Daily Wrap-if that's possible

I don't even know where to start tonight. Lets start with what the averages actually did, the S&P, even though it ramped from 11:45 on after opening lower on a devastated Euro, closed in the red at 0.19%. The Dow-30 ramped too from about the same time to close down 0.31%, the R2K was essentially the same story at -0.36 and the NDX turns out was the right pick if you were going to pick any of the averages for buying calls today at 10:50, about 10 minutes before the NASDAQ 100 reversed to the upside for the day to close the best of all the majors ar dead, flat break-even or 0%, the calls themselves as of the close were worth about 6.6%, not exactly what I was hoping for, but with a little AAPL help near the close they added a bit more in after hours as the NASDAQ futures headed higher for another hour.

If there was a pick today in the averages, AAPL was it, hopefully the calls that are now in the green retain some value and add to it.

There are two things (essentially) I'm expecting, Trend 2 to the downside, but before that a bounce to the upside as HY Credit can be called oversold pretty credibly and has a positive divergence that suggest it wants to work off a bit of that tension or for whatever reason. Actual performance of HYG today fell behind that of the SPX, as did Junk Credit so the divergence remains, but the downside song remains the same, which is part of what is making trend #2 look so nasty to the downside.

 HY corporate Credit lost more ground today, bounce or not, it's pretty darn hard to come back from this large of a dislocation and while some claim the POMO train eaves the station late morning, to noon, why isn't the most discounted High Yielding asset part of the party, a party that is going no where fast as you can see by today's returns, but has all the volatility and making of a scary top?

O the other hand, the only reason I think the market has a chance to move to the upside at all is because of a positive divergence in the very same asset, positive as it is, I still can't see the market escaping the massive dislocation seen in credit-talk about a manic market!

However, High Yield Corporate and Junk Credit aren't the only leading indicators leading to the downside, the $Au$$ie has gone so negative, it's far below the start of trend #1 and is all the way back to the start of the new cycle at the November 16^th lows.

As a leading indicator among the currencies, the Australian dollar has to be one of my favorites, perhaps because it is a favorite of the carry trade crowd and responds long before the market as you don't take guesses with 200 to 1 leverage. The $AUD is the worst looking leading indicator we track, while most are bad enough at new lows on the year, the $AUD is at the lows of November 16 that started this new cycle, that's a huge divergence.

After the ECB decision to leave rates alone and Goldmanite, Draghi spending the rest of the time trashing the Euro-zone, he managed to knock the currency down without cutting rates, today was the first day the currency really decoupled with the SPX, so what did they use to lift the market off the lows?

That's the Euro in orange vs the SPX in green...

It looks like the 2013 old standby, the VIX.

 To whatever degree the market was saved today from a worse fate, it seems the VIX was again the asset of choice.

However as I mentioned, once, twice and just last night to my recollection, since the buy signal in the De_Brandt-icator or the SLOT (I hope I don't make a spelling error on that suggested name), the VIX has seen what must be a year's record in huge volatility to a squeeze indicative of a highly directional move, but one I have suggested at least 3 times, has more time for price to loiter in and around the Bollinger Band Squeeze, but that can't last forever and I really don't see a highly directional move to the downside in the VIX after it has recently hit something like 6 year lows.

The Yen which is flat and threatening just about every carry trade basket remained flat today which is a lot different than the recent past when it was nose diving, whether the threat is serious or not, it's there.

Meanwhile the $USD/Dollar index continued to gain for the week (+.73%) being the biggest 4 day move in 7 months, this seemingly having a lot to do with the recent increase in volatility now that investor sentiment is at ridiculous levels clearly consistent with a market top and bad news to follow for all the new dumb money as I have shown the last several week, but again today in a couple stunningly beautiful charts. The first, the oxy-moronic Investor Intelligence survey with a 33.6$ spread of bulls over bears seen here 

And then the next one as a compilation of newsletter services that are at bullish highs not seen since the 2000 Tech bubble top right before it popped, seen here 

In addition to all the other evidence, we have Mass Psychology, a study unto its own, flashing major red lights.

Still in Leading Indicator land, Yields were negatively divergent again today as they have been throughout this increased volatility, HY credit hasn't moved for days, not even with the volatility, and commodities-that “other risk asset group, was taken today with the falling Euro and rising dollar that it couldn't get off its back all day, not to mention the group hasn't made a higher high since November 21^st of 2012. In fact the in what may be a sign of the future of risk assets, the volume dependent CME for the first time I remember in quite some time actually cut margin requirements for Gold and Silver along with a slew of others by 10% and 14% lest all business run dry due to a lack of volume as seen below in GLD.

