Market Update

So far this is looking pretty good, I feel fine with positions opened this week and think that we are moving toward the end of the bounce we first got intraday signals for as early as 10:45 (first suspicions) on Tuesday.

I intended an intraday update, but added a little more as the charts added are relevant to recently discussed positions like Treasuries / TLT long as well as the arbitrage signals both intraday (as I kind of suspected last night as there weren't many currencies to drive risk (you may recall from last night's futures update) and for the current leg toward the reversal pivot.


The SPY Put opened earlier as a "fade" trade is at a +15% gain already, I could take it here and be happy, I'll see how momentum looks.

I captured the DIA last and took more charts as the arbitrage assets were captured second to last and some of them had some longer term signals so I figured I'd follow them up with the DIA.

Determining market flows, probabilities, risk, timing and rotation is the first job then finding assets at a high probability/low risk entry (often difficult trades to enter emotionally) is the next job.

DIA

 The 1 min with some late day accumulation, but limited and nothing has changed , the negative continues to lead.

A longer view of the DIA 2 min, note the flat range and 3C's positioning during that flat range as usual.

What does price and 3C look like to you at that yellow arrow?

DIA 3 min, you may recall earlier in the week there were signs of intraday accumulation, it actually started first with market psychology concepts and technical price patterns in AAPL, then was followed by actual divergences several hours after the first posts looking for a bounce were actually posted.

The intraday movement is what I'm interested in here, MIGRATION of the newest divergence - the 5 min going negative intraday is significant to the migration process.

A longer view of DIA using a 10 min chart, a much stronger timeframe and divergences than anything above. The accumulation period (stage 1) is clear to the left, the first signals of a relative negative divergence as well as some major changes in that area like the unwind of the AUD/JPY carry trade and many other very sudden changes.

Again, but on a longer timeframe (as the market is fractal), what does that range in the red box as well as today's move and the leading negative 3C divergence look like to you when you pull them all together?


IWM (first charts captured)

 1 min intraday showing some late day positive divergences in the final hour of trade, we have a negative and as the market saw a slight bounce earlier, it seems the only place there's any sign of strength (even very small signs) are right here on this 1 min IWM chart. Overall, Leading Negative.

IWM EOD positive yesterday and now the 3 min chart is seeing some negative migration, this is good as the IWM's intraday charts are the strongest.

QQQ

 I'm trying to show the intraday negative today as well as the first hints of an intraday signal for a bounce that we saw.

 Again I'm trying to show some trend on the 2 min QQQ, but the ,migration of the negative is VERY clear today with a near vertical leading negative divergence.

 QQQ 3 min intraday is flat or in line so far, we need to see this turn negative and migrate through 3 min

The QQQ 5 min chart shows VERY clear distribution. more interesting is the new leading negative low hit today, remember the 5 min timeframe is about the fastest timeframe depicting institutional activity.

SPY

 Again showing the original positive we saw Tuesday I believe and today's leading negative as the SPY has been one of the worst today.

 If that SPY 2 min chart's divergence today isn't a clear sign of migration and a building negative divergence, I don't know what is.


As for the Capital Context SPY Arbitrage model based on : HYG (credit), VXX (Short term VIX Futures) and TLT (20+ year Treasuries) shows clearly the invisible hand pulling the lever as I suspected would need to be done last night as the risk driving currencies all looked like they could push the market no further.

You can see the positive SPY arbitrage to the right, just below +$.50

As mentioned, Junk Credit (High Yield) trades almost exactly like HYG (High Yield Corporate Credit), even their 3C signals. However JNK IS NOT AN ARBITRAGE ASSET SO THERE'S NO NEED TO MANIPULATE IT, making JNK well suited to showing early credit sentiment.

"Credit leads, equities follow".
JNK

 From the earlier positive, JNK has clearly been seeing distribution in to any price strength.

Regular High Yield Credit which is less liquid shows the same.

High Yield (risk on) credit on an influential 15 min chart is clearly navigating risk sentiment, "sell/short, in to any price strength". HY Credit is also not used as an arbitrage asset.

ARBITRAGE-short term market manipulation... For supportive upside market arbitrage, HYG needs to move up; TLT and VXX need to move down. For negative arbitrage (rarely used) it's the opposite.

HYG

 HYG'S INTRADAY CHART WENT NEGATIVE EARLIER, IT HAS ONLY GOTTEN MUCH WORSE SINCCE.

HYG  2 min chart is CLEARLY showing migration and a leading negative intraday signal.

HYG 3 min is seeing migration as I was hoping to see

As is the 5 min chart, this is where we are at a pretty serious level for the bounce move started 2-days ago.

HYG 10 min intraday simply means there's strong underlying flow (distribution) for a 10 min chart to go leading negative intraday.

HYG's 15 min trend, the recent distribution has made it pretty clear what they've been doing with HYG, I doubt there's much selling of long positions in to strength and likely more short selling at this point.

VXX needs to move up for the market to see weakness or rather is a sign of market weakness.

I'm fine with yesterday's position, the intraday chart is VERY clear about the signal

UVXY's longer term 15 min trend (same as VXX just 2x leverage-used for confirmation) is also very clear about the highest probabilities for the next leg.

XIV trades opposite VXX / UVXY, the intraday trend here is leading negative so short term reversal signals building in VXX and UVXY are confirmed.

TLT- Treasuries...

 You know long term I like TLT long a lot, short term I have felt as mentioned again last night, that treasuries will pull back. This 2 min positive I believe is help on the SPY arbitrage, turning it negative.

This may also be accumulation of TLT at lower prices as I would suspect.

 TLT 15 min from the first real pullback we knew was coming (to help the market make new highs), to the very sudden shift just prior to the 8th of July, to the recent pullback expected.

As I said this week, I view any pullback in TLT as a gift.

TLT 4 hour long term is showing why I have been interested in TLT long recently.