GENRAL TONE

Thus far it's fairly flat and dull trade with the exception of the NASDAQ 100, the R2k is at .08%, the SPX at .31% and the Dow-30 at +.20%. I heard someone else say traders should play a drinking game, every time the DOW crosses above or below $13k you drink.

Commodities are showing modest improvement from yesterday's late day wash out, led by strength in the PMs, copper, not so much in Steel, Coal, and slight strength in USO (+.39%)

USO

 USO is still hovering around the lower channel -remember the channel buster I mentioned as it happened,  I said that although it looks bullish (and at that point we didn't know, it could have launched parabolically like a rocket), more often then not, it leads to a downside break of the channel which is exactly what happened-there's a tool for your tool box.  I have a half completed scan using Stochastics and Linear Regression Channels to look for these channel busters as they tend to be pretty reliable trades.

Commodities intraday vs the SPX

 One of the reasons I post these charts is because they are risk assets and should move with the market, they can also be leading indicators giving us a clue as to the market's plans when they diverge either bullishly or bearishly. The red box is yesterday afternoons break in commodities.

 Here's a multi-year example of what I'm talking about, while the positive divergence in commodities in 2010 at the far left looks small, it was over the course of a month, so it would have been very obvious at the time. Then commodities confirmed the 2010 uptrend in the SPX, then in 2011 the diverged negatively and sharply right at the test at late July , the market fell over 16% on that com
modity divergence. They marked a short term top in October/November last year and have been extremely dislocated or negatively divergent with the SPX since. I view this as a serious red flag.

Yields/Rates, much like Credit, are also leading indicators.

 Here on a nearly 3 week chart they marked a pullback on the 15th in the SPX, they started making higher lows before the SPX in to the 16th and again on the 23rd (white arrows), however the more recent trend has been leading lower. Below is a longer term example...

 Rates warned at the July test that sent the market down 16%, they also called the October low before the market and since then have remained extremely negatively dislocated from the market, actually at multi-decade lows.

Browsing through some of my watchlist stocks, I saw APOL being decimated, I jumped to the sub-industry component stocks and saw the entire group of education is being taken to the woodshed today. There are several names here that may make for interesting shorts on a gap fill and several others that look pretty good right now. If you do enter any of these, make sure your risk management treats multiple trades in the same sub-industry as 1 trade.

APOL

 This is one I would wait for a partial gap fill as the risk/stop level is just too far away, but there's something ugly going on in the group.

CECO

 Any entries would be under the same conditions as above...

EOMC

 This is already ugly with a bearish break away gap and a rare one at that too., I could see taking a shot at this with a stop just above this week's intraday highs.

ESI

 I would want to see some gap fill here as well for risk management purposes, although this could turn out to be a breakaway gap.

LOPE

 A slight bounce here would be intriguing, I will point out this made about a 1 year intraday high yesterday before dropping today (head fake).

APEI

 I could see taking a shot at this with a stop above yesterday's highs.

CPLA

 This is another I could see taking a shot at here, there was a high volume break away gap (a little small) and then a bear flag that rounded over, there are quite a few choices for potential stops in the area.
STRA

Here's another breakaway gap and just eyeballing it, it looks like it wasn't filled, then a bear flag and a heavy volume break from that bar flag, I like this one too, but any strength would be great to short in to.

This sector all around looks to be in trouble, not just a couple of stocks.

GLD looks like it may be turning here, I'll update that separately.

XLE/Energy is turning and on some volume, I'll update that as well.

DJ-20-Transports continue to diverge with the Industrials and are red on the day.

Treasuries may also be turning, they are just crossing up in to the green.

I have a couple of earnings stocks that I'll be looking at today and a long watchlist of some bullish and bearish stocks that have been just a matter of tactical entries. The bullish stocks tend to be rather cheap, perhaps Cats and Dogs, but there are several that look intriguing.

I'll post further updates and trade ideas that are tactically close to an entry.