Market Update

As exciting as that opening was, I figured it was way too early to have a waterfall sell-off, typically whatever the opening trade is doesn't matter much, by 2 p.m. it changes and then by 3-3:30 it often changes again, this is why I really don't sweat opening trade, it's designed to make people panic, to run the amateurs out of the game early, it's amateur hour in which the sheeple are fleeced.

Now whether we get the kind of upside momentum needed to make a put attractive is a different story, but there may be some regular equity shorts or longs that will set up that aren't dependent on volatility, time and the other elements options and the Black Scholes model are sensitive to.

Honestly, I hate early action like that as it forces you to make a decision well before you have solid data in front of you, as I said earlier, I'm much happier to have opened positions yesterday when I had the time to look, I had the time to verify the signals, if anything this seems to be more of a head fake move. For those in UNG, it looks like it is seeing a similar move and no matter how many times I show it as a positive event for your position-excellent pricing, low risk, excellent timing, many are stuck in the old ways of Technical Analysis and think price is the end all, be all. In my experience, price is one of the most deceptive and dangerous indications to rely on, it causes subjective, emotional decisions.

In any case, the market is getting itself in to a sticker and stickier mess, this is the confirmation that's there in a huge way on longer term charts like I've never seen, but tactically we still need it on shorter term charts and it's building.

As for wold-wide global risk assets, remember what CONTEXT looked like for ES (SPX Futures) the last few days (positive 6-8 ES points on average)?

Take a look today? What's changed? Risk assets aren't in agreement with SPX enthusiasm.

 CONTEXT has moved to a -6 point differential. With the delay in the chart and all, the nearest I can tell is current ES fair value is about 8 points lower at 1609, if CONTEXT doesn't loose more ground.

Some of the things really starting to wear down the market like body shots to a boxer...

 Short and long term commodities as risk assets should perform with equities, they did until 2010-2011.

Remember this morning I said commodities went 180 degrees in the opposite direction of the SPX, yesterday the problem was evident, today it was screaming.

 The AUD has been supporting and moving along with the SPX, a role it took over from the Euro when the Euro broke down. You may recall the last RBA rate decision was policy on hold, no change, the RBA wanted to see what the economic data would look like and as such the $AUD wasn't tipping its hand either way longer term, most expected at least a rate cut at the next meeting and maybe 1 more this year, the economic data has not been good out of Australia and China-they're basically the same region, Australia ships a lot of raw materials to China. Overnight the RBA had no choice but to cut, the AUD was reflecting the probability yesterday on the weak Chinese/Australian data, today it just fell parabolically, again, not a market positive, a negative.

The Euro long term is way dislocated, so much so I doubt many think reversion to the mean is likely, but given enough time, reversion to the mean is almost always a certainty, that's very market nregative. Closer to home the SPX making new highs here and the Euro failing and making lower highs was another makret negative event, all putting pressure on the market and thus all the recent intraday manipulation.
 

 Remember the Yen and its increasingly stronger correlation with the market? Who came first, the Chicken or the Yen, I think it's the Yen moving the market, not the other way around. Whenever the Yen gets in to a sticky spot like in yellow, the market drags, when it moves like in red, the market pays for it. This is why I wrote about 10 hours (my time, not your reading time) of information on the Yen/USD and the long term implications for the market, not good at all.

 Speaking of the $USD, since the global race to debase currencies, as I said way back when, as this happens for whatever reason, traders buy the $USD, I also think this strongly reflects smart money's foreknowledge about F_E_D QE plans, the dollar weakened under QE, now it's getting stronger and that tells you what?

The Yellow area on the chart above this one of the USD is a pullback from a large "W" base, not at all unusual, the market has been running on this weakness short term in the $?USD, but as soon as it makes the first higher high and shows the pullback is over, the market is in big trouble. You can probably see how the timing of all of these major events like the Yen/Dollar long term moves are all converging to take place around the same time.

 The normal inverse relationship between TLT (Treasuries) and the SPX this morning probably seems intact at first look, but as I updated earlier today, it wasn't, you can see treasuries moving up with the SPX longer term here...

And this morning here, which is ironic because just last night I posted the 3C accumulation in treasuries, which is to say smart money is moving away from risk and back to the Flight to Safety Trade. Check the 3C charts for TLT and VXX published last night warning of this.

 VXX won't make a new low as it should on a new SPX high, again this is pure demand for safety in VIX futures being bid and not just short term, but intermediate out to 7 months.

And this morning's VXX move up with the SPX, warning of trouble and traders flocking to safety. Again, this was shows in last night's post as recent accumulation in VIX Futures.

These are but a few of the many charts of objective proof, but most traders are too busy watching a moving average of the SPY to ever look where it really matters.