XLF & Market Update

Most everything still looks like it's coming down intraday, take the SPY for example...

Intraday 1 min leading negative divegrence, this is what we saw a while ago before price even started to come down, but index futures , the averages and TICK were negative.

This is also where we'd start seeing increased improvement, in to lower prices, which I'm assuming will likely be somewhere around intraday lows.

I'm going to use XLF/FAS/FAZ (Financials, 3x long Financials & 3x short Financials) as an example, but I could use almost anything, the SPY, QQQ, IWM, etc.

 XLF 1 min just like SPY 1 min above...
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 However there's already improvement on the 2 min chart .

The FAS-3x long 5 min chart which is heavier underlying flow of funds is also looking better, leading positive, these are the charts that really needed repair as they were mostly in line with lower price action going in to yesterday.

 FAs's longer term 15 min trend is where smaller divergences seem to be accruing and building a wider, stronger positive divergence.

 FAZ, the 3x short Financials on a 3 min chart is showing distribution, if I had any inverse/short trading positions, this is where I'd be thinking about taking whatever is left of them off the table.

FAZ 5 min chart, also a heavier underlying flow is negative on the day and starting to lead deeper.

And the 15 min FAZ trend is near the mirror opposite of the 15 min FAS trend with a leading negative divegrence.

As for leading indicators, HYG continues to outperform, but we have seen this lead the market by several days to about a week.

HYG (blue) vs SPX intraday

And perhaps most notable, our SPX/RUT and VIX Inversion...

 The intrday charts continue to show positive SPX/RUT ratio indications, not confirming the market lows.

Also the VIX Inversion is at a typical buy signal.

Comparing to the last time we had such a signal at the August lows leading to the August cycle higher, then topping and eventually making a new lower low as was expected from the start...

The SPX/RUT signal is not quite as big, but the VIX Inversion signal is quite a bit larger.

There's a chance that this is a base that forms a move that creates a right shoulder a some people have been expecting in averages like the SPX...

In this scenario a right shoulder would be formed, about the size of the bounce at the red arrow creating a H&S top, it seems a bit too obvious to me and I have viewed the SPX as a Broadening top, however all H&S tops start as Broadening tops, but this one has broke down and just like the H&S shakeout I described yesterday, this as a broadening top would have pulled in the retail shorts and just like the H&S shakeout, this would be a perfect place to shake them out with a move above the trendline that shakes them out and then fails to a lower low, whether it makes a right shoulder or not almost seems like a moot point being the neckline is already broken.

The larger point is this looks to be shaping up as a rather larger or strong counter trend move/correction, so once again I mention that to anchor expectations as it's one thing now when sentiment is bearish to say, "I'll use any price strength to short in to", but when sentiment changes on a strong move, emotions take over, this is why I try to anchor expectations before we get to an emotional stage with objective data.

The name of the game for now however is still patience unless you are doing some day trading which I'm putting out the market signals fi like the last pullback signal intraday.