End of day Risk Assets

There were no big surprises in the risk asset layout, credit stayed down, commodities didn't participate in the afternoon move, the Euro bottomed before the market this a.m. and probably had something to do with the Goldman Euro long call on the same day that the ECB disappointed and the normal expectation would be for the Euro to lose ground because of it (along with the market), so it seems like a very transparent attempt by Goldman to unload some Euro longs in to some demand by putting out their "Free" buy signal. The last 3 they put out were as wrong as you could get, a buy at the market top, a sell at the market low; when a company that trades against their own clients starts offering free trading advice, use it for what its worth.

Just think about it, the market/Euro moves up based on Draghi saying he'll do anything to save the Euro before a big ECB meeting and then he does nothing at the meeting and GS expects the Euro to go up? They're smarter than that, but they're hoping that you aren't.

I find it a little interesting that ES isn't looking so good (at least not 3C) as soon as the equity market closes.

It actually looks even worse since I uploaded the capture.

We finally have a clean set of signals that make sense and have good confirmation, it's just a patience game from here. I'll be looking to see what short term and maybe even hedge longs that I want to unload in to whatever price strength remains and what I want to short or buy (like UVXY/VXX) as the short term signals turn which can happen in a blink of an eye, I've had them change while I was writing a post, so I'll be on the lookout for that, but I want to know what my plan is in advance as mentioned as it can turn that fast and has in the past when Goldman has put out these "Free Advice" calls.

I'll update you if anything interesting develops in ES

Chart Request-Full QQQ Timeframes

There are a lot of charts here, the longer the timeframe, the more serious the trend, but often the further out the trend.

 QQQ 1 min, I don't think this is weakness yet in the 1 min trend.

 QQQ 2 min leading positive divergence since well before the intraday lows.

 The 3 min chart, also with a positive divergence well before the lows, in other words, this was a set up cycle. There may be a bit of very recent weakness in this timeframe or more appropriately, the 2 min strength didn't make it all the way through the 3 min chart.

I find the GS long rec'd today to be very interesting with the short term intraday positive divergences today.

 5 min leading negative divergence, this is where the timeframes get more informative as to underlying action.

 The 15 min chart, the last peak didn't have as long of a negative divergence and not as deep in leading negative territory.

 As the charts get longer, the divergences look very small, but they are about the right size, the smallest was 2 days which is short, but not that uncommon. This is where the 30 min is leading negative at a VERY deep low, take a look at the price pattern...

The price pattern on the daily is a bar flag, if you recall the "short term trend" (which is longer or more serious than what we have seen the last 6 or 7 days) expectations were for a move BELOW the bear flag to most likely set a bear trap, with all of that 30 min weakness, the timeframe is about right for a move of that caliber and the position of price is about right, the rough idea for the target is the red box.

 The longer 60 min trend shows what has roughly been "in line" or confirmation since the Q's went positive to the far left, however the last two reaction highs to resistance of the bear flag have been in deep leading negative territory.

 The 4 hour chart shows confirmation to the far left (green arrow), negative divergences at the top that don't look that big, but are around a month long, the June lows/positive divergence and in the same area as mentioned above, a leading negative divergence which provides pretty good confirmation.

The daily chart has the biggest accumulation area at the 2009 lows, it went pretty negative at the end of QE1 in 2010 and then the sharp negative divergence in July of 2011 sending the market down about 20% very quickly, the leading negative divergence now is the worst on the chart since 2009.

Finally the 5 day chart showing the 2000 tech bubble, the 2007 negative divergence/market top and what has turned out to be an even worse negative divergence lately, which is not surprising being the market was levitated by means of monetary policy rather than real demand.

More Confirmation

If you recall yesterday's late day post on the Euro/$USD, then you'll remember that they both confirmed each other and the very short term charts were bullish the Euro, the trend that is quickly developing and should be the next real trend (bigger than this latest move up) was very negative the Euro and bullish the $USD.

Well now we have GS adding more confirmation because the last several times they have said go long or short, the market did what they said for about a day (about in line with the short term charts posted) and then the trade went completely against Goldman's rec'd.

GS trades against their own clients so when they start offering free advice like their call today to go long the Euro, that usually means they are selling the Euro, which fits with the larger trend in the currencies posted yesterday as well as all of the market charts and others posted today.

FB at least short term

The short term charts just keep adding and adding to a leading positive trend, I think I'll wait to add to the original position, but for a very short term trade if you are nimble, it looks like the market will cooperate...

I'm liking FB as a short term trade-maybe an add to

With the market strength, however short it may be, it looks like FB is going to see some upside. I may even consider adding to the main position, charts to come.

Just Stay Patient

We are just waiting for the market to tell us when this move will be done, here's the SPY...

 This 1 min above and 2 min below are still in positive position so I'd expect more upside from here, we are waiting for these to turn negative, when these turn negative, that will probably be while the market is still moving up, that's when we want to look at entering short positions as the most important chart in this post is the last one, that shows what the real underlying action is.

The 15 min leading negative... This is the trend we want to play, we just need the short term charts to turn as a timing indicator.

Currencies-I don't think the charts were wrong

Yesterday I posted this covering the $USD and Euro, as of this morning and with Draghi punting, it seemed like we skipped over the short term chart divergences and went straight to the heart of the matter, the longer term, more important divergences, but from what I've seen today, I don't think those charts are wrong at all, I just don't think they've played out yet and the short and longer term charts I have been posting all day today about short term strength with distribution in to it and the negative divergences getting worse, actually fit very well with those charts from yesterday.

