This started out as a simple market update post, but I had to correct some data management issues on daly charts and got off on putting together other data while I waited for that problem to resolve, so this may seem a little ad hoc, but if you take in in context of one of my last posts explaining the wedge and breakout of the bearish wedge's psychology, then I think this is a useful visualization of where we are, why the SKEW and VIX index are both so worrisome from a market point of view as well as the 3C readings and internals such as the P/V relationships. I could add more including commodities, correlations, industry group readings, bellwether stocks and earnings, macro-economis, etc., but lets stick with what I have here.
First CONTEXT for ES which is another issue...
It's pretty clear that diverse risk assets are not in line with ES and their correlation model (green) is showing ES as trading rich to other risk assets.
Now some internal/market related indications (these are about an hour old as they were captured first before my data problem):
Here commodities in brown on a longer term timeframe are completely out of sync with the market, they shouldn't be if the market ramp was healthy, as you can see they have had a strong correlation in the past. Recently, during the breakout from the wedges in the major averages, commodities have deteriorated further.
Intraday the Euro in orange shows some correlation, in red yesterday the Euro went down first and the market followed, today in white, the Euro trended up first and the market followed, now the Euro s weakening as the market headed higher. (Note now the market is following the Euro's lead and moving lower).
Long term during periods on non-QE, there's a strong euro/market relationship, many may believe it has come undone, I think it will revert to the mean, meaning stocks will have downside catching up to do. The orange area are the wedge breakouts.
Intraday Credit suggests the market is ahead of itself and will pullback, that has already started as these charts as mentioned are about an hour old.
Financial momentum also helped lift the market intraday, but s fading and now the market is fading with it.
3C
DIA intraday 1 min suggested the move in the DIA would fail, it has given back the move thus far.
DIA 2 min also suggests the move will fail and is being used for distribution, note the earlier divergence was right on.
The 5 min chart suggests this small move is seeing heavy distribution
The 15 min chart is hinting at the longer term prospects as it is fully divergence from prices.
We are seeing the same in the 30 min. Alignment of multiple timeframes is a strong signal that we are nearing a reversal point.
IWM 1 min is leading negative
Note how much worse 3C has gotten since the break out of the wedge, remember what I said about this entire process.
Recent 5 min from confirmation to a leading negative divergence.
the 15 min chart is negative as well.
Long term the 30 min chart shows how bad this area really s, the only thing that comes to mind when looking at this chart is, 'The bigger they are, the harder they fall". This is an extreme divergence we haven't seen in probably a year or more. The yellow area is the wedge breakouts.
The hourly chart points to the same major trouble.
QQQ 1 min suggests this move will fail and looking at the chart just now, it has.
Note the change in how much worse 3C reading are since the wedge breakouts (yellow)
The 5 min chart is showing extreme movement.
As is the 15 min, remember the XLK post yesterday, the Q's are packed with tech stocks.
The 15 min is clearly negative now.
And the hourly chart points to how severe this distribution has been.
SPY 1 min intraday
SPY 2 min , this move up has failed.
The long term 2 min view and 3C's reaction during the wedge breakouts.
The 5 min chart confirms the same intensified distribution during the wedge breakouts.
This is a long term 30 min SPY chart with a 3C depth indicator, the white areas are areas of accumulation, the deeper the red area goes, the more distribution that s present.
This should give you some idea of how serious the underlying trade is , it would seem they have either sold and or sold short a very large position, thus the negative divergences in to higher prices, but that s what 3C is meant to do, either confirm or contradict price, telling us if the move up is a real move that will have further bullish consequences or if it is more likely a trap. Everything I see suggests it is a trap and one that is on a substantial scale.
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