IWM Update

The fill on the last IWM Put position was $1.85 as volatility has picked up, so do the prices, I should have opened it when I saw the first Futures divergence earlier, but that's always my last priority when I have other things to look at, I'm glad I didn't miss that High Yield Credit move.

Here are the charts for the IWM...

 IWM 2 min

 IWM 5 min

 IWM 15 min

 IWM 30 min-again does the area look familiar, hint, "Snake"

 IWM Trend Channel, the Trend Channel uses the recent volatility of whatever asset it is applied to, it creates a channel that is a SD above and below the "Normal" behavior for the issue, if volatility changes the Channel accommodates it, it's when volatility changes so quickly that it breaks the SD that something has changed, after years of using this channel, I have rarely regretted taking the signal and moving on, I know by design it will never exit at the exact top and there's usually volatility after, but it's rarely worth trying to capture and those lessons as to why are learned when you go back and look in the future, like HY Credit today taking out an entire year of gains, moves like that occur .

Additionally the 20-day ATR of the IWM moved down at the red arrow, it should have been increasing, that was a red flag we discussed when it happened, shortly after the Trend Channel stopped out. The ATR has increased as it should at a higher high, except it increased on lateral chop and decreased on rally, the EXACT opposite of what you want to see, so what looks good is actually worse.

 The long term 30 min IWM, as I told you yesterday, when they track price well for a while and then go off on a divergence, it tells me the timeframe wasn't picking up any distribution in size, when distribution in size appears, something has changed. People have a hard time with the concept of distribution in to a rising market, I can tell you that with the exception of AAPL after Third Point Dumped it from their top 5 holdings, I can't remember the last time I saw distribution in to a decline, smart money is out by then and they use higher prices and demand to get out.

 The 60 min IWM chart, this is an even stronger divergence

 I never thought to try it, but Peter Worden, the son of the man who created all modern money flow indicators and MoneyStream, said last night he was concerned about the monthly chart, I never though to go out that long, but it shows 2007 distribution, 2008 distribution, 2009 lows accumulation, distribution as QE1 ended and distribution ever since, if that's hard to believe, check out volume. Last night I posted a chart that showed increasing volume during the 2002/2003 through 207 bull market, volume increased at every new high, VERY different from this move, of course this is a VERY different move that the market as never seen a bubble with no asset-A Central Bank Bubble.

 This is the 5 min chart of R2K Futures rolled back to earlier this week as I can't show the entire week's history on this 5 min chart. Something started Wednesday night/pre-market Thurs.

 Here's the same chart rolled forward to present.

 The 30 min R2K futures

 The 60 min

The 4 hour-Remember I told you there was large accumulation in to the November 16th low, here it is, this is how a typical cycle works, accumulation of shares and then selling them in smaller positions in to strength as to not upset the Supply/Demand balance.