Daily Warp

Make no mistake, today's minutes were not good in any sense for the market, it revealed a much more hawkish F_E_D than the last F_O_M_C and Yellen made us believe.

However we are talking about the gyrations in the market that have nothing to do with demand and everything to do with positioning.

I tend to think the market comes down and builds a larger base and bounces which will be an excellent opportunity to short in to, maybe even open puts. If the market comes down to build that larger base it gives us a chance to piggy back the bounce with positions like the IWM calls which I opened in a spec position yesterday, but if there's no pullback/larger base, we're not missing out on much as the real trade is shorting in to the bounce which I think is very high probability with the market coming down just after as we have already broken most of the right shoulder tops (started the decline to stage 4).

So we can't really lose. Leading Indicators from this afternoon suggest we see a larger base which really only serves as a piggy-back long trade/calls.

 The 5 min charts like this QQQ are still in good shape (the bounce divegrence).

However charts as far out as 3 min (QQQ) are showing a negative divegrence suggesting a pullback to create a bigger base which would look something like this...

A pullback and a "W" like base, probably a stop run under support and the bounce. If this happens, the head fake/stop run area is perfect for opening or adding to piggy back trades like the IWM calls, if not, no big deal.

There are a number of charts which include the market averages (5 min) that still suggest a bounce, there are other momo stocks that suggest the probabilities for a bounce are high as well, here are a few examples...

 NFLX 5 min ready for a bounce

However, only a bounce as the longer term charts as shown last night are in shambles,  this is why I want to short any price strength.

TWTR suggests a pullback first on this 3 min chart, as long as the 5 min stays positive and doesn't deteriorate, a wider base and bounce is the probability for near term trade and of course it gets ugly from there  because none of this is real demand, it's Wall Street built cycles, that's all those positive divergences from yesterday were.

 FB 2 min suggests a pullback and wider base as well

As does the 2 min AMZN.

As long as these negative divergences don't ruin the 5 min charts, we should get the wider base and the bounce we can short in to, if the 5 min charts start falling apart or there's no accumulation in to a pullback, the market is in bigger trouble a lot sooner than most think, IT ALREADY IS NO MATTER WHAT HAPPENS SHORT TERM.

Momo stocks I quickly looked at had bullish inside days on the daily candle, SCTY, NFLX (tweezer bottom), PCLN and TWTR inside days. Market breadth suggests the momo stocks see the best bounce and also the deepest decline after.

However the normal correlations are far from normal, look at the USD/JPY vs ES after the minutes as the $USD took a beating on the minutes and the Yen popped.

That's far from normal, as I said,  any upside from here is a Wall Street driven illusion so they can get out or in to their bigger positions.

As for internals beyond what you saw in Leading indicators, of the 9 S7P sectors, the market was acting risk on with 8 sectors in the green and the absolute opposite of yesterday with Utilities being the only one in the red.

The Dominant Price/Volume Relationship was SUPER Dominant in all of the major averages, it was Close Up/Volume Down, this is the most bearish of the 4 possible combinations and usually results in the next day being down, which would fit with the pullback scenario.

As for miners and GLD, I expect we will finally get that pullback off a failed breakout which started today, the Junior miners suggest that it fails likely as soon as tomorrow so I'm looking forward to the pullback and accumulation on the pullback and buying NUGT again at lower prices, this is a long term trend trade that I think will be a huge winner.

Market dispersion continues with the NDX up +0.75 and the R2K only 0.14% with the Dow missing 17k this afternoon.

I think we are in good shape, we either get a pullback and get some short duration leveraged longs (piggy-back trades) in or we don't and we likely get to short price strength in to already broken right shoulders (H&S tops) getting a better entry and lower risk with good timing or at worst, the market just heads down from here in which case our current shorts take care of themselves, but I think that is the lowest probability near term, the highest probability resolution after a bounce.

Finally, I thought this was an interesting article and you might find it interesting as well, "The Difference Between A Good and Bad Trader: What Brain Imaging Reveals