initiated at Friday's close zoomed up like a rocket today (see chart below) gaining 4.5% for the day.  XIV has been badly lagging UPRO in the momentum game but it looks poised to make up lost ground if the technicals can hold together.

Prospects Improve....11.8.14

Everything is beautiful...at least for today. M3 has punched the previously lagging XIV into #1 slot and there's some good upside potential there.  The Ponzo Time machine's risk profile for SPY has also improved significantly since our last look.

New Highs...11.6.14

Another new high day led by GE and pushed by XLE.  There was an early stumble 60 minutes in but buyers stepped in dominated the rest of the day...closing on the highs.  The NYAD wasn't really that bullish...closing at 1.28 and volume was middling so we're climbing further and further into overbought territory and technical resistance as each new green day develops.
XIV had a little bullish breakdown today and this may be a signal of the emerging paradigm for the rest of the year.

Tentative Strength Continues...11.5.14

The behavior of XIV continues to be worrisome as it is woefully underperforming UPRO and even SPY.  The last 10 minutes saw a bullish volume surge, putting QQQ in the green (having been red all day) and finally giving a boost to XIV  The NYAD closed near the lows of the day.
Energy stocks were the big winners, silver was  the big loser.
The VIX dropped almost 5 % and prices are up marginally in after hours trading.

Waiting on the Election....11.4.14

Red for SPY and QQQ, green for DIA. and in a surprise move XIV actually moved into the green today after a long hiatus in the red.  M3 is in cash having been stopped put yesterday for no loss.
The oddsmakers are projecting a &%% win rate for the GOP and statistically speaking, having a Democratic President and Republican Congress has been a bullish winner and we are now in the historically most bullish months of the year so the odds look stacked to move the markets higher...at least until year end. That being said we are already at new all time highs and although we may see a surge up past previous resistance we are in fact technically overbought (see the TrendX in the right panel).  We've talked about paradigm changes before, when the left side of the chart essentially becomes little help in forecasting the emerging right side of the chart and we have to be alert to the fact that such an event may be upon us now.

Pop and Fade...11.3.14

New highs early in the session were followed by a gradual slow meltdown for the remainder of the day leaving the VIX 6.5 % up the major indices closed basically neutral.
Friday's surge was a hard act to follow and with all the markets at long term resistance the technical odds favor a pullback.  Refer to the Ponzo charts posted last week to get a flavor for possible near term scenarios.  The elections tomorrow may further roil the markets so we're in a wait and see mode.
We stopped out of UPRO today on a special intraday update for no loss.
XIV is failing to gain traction and has been kicked from the M3 roster at today's close.

Japan Changes the Game....11.1.14

At Thursday's close  it looked like Friday might be a neutral day and then Bank of Japan announced a massive QE program overnight and a buying party ensued.  Although the TrendX (side panel) looks to be topping out the BOJ plan could be a game changer, at least for a while, as we have now broken through to new highs on all the major indices.  What's interesting about the BOJ plan is the strategy of buying both bonds and stocks outright.  We'll have to see exactly how that affects liquidity (should improve it) and the actual schedule of buying to better judge possible impacts on the markets but for now the prospects are all bullish.
Over at M3 we've booked some nice gains with UPRO, which has been outperforming XIV lately (see charts below).
Also a bit of a head scratcher, the VIX was only down 1% at 15 minutes pre-close Friday and then dropped another 2.3% to finish the day down 3.37%......a piddling drop in the face of Friday's massive and across the board buying.