A Few Interesting Notes

Well we talked a lot this week about the range just sitting right there and really the only average not to make it through being the QQQ, although it made quite a run as it was the furthest.

Overnight there was little doubt what the level of choice was to drive the Futures, FX/Currencies, the EUR/USD and Japanese Yen weakness, you could see how obvious it was pre-market, but it ran through most of the day. Here's a look...

 This is ES from about midnight at the white arrow where there was a 3C positive divergence, the green arrow being the European open and yellow the US open.

 This is the EUR/USD after recent weakness, it rallied 100 pips overnight, same areas at the arrows above.

 After the 9:30 open to present in ES

The same for EUR/USD.

ES rallied well today, but that persistent negative divergence showed up today, we haven't seen a negative one since Q1 2012 and a positive one just before the June SPX lows, this was an interesting development, especially considering where price was relative to the range.

In to the close, ES came back down to VWAP.

ES retracing to VWAP.

 Look at the correlation between the Euro and SPX today...

I did find the $AUD divergence interesting though as one of my favorite Leading Indicators and my favorite among currencies.

At first I didn't get High Yield Credit today,

 I did know that HY credit was at record short interest highs, it seems like today shorts were squeezed, but that wasn't all...

 HY (HYG) credit looked almost exactly like the SPX, then I started thinking more about it.

 In to the short squeeze 3C was negative in HYG 1 min

2 min and it goes on through 3 min.

It seems the traditional lever that has been used to either support or ramp the market has been volatility, but it seems they couldn't squeeze anymore out of volatility today and instead had to turn to FX and a Credit short squeeze, remember how HYG looked just like the SPX, now look at VXX-volatility...

 Here you see a near perfect correlation (inverse) at the green arrow where volatility (which may have started off as legitimate hedges being moved forward)  was used to ramp the market, but today there was none of that, Volatility seems to be used up in that sense and it started rallying today.

 There were some sharp positives in various leveraged forms of volatility like VXX which we have seen the last 2 days

And UVXY -10 min with a huge leading positive divergence today.

The point is the market is not and has not been able to get it done on its own without manipulation of correlated assets, which seem to be running out-volatility tapped, Credit short squeezed today-take a look at the daily volume.

Normally the day before op-ex Friday is pretty mellow and op-ex stays fairly close to the action from the previous day, I'm really curious as to what happens tomorrow. DeMark was calling for a top in the U.S., with the caveat that the market had a little more upside to go, we were saying the same thing at the same time, I wonder if this is it. I saw some interesting shorts setting up today toward the end of the day as you saw, that use to be one of my best indicators, "What are stocks doing? Are there more bearish or bullish?"

The Dominant Price/Volume Relationship today (finally it's back) was a bullish Price Up/Volume up, however with the volume up as we are above or through the range, the chances of that being a blow-off move or part of one go up, I believe that is what DeMark was looking for as well.

A few of our DeMark inspired charts for some of the major averages...

 SPX daily

 Dow Daily

IWM 3 day

In other news, INTC reported today, they beat on Earnings per Share, they miss on revenue and they gave tepid guidance, the guidance is the most important, it's not what you did, but what they expect you to do moving forward. Intel closed down -5.25% in after hours.

If anything interesting comes up in futures (while I'm awake) I'll let you know.