So I don't think those FX charts were wrong (at least the short term ones that I assumed were wrong early today), I just think we had to be more patient.

Shocking QQQ Chart

As I was just browsing some charts I ran across this QQQ 30 min that has just fallen apart and this is a serious timeframe.

Look at that leading negative divergence

I think we'll get a nice opportunity here

Judging from the intraday charts, I think we will get a nice, worthwhile opportunity to short nice price strength, take a look at the SPY.

 SPY 2 min looks really impressive with this leading positive divergence (3C is not pointing at a target).

However the 15 min chart has continued to move down today, it should see even more downside on price strength, this should give us some excellent entries.

LET THE TRADE COME TO YOU!!!!

GLD should see a similar short term bounce up

Then it looks like it will continue with a pullback move lower, should be interesting around that time.

ES Update

It looks like we are finally getting some really good signals and maybe last night's FX (Euro/$USD) post was correct, I'm looking for short term strength, but that short term price strength to be under heavy distribution. Therefore I want to use any short term price strength to enter shorts, there's less risk and much higher probabilities, even though it feels like the wrong thing to do (shorting price strength), we have good evidence that we haven't seen all week, not this clear.

Here's ES which should move up soon.

Scratch that last part, it is moving up just as I uploaded the chart!

Financials

Again, we want these stocks to come to us on price strength and underlying weakness, take a look at the Financial Sector.

This is what I call opportunity, just let it come to you-patience.

 Just like FAS or the market averages, the 2 min XLF/Financials showing an intraday or short term positive divergence.

 XLF 15 min

XLF 30 min

Back to the intraday volatility theme

You should recall the earlier posts of intraday volatility up while the longer, more important charts are showing VERY negative readings, well here's an A-B comparison of the Financial 3x Leveraged ETFs FAZ (3X short bear) and FAS (3x long bull).

 FAZ 2 min negative intraday

 FAS 2 min positive intraday

 FAZ 15 min leading positive

 FAS 15 min leading negative-just from today!

 FAZ 30 min leading positive just from today!

FAS 30 min leading negative!

UVXY Signals

I believe I said the other day that deciding where exactly to look at opening a position in UVXY or VXX (especially if they are not options positions and you don't have to worry about time decay), is almost like haggling over pennies.

Since these are short term futures ETFs, the longer term charts in my experience don't tend to represent longer term trends the same way they might in say a market average, but are more an expression of strength.

In that case, I'm really impressed with the strength I'm seeing in UVXY, I think if I were to be looking at opening an equity long rather than an options position, I'd probably not be too worried about getting the very best intraday entry, I think I'd be more worried about missing the trade.

Take a look at these longer term charts...

 The 15 min chart is breaking out to a new high.

 So is the 30 min chart

 3C represents the buying pressure in the stock at various price levels, compare the pressure right now at point B compared to point A and look at the difference in price between the 2 points, this is a stronger than it looks, leading positive divergence.

Look at where the 60 min chart is as price is near the lows on this chart as compared to when price was at the highs, a huge leading positive divergence.

ES Update

ES with a 1 min leading divergence

And Another Example

This is looking more and more like a plan....

The SPY...

 SPY 2 min intraday positive divergence... This suggests strongly that intraday we will see an upside move, but this is not a long enough timeframe to show what big money is doing.

 SPY 5 min is a longer timeframe that starts to show what smart money is doing, it seems they may not have had a real idea of what Draghi would do, so they can use the volatility intraday to adjust their positions based on the Draghi news which is clearly a market negative. Look how the 5 min chart has added to the leading negative divergence today, no matter what the 2 min chart looks like, this 5 min chart is much more important.

And the 15 min chart is even more important, look at the leading negative added today alone.

Another Example

This actually is not only a good example, but it may very well provide us with the opportunity to let the trades come to us today on a high probability basis, check out the QQQ  charts below

 QQQ 1 min is showing an intraday positive divergence, this would continue the choppy, but volatile trade I mentioned in the last post.


 QQQ 3 min chart-Still an intraday timeframe for intraday moves, a slight leading positive divergence, this suggests the volatility and chop (an upside move here) continues.

However, at 5 min we get in to more serious charts showing larger institutional activity, today the leading negative divergence is even worse, if this continues, we can hopefully short some names on an upswing as the larger institutional activity continues to show strong distribution.

Continued Intraday Volatility Until a Snap

The market seems to have certainly priced in more than Draghi delivered, again this is just a guess, but I'm wondering if we aren't going to see wild volatile swings most of the day until a sharp crack lower?

 ES 1 min positive divergence-small but intraday positive.

 This kind of volatility to keep up.

ES is heading down, the model is as well, meaning risk assets are heading down.

Market Update

Well the earlier 1 min charts have given way as they seemed they would, here's what we are basically looking at right now.

 The IWM was one of the averages earlier showing a slight leading positive divergence as it headed to fill the gap, that has disappeared and it is now in line or price trend confirmation.

 The IWM 5

 QQQ was one of the charts going negative or in the very early stages of doing so at the last update, it went even more negative and is now in a leading negative divergence, however there is a slight relative positive inside that leading negative, it may be nothing or it may cause a little intraday bump.

 The QQQ 5 min QQQ is looking really bad here.

 The SPY was the average that was exactly in line this morning, it remains so as it and 3C make a lower low.

I'd like to see this 5 min chart make a new leading low, within this already very ugly leading negative divergence.