This is another asset I have only wanted to trade very short term, but see something developing, perhaps this was that something and we start to see a more workable set of underlying divergences to give us an edge that lasts more than a few days and is actually worth putting some capital in to.

However the biggest early morning and end of day news may be AAPL which I recently looked at, decided something is going on there, but not having a solid grip on what, what timing, what kind of move, decided to wait for the charts to provide more of an edge than just, “Something is going on”.

This morning the news was out that fund manager from Greenlight that I just talked about mere days ago, David Einhorn who like many AAPL long fund managers has watched his profits erode, some have seen more than profits erode, is suing AAPL. Einhorn more or less wants to be compensated for his losses (although his lawsuit is saying that, not his words) so he is more or less demanding that AAPL take those record cash profit they have amassed, of which approximately 70% is located off shore in managed accounts and only 30% is free, and create and pay him a preferred class dividend. For most of the day until about an hour or so before the close when AAPL said they are more or less open to returning more cash to shareholders, even as they have already paid out $10 billion of $45 billion over 3 years. AAPL's management more or less said,

“Apple's management team and Board of Directors have been in active discussions about returning additional cash to shareholders. As part of our review, we will thoroughly evaluate Greenlight Capital's current proposal to issue some form of preferred stock. We welcome Greenlight's views and the views of all of our shareholders.”

From there, here's what happened...

 On the 10 min chart something is going on in AAPL, there's just not enough collaborating charts to make a judgement about what kind of trade and more importantly when, this isn't the first bullish divergence in recent months we have seen in AAPL to only see it go through a series of Crazy Ivan head fake moves.

Here's the move on the release of the statement, now you want to see something that confirms the fact that some people get information well before others as there's no money to be made chasing this short duration parabolic move, by the time you get filled, there's not much less unless you are an HFT. However, with the right timing and confirmation, we can still compete, although I personally wouldn't have this time and make no apologies about it.

For a statement released about 3:38, there were signs of someone knowing something as early as 2:15, for sure by 3 p.m., but as I said, I wouldn't have jumped in to this, at least I don't think so and here are two reasons why. The first is right above, this is a 1 min chart only, that's not heavy accumulation, it's more likely market makers or someone getting word AAPL is coming out with a statement which is something AAPL never did under Jobs. Second it looks like the move was sold in to as you see the red negative relative divergence at the highs.

 Third, the divergence wasn't strong enough to hit the 2 min chart, Monday morning quarter-backing is ok with the Superbowl, but we live at the right edge of the chart where you never know what is coming next and 1 chart, a 1 min chart, is simply not enough to jump in to a trade like this, not for a couple of percentage points.

Moving forward, looking at Futures, although it's very early, they aren't knocking my socks off, but I will be fir and say they aren't so far gone that they can't stage a comeback overnight in the 3C charts, although tomorrow is op-ex and even the weeklies lately have been very slow days, typically starting on a Thursday and today qualifies as slow, so we'll want to watch futures in to the end of day trade, that's where we picked up last Friday's money making trade sold on Monday.

 Although positive earlier and worth taking, ES is now very blah on the 1 min.

 More importantly is the 5 min, it's not so far gone that it can't be salvaged, but much more deterioration and I have to wonder where the HYG rally is going to come from.

 NASDAQ futures are staging a bit of a comeback after the after hours AAPL ramp was sold in to, so a comeback is possible.

 Again the 5 min chart is not too far gone, but it's not signaling a lot of confidence.

However Gold futures which have been in line are showing a positive disposition since before the CME margin reduction came out, this is one we will want to watch, there may be more opportunity here than dumb luck based on lower margin costs.

Lastly as for the Dominant P/V relationships today, the Dow had the most bearish of the 4 with 1/3 of the components closing up on lower volume, usually a sign of faded momentum.

The NADAQ luckily was on the opposite side with Close Down/Volume up at 40%, which is typically seen at the bottom of a move before a 1-day reversal to the upside.

The Russell 2000 was just barely dominant with the bearish Close up/ Volume down.

Finally the SPX had no dominant relationship.

I'll be looking for the Q's to hopefully make good on the expiring weekly calls tomorrow, I think our best chance based on what I know now is to look toward the afternoon trade for a set up in to next week.