Quick Market Update

It's still early and you know how I feel about early trade, but yesterday I pointed out in multiple posts how the market had come completely unravelled from any correlation, it was very strange and that wasn't even counting the 3C charts, today the open seems to have given us our answer. As I said yesterday, "Market action unfolds with the intent to deceive" and momo chasers which is about the extent of the trade late yesterday, got burned bad on the open, if it is too strange to be true, it probably is.

There are a ton of fundamental issues that have arisen today and once again, Sunday's post, if you still haven't read it, has pretty much been as timely as it gets as to events unfolding this week.

 The SPY-FEAR IS STRONGER THEN GREED. The SPY on the open, retraced all the way to yesterday's intraday lows, taking  out nearly 4.5 hours of parabolic rally on the open.

 As usual, we start the day with a triangle, that looks to be in the midst of being gamed right now.

 Unlike yesterday, today the market is in line with FX correlations, thus the rally out of the triangle happening now as the same pattern was present in EUR/USD FX pair.

 Here's the wider view of the disconnect between the market and FX arbitrage correlations, I pointed out a day or two ago what happened last time the market ran ahead of the correlation which can be seen in the red box to the left, a severe drop the next day and regression to the mean. The market is much further out of sync now, even with the opening gap down.


 The early indications were of confirmation of the drop, you can see clearly 3C falling apart during yesterday's rally, but that was by far the least strange of events yesterday.

 Here on the 5 min chart, it's still early but we have a negative divergence and the start of a move in the right direction. In white is the last time the market broke north of the FX correlation and the parabolic trade as well as the negative divergence and huge drop the next day.

 It's too early to expect a 30 min chart to move yet as we only have 3 data points as of 11 a.m., but the longer term view is in place and leading negative.

 The DIA's confirmation this morning as well as yesterday's very bad negative divergence.

 More confirmation.

The Q's also went very negative yesterday during the run up from intraday lows and here we see confirmation and as the last capture, a small positive divergence that had formed that led to the current move above the a.m. triangle.