Later I'm going to be posting some of the emerging themes I see developing and the trades that go along with them. Some interesting things are certainly afoot. Looking at the SPY today however, there's a bit of a mystery.
SPY 3C 1 minute chart.Ysterday I showed you the negative divergence that set in the SPT and market in general, as you see above, that was the high of the day for the SPY. Thus far this morning 3C is confirming the weakness in the market. This could be unwinding of risk before the Fed's minutes released at 2:00 today, or something else.
Here's a more important hourly chart of the SPY. There was a negative divergence through December which made sense, after all, for practical purposes, the SPY was nearly rangebound. The last 15 trading days or 3 weeks netted a total return of 1.48% which works out to be about a tenth of a percent a day, which is in my opinion a flat market as a strong move could easily do 1.5% in a day-this was 15 days so the distribution we see made sense.
Looking at the same important hourly 3C chart, what doesn't make sense is yesterday and today. Look at the scope of the negative divergence at yesterday's highs and the leading divergence we see today marching lower. This could be very significant. I've posted a number of charts today and yesterday showing what happens when a breakout fails, it isn't pretty. Perhaps the Fed minutes will provide some clarity, but this is a very deep change in character over a day.
As I mentioned, there are several macro-economic themes that seem to be taking shape and I believe they will offer some nice trending trades which I prefer as a good % gain can be made. Look for that tonight, I may post a few ideas during market hours, but I want to address the themes tonight in the wrap up.
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