Sentiment Flip-Flop

I mentioned the overwhelming bearish sentiment of the "Fear and Greed" index, this as the market was just some 3% off the recent all time highs and actually, yesterday (June 15th).

This is part of what I was talking about in setting support at the 150-day sma for the SPX and how stops would line up there. Yesterday was pretty clear we'd get a 1-day oversold bounce and interestingly just as the Fear and Greed Index was registering overwhelming bearish sentiment. As I said just yesterday in seeing the market ready to shake-out the newly bearish traders,

"The one thing I don't like is the increased market perception and fear, that tilts the ship too far one way and it's very lucrative for Wall Street to rock the boat in the other direction quickly, stopping out or triggering trades, it''s short term maneuvering that has little to do with the bigger picture, but it makes them money."

This is the Fear/Greed Index form YESTERDAY, the 15th...

EXTREME FEAR just yesterday triggering the comments above also from yesterday, And What does Wall Street do when the boat is leaning too far in one direction? They take advantage of it.

The daily SPX chart with the failed head fake move in May and the recent support created at the SPX 150-ma which was already getting attention.  As I said yesterday, "Now all of the stops will be at the 150-sma".

Today's 1-day oversold bounce has created a short squeeze of all the newly bearish traders, on the squeeze and resulting sentiment shift as it only takes hours on a decent move, where do you think all the stops are lined up?

What is interesting today or rather this afternoon are the following charts...

 Last night in the Daily Wrap in talking about Index futures, I said,

"As for futures, it's a bit early, but the ES intraday chart doesn't look good here...This is an even narrower, sharper "V" bottom than we saw last week, however ES 1 min has gone deeper leading negative since the close, maybe it comes down overnight..."

That's EXACTLY what it did, see the ES 1 min chart overnight with yesterday's cash close (4 pm EDT) at the red arrow and the 3C negative divergence after the close which led to the statement above as well as price coming down overnight around 4 a.m. (just after the European open) to the intraday lows from yesterday. I was ho;ping the cash market would do the same today for trade management of VXX, but beyond very short term management of VXX, it's actually not a bad thing we didn't get the intraday lows in the cash market.

If you recall last week's price action, it was forecasted to be short lived because of such a narrow "V" shaped bottom, the bounce lasted 2 days before failing and that was a larger "V-shaped" base than this week (a little more like a small inverse H&S and a better 3C divergence).

Last week's "V" which was wider with a better divergence that lasted 2-days before failing and yesterday's "V" which I hoped would widen out this morning before heading higher to take VXX gains off the table, but it may have been better that it didn't make a wider base as this is weaker than last week's.

And intraday the ES/SPX futures chart going negative

The NQ / NASDAQ 100 intraday Futures going negative.

As well as the Russell 2000 intraday Futures going negative.

Price action is VERY reminiscent of a short squeeze with few if any pullbacks intraday, which makes perfect sense with yesterday's sentiment extreme (bearish).

However what is most interesting as the NYSE TICK Index starts to fail intraday...

NYSE TICK Index falling out of the channel

...Might just be the VIX futures, the real VIX futures...

These are the intraday VIX futures. You already saw how much better VIX/VIX futures are holding up vs the SPX and now they are turning from the pullback expected which is why I wanted to see an early SPX pullback to intraday lows to close the VXX calls, but that may have been short sighted as it should have created  stronger base area, as it is now  the VIX intraday futures are turning from the expected pullback to positive .

Taken with the Leading indicators, the predictability of sentiment going to a fearful extreme with a clear  and defined support/stop area at the SPX 150 ma, this looks like the boat was rocked the other way, as I said yesterday, it's short term extra cash, it has little to do with anything and the market was already in a short term oversold condition as of the close.

Suddenly the close is getting very interesting pre-F_O_M_C.