The "Zippy" Tone Today

From very early on to the last post preceding this one, I've remarked quite a bit on the tone or character of the market today, very fast, deep divergences and I didn't cherry pick any of the examples, the last one, Transports /IYT and the DOW-20 were just a possible add-to position.

I think I have an idea of what was creating this, I'll let you draw your own conclusions as to what it means. First a few examples... (I can't get too many charts on tonight as Blogger or perhaps my Internet provider... I hear they are throttling back after you use so many gigs of data-  is ultra-slow)

 DIA 1 min

IWM 3 min

QQQ 5 min

SPY 1 min

This character was EVERYWHERE today, but between 1-5 min and occasional 10 min charts. I think I have the answer that explains both the character and the 1-10 min charts...

TODAY WAS THE SPX'S LOWEST (NON-HOLIDAY) VOLUME OF THE YEAR!

CASH SPX volume.

I'm not going to go in to the importance of price/volume analysis, but I do think it's a lost art that is more important than most traders realize unless they are old-school when stuff like that mattered.

In any case, the TICK again today was in an ultra-tight range...

There were no significant moves as far a the number of stocks all day today (between -500 / +750) this is really a low range so any distribution signals would look like they looked today, accumulation signals would have had the same look to them if they were there, so I think that also tells us something about the tone of trade. The TICK readings above are entirely consistent with the closing Dow-30 +0.13%. NASDAQ 100 +0.03% and SPX 0.14% (not as much with the IWM +0.60%).

As far as not seeing these signals (INTRA_DAY) TODAY on charts past 5 - 10 mins (I'm not saying there weren't negatives past 10 min, just not with this character) is pretty simple, when you have a divergence on a 30 min chart, it's a much bigger underlying flow of money than say a 10 or 5 min chart. The volume simply wasn't there today to put those kinds of trades through without having every HFT and wanna-be day trader trying to front-run the order. I think this lack of volume, lack of larger signals today is largely why there was a lack of interesting trades opening up today, there just wasn't enough volume or activity to make those interesting trades pop up (if this keeps up-which I don't think it will or can, then we have to rely on underlying trends more).

Another oddity today (including the low volume) was the fact that volatility all but disappeared, we were seeing 1% moves with much larger high to low ranges, that's gone and it should have been amplified on the lowest volume day of the year, volatility should have been sky high.

The market also needed a lot of support again today just to get those pretty pitiful closes, it's very clear in the SPY Arbitrage which had to rely on HYG and VXX (as VIX contract expires Wednesday-partly why I think that's going to be an interesting day).

(Good lord the next 6 charts took nearly 10 mins to load, I thought my computer was broken)...

 Again the SPY Arbitrage was up near $1.20 by the close, that's a lot of support for an SPX close of +0.14%.

HYG intraday is very clear as an arbitrage asset, HYG needs to rise while VXX/ TLT need to fall to support the SPY and toward the afternoon you can see HYG's Rate of Change is much sharper than the SPY's, that's why the SPY Arb. chart looks like it does (gaining in to the afternoon sharply).

 VXX (VIX futures) which are already at a large cash advantage for the Put/Call ratio won't in my view, see any relief until the contract closes Wednesday, from what I understand the next 3 months after Wednesday are skewed to the Put side pretty heavily. In any case, VXX fell a lot harder than the correlation which is what creates the arbitrage.

 However TLT wasn't playing along, honestly they didn't need it between HYG and VXX, what is interesting is the dichotomy here and I think it makes very clear that this is manipulation arbitrage, not true asset movement.

This is TLT with the SPX inverted, the normal correlation without being positive for the arbitrage at all would have the blue TLT line run almost exactly in line with the SPX, but you can see that TLT WAY outperformed the SPX, in fact I wonder how high the SPY Arbitrage would have been if TLT just was neutral today? Something to think about.

So we have a "Flight to Safety" asset way outperforming (TLT above), the VIX protection is (from what I understand from the last update) is piled up for August/September contracts after July expires Wednesday. Then we get this...

XHB is the biggest sector under performer ar -0.96% (I believe we are about to see another housing price shock to the downside), but this is the real Dichotomy...

Utilities, one of the largest "Flight to Safety " sectors sees a +1.63% day. How does the IWM see a fairly strong +.60% while TLT is outperforming and even more strangely, Utilities are far outperforming?

All of the other groups were between -0.25 and +0.44% (taking out HB's and Utes.).

So while the market needs $1.20 in positive arbitrage to get a 0.14% SPX close and the IWM does pretty well considering at +.60 with the other two averages at +0.13% and +0.03%, TLT is significantly outperforming and the safe haven Utilities Sector is putting in a +1.63% gain, unreal!

As far as SPY position, this is the Classic, "Kiss the Channel Goodbye"

(whoa, that one didn't want to upload)

The red arrow is the Break on the upside of the channel, these always look bullish, but they almost ALWAYS see the channel broken on the down side (vice versa for a down trend channel breaking below at first). THE BREAK ABOVE JUST SO HAPPENED TO BE THE MAY 22ND KEY REVERSAL DAY!

If you look at some classic Technical Analysis books, the "Kiss" is suppose to stop at the lower channel as it acts as resistance and that's the low risk short with a stop in the channel, that hasn't worked for years, the premise still works and holds, but price always moves back in to the channel because it's exactly what retail doesn't expect.

I can't get a big breadth post out (and they are always big), but I figured I'd show you at least 1 chart.

This is the percentage of ALL NYSE stocks in green that are trading above their 40-day moving average vs the SP-500 in red. Obviously in a healthy trend the % of stocks should move up with price, you've seen this many times, how we fell from +85% to +73%, but what I'm finding really interesting as we continue to fall on the legs up in the SPX is the readings on the downside, the last one was at 19% of all NYSE stocks were above their 40-day moving average, meaning 81% were below it and this as the SPX is +24% higher than at the November 16th 17% reading when the move started!

As far as the areas I showed you last night when I said I wouldn't be surprised to see us higher at least until Wednesday which was based on resistance areas, well the NASDAQ and IWM have already completed the task, the Dow and SPX technically have as well, although not as impressive as the IWM and QQQ which is pretty much almost exactly as described as the "VERY STRONG" move up, setting up the last move up and loading the truck up with shorts.

Beyond that we're now at futures which as I showed last night already look horrible, the $AUD didn't give much of a show today, thus I think the SPY Arb was needed.

1 min everything is pretty mellow, the sharp behavior was seen in futures as well today, for example...

NASDAQ 100 futures (5 min) in red during regular hours.

Like stocks, the sharpness of them didn't show up in the longer charts, not to say they don't look bad, just didn't have this kind of character today just like the market.

It's taken me several hours now to get these charts loaded so I'm going to reset my computer, call my Internet provider and see what the deal is. If I see anything in futures that looks really interesting I'll either post them or I'll at least do a written update.