Other Indications

These are not rock solid signals, I'd usually try to bring you more solid signals, but because this is a special case, because the market's volatility has grown very unpredictable and because many of you are in very highly leveraged trades right now, I want to give you the information as I see it.

Speaking of volatility, the ROC of the descent in the VIX has slowed considerably, going from the biggest 2-day percentage drop EVER to a much smaller ROC today. Right before a reversal I expect to see strong intraday and 10-15 min (maybe longer) positive divergences in volatility VIX futures like VXX and UVXY. They are showing some improvement and have some base areas that the leading divergences can build on, but I'd say not there yet.

Treasuries are starting to see some positive divergences, there was a definitive flow of funds out of Treasuries or what might be considered the "Flight to Risk" trade as money moved out of safe haven treasuries and in to higher yielding risk assets. Remember as we saw price drop Friday, almost al other risk assets held up, Treasuries saw a flight to those risk assets, this is why that drop Friday didn't bother me because it looked like price being manipulated to be accumulated at lower levels as everything else argued against the price drop being real.

Here's what Treasuries looked and look like...

Late last week there was a move out of T's and this before the "Very uncertain weekend-Fiscal Cliff", as I said Friday, I think smart money is smarter than anyone realizes as they were positioning while everyone else was saying, "Step to the sidelines in cash", we positioned with QQQ calls Friday and were rewarded. I'll step to the sidelines in cash when I can't find a signal in the market.

There's some movement as it looks like some funds are coming out of risk assets like Credit and moving back to the safety of Treasuries.

One other asset that you may not have even thought about, but UNG-Natural gas, also seems to have been a victim of a flight from lower yielding/BETA assets to higher ones for this move. In fact UNG saw almost the same exodus as Treasuries so I expect them to also see the same inflows of capital too as the market moves closer to a leg down.

Negative on the 5 min last week and positive now.