Closing Wrap

If I was asked by a friend, "What happened in the market today?" my answer would be, "Nothing!" which is exceptionally ironic given that ES dropped about 50 points last night to limit down in one of the most volatile moves we have seen probably this entire year.

On Quad Witching Options Expiration, the market behaved EXACTLY as you'd expect for an op-ex Friday, stayed in a range and didn't deviate much from that range.

Now the very basics here are that there's long term weakness in the market, smart money has been moving out for sometime

Confirmation to the left, distribution from March to May 1, after the Seasonal Adjustment farce of early 2012, then the June 4th lows with a decent accumulation period (relatively speaking) that was sold in to higher prices the rest of the year. This last rally from November 16th is in a horrible position, there's much, much less long support for stocks than ever before through the entire year.

 So when a fundamental (real event) that the market has no inside line (inside information)  on, actually takes place and the market has to react instead of do what it usually does which is to move on an established course, the lack of support, the fact it happened during an illiquid period (after hours) and the fact that the rise of HFTs has nearly killed the traditional liquidity providers (I'm talking more about stocks now than futures) leaves you with one thing, a hollow shell that was monkey-hammered hard. What would you expect to happen?

 Look at that 50 point drop last night and then a range that lasted through the entire overnight session and today's regular session trade barely did anything outside that range. We had an early bounce that took ES 3 miserable points above the range highs ($1425) to $1428. On the downside nothing happened either.

Trying to get a half way decent 3C signal today was like pulling teeth, there wasn't a single signal among the major averages that I would have traded. As I said earlier, it seems that the PPT was holding the market together so op-ex on  quad witching didn't take the other half of BAC's market cap in lost contracts or algos were working or a combo of both.

The fact the signals were so small, so frequent and so short makes me think it was algos making a series of small corrections whenever need be to keep the market on a steady course just as you would as the driver of  car... slight corrections, no turns or U-turns.

I looked through a lot of leading indicators and assets, I did see AAPL looking a little like it got some short term wind under its wings, maybe to fill a gap? Also started acting better in the afternoon, but this was something we talked about in advance yesterday.

I'm not sure if this was  factor, but it did seem like ES saw selling at the weekly VWAP every time it came close or hit it (3 times)

If you don't believe the algos were running things, take a look at CONTEXT / ES...

ES clung to the CONTEXT model so tightly that the correlation was nearly perfect, just under 1.0

Leading Indicators on the day alone were dull, credit clung to the SPX which was to say did nothing, Yields were the same and Commodities did stand out to the upside.

Interestingly, the $AUD now has a nearly 2 trading week long negative divergence with the SPX and getting worse in intensity. Intraday it nearly went straight down while the Euro and $USD were much more flat.

I'll look around this weekend, I figure if I find anything it will be amongst a trend in stocks and ETFs, otherwise, today was the most boring day after one of the most exciting nights just hours earlier.

Have a great weekend, don't be surprised to see some posts up on ideas, trades,  and whatever I may find, perhaps part two of the "Head Fake Move".