From Briefing.com

I thought this was interesting..

Briefing.com's ETF coverage. First the move in UNG wasn't anything that would catch most people's attention, it was the change in character, but it ended up on their list. Crude we identified yesterday as being in trouble on the break of the bear flag and FXC/Copper was also noted yesterday on a change in character.

Interesting closing

The last 20 minutes of the market were on a tear...

Here we are, I've noticed this occurring with more frequency late during the close of Fridays. However what was even more interesting is the chart below.

What was more interesting is the corresponding move in High Yield Credit which nosedived, the last minute of the day it completely decoupled and made the biggest 1 min. move of the day, almost the biggest move of the day period.

So if Credit leads equities, I wonder if a end of day plunge like this should be any more thought then an odd curiosity?

AAPL continues to take a pretty good beating

My AAPL Puts are now 6% in the green.

 It's not just the price action the last two days, but volume as well.

 Here's the AAPL wedge and bull flag, a move below the bull flag and next the wedge, will likely set off a snow ball effect.

And a reminder of the 60 min chart's longer term perspective.

Swing Pivot

I was just browsing some charts and HD had a similar situation, although it's not a perfect example and this pattern on a multi-day chart is even more powerful.

 HD was coming off a decline, there's more off the chart to the left, it hit a volume peak and then saw some unusually high green volume, it took off from this area.

Here's a close up of the pivot area and like I said, if this was a 5-day chart, the signal would be even stronger. We have a series of days making lower lows and lower highs, the last one is marked at the white arrow. The next day didn't put in a lower low, this becomes the candle you want to pay attention to, the long tail candle right before it is the pivot, the second candle is the signal candle. When prices move higher then the high of the signal candle, that's your sewing long entry. You can put a stop below either the low of the pivot or signal candle.

UNG Slight Change in Character...

 Recent volume, especially yesterday's looks like capitulation. Today's volume is certainly an outlier.

Recent 60 min trend. With all of that volume building as UNG has lost ground, it certainly would be easy to pick up a large position. I would like to see a swing trade pivot put in and a cross above that pivot, I'll explain it later.

Options

I just took a look at later expiration dates, there's a bit of trend of buying out of the money puts, some surprisingly out of the money, this would fit well with what the SKEW Index has been showing.

Pinned

I just took a quick look at the SPY options, the PUT's open interest is virtually non existent at in the money, the real open interest in much lower. As for calls, it seems like a close any where below $132 will do just fine.

IBM Moves the Entire Dow

This is exactly why I value my Price/Volume Relationships. Do you have faith in an index like the Dow when the entire move up on the day is because of 1 stock?

Article Here

Here's the current Dow-30 component weighting for the top 10 components, note IBM accounts for 10% of the weight. IBM is up 4.38% and the Dow +.36%. Right now 13 of the 30 components are in the green, nearly half of them are at gains less then the Dow's.

Investors and Traders Hit New Highs in Complaency

The VIX has made a new low today, which means investors and traders are becoming more complacent, they are letting their guard down and assuming that the market will just keep acting predictably even though we have a number of unpredictable events taking place. This is what I meant when I said that everyone should understand the basic fundamentals of what is going on both here and abroad. The market loves when it can make the most amount of participants wrong at any one time and investors are falling for it hook, line and sinker.

The last time we were at these levels, we saw a sharp decline, you may not remember what that felt like emotionally at the time, but it was panic and no one knew when it would stop, except WOWS members got a head's up about 4 days in advance via 3C.

 VIX new low today

The last time we were at these levels, the decline of late July started (SPX in red vs VIX green)

Market Update and then some

This started out as a simple market update post, but I had to correct some data management issues on daly charts and got off on putting together other data while I waited for that problem to resolve, so this may seem a little ad hoc, but if you take in in context of one of my last posts explaining the wedge and breakout of the bearish wedge's psychology, then I think this is a useful visualization of where we are, why the SKEW and VIX index are both so worrisome from a market point of view as well as the 3C readings and internals such as the P/V relationships. I could add more including commodities, correlations, industry group readings, bellwether stocks and earnings, macro-economis, etc., but lets stick with what I have here.

First CONTEXT for ES which is another issue...

It's pretty clear that diverse risk assets are not in line with ES and their correlation model (green) is showing ES as trading rich to other risk assets.

Now some internal/market related indications (these are about an hour old as they were captured first before my data problem):

 Here commodities in brown on a longer term timeframe are completely out of sync with the market, they shouldn't be if the market ramp was healthy, as you can see they have had a strong correlation in the past. Recently, during the breakout from the wedges in the major averages, commodities have deteriorated further.

 Intraday the Euro in orange  shows some correlation, in red yesterday the Euro went down first and the market followed, today in white, the Euro trended up first and the market followed, now the Euro s weakening as the market headed higher. (Note now the market is following the Euro's lead and moving lower).

 Long term during periods on non-QE, there's a strong euro/market relationship, many may believe it has come undone, I think it will revert to the mean, meaning stocks will have downside catching up to do. The orange area are the wedge breakouts.

 Intraday Credit suggests the market is ahead of itself and will pullback, that has already started as these charts as mentioned are about an hour old.

Financial momentum also helped lift the market intraday, but s fading and now the market is fading with it.

3C

 DIA intraday 1 min suggested the move in the DIA would fail, it has given back the move thus far.

