However as I said last night, "... the market looks like it's in true summer doldrums, but I'm not sure I believe that is what we are seeing.... I suspect it's something a bit more serious."
One of the concepts that is true in so many scenarios is that of, "Changes in character lead to changes in trend".
If we start with the overall market...
Intraday we also saw a change in character. Ever since last week we have been able to accurately predict morning or first half of the day weakness followed by an afternoon recovery and have been able to predict it the afternoon before based on 3C signals. This is exactly what we have seen for a week, morning weakness, the intraday lows put in and an afternoon recovery. Today's 3C charts were the first time we've seen anything different in just about a week now, maybe 6 days as can be seen in this market update.
Furthermore we saw a clear change in market trend with every major average closing near the lows of the day (no more afternoon recovery), the Russell 2000 closed at the lows of the day.
The late day (intraday) 3C readings showed some strength developing in the SPY and Financials while the NASDAQ and Tech sector seemed to be using any bit of strength to sell in to which is the EXACT market trend we have been seeing EVERY afternoon for a week now.
So not only do we have larger changes in character, but smaller intraday ones as well; one other that should be noted is the short term VXX as I have been showing the last several nights 3C strength in real VIX futures.
Was today's change in character enough to get us our bounce? As we have gotten closer to the big picture and as I said last night, I think we are in it now, things get more volatile and unpredictable, that's why I don't blame anyone for sitting out any bounce and just use the price strength to short in to.
However there are a few signs that we are close, perhaps as close as we get to a bounce, although NASDAQ and TECH 3C charts are in poor shape, this may sound counter-intuitive as they have performed well in price, but that's exactly what smart money sells or shorts in to, the same thing we saw the last week in all of the averages, selling the afternoon recovery which created early weakness the next day.
Credit...
Based on these charts, I'd say we are about as close as we can reasonably expect, of course some more 3C confirmation would be welcome.
Speaking of yields and Treasuries, you saw what I said last night about 30 year futures and the expected TLT pullback and what I expected to see (10 year and other treasuries look no where near as good)...
As far as what's going to push the market and CONTEXT clearly thinks we get a bounce...
as for an engine, it's hard to imagine a carry cross doing the work, especially the $USD/JPY, maybe the AUD/JPY, but as you'll see, the JPY has some 3C strength that would make any carry cross driver difficult.
I could imagine a scenario in which the Yen sits right here and just builds a larger positive divergence, lets the AUD/JPY do the short term work and then we have a huge, nasty JPY positive that can easily pressure the market to the downside in a big way, although that's just speculation for now.
I wanted to give you a quick look at a couple of Breadth Indicators without doing an entire post.
% of ALL NYSE stocks trading above their 40-day moving average.
This should climb with a healthy market, a long time ago we could see that wasn't the case, from +85% of all stocks > than their 40-day to +78% to 50% now, only 50% are above their 40-day m.a. at these market highs!
Again, slipping from 81% to 74% to 54% currently, if this isn't clear evidence that stocks have been sold to close out the FX carry trades, I don't know what is!
Basically if we can get good signals for a bounce, I think a lot of us would play it, but shorting strength is the most important, this is why I don't wait to build out that Core short portfolio because this market has been so fragile, it could have broke virtually any time after March VERY easily and I don't have to run around like a mad man, positions are set and ready to go, adding to them is just a bonus.
Finally, the IYT Put that was closed today at a loss never got a P/L post, here it is...
I've had a few questions about what the URRE (current long position) charts look like as I'm expecting a move higher, I don't think I need to draw in the positive divergences....
You see why I like it?
As for futures,
Silver and gold still look like they should be coming down, the weaker $USD may cause some trouble.
And normally I wouldn't post 1 min charts of Index futures for overnight, but since they are so similar and fairly large divergences...
I have an 8:30 Doctor's appointment tomorrow, I should be back before the open, but just so you know.
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