Market Update

In last night's "Daily Wrap" I showed you the Dow-30, the NDX-100, the SPX-500 and how close they were to a very obvious range, I think the SPX was 1 PENNY from breaking above that range where limit orders would be stacked up most likely, the Dow wasn't far at all, the NASDAQ wasn't far, but had the furthest to go.

" In the SP-500's case, resistance at the arrow to the left is at $1654.19, today's HIGH was $1654.18, EXACTLY 1 PENNY AWAY FROM A TECHNICAL BREAKOUT.

What market maker or specialist wouldn't push for that, it's worth it just for the volume rebates or the spread."

There's also a zone of overhead resistance in that area that gets a lot more sticky for the market considering all the gains have come from overnight, low volume futures, during the day the market hasn't been able to do much so I was kind of expecting those levels would be hit and the easiest way would be to move the market to gap up through the overnight futures, that obviously didn't happen.

We still have quite a bit of time today as far as "Things that can happen" and I don't mean just one. I also showed you in the last post (VIX Futures) the very flat range in VXX, UVXY and XIV, I'd say 80% of the time before a reversal there's some kind of head fake move, for VXX and UVXY it would be a run on stops below the range, for XIV a false breakout of the range, but they are just that common.

In any case when I first looked at the market update I put together the SPY looked a lot more like it would try to hit that range I talked about last night and above, it doesn't look as great now, but things change fast. I want to show you the short, intraday 1 min or so and what's right behind it in the context of any head fake moves on an intraday basis either at the ranges I talked about last night or even the ones mentioned in the VIX Futures post.

 This is the weakest chart, but also the fastest to move so we use it for intraday moves, it's the 1 min IWM, it looks here like there's some strengthening and possibly the IWM moves up intraday, that doesn't mean that's where it ends today...like I said, we are very close to these ranges and we still have a lot of time in the day as far as moves are concerned.

 The very next chart , IWM 2 min shows no strength at all, so the point being, any short term move would almost absolutely be that as there's no strength behind it even at the next timeframe of 2 min., it's actually quite weak, which makes sense when looking at the VXX/UVXY charts or a number of other assets/charts and indicators.

 The QQQ 1 min has made more of a move, but as I said, it had the furthest to go, but it looks like its seeing distribution in to this move and the TICK chart at the end is also interesting in the context of this particular chart.

 QQQ 3 min is obviously not showing any strength to support any kind of move that is much more than an intraday move and I think at this point they'd need to pull the levers of Arbitrage (HYG, VXX and TLT). HYG is already up a bit , although seeing distribution, a head fake move in VXX would accomplish the same as far as pulling the arbitrage lever and TLT has pulled back today which is another subject entirely as a trade. The point being, even a very quick head fake move that would normally be seen with such a tight / Flat range like VXX's would also accomplish pulling the SPY arbitrage lever.

Now I didn't even look until I typed that last sentence, but take a look at the SPY Arbitrage model I just captured.

They are pulling the lever because the market isn't strong enough to do it on its own, it was that obvious that when I checked this chart, it was exactly what I thought would happen, except already well under way.

 This is the SPY 2 min intraday, it's not strong, that's not a positive divergence, but it's improvement to try and help out here.

The very next timeframe (the concept of migration of a divergence) there's nothing positive or even helpful, in fact the leading negative has only added more downside to the divergence today, so once again, very weak here.

And the TICK chart which has been weak all week, barely able to pass +100, has been in a tight, flat range of -750 to +600, this is exceptionally week or a standstill, very few stocks are moving up vs down, in fact the bias is toward more moving down with the -750 lower range.

Just something to watch for because I think if it gets pulled off as I thought yesterday, that will be an excellent entry place for assets like VXX, FAZ, etc.