One last post...

I'm really pushing it on time, but keep an eye on the 5 min 50 bar moving average, especially a break of it and volume on a break of it.

AAPL Update

AAPL is notably lagging the NASDAQ 100 today, some other interesting observations...

 AAPL forming a bear flag today after yesterday's break...

 The channel that held AAPL's move up for almost 3 weeks broke yesterday, on this timeframe AAPL would now be considered a swing short and has stayed below the upper trend channel which would be the cover signal. Interestingly, as AAPL broke down yesterday and today, its ATR has more then doubled from about $2.50 to $6.00. Also you can see the decline in the "Close within range" indicator.

 AAPL 3C at yesterday's break and in today's bear flag.

The 2 min chart in the same timeframe.

This appears to be a solid break in AAPL. A move below $133.75 breaks the Primary trend.

Quick Search

I just checked Briefing.com and did a quick news search for the Euro-zone and other then the earlier ECB rumor, which doesn't seem to be a major positive or negative, there's nothing much going on, in fact there's some bad news for Greece having to potentially renegotiate the entire Debt write-down PSI deal.

The point being, the move in the Euro doesn't look like a move on any fundamentals or even sewing circle rumors, but rather the typical volatility shakeout upon the psychologically important $1.30 level being broken today as the Euro opened the week on a gap higher to nearly the $1.33 level so it fell fast to break the $1.30 level, thus this move that the market is so correlated to appears just to be a technical shakeout.

2 p.m. is here-Market Update

 You probably don't need the indicator to see momentum is fading, this includes yesterday as well, but I applied Rate of Change to the SPY just to make it visually clear.

The SPY chart makes sense being that it has followed the Euro nearly tick for Tick today on a parabolic move (which looks very bullish, but they rarely are), the Euro has lost momentum too right around $1.31, I suspect a break of $1.31 will start the Euro on a parabolic move down.

 Short term trade is showing distribution in the DIA 1 min

 The 2 min never had a change today and is actually worse.

 Here's a close up of the 2 min.

 ES is showing the same and volume has fallen off substantially


 The IWM as well..

 The QQQ 1 min doesn't even need arrows to point out the divergence.

 The 2 min is leading negative, which is a lot worse.

 SPY 1 min never confirmed and is falling off.

As is the 2 minute.

The EUR/USD and a divergence with the SPX will probably be the most solid signal, but we are already seeing signs that look like the market is anticipating the Euro to reverse soon. The closer we get to the close, the more important the trade becomes.

For any short term traders that want to take advantage of the overnight volatility, if you can compare the Euro/FXE to the SPY and see a deep divergence between the two (often the market lags the FX divergence by 15 - 30 minutes) and the market is still elevated as the Euro starts moving down (especially below $1.31) it would probably be worth a speculative short on the SPX that would likely be closed out on the open tomorrow. This could be done with PUTS or buying something like SPXU (inverse SPX leveraged ETF).

In the next half an hour or so, I'm going to have to get prepared for a funeral at 4 p.m., however I'll be covering the closing action as soon as I get back home tonight.

URRE Update

 URRE is having another good day on volume and the base is looking more mature. We wanted to see volume pick up on the right side of the "U" base and it has done so.

 As usual, here's the false breakout of the bullish ascending wedge that failed and URRE went on to base. It appears that a move above $1.45 will likely be the stage 2 mark up area.

Thus far this move up has shown excellent confirmation.

Market Update

I believe the Euro is moving on 2 things, 1) the volatility shakeout after $1.30 was broken in the wee hours of the morning and 2) the announcement that the ECB is in some way, getting involved in a Greek Bond swap, but that story is VERY unclear as it mentions the ECB would distribute profits from its GBG (Greek bond) holdings to national EU Central banks. The problem that has everyone scathing their heads is the question, "Where exactly are the profits coming from" given this chart of GBG trade...

Thanks to Peter Tchir for the Bloomberg terminal chart...

And as you might suspect, the ECB, when asked about this 'newest rumor", declined to comment.

It's clear that the market is moving strictly on the EUR correlation and nothing much else..

Today's intraday trade between the Euro and SPX.

As for the Euro itself...

The early parabolic move has only intensified and parabolic moves tend to end badly in the same fashion they went up.

As for the market averages...

 The DIA is not confirming, so it looks like algos and dumb money/momentum chasers.

 The Q's have a possible negative divergence developing

The SPY hasn't confirmed either and is leading negative with a recent move down as well.

So the question of the market intraday really boils down to what is the Euro likely to do.

Here's FXE...

 The recent sideways action is seeing a leading negative divergence.

The next timeframe is seeing that weakness bleed over.

ES is also negative, both longer term relative and leading...

It's still early in the day considering most of the important action won't come until after 2 p.m. and increasingly in to the close.

