Market Update

I think I'm going to drive my web-designer crazy and ask him about a live video feed, he'll probably comeback and scare the death out of me with some crazy fee to do it (like texts), but sometimes there are so many things I want to show you and by the time I capture, annote, upload, explain and post, the market can really move quickly so I'm trying to keep updates to important ones, transitional so you don't just see one spectrum and the next update is on the other spectrum, I want you to understand developments as I've found members come up with some of their best trades on their own by understanding developments.

In any case, the Q's look better than the rest of the averages generally speaking and AAPL seems to be leading and I think the reason is pretty obvious, at $3998 on only a +0.16% gain, the NASDAQ Composite could join the Dow and SPX in hitting those target whole numbers mentioned last week acting like a magnet with averages so close, the COMP only needs 2 points, it's a fraction of a percent and its the only one that hasn't made that close, there's obviously retail mutual fund flow in it which is what happened at the top of 2007 when the SPX was making its all time new high (after a series of them of course) and I remember specifically an interview on CNBC with the author of Dow 20k, he was proposing that the 2002/3 to 2007 Bull market would hit $20k, that marked the top, but again for .05% more on the close, it has a lot of value as retail comes out of fixed income Mutual funds and in to equity Mutual funds. The words, "Mutual Funds" can't be emphasized enough, this is retail, hedge funds are for qualified investors.

Take that with the chart last week that one site called, "The scariest Chart for Stock Bulls Ever" from Investors Intelligence Survey (% Bears) WITH BEARISHNESS AT LOWS NOT SEEN SINCE LONG BEFORE 1990...

This chart speaks to so many concepts both old and recent from Jesse Livermore's "Sitting" to last night's quote from Don Worden about achieving truly superior gains by knowing when to be "Contrarian" to the flow of funds through domestic mutual funds to the VIX, our 3C charts, breadth charts, Leading Indicators, the manipulation levers not working so good if at all, and the list goes on, not to mention the F_E_D, this is a post that could be a5 or 6 part series alone so lets leave it at that.

So far this is what we have...

 SPY 1 min - after the Friday Op-ex the negative divergence was plain to see (at the lower low of 3C, not where the arrow first starts at the far left). This morning there was a negative on the open as well, again picking up from where Friday left off sending the SPX in to the red briefly.

Otherwise today continues to deteriorate with a leading negative position.

 2 min chart : At #1 I didn't want to draw the far left arrow all the way across the chart to the current 3C reading, but this would be both a large relative negative divegrence as well as a leading negative. At #2 3C was in line intraday on the op-ex pin, it went leading negative right around the time op-ex pins are lifted on Friday (2 pm-ish).

 This is the 5 min chart, note the ranges that are so magnetic, but also underlying trade in to breaks above those ranges. When prices come back under those ranges a head fake is complete, that's when they tend to move very fast.

 QQQ 1 min in line as I said before it looks the best and I think the reason is obvious, but it's still an intraday chart, kind of like intraday "steering" of the average.

The 2 min chart has a lot on it, from the negative at #1 sending the Q's lower with a head fake move just before (they happen on all timeframes) in the yellow box, #3 is inline on the downside move and #4 is the accumulation seen on Tuesday most of the day and the last hour or so of Wednesday, at #5 you'll also note a head fake move before that trend reversal (yellow) and #6 a clear failure to confirm and there's less money supporting the current trend right now vs the previous one to the left, indicative of distribution in to higher prices.

 This is the entire QQQ Oct 9th Cycle - 30 min

IWM intraday positive in to op-ex, and in line through most of op-ex, again negative after the pin is released around 2 pm and leading negative, although a close in zoom intraday shows IWM in line (green arrow)

 IWM 3 min shows the build up for the channel buster, some energy need to be stored up to break the channel (#1) and #2 in line for a brief time before going leading negative at the Channel Buster. These Channel Busters are reliable head fakes, they tend to fall quickly (or rise quickly if it breaks the bottom channel)  and the fall typically goes through the bottom channel, #4 is the leading negative we have known about since shortly after the IWM made this move.

 5 min Oct 9 IWM complete cycle, accumulation at 1 for about 2 weeks in to the Oct. 9 low which was also a head fake stop run move. At #2 IWM is in line in a clear channel downtrend and #3 the channel buster you saw above was specifically planned with accumulation at the bottom of the channel. #4 shows the leading negative divegrence which is lower than the accumulation as the IWM was at lower prices, this is a really nice looking (bearish) chart and I really look forward to covering it with a special on Channel Busters after it has resolved.

 VXX with a negative divegrence sending VXX lower in to what has been some very strong, unusually strong positive signals, today a possible stop-run head fake.

VXX 2 min showing all the same including the unusual 3C strength, very suddenly, very sharp,

 VXX 5 min with another unusually strong signal.

 Spot VIX, at #1 this is the last time the VIX moved as it should compared to the SPY in red, although the SPY has made higher highs, VIX, while remaining in the complacency zone, hasn't made similar lower lows, it seems a constant bid has been under VIX, at #2 in the Bollinger Band Squeeze indicating a highly directional move to come, when first seeing this I warned that we usually see a head fake move before the directional move such as #3, but so far nothing.

 Actual VIX futures which pulled back and the 5 / 15 min chart showing this was part of our analysis last week , but now that's changing, it can be seen on this 30 min chart already, but more clearly as it migrated from the 15 min.

 VIX Futures 15 min

HYG was used to ramp the market at the EOD Friday@#1, however it has been looking very weak here.

The Yen 5 min chart and the divergence noticed late last week, this is the entire divegrence.

A closer look at the 5 min Yen.

And the EUR/JPY...

 Since the Yen slam last night that sent the carry pair to its highs of the night, but didn't move index futures, there has been a lot of deterioration in the pair, mostly due to Euro weakness, but if the Yen pops to the upside, this will get worse and initial indications this morning showed the SPX following the pair broadly in to the open.

I have a couple more charts to look at and post and I'm going to start looking at position management as well as new positions, I'm actually quite happy with Friday's UVXY long and VXX calls the way they are looking, they are the chart/signals that I don't ignore.