TLT

Once again, it's a time saver for me to address TLT in the response to a email question.

The Question was,

"Looking at TLT action today, is this a sign of failed accumulation?

I was watching TLT and 3C and the big pushdown came as a surprise to me since 3C did confirm the high of yesterday."

The Answer:

"Did you see last night's updates on TLT being used as a lever, it wasn't a failure to confirm it was a specific push to drive it lower as the SPX was in more trouble than we'll probably ever hear about.

I said last night as well I was surprised TLT didn't make a head fake move, but this is lever pushing, maybe because of op-ex today. There are some initial signs of accumulation in to today's drop, once it levels out we should see more. The long term TLT chars have significant accumulation, I don't think these short term pushes on the lever will change that"

As far as a possible op-ex pin, the SPY is -0.13%-, QQQ +0.14% and the IWM is stronger around +.40 and the Dow weaker around -.30, but most options will be on the SPY and QQQ so they are very close to flat which is typical op-ex behavior.

As for TLT, as I said, the longer term chart has so much accumulation in it, it would take a lot to change that and we aren't seeing those signs.

HYG is the 2nd lever (TLT, HYG and VXX), since VXX is flat, it is not an issue, but HYG is seeing massive selling, to keep the market on an even keel, TLT would need to offset HYG, again I suspect it is op-ex related, but as far as specific evidence...

 TLT would be making a head fake move as mentioned last night, I was surprised it hadn't, but more importantly it is a lever right now.  We see accumulation building in to the pullback which is confirmation of a head fake move and that TLT is not actually deteriorating, but we need to see that accumulation migrate as usual to get strong confirmation.

HYG-Risk Asset HY Credit being aggressively sold.

HYG daily-

 HYG 5 min distribution

1 min intraday accumulation, HYG is intraday oversold.

It wouldn't make any sense at all for risk to be under aggressive selling and no move to safety, this is why I think as I thought last night, TLT is making a head fake move to support Op-Ex.

I'm looking at leading indicators now, but again, the theme is simple, such aggressive selling of risk in HYG would send the market hurdling lower without a counter -balance off set which is TLT since VXX is fairly flat.

However, again it would make no sense to be moving so aggressively out of risk and not in to safety, TLT's lower prices trigger stops, which TLT did this morning (that's why we call it a head fake) and if those are accumulated, we know what is happening and in that case, the selling of HYG actually would be seeing accumulation of a Flight to Safety asset.

The bigger concern right now for the market is that the long term and now the short term Leading Indicator dislocations from the SPX, have always been the sign we are right at a reversal point, the thing is, the longer term dislocations are bigger than anything I've ever seen in LI's before.