This Week

Pretty dull...

-High Yield Credit closed at the lows of the day, but held up slightly better than the SPX on the day.

-High Yield Junk Credit only lost about half of the SPX on the day, it traded much like the SPX intraday.

There are several notable features on JNK's chart, first a negative MACD divergence between July and present, I never use traditional indicators in traditional ways as there's no edge is seeing what everyone else sees, so the settings are longer (24/52/9). Wilder's RSI (short setting of 6) is negatively divergence as well when comparing the yellow trnedline on the indicator and price, RSI should be higher.

I often point out the reversal candlestick on volume concept that works so well on virtually any timeframe. At the green arrow we have a "Hammer" bullish reversal candlestick on increased volume, the next day a reversal (remember I always point out that there's no way to judge how long the reversal will last, it's just a reversal of at least a day). At the red arrow today we have a bearish "Shooting Star" candlestick on rising volume. To remember these candlesticks and their meaning, the hammer looks like  hammer and should be found after a trend down, "The market is hammering out a bottom". The "Shooting star" should come after  move up and as the Japanese say, 'A shooting star portends trouble overhead". Finally the body of the Shooting star is within yesterday's body which also makes it a bearish reversal "Harami" or what we call in the west, "an inside day", the Japanese call it, "Mother with child".

As for the EUR/USD...

 The Euro declined since 12 pm today, one way to get a feel for intraday trade would have ben to look at the Euro vs the SPX in which the SPX topped at 1:43 p.m. while the Euro remained in decline, without the support of the Euro or a weaker dollar, further upside in the market was not probable.

 On the week the Euro lost ground and closed just a few pips off the week's lows, in green is the initial knee jerk reaction to the Spanish 2013 budget, short lived.

As pointed out in last week's wrap, the Euro was just above resistance and not looking like it would hold, it closed back under resistance this week as $1.30 remains a key technical and psychological level.

Overall since the announcement of QE3, the Euro remains closely correlated with the SPX.

Yields which have been an excellent leading indicator topped out today about 30 mins. before the SPX topped out. Yields have also been closely correlated with the SPX since QE3, but they are significantly dislocated between August 16 and Sept. 14 (a month) with 5 year yields down -12.4% vs the SPX up +3.55%, this traditionally has been a strong reversal signal for the market.

Of the 3 most important industry groups, Tech, Energy and Financials, Tech had the worst week since last Friday, down -2.22% vs the SPX at -1.35%. AAPL closed near the lows of the day, and lost more in After-hours in the $666 area.

The defensive Utilities group was the only of the 10 major industry groups to close green on the week at +1%, you'd hardly believe QE3 was announced the way the market is trading.

Transports continue to suffer and diverge from the market, IYT closed within $0.15 of making a new closing low for the year.

Transport are the end of the line for manufacturing and thus paint a portrait, although not much can be as bad as the actual manufacturing data hitting 3+ year lows across the board.I know airlines are also facing trouble, Lufthansa had bad news today as their savings efforts have been thwarted by higher fuel costs and a weak economy (I actually like their airline, although the passengers are unruly in my experience).  Closer to home here in South Florida, American Airlines, the 4th largest private employer in South Florida has plans to lay-off about 1500 employees here.

We've heard from the world' largest shipper this week, Maersk and the news wasn't good as mentioned yesterday. The Baltic Dry Index, a daily index of the cost to ship dry goods is near 3 year lows.

There was a slight uptick on September 17th, but tht' fading already and I'm pretty sure we'll see new lows shortly.

The US Dollar index gained +0.75% on the week, with oil seeing a -0.90% decline as the two have an inverse relationship,the PM's, gold and silver actually closed the week just about unchanged, but there still appears to be some trouble coming for GLD.

The 15 min chart for GLD has worked very well, calling a negative divergence on the breakout above resistance that now looks like a head fake move on the 21st, it lost ground from that negative divergence and saw a deeper leading negative divergence the next two days and gave up ,ore ground on the 25th on a gap down. From there a relative positive that sent it higher, but in to higher prices, we now see one of the worst leading negative divergences.

It's a very strange market, it doesn't trade at all like QE3 had just been announced. I thought after the QE3 announcement one theme we might see is lower prices so institutional money can accumulate , preparing for a QE ramp, but we just haven't seen that anywhere consistently.

I'll be adding any new information I dig up over the weekend, in the meantime, enjoy your weekend!