Wrapping it up-Futures

Yesterday was a strange day in the market (Monday), almost an ineffable strangeness; it was very much like the invisible hand was trying with all of its might to lift the averages, not to a mind numbing huge day up, but some modest target and being the SPX closed only 9 points away from a new high (about half a point), it would seem that this may have been what the market was striving for.

The market use to draft a lot better, if one average was up, the rest would draft off that one, don't get me wrong, there was still differences in relative performance, but green was green and red was red.

Yesterday it seemed like the SPX was the main index of interest for the invisible hand and there's nearly zero doubt in my mind that the movement in the VIX, some attempts to influence market moving currencies and even the rumor on Bloomberg about AAPL's cash/dividend possibility (although specifically targeting the NASDAQ 100 where AAPL carries nearly 20% of the average's weight and as the NDX was struggling badly to break out of the red) were all desperate attempts to achieve whatever upside goal those who pull the levers behind the red velvet curtain, had set-as if the market needed that same drafting.

I said during market hours yesterday that I would be very interested to see the daily closing stats and once I saw them, I felt like I understood a little more about why the market was so difficult to move, why the VIX had to be sent down to seven year lows, why the rumors about AAPL came out when they did, the market simply isn't in good shape and as already mentioned, even with 3 of the 4 large averages closing in the green, many metrics went downhill, most notably market breadth.

Today the market seemed like it had already spent a lot of the manipulative currency (not meant as a pun) trying to move the market yesterday and today there wasn't much left in that particular piggy bank.

The market was weak all around today, but it seemed particularly weak in the same two averages it struggled with yesterday, the NASDAQ 100 and the Russell 2000 (both closing red today), breadth suffered again today on a day when the volume was only modestly higher than yesterday's which was the lowest volume of the year. Today however in at least a couple of averages, the dominant price/volume relationship was "Close Down/Volume Up", which often acts as a short term 1-day oversold condition. Considering what I saw in GOOG and AAPL today, it wouldn't surprise me if that were true, but considering what I saw in the 3C charts of the averages, it wouldn't surprise me if that were only true for a short period of time, possibly even ending intraday tomorrow.

As for closing leading indicators, nothing really jumped off the charts, however they still weren't good. Today was a day for algo driven correlations and what seemed like more of arbitrage trading than anything else as I had pointed out in this post "Quick Market Update" with the comment, "The market looks a little overdone on the downside intraday when comparing to currencies, some 3C signals, etc."

If you want to see something you don't see every day, take a look at CONTEXT and what I believe you'll see is an arbitrage algo driven market.

Rarely do we see ES and the ES model track so incredibly close and during market hours no less.

As far as Leading Indicators, it's hard for them to diverge significantly when CONTEXT is so close, but they didn't need to (although many did) as they already have on a longer term basis.

Lets take a look at the specifics.

 HIO going negative, especially in to the now famous closing ramp

 HIO on a longer term chart over months, already having diverged significantly away from the SPX.

 HYG pulling away from the SPX yesterday and continuing today, again specifically in to the closing ramp, HYG is already dislocated on a longer term basis.

 FCT diverged intraday as well since yesterday, again another leading indicator moves down against the SPX closing ramp.

Yields also moving away from the SPX intraday.

So we'l see what the market, AAPL and GOOG have to offer in the very near term tomorrow, but for now the futures seem to be giving away more of the market's secrets just as the did last night.

 ES leading negative 1 min in after hours, perhaps the reason why they were so in line with 3C today during regular hours was because of the apparent arbitrage trading seen above on the CONTEXT chart, however after the algos have gone to bed, it appears the distribution is back on.

 ES 5 min chart in a deep leading negative divergence

 TF/Russell 2k futures 1-min are also leading negative ever since regular hours trade ended.

 The R2K 5 min futures are also leading negative just as the 5 min ES/SPX futures.

 NQ/NDX futures 1 min are also leading negative, seemingly since regular hours trade ended.

And would you be surprised if I told you the NDX 5 min futures are also leading negative since regular hours trade ended?

None of the Currency pairs are doing anything spectacularly interesting at the moment, but are all in an area in which it wouldn't take much of a move for the FX pairs to have a very meaningful effect on the direction of trade.

Some of the most important information is located in the intraday updates, be sure to try to catch up with them.

Other than the ongoing story in China with some PIG virus, which could become a big inflationary story, Japan's ongoing efforts to try to talk the Yen lower until the new BOJ governors take control and whatever adventures of the European PIG or PIIGS rather, we'll just have to see what the overnight holds and how tomorrow fares. My guess is we do see some short lived upside, as I already showed you today, there are larger structural problems in the market that are far beyond the movement of a single day, at least any single day's upside.

If anything develops before I turn in, I'll bring it to you.

Look for MBA Purchase Applications, Retail Sales and Import/Export prices tomorrow pre-market, during market hours we have Business Inventories, the Wednesday EIA Petroleum report, a 10-year Treasury auction (which the F_E_D will end up monetizing despite swearing under oath not to do such things that allow our government to spend at will knowing the F_E_D will make sure there's enough money created, whether via printing or digital 1's and zero's) and lastly the Treasury Budget.