Market Update

Europe closed down on the day, not much, but it is now in a range which is a very large change in character from last week's trade. It would not be unusual at all with so many events this week for the market to settle in to a range, however as I mentioned last week and as we saw in Equity Futures, there was a "buy the rumor" and I suggested a sell the news event as completing the action. The ECB announcement didn't see a sell the news, however going in to this week there's significant deterioration in front of some key events that one would think, would keep the market range bound. Keep an eye on the ranges (the NDX has already broken its range), especially if all of the averages break their respective ranges, pay close attention to volume if this happens in all of the major averages.

 The SPY range, in most cases, range trade is where we see institutional money moving around, it' an ideal area to do so as VWAP is steady. However there's another kind of range which is simply a holding pattern, this is what I would have expected, but it doesn't seem to be what is happening. There's a very good chance the market got way ahead of itself and already discounted the best case scenario and now is discounting reality at levels that are advantageous for hedge funds to liquidate in front of September and ultimately new year redemptions. Although New Year's is still a way off, if you are holding a large position at good price levels and don't expect to have the same access to those price levels at New Year's then it doesn't matter if the new year is several months off or a week off, your actions will be the same.


 SPY 1 min in the range, not what one would associate with a holding pattern.

 3 min chart's rate of change has picked up dramatically in the range.


 15 min chart leading neg. for the last 2 days.

 DIA 1 min looks similar to the SPY.


 Same increase in the rate of deterioration on the 3 min.

 The 15 min looks like a "Sell the news" event.

 QQQ 1 min looks the same as the SPY/DIA, but the Q's have broken the range, volume has not picked up as of yet, I suspect because the SPY/DIA haven't confirmed the QQQ break.