Daily Wrap

I had just recently been talking about how it was rare to see VIX manipulated early in the day yesterday and how it's usually an end of dat ramp- vehicle via the VIX Whack-a-mole. Today, the market proves me right for what? the SPX closing up +0.07% or the Dow up +0.01% actually 0.007%, the smallest fractional gain possible? No... GREEN.

 Toward the close the SPX and Dow were in danger of closing red so what do they do? In the last minute of trade, Whack the VIX.

Here's the SPX in purple and VIX in candlesticks, note the deep drop on the last minute trade, taking the VIUX out at the knees for a green Dow close of +0.01%, but it's green.

Again SPY Arbitrage was used as a lever, today good for about $.60 SPY cents, but that too was in a late, last ditch effort to close the market green, SPX +0.07%, Dow +0.01%, RUT +0.03%, NDX +0.27% and transports -0.09%

Note the late day push to pump the SPX to green, this was done via VIX and HYG (2 of the 3 components of the SPY Arbitrage model).

HYG bashed higher in to the close sending SPY Arbitrage higher, getting the SPX/DOW/RUT green close.

Transports apparently strong on the open didn't fare too well on the European close and it was too much to make up the rest of the day with Trannies closing down -0.09%

For all intents and purposes, a FLAT day and I've had more emails the last 2-days talking about the market in terms of "watching grass grow" or "watching paint dry". I  remind you, when the market lulls people in to complacency, it's very dangerous, as I always say, "It's like the kids in the room next door being just a little too quiet, you know they're up to something".

This is what I have found to be true as well, low volatility situations tend to explode in to high volatility while high volatility situations tend to slowly decrease to lower volatility, so be careful about complacency.

The range was ultra tight today, if you didn't pick iy up in stocks you had to see it in NYSE TICK,

Almost the entire day in the +/-750 range, except for the hammered close, a very narrow range and clearly why breadth indicators surely have not moved tonight to any better standing.

$USD weakness as we have been expecting came on the back of Euro, $AUD and Yen strength as we have been expecting sending USD/JPY fading back off the $116 level...

$USDX weakness today from just after the European open through the US close.

USD/JPY faded off $116 just hours after the European open until just about an hour and half before the US close, not a helpful lever today. Remember the futures post, those were larger macro trends.

Quite notably, even with the VIX smash, VIX is outperforming the SPX correlation by a wide margin, some starting yesterday, again don't forget about the larger VIX FUTURES picture.

VIX vs SPX (SPX prices in green inverted).

Volatility is slowly creeping up while this market is seemingly as flat as can be.

Since the bond market was closed, the closest proxy for yields is inverted TLT vs the SPY, look what happened...

Despite the market levers (some of which are failing), the SPX failed to rise to yields approximate 1 p.m. high as yields came down from there and moves lower with the SPX only surging at the close for a green day on the back of a VIX Smack-down, a move that should be faded down to yields as the bond market opens tomorrow.

While I suspect the market will end the way it started, there's always the concept of the Igloo top/Chimney as rounding tops become more obvious , a head fake move used to lock in longs that may start to waiver, but also an excellent timing signal for the start of a stage 4 decline as we saw with the August cycle.

The August cycle's Igloo/Chimney top and the sharp "V" bottom, I have suspected we'd see symetry in the top with a shaper downside reversal, likely a big gap down day, but the concept has been right about 80% of the time, even though this "V" bottom was one of the times in the 20% in which the reversal was more an event than process.

The IWM looks to be the most at risk for such a move because of its base.

The IWM had a larger base than the SPX, DOW or NASDAQ, the market tends to have a lot more symmetry than you may first notices with upside reversals being tighter than downside reversals (tops).

In any case, it's a concept that we have seen in all reversals, all assets and all timeframes about 80% of the time so that has to be balanced against market symmetry.

The one thing that is clear is even with these market levers. the message of the market is extreme weakness for the Dow to need a VIX whack just to close +0.007%!

The message of breadth is clearly weakness

SPX vs the Percentage of NYSE Stocks Trading Above Their 200-Day Moving Average...

As well as the message of 3C...

QQQ vs 3C 30 min with significant distribution at the top area.

I trust I've posted Leading Indicators enough that you have them pretty much memorized.

Internals were absolutely boring, there was no Dominant P/V relationship although last night's suggesting a close lower today was pretty darn close, the Dow up 0.007%! The SPX with a VIX smack down up +0.07%!

5 of 9 S&P sectors closed green, again though not exciting, the top performing was materials up +0.49$ with Utilities lagging at -0.37%, barely a move.

The Morningstar sectors closed 123 green of 238, again, about as mediocre as the market, but don't let this low volatility fool you, it tends to jump while everyone is complacent.

I'm going to check in on the futures market in a couple of hours after I return from taking my woman out to dinner to celebrate Veterans Day. If you didn't see the Futures post earlier today, it's worth a look as the bond market re-opens tomorrow...Futures Indications