Market Pullback charts

As promised in the last post, here are the charts that make me think that we are seeing a short term pullback before the market moves a bit higher in the near term. The mid to longer term charts still have significant damage, nothing has changed there and the fact dumb money is itching to get in is another obvious red flag.

 SPY Arbitrage has been positive all day.

 CONTEXT'S ES model has been improving all day and is now at less than a -2 point differential.

 HYG seen earlier today was holding up well vs. the SPX, by the EOD it was making new afternoon highs just as it looked like the market was taking out some stops.

SPY/SPX makes an afternoon run on the stops, the contemporary take on a classic pattern, a double bottom. As I mention from time to time, the market is fractal in nature, meaning the same patterns seen on a 5-day chart can be seen on a 5 min chart, that's because human nature is the same and Wall Street's penchant for using that and Technical analysis dogma against you is pretty constant.

Classic Double bottoms use to make a shallower second bottom, they didn't use to test support, but rather pullback just above and this was a sign of demand, but now Wall Street runs these classic patterns down and hits the stop creating a lower low that will also pull in the shorts as they can't tell whether this is early on in a downtrend or a run on the stops in something like a double bottom or move to support.

 FCT, like HIO, still show the real dynamic below the surface of short term trade is still very much selling.

 Commodities vs the SPX held up a bit better today.

 Commodities vs the $USD are trending the wrong way, I suspect they are pulling back in to this dollar weakness to be accumulated (the normal relationship would see commodities as well as stocks and other risk assets moving up vs a falling $USD).

 High Yield Credit was negatively divergent going in to the recent highs, it was positive vs the SPX at the afternoon SPX lows today as was Corp. High Yield Credit seen above.

 Yields were negative at the top, but otherwise tracking the SPX in the short term, very well and positively divergent at the afternoon test of support.

 The Euro was mentioned this morning as showing better relative strength intraday vs the SPX, it ended the day the same way as well as everything in between.

 The $USD's short term pullback is supportive of the market, that is one reason I suspect the pullback in the averages is being accumulated.

 Longer term the Japanese Yen is having trouble maintaining a downtrend, whereas in the recent past, like last week, a little jawboning by PM, Abe or talk from the BOJ sent the Yen lower, but I suspect the longer term trend is seeing the carry trades being closed, as the Yen is part of a number of different carries, to close it the Yen would have to be bought and it seems that buying is sending the Yen higher, so it must be fairly substantial covering of the carry trade.


 Sector performance was largely showing a flight to safety today as the averages were down, but a few risk sectors were seeing some action including Financials, Energy and Tech to some degree.

All of the "out of rotation" sectors look like they are low enough that they could eyasily roll right back in to rotation.

 The intraday EUR/USD 1 min

The single currency Euro  15 min chart shows a leading positive divergence

 As does the 30 min

 As does the 4 hour in a rather large divergence for the Euro

 And the daily has a positive divergence, although it still maintains an overall negative disposition, it does look like it could bounce in a pretty big way.

 The US Dollar index 15 min chart is in a leading negative position

 As is the 30 min

 And the 4 hour has an overall positive disposition, but looks like it could pullback, just as the Euro looks s if it could bounce. All in all, I'd expect the EUR/USD to be supportive of the market in the very near term (few days).

 ES 1 min ended on a leading positive note.

 ES 5 min also has a local leading positive divergence.

 NQ 1 min also finished strong with a leading positive 3C divergence

 And NQ 5 min looks good locally as well.

Finally TF (Russell 2000 futures) 1 min is in a strong leading positive divergence.

I'll be back with more charts including a look at the $AUD before tonight's RBA rate decision.