A Strange Market

I have said today and maybe yesterday that this has been a strange market. One reason is that there have not been comparable era's to measure against, this is the first time  can remember the market being in the position it is in with so many underlying currents that can not be factored in to a reasonable comparison, for instance, the situation in the EU, rumors of Nato preparing for a strike on Syria based in Turkey, the extraordinary monetary policy accommodation, price patterns saying one thing and underlying conditions very much at odds with them (which is not anything really new for us) and now rumor after rumor.

For instance, yesterday the late day rally was widely credited to a statement from EU finance ministers that didn't amount to anything more then the same statement they would have made going in to the meeting, after all, increased cooperation which was the basic statement was indeed the point of the meeting. I warned that there are always a bevy of pundits, trading firms, news organizations and popular blogs that all chime in. In last night's post, I showed you completed positive divergences that would likely have turned the market higher and they were in place an hour or more before the EU finance minister statement, showing that there was some other reason that the market was preparing for a big move, before the meeting was over.

Today the "Reason for the rally" according to ZeroHedge, who incidentally said yesterday the reason was because of the EU Finance Minsters statement, says it was because of Morgan Stanley who gained 12% yesterday in late day trade.

The web-figuratively and literally is very twisted and as ZH is becoming more influential, they are now moving markets or at least stocks.

This article will explain a lot about MS and ZeroHedge.

Furthermore in ZeroHedge's latest reason for the rally, they cite some pretty incredible bits of data and claim that MS not only leaked their numbers two weeks ahead of earnings, but those of GS as well, this is in the title of the post. As the New York Times article points out, the ZH article put out was written by an anonymous blogger with no way to reach them to set facts straight, so the MS response had to go through a PR campaign and likely the rumor mill.

Reason For Latest Market Rally: Morgan Stanley Leaks Own, Goldman's Numbers

It is expressly forbidden to leak earnings ahead of time (although as I have shown in the past with an earning season example of this in which I used 3C to correctly predict 95% of 22 companies reporting). However, doing so in such a public way as well as having access to Goldman's numbers to boot, seems a bit unlikely.

As for MS, who had been taken to the woodshed with most financials this week, it appears something was going on before yesterday's story.

 This shows about 2 months of history on the 15 min chart, you can see accumulation leading to rallies, distribution leading to declines, but more importantly...

 Just looking at the recent accumulation, something was going on here before yesterday or even Friday, this is 9/2 through today at the white arrow.

 The 10 min chart also shows something was up, maybe their planned campaign?

The 5 min chart is similar.

As for GS...

 This long term GS chart shows the last hurrah for GS in 2010, confirmation of that trend up until it wasn't confirmed anymore (red arrow), the downside is confirmed in the green arrow, as to the white lateral, I don't know, it's a very long term chart-3 days

 The 60 min chart shows the last rally attempt with no accumulation, the ended badly and downside confirmation until recently. There's a positive divergence, then a bounce and a negative divergence.

 Here's the 15 min chart....

And a closer view, gap lows were accumulated and a move up from there, ironically another positive divergence just before the big move up, that same move that was supposed to be Morgan Stanley's exclusively? Not to mention the market divergences. 

It's too twisted and convoluted for me to make head's or tails of.

SPY Update

I'm updating the SPY because I still have a lot of charts I want to look at and in general the trend in the SPY is similar to the other averages for the most part.

 A lot can change very quickly and the earlier SPY negative 1 min divergence did produce a small pullback to the 5 min 50 bar average, however in the afternoon the 1 min hart has moved in to in line status or confirmation, which was surprising.

 This is a close up of the 2 min chart still with some negative divergence, but it too can move quickly and catch up, move in 3 start on the earliest timeframes and proceed to the longer ones.

 The 5 min is still showing a negative

 The 10 min which was a little negative is making moves toward confirmation and a little higher and it will be there.

 The 15 min chart which is the strongest in the SPY and has been leading added a larger leading divergence today in the white box. Ultimately it is moving the right direction and is one of the more important charts. The 3C depth chart below also has the same look as the start of previous rallies.

