Early Arb. Data Looking Like a Bounce

There's a lot of data coming in, some in the averages, some in arb, etc, but I think our "theory" on how this would play out is pretty close, our theory on what the minutes would (a few bones for Wall St. and easing on the Sept. Tapering language) and would not (tone done the hawkishness, likely not give a date for tapering) contain, seems pretty right on, I don't think Bernie liked having to do damage control 2 hours after the mins. were released last month.

Here's what I have so far, remember that VXX (VIX Futures) would need to come down, HYG (High Yield Credit or risk on asset) would need to move up and TLT coming down would be best, but it could be done with HYG and VXX if TLT were relatively still.

 VXX (VIX Short term Futures) would need to come down for the SPY arbitrage to positively effect market prices, we'd be looking for negative divergences in to the release of the minutes or in the case of a leak, since before 2 p.m.

1 min VXX is negative at the knee-jerk pop at the release.

The larger, more important signal is the 2 min chart because it clearly shows there's a negative divergence right in to the intraday highs (sell the highs) , I suspect Wall St. got wind of the minutes at least 24 hours in advance as I said yesterday based on the extreme nature of the charts.

*NOTE THE WHITE ARROW, RECALL YESTERDAY I SAID VXX LOOKED LIKE A GREAT SHORT TERM CALL TRADE, IT SEEMS IT WOULD HAVE BEEN. Did anyone take this trade? (Email me please).

Even more damning for the fairness and even playing field concept of Wall Street is this 10 min VXX chart, it clearly shows a leading negative divergence on a strong timeframe at the red arrow.

 The 2x leveraged version of VXX, UVXY confirms VXX, yesterday's accumulation for a short term pop higher which would have been a great call position. and UVXY already leading negative by the release of the mins.

 3 min UVXY also damning as far as a level playing field, there was clear distribution in to the highs and we had seen this before, this is one of several reasons I expect a bounce.

HYG (High Yield Corp. Credit) which is one of the largest credit assets traded, THIS WOULD NEED TO MOVE UP TO SUPPORT THE MARKET, this is why the "V" shaped upside reversal in HYG so abruptly had me thinking there was a leak of the minutes yesterday or before.

HYG 2 min is leading positive in to the release of the minutes, it's not a long timeframe, but we need more time for the longer timeframes to register, for immediate signals we need the fastest timeframes.

 HYG 5 min seems to indicate accumulation at the intraday lows, which is exactly why I said I think the market needs to pullback today and create a larger base or footprint to bounce from, also allowing stronger accumulation at lower prices.

The fact it is positive on a 5 min charts at the 2 pm release suggests it was under accumulation long before the mins. were released today.

TLT as I have said looks like a great long as this 15 min chart shows, I'm not sure what it does short term, if it falls, then it helps the market through SPY Arbitrage, if it holds still, then HYG and VXX's trajectory will move the market higher with SPY Arbitrage.

In any case, TLT is a separate issue and a position I like as a longer term long which is another post.

I'll try to get a market update out, but I also want to see if there are any positions setting up, I'm glad I had my positions for a bounce set up already.

And there goes the market!