A few things are happening, right now even as the SPY is trying to fill the gap essentially and get green, it is seeing distribution, this is what I have been telling you since last week when I said Thursday night on some risk on assets (currencies) with positive divergences, "Something doesn't look right".
Those divergences sent the currencies higher, but were cut almost immediately short with distribution in to any slight gain, knocking them down, it happened again Friday, any bit of strength is being sold, the hedge fund herd (they herd, I'll ex[plain why later) is breaking up and that's why the signals didn't look right, the same thing happened in AAPL as soon as it was disclosed that Dan Loeb no longer held AAPL as a top 5 holding, every bit of strength in AAPL was sold until the sellers (hedge funds) panicked and all trried to sqeuzze out the door at the same time, not caring about a horrible fill, just wanting out. That sent the GOLDEN STOCK, AAPL down 45% in 7 months.
When AAPL was crossing $700 to the upside and I said it had the worst negative divergences I had seen in AAPL ever, did you believe me?
Now AAPL has lost 315 points and moved down almost IN HALF in 7 months, do you believe those divergences were accurate now?
The same is happening in the market now, I showed this morning, strength in any risk asset (currencies, etc, is being sold as soon as it appears.
TLT is down, I knew and told you when TLT was near its highs it was going down, for some reason I didn't understand at the time (and you never understand what smart money is doing, you just see it, at least until after when it's too late to make any money), the reason was two fold, to allow the SPX and Dow to make new highs and smart money to get out and sell short the market and secondly to accumulate TLT at better prices. If you think TLT being down is bearish, it's because you follow price only. If you are smart money and have seen the exodus almost all year in to TLT, you know TLT is going higher as the market crumbles so if you know that, do you want to buy TLT near its highs or do you want to buy TLT as cheap as possible?
Before we get to TLT charts, I'll just tell you about the 3 SPY arbitrage assets this a.m., VXX is almost unchanged, but under accumulation. HYG is down pretty significantly BUt, is seeing short term accumulation, HYG is oversold and they will use that as cover to use HYG as a lever to support the market right now because VXX is being accumulated and other than short term HYG intraday accumulation, HYG is being distributed HARD, they are as I said, running, not walking to the exits.
What will be interesting is to see whether HYG is sold early on any bounce/strength?
TLT is down, it gapped lower with the market last night which seemed strange as they move opposite each other, but I'm convinced the low volume of overnight futures was used to gap TLT down so it could be accumulated on the cheap, that is what is happening in TLT.
I'm posting this so you know what is going on and what to watch for-HYG as an upside lever, and whether HYG is sold in to any strength earlier than it should be, I'll tell you that. if so, then this market, as extreme as the divergences are like AAPL, is doing the same thing right before AAPL crashed and that may be the only way we can pinpoint a market acting this extreme, hedge funds are every man for himself and selling any strength.
TLT charts next.
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