Closing Indications

Earlier when the market broke down at first I though it was some kind of news we hadn't seen yet, then AAPL breaking the 200 day was blamed, but it was really Dan Loeb releasing AAPL as his biggest losing position that started everything on a downhill spiral, which includes AAPL's trade. This is why there were no negative divergences that we see on moves that are only .05%, we'd certainly see a negative divergence on a move of -.90%, it wasn't there because it was a spontaneous reaction to Loeb's 13-F release.

It remains to be seen how much of the accumulated position from last week may have been sold off, but it seemed like they weren't done with the cycle by the looks of many charts shooting in to large positive divergences near the close, accumulating at better prices. What the $USD couldn't do 2 days in a row, Loeb's 13-F did, that's how influential Third Point is.

As for leading indicators, FCT was positively divergent on both intraday and longer term with a near vertical move up near the EOD.

HYG Credit held up much better than the SPX, but that makes sense, these are better informed traders with much larger positions, much less likely to have a knee jerk reaction. HY Junk Credit held up better as well, as did High Yield that also saw a near vertical climb at the end of day while the SPX was headed the other direction, if I have to take my cues from the market or from credit, I go with credit every time so the move in HY credit was impressive.

Both FCT and High Yield closed in the green as the market was at it's ugliest! Remind you of any market maxims?

Yields held up better than I expected, they closed perfectly flat, that gives you a positive divergence vs the SPX.

Even commodities flattened out in the last 15 mins of the day when the bigger players are active.

The relative momentum in sectors toward the end of day saw Financials stay strong, Energy even started to pick up, Basic Materials performed better and they have  lot of momo stocks in that group, Industrials held up well, Tech didn't, but you saw the positive divergence shooting up in the Tech sector near the EOD.

It was definitely a unique day as drops like that usually have more warning, this was one of the best examples of the herd mentality on Wall St. you'll probably see this year.

All in all I'm glad I didn't make any knee jerk moves, just like when QE3 was announced the conventional wisdom was the market would tear higher, we waited for the evidence before making any moves and the conventional wisdom was wrong, if you're thinking, "Yeah but they're not buying yet", they've been buying non stop since twist, the market also shot up after Jackson Hole and that was before QE2 was even announced, it was strongly hinted at.

Looking at individual stocks, it does appear there's still upside room, how that gels with the election, I guess we'll find out soon, but we'll probably know before most as we are looking at things that most aren't seeing.

As for AAPL, it may have just about hit bottom for the moment, Loeb's release was definitely a flush of AAPL positions today, it makes me think about when BAC was flushed late 2011 after Paulson's fund lost so much on BAC (down something like 55% for the year-the fund not BAC!) and then it shot up to more than double over the next 2 months.

A few AAPL charts that may be suggesting this (and I've been straight about AAPL over the last week, it's been disappointing in the 3C action or lack of it)...

 My Custom DeMark inspired indicator with it's buy/sell signals is giving the first buy since the May low. AAPL also closed outside of the daily Bollinger Bands today.

 Here's a REALLY simple way to use ROC applied to price to give you a head's up, it clearly calls a negative divergence in AAPL's higher high, as a matter of fact you can add this to a lot of indicators and increase their performance and get earlier signals and signals no one else sees. The strength of embedded Stochastics is over, but we are close to a level in which AAPL has reversed before, not my favorite indicator, but it is what it is; just thought it was interesting with the custom indicator above.

 The money flow in AAPL at the End of Day (EOD) was higher than at the a.m., perhaps someone was buying up those shares of AAPL that were easily available.

The 1 min chart at the end of day also had a sharp positive divergence.

If AAPL does bounce and I think it has to, there's too many bears in there, it definitely helps the market cycle.

I'll post as I find interesting stuff, the bottom line though is many of the leading indicators today didn't just hold up, they went straight up against the market, that's impressive.

Other than that, enjoy your weekend!