I have to say that I kind of feel the pressure that Congress and the White House must feel. Some of you know that I'm on the board of our condo association, serving as Secretary. We are right now going through a budgeting process in which by Florida law we need majority of owner's votes to keep our reserves at "less than" fully funded, which may not sound like a good idea, but if we go to fully funded reserves our maintenance fees that are already double what most associations pay will nearly double again and the delinquency rate ill likely double.
In some ways it almost feels worse than government because there are so many people with agendas (ex-board members voted off, etc.) spreading all kinds of untruths, but there's no media, no one to keep them honest so it's a non-stop fight that we are in the middle of, I don't envy any of these people, but at least they get paid for their service!
OK, so what I wanted to point out after I watched how the market reacted to the press conference is something that I would expect to see considering the view that I have of short term market action and what comes next.
I have received some great emails from members who are thinking outside the box and with forethought, some of the issues include this being an op-ex week, the end of the year window dressing, etc. All great comments and I encourage you to consider all of these things, I however can only bring you what I see and what my interpretation of that is in an unbiased way. I'm not an expert in what could happen and I'm not dismissing any of these ideas, but I'm here to give you the facts as close as you can get to fact in the market.
These charts I found to be interesting within the context of anticipation of near term market action and what comes next.
TLT-Long Term Treasuries have been heading down as the risk on trade is in place and the markets moving up, Treasuries are a flight to safety trade when anticipation is or in fact the market is heading down. So to see early positive divergences in TLT suggests that some are preparing to move to a more defensive position which is in line with what I expect to happen after this move up that should have the QQQ resistance area as its target.
On a slightly longer chart the divergence isn't there yet, so it is just getting started, ironically as we come closer to the QQQ area in which I believe a breakout will be a failed move/ head fake , sending the market lower.
On a 5 min chart there's no sign yet, but remember new divergences start on the fastest charts and migrate to the longer ones, so this makes sense.
XIV, the opposite of VXX and moves with the market is now starting to show a 1 min negative divergence as are most of the market averages right now, when the market moves down, XIV follows.
A slightly longer timeframe and we just start to see it, suggesting this is either a new trend just starting or it's part on an intraday move, but because of the TLT signals, I think it's the start of a new trend.
At 5 mins it's not there, so it seems to be the beginning of planning for what comes next.
UVXY moves opposite the market so to see a positive divergence just starting there confirms the other charts above.
3 min chart and it's not there yet, so either an intraday move or the start of a new trend, I suspect the latter.
VXX is the same as UVXY in correlation and has the same signal.
The botto line is as the QQQ approaches the target area in which I believe it will fail, the defensive trades and correlations connected to defensive trades that happen during a market decline are showing early signs of forming.
No comments:
Post a Comment