Added FAZ Aug 21 Calls

FAS/ FAZ Financial leveraged ETFs

I've told a few people in emails today, "I wouldn't add to FAZ quite yet", I probably would now.

FAS=3x long Financials
FAZ=3x short Financials

 FAS 1 m

 FAS 2 m

 FAS 3m

 FAS 5 m

 FAS 15 m

 FAZ 3 m

 FAZ 5 m

FAZ 15m

TALK ABOUT HEAD FAKES!

We talk a lot about head fake moves being the last thing before a reversal, the only thin I see in XLF is a move exactly ONE CENT above intraday resistance, that mov couldn't spark higher highs and looks like it was hit with distribution.

 On a 5 min chart at the EXACT spot

And there it is, 1 cent above intraday resistance.

ES-3C and price starting to crack

UVXY

I think it has pretty much been a buy all day, this might be a good time to take a look at it if you are interested, check out the 15 min chart

Nice leading positive divergence

What timing-Financials

And it seems that Financials may be just about ready to give up the ghost. The migration through the 1-5 min timeframes seems to be getting under way again as the shortest timeframe is picking back up on the negative side, which will migrate through the longer charts and make them worse.

 A VERY FLAT range, that's indicative of distribution itself, now the 1 min is turning back down, hopefully to a new lower low.

 That should filter to the longer 3 min and eventually

to this 5 min that is already looking like it wants to crack, it may be appropriate in the last post that I said, "Hanging on by a thread"

Risk Asset Update

From looking at hundreds of charts today, in my opinion there's only 1 thing keeping this market afloat right now and that is the financial sector. I'm not concerned about it, it's just the last piece in the timing puzzle, here's an example of what I mean and why I'm not concerned.

 Here's the 5 min trend of the SPY, I used the SPY for a reason, the S&P-500 has the most exposure to financial stocks of the major averages. Note the overall negative relative divergence as well as today's leading negative divergence. Now look at the same chart for Financials below...

 They are starting to see a leading negative divergence intraday, but its not as strong as everywhere else we look, later in this update you'll see 1 more example of this.

Now, why I'm not worried...

The 15 min chart of Financials, it is not only leading negative, but the worst it has been since June, it's just a matter of time/timing, just like I said yesterday.

Now for Risk Assets...

 Commodities as you can see have not performed well this week, after the 2 Central Bank decisions (actually 3 if you count the BOE), commodities had all hope drained from them.

 HY credit with a positive divergence and the SPX goes up, now a negative divergence.

 The dislocations of Yields and the SPX, you can see right now we are more dislocated than ever, this is why I'm taking this next leg down more serious than before, or at least one reason.

 The Euro intraday is in line with the SPX, this isn't of any consequence, look at the longer term, note how it is similar to yields as well as other charts we have seen with the last two reaction highs in this bear flag really falling apart.

 There it is to the right, the last major dislocation sent the market down for a ride, this one is worse.

 HY Corp. Credit was in line, it has fallen out, this doesn't bother me either as HYC credit has a big ETF with a lot of liquidity and is easy to move in and out of fast unlike High Yield credit.

Energy has fallen out with the SPX

  Here are Financials in sync with the SPX, as mentioned above, this is the other chart.

 Technology has fallen out too, it's just financials now, 1 thread.

Afternoon sector rotation shows financials as leading, Utilities as a safe haven trade are rotating in, Energy and Basic Materials (especially the latter) as a risk on trade are rotating out, Industrials aren't doing anything, Tech is barely doing anything, not is Discretionary.

It's just Financials it seems I need to keep a close eye on.

FB Charts

The short term FB long trade mentioned yesterday looks done to me, I know we have at least 1 member who made +88% on the trade in 1 day, I'm assuming there are many more so it was definitely worthwhile.

The longer term charts saw some constructive action today (we had been looking at FB as a longer term trade until yesterday's came along) so I continue to look forward to seeing what else we can try to pull out of FB while everyone else concentrates all their effort on talking bad about the stock-if it shows the right signals, we'll short it to, but it's just a stock, just a way to make money, no need to love or hate it.

