Daily Wrap

I already told you about the internals pretty much, AAPL is going to be a fulcrum item tomorrow, I cant see nearly 200 major hedge funds all hitting the sell button at once, that wouldn't be good for anyone, but it will be worthwhile to watch the underlying action for the long term set up in AAPL.

We are nearing the Jackson Hole Speech and probably a revision to GDP that comes in with a minus sign n front of it. The banks have got their analysis out there and it's basically damed if Bernanke does, Damned if he doesn't, but we have to remember where that analysis is coming from.

I imagine thier will be volatility tomorrow with people wanting to get out or get flat before the JH speech. I have a few opinions of what may happen but that's irrelevaent. The only thing that is relavent is if there is an operation twist announced, it'll be good for financials and with the short interest in that sector, that could produce a pretty loud sonic boom to the upside. I found BAC's trade to be notable the last couple of days. Remember what I always say about a head fake almost always preceding a reversal?

Check out BAC...

 Right before the break of support, I was seeing positive divergences, support broke, volume spiked and I said, "I think it's a head fake" then today BAC rose over 11% and the area in white is pure short covering, notice there's no pullbacks. This has been the dog of financials, and it has a head fake then an 11+% day?

 Take a look at the 30 min chart of BAC, the head fake actually was a positive divergence-or accumulated and look at financials below...

Same deal, XLF saw a head fake on a very positive divergence and this is the sector that benefits most from OPT2 (Operation Twist 2).

Because of all of the safe haven buying, the Fed could actually sell some 10 years. The 2 years are untouchable because of the FOMC statement and policy of ZIRP through 2013. So what happens if Gold keeps moving down and the long are driven out of treasuries because of Fed policy, where doe that money go? Well the banks have done pretty well with risk assets like equities over the last few years of QE operations, phrases like "Perfect trading quarter " come to mind. And then we have my theory of what happens after Op-Ex Friday from last week, under that theory we still have a short squeeze to drive out the shorts that entered on the "sharp sell-off" that I mentioned last Wednesday.

Here are some other charts I found interesting

Treasuries 

 IEF 7-10 year TreasuriesWe know there's been  lot of safe haven buying is T's over the last few weeks, but this 30 min chart is just fiercely negative.

 IEI 3-7 year Treasuries, this 30 min chart is just as nasty if not a bit more.

 TBT-ULTRASHORT 20 Year Treasury, this 15 min chart has recently taken off nearly vertical.

 TBT 1 mn and there's 1 min confirmation through the last several days.

 TLH 10-20 year Treasury Fund, again another negative divergence on the hourly chart.

 TLH 30 mins-same thing

There was a positive divergence on this TLH 10 min chart, which makes me wonder f the market will be off tomorrow and we'll see some safe haven buying. We never did get that head fake that I had expected.

And now some VERY interesting charts in the Industry groups...

 This chart is actually one of the last  I captured, I started looking at the intraday charts of industry groups, it never occurred to me that there could be action on the daily harts, WOW was I surprised! This is XLE on a daily chart (Energy).

 XLE hourly

 XLE new leading divergence 15 min

 XLF daily-a small leading divergence (for newer members, the longer the timeframe, the more meaningful the chart and the bigger the implications of the signal.) Daily

 XLI Industrials- Nice leading positive divergence (Daily)

 XLK Technology, a pretty spectacular relative divergence (Daily)

XLP-Consumer Staples -a parabolic leading divergence to new highs (Daily).

I've been watching the indices so much and the intraday charts because  felt this action was rather new, I didn't think to look at the daily charts of the Industries. I want to stay nimble through this Jackson Hole Speech, but this is almost like a new discovery that has really taken me back. I obviously have a lot of charts to look at in light of these industry group daily charts.

As for the market tomorrow, these charts may have not had enough time to catch up to the afternoon move, but I'm thinking based on these and the P/V dominant relationship, we see some pressure on the market tomorrow, at least n the first half of the day.

 DIA 5 min

 IWM 1 min

 QQQ 10 min-fits with that treasury chart on the same timeframe.

SPY 5 min.