 DIA 2 min also suggests the move will fail and is being used for distribution, note the earlier divergence was right on.

 The 5 min chart suggests this small move is seeing heavy distribution

 The 15 min chart is hinting at the longer term prospects as it is fully divergence from prices.

 We are seeing the same in the 30 min. Alignment of multiple timeframes is a strong signal that we are nearing a reversal point.

 IWM 1 min is leading negative

 Note how much worse 3C has gotten since the break out of the wedge, remember what I said about this entire process.

 Recent 5 min from confirmation to a leading negative divergence.

 the 15 min chart is negative as well.

 Long term the 30 min chart shows how bad this area really s, the only thing that comes to mind when looking at this chart is, 'The bigger they are, the harder they fall". This is an extreme divergence we haven't seen in probably a year or more. The yellow area is the wedge breakouts.

 The hourly chart points to the same major trouble.

 QQQ 1 min suggests this move will fail and looking at the chart just now, it has.

 Note the change in how much worse 3C reading are since the wedge breakouts (yellow)

 The 5 min chart is showing extreme movement.

 As is the 15 min, remember the XLK post yesterday, the Q's are packed with tech stocks.

 The 15 min is clearly negative now.

 And the hourly chart points to how severe this distribution has been.

 SPY 1 min intraday

 SPY 2 min , this move up has failed.

 The long term 2 min view and 3C's reaction during the wedge breakouts.

 The 5 min chart confirms the same intensified distribution during the wedge breakouts.

This is a long term 30 min SPY chart with a 3C depth indicator, the white areas are areas of accumulation, the deeper the red area goes, the more distribution that s present.

This should give you some idea of how serious the underlying trade is , it would seem they have either sold and or sold short a very large position, thus the negative divergences in to higher prices, but that s what 3C is meant to do, either confirm or contradict price, telling us if the move up is a real move that will have further bullish consequences or if it is more likely a trap. Everything I see suggests it is a trap and one that is on a substantial scale.

Another look at Financials

 XLF bearish wedge and the typical breakout of the wedge. XLF has had 8 days outside of the wedge, not one set of good follow through days. I expect to see some distribution through the wedge, it's the breakout of the wedge where experience has shown us that the distribution gets a lot heavier. There's a reason this happens, during the wedge smart money can get away with some distribution, but astute traders will generally recognize the wedge as being bearish, some may even short the wedge. Upon a breakout of the wedge, traders now see the wedge as a failed pattern because 100 years of technical analysis books have taught the masses that a breakout means either the wedge was never a valid bearish pattern in the first place or 2) that it is now a failed pattern. Shorts who cover on the breakout usually give the breakout a little more juice, but most traders have also been taught, 'When a pattern fails, reverse course and trade in the opposite direction", in this case, that would mean going long. Wall Street has traders figured out and has for a long time. The longs now entering the market are of course buying, which gives Wall Street plenty of demand to sell short to and go undetected as someone has to take the other side of the trade. This creates a bull trap for Wall Street and when the wedge finally does fail, the longs add the juice to the downside move as they ramp up supply by selling shares at a loss. This is a pattern we have seen play out over and over again. Ask yourself, why hasn't the breakout of the wedge produced a steep climb higher? Because there's no institutional money buying it, they are selling it.

 The 30 min chart shows the start of the wedge and how 3C has deteriorated as the wedge has moved to a breakout.

 This 15 min chart has the breakout marked in the yellow box, look at 3C during this time.

 Here's the long term 2 min chart, note how it is even more negative at the breakout rather then confirming or positive.

And the 1 min chart is falling apart much faster now, I would think the trap is set and about to be sprung.

ZH Posts on SKEW

Remember, you saw it first here on Sunday, but it seems I'm not the only one concerned (or actually not concerned as I'm short) with what ZH calls a "Canary in the coal mine".

Link 

AAPL Update

I took a put position in AAPL on 1/17  using March $430's and have stuck with it. AAPL has seen a sharp decline starting yesterday afternoon.

 Here's the decline and it's on heavy volume.

 Here's what I liked about the AAPL short trade. In October, AAPL set new all time intraday highs as well as closing highs. The December wedge is bearish, but as AAPL is probably one of the closest watched stocks and the wedge was very apparent, I knew the probability of a breakout of the wedge was very high, the probability of the break out also being a sucker's move was also very high as this is repeated over and over again in the market, taking advantage of what technical traders still hold to be the gospel of technical analysis and turning it against them.  On Jan 9th AAPL posted a new all time high on an intraday basis, but couldn't hold it. A new all time high should have sent AAPL shooting up on the breakout, instead it failed. Then on the 17th a new closing high was made on low volume and a weak, small bodied daily candle, again, the interest in buying a new high was not there. Since it has set another new high, again on a very weak day. There's been no follow through, no increased volume, no impressive 1-day moves. Something is out of character for AAPL.

 Here's the recent activity in 3C and it was negative on the 17th as it is now.

This was the real kicker though, the long term 60 min chart and comparing the October new high to the recent new highs, 3C is much lower locally and on a relative basis between October and now. This means whatever the amount of institutional money in AAPL back in October, right now at several new highs that have now failed, the institutional commitment is much smaller. Retail isn't going to take AAPL to new highs alone, AAPL needs institutional interest and thus far, it isn't there.