 The earlier triangle consolidation brought more gains, for those looking at this new triangle consolidation which is much bigger, just remember that it is in these flat areas where institutional money is active, although to anyone looking at price it would certainly seem otherwise.

 1 min not looking good

 2 min at a new lower low and leading negative-we only have probabilities to base our decisions on and the probabilities here say the trade is over.

 The 3 min chart nearly screams the trade is over.

 And the 5 min chart does scream the trade is over, this is an important timeframe.

However for the longer term trade we have been monitoring, the action in the 15 min chart today looks VERY constructive, look at where 3C is now vs the past and where price is, it seems institutional money is MUCH more active in the stock on the long side. That doesn't mean it won't come down lower, if I'm not chasing the stock higher, believe me, they aren't either.

Time to bail on short term FB trade IMO

Treasuries-Flight to safety; more pieces of the puzzle

When risk assets like stocks move down there is a flight to safety trade, that may include Staples, Healthcare and Utility stocks, but more often than not it is a flight to the safety of treasuries.

I was looking at the divergences in TLT which seem to confirm just about everything else we are looking at not only on a longer term strategic basis, but on a intraday tactical basis. As a way to find confirmation of the signals/readings on the 3C charts, I'll often look at an asset that is the mirror opposite and look for 3C signals that are the mirror opposite, that way we know what is happening in one is confirmed by what is happening in its counterpart, so here's an A/B comparison of TLT (Long 20+ year treasuries) and TBT (UltraShort 20+ year Treasuries).

 TLT intraday 3 min chart's trend, there was distribution, but note the least reaction high, even on a short term 3 min chart (lots of details), in the yellow box there is no negative divergence, now look at today, not only an intraday leading positive, but a longer term relative positive divergence

 TBT 3 min shows an intraday and longer term leading negative divergence-confirmation.

 TLT 60 min with a recent leading positive divergence

TBT with a recent 60 min leading negative divergence-confirmation again.

It looks like the flight to safety (in underlying trade has begun, which tends to confirm what we are seeing in the market charts.)

Market Update

I can't bring you all of the charts I want to show you, it just takes too long and I could miss something big, but as I said, QQQ all timeframes from 1, 2, 3, 5, 15, 30, 60 min and even 4 hour and daily are in NEGATIVE DIVERGENCES.

Here are some of those charts

 First all of the charts have broken above some obvious recent resistance zone today, very common to see a head fake move right before  reversal (forget the GS long Euro call yesterday!!!), also as I point out time and time again (although we had already seen the short term positive divergences yesterday), a bullish candle like yesterday's Doji/Star with high volume is almost always a reversal candle and on almost every timeframe (the candle has to be bullish or bearish and have higher than normal volume) *Note that candlestick reversals have NO TARGET, it could be a day, a half a day or a month, they just tell us the current move is about to change, no other target information is provided.

 DIA, same Doji/Star with high volume, same breakout above local resistance and same lower volume when a breakout should see increased volume.

All the same in the QQQ, except the Q's also broke above the bear flag, this will bring longs in as the bear flag is now considered a failed pattern, so in essence we have the makings of a bull trap.

 SPY 15 min-this is the strategic outlook, this very negative leading divergence, from here it's just about looking for the tactical trade,

 SPY 2 min leading negative, note the positive divergence yesterday AT THE LOWS-NOT A COINCIDENCE.

 The longer trend of the same timeframe , see the July 26th-Aug 1 negative divergence? This is why I called this a "Noise move", I didn't expect it to last this long, today's position is leading negative in a bigger way.

 3 min migration, the negative here is now bigger than yesterday's positive, SELLING IN TO PRICE STRENGTH.

 3 min trend shows an even worse outlook.

 DIA 1 min

 DIA 3 min looks REALLY bad.

 migration to the 5 min

 The 15 min with the "Noise move" and today's move at a leading negative divergence-again this is more of a strategic outlook.

 QQQ 1 min leading negative below yesterday

 5 min tend with a leading negative, really the worst of the series.

 QQQ 30 min, again today's divergence is the worst of the series.

4 hour leading negative-this is a serious strategic outlook.