 High Yield Credit went up a bit, but is not willing to go any further and has declined since.

 Financials did come in to rotation a bit, but still lagging far behind.

 High Yield Corporate Credit is similar to high yield, there was a little upside, but it refuses to go any further and is under-performing significantly on a relative basis as measured by the white trendline on the SPX.

Sectors have seen some change from early this a.m., financials are doing better, tech really hasn't moved much at all. The other sectors doing better are doing so because of the FX correlation to a weak dollar (strong Euro) such as Energy and Basic Materials. Industrials have declined a bit and discretionary (as mentioned earlier hasn't moved up or down in weeks) is continuing its downward slide.

Financials Update

 XLF's bearish ascending wedge and the typical head fake move. Wedges are "supposed" to break down at the apex, if you look at the last candle in the apex it even hints at that, but as we have seen so many times before, a breakout causes a lot of havoc for traders expecting a breakdown. The breakdown almost always comes as the wedge is for real, it's just the manipulation of the pattern between the apex and that actual breakdown that has changed.

 XLF 60 min chart has reached a new leading lows and quickly. The majority of the downside 3C action took place at the breakout area, which makes sense as that is what the false breakout is used for the purpose of distribution, whether selling or short selling.

 The 30 min chart shows the same, especially in the breakout area.

 The 15 min chart is more detailed and really shows the 3C deterioration at the breakout area in yellow.

 The 1 min chart shows some price strength today, although 3C remains on a downward trajectory. Shorting in to strength is not easy, but it is usually the lowest risk entry and the probabilities as you can see above look good.

 FAZ, the 3x bear financial ETF looks similar to XLF, just the mirror reversal.

 The 30 min 3C chart is very positive.

 Again the 15 min chart shows the detail of accumulation in the false breakdown area.

As well as the 2 min chart.

FAZ if good for leverage and especially swing type moves. Some of the Financial shorts I have mentioned recently and others that look pretty good include:

JPM, BAC (although I favor trading this with in the money Puts a month or two out and on a swing basis), MS (this is another I would favor Puts for the leverage), GS looks decent for a swing move for the next leg down, MBI, although not a true financial in the sense of the others, it's close enough,WFC also looks interesting.

Although I mention "Swing' trades, I'm a believer in taking what the market offers, this means I would not set a swing target, but let the market tell you where the trade is going; it may very well turn in to a nice position trade. I just prefer to view the initial trade as a swing trade, especially for risk management planning. While we are on the subject of risk management, on initial entries, I prefer to phase in to the trade; entering a short position on strength is like a gift, although adding to the position as it moves in your favor is also a good idea. I would go for the widest stop that is sensible for the initial trade entry, the way I use risk management, this means taking on fewer shares, but you can always add.

The Likelihood of a Top Rolling Over

Back to our Credit/Risk Asset indicators. I have recently said and will repeat, I think this layout combined with what 3C has been showing, will prove to have been very valuable when we look back, so I would urge you to consider its value now while it still matters.

 While I have most timeframes set to look at the probability of a top rolling over, I did want to see if High Yield Credit was moving with the market at all this morning, as you can see, it wants nothing to do with any move up. This is important because the credit markets are much larger then the stock market and they are played almost exclusively by the professionals, as they say, 'credit leads, equities follow).

 The market is as I suggested earlier, perfectly in sync with the Euro/USD.


Now for a look at the timeframes that should answer our question...

 The Euro is severely dislocated longer term, but intermediate over the last several weeks, we see it peeling away from the SPX.

 Even though rates are near all time lows (rates act as a magnet for the market), when looking at the last several weeks, they too are rolling over flashing a warning sign.

 Even financials which have had a good run since the end of Q4 are rolling over and the market can't get far without them.

 High Yield Credit...

Commodities...

All rolling over. The market shouldn't be far behind, but as I mentioned late last night (or very early this morning), keep your eye on the trend, the intraday and daily gyrations right now have little meaning compared to the trends you see above. I personally would be using any strength to initiate or add to short positions.

Euro Catches a Bid

 Any early market strength is almost certainly attributable to the Euro moving up since the 9:30 open (green arrow) and although this looks impressive...

It's almost certainly technical related then anything else as the Euro did break the important $1.30 mark last night. In this light, a technical bounce is to be expected, we see it almost 95% of the time when an important technical level has been taken out. In fact, the action in the Euro over the last 3 weeks is directly attributable to the original break of $1.30 in which we expected a bounce even while the Euro was still moving down.

 Here's a daily chart of the last break of $1.30 and the subsequent bounce.

This is a much longer view showing a top formation in the Euro and the break of $1.30.

This is all part of a much larger, multi-year downtrend. Here's a weekly chart.

The bigger picture here doesn't look good for the Euro or any correlated assets.