 The 30 min added to it's leading status today, which would suggest to me that rather stable prices today, have been used for accumulation, rather then trying to buy a rocket like yesterday.

And the 60 min chart is in line, this is not very common for moves of a short duration.

When we are long, we don't like to see price decline, however if you look at some of the most stable uptrends that have lasted years, pullbacks are normal and relieve overbought tensions rather then letting them fester and turn in to a violent move down. We had a pretty big rally yesterday off the lows and a short covering rally would likely not see too many pullbacks along the way, however I don't think we are yet in an area in which shorts are panicked.

GLD Update

As GLD continues to consolidate along the 150 ma as I suspected it would, it's losing all sense of correlations.

 The continued consolidation along the 150 day m.a. which is normal considering past visits to the m.a., what is not normal is the way we got there, it's a first as far as downside volatility.

 A few days ago GLD was a flight to safety trade, yesterday it showed positive divergences and is up about 1% today, clearly not a flight to safety trade with the market green. Now it is more correlated with the dollar, strange to see that in a couple of days, although I suspect it probably has more to do with consolidation then anything. This 1 min chart is negative.

 The 5 min is negative as well

 The 10 min chart is inline with prices

 and the 15 min hart, which had gone positive on past moves up is negative today, that's not a great development.

Even the leading 30 min which has been hopeful is showing some weakness here.  I would suspect it will pullback again tomorrow, however, for what reason/correlation, spin the wheel.

Continue to pay attention to how it reacts around that 150 ma.

This Could Be It

 SPY Bollinger Bands 15 min.

 DIA possible break on a directional move.

 IWM 1 min

 QQQ 1 min

SPY 1 min

VXX-Volatility

The VXX trades inversely to the market.

The signals are similar except in reverse.

 VXX 1 min positive divergence which is the same as a market negative divergence, when the VXX is up, the market is down.

 VXX 5 min is slightly positive.

 VXX 10 min has a slight positive relative divergence in white, within a larger leading negative divergence in red.

 The longer term 15 min chart has added more leading downside today

As has the 60 min chart.

This is an odd market, but I have suspected this would be a different move then what we've seen the last 2 months. It seems like the short term negative divergences are restraining the market from popping while the longer term charts continue to accumulate. I think the key to this is the Bollinger Bands and which way that volatility squeeze breaks.

Market Update

Interesting day so far, as I said, this market is a lot different then the last 2 months.

 Bollinger Band Squeezes-IWM 10 min

 QQQ 10 min

 SPY 10 min

 DIA 10 min, now because of the 3C charts in multiple timeframes, I'm really interested to see which way these will break. My next post will cover the VXX

 So far the pullback has only hit the 50 bar ma on a 5 min chart, not a 10 min, but there are some negative MACD/RSI signals and volume is low, which can be taken a few different way, flat trading ranges with low volume are often accumulation areas. On the other hand, when you have price gains, you want to see volume pick up-we are kind of in a mix of both.

 DIA 1 min still negative, but as I mentioned on the first update, it could lead to a pullback or a consolidation, although I leaned toward pullback.

 DIA 5 min is negative still, not horribly so, but negative.

 The 10 min had an earlier negative divergence sending 3 lower, if not for that, the recent trade is nearly in line, just lagging below.

 The DIA 30 min chart has gained strength today, moving higher.

 QQQ 1 min

 QQQ 5 min

 QQQ 10 min trading in line, just a little stronger then price.

 QQQ 30 min has also added to its leading divergence today.

 SPY 1 min was quite a bit worse earlier, although still negative.

 SPY 5 min has largely been in line with only a recent negative divergence

 SPY 10 min actually added to its leading position, but shows a relative negative divergence within that.

 SPY 15 min chart has clearly added to its leading positive position today.

 And the 30 min has clearly added to it's leading positive today. Just having 30 min divergences is impressive, leading are even more so.

 IWM short charts look like the Q's, the 10 min added to its leading position today

As did the 30 min.

Very interesting day for me.