The Long and Short of it...More Red Today

Basically that's about what I feel is happening, I think we see some upside long action as pointed out earlier today as well as last night and that action on any upside is a gift to set up shorts like the AMZN short idea I published, let the trade come to you.

These charts published toward the end of the day make pretty clear my expectations short term and my view that any price strength (which I think may be choppy at first as 1,2 and some 3 min charts were rough today) should be used to position in to nice looking shorts, we have a couple longs out as short term bait, but that's nothing too big.

I noticed HYG and Junk credit acted a bit better than their correlation would suggest plus the divergences in HYG are nearly identical to the market averages linked above. Our "Pro" sentiment Leading Indicators both popped to the upside the last part of the day, but were clearly signaling short term "risk on", quite short I believe, but we'll let the market tell us that.

TLT actually over performed a bit today as yields were close to unchanged. The VIX (as we have been predicting this week) saw it's biggest 1-day gain in 7 weeks. The overall "Taper-On" feel was there with gold and silver as well as oil underperforming along with some weakness in the $USD, but we had more JPY strength. 

In fact we had a pretty strong day in the JPY, which just attests to the bearish undertones even as we set up for a pop as whatever is left of carry trades is unwound in to JPY strength.

Commodities were finally inline today rather than underperforming so a slight upgrade there. Finally, Transports took a nice knock on the chin to the downside after numerous IYT/Transport short calls on 8/2 right at the top of the recent move for transports, any one taking those trades should be nicely green, more underlying weakness.

The VXX.UVXY looked great as VIX Futures have been pointing toward upside, but they should see a little break with some market upside, again it's in this link.

Last, there was another Hindenburg Omen today (Market Crash warning sign).

All in all, I think we are right on top of this market, remember the AAPL weekly put closed just before AAPL developed some strength, well we should have a number of weekly puts setting up over the next day or so, but don't confuse any price action as market strength as the retail crowd will yell "Buy the Dip Still Works!", this market is clearly weakening at a faster pace and soon the longs will be buying deeper dips that don't come back.

Sometimes it's difficult to get a feel for a market in transition, this has been a historic transition, but it's coming in very clearly now, so long as the market can hold together near term, we'll have some great last minute shopping opportunities. I say, "So long as it holds together" because I won't soon forget the AAPL bounce that was building when we were much closer to $700 and closing a short to open it higher, then Third Point had sold AAPL and it was no longer on their top 5, from there it was EVERYONE HEADING FOR THE SAME SMALL DOOR AT THE SAME TIME.

I'm not concerned at all though, I think we'll not only be fine, I think, as I said earlier, THIS IS A MARKET GIFT, price strength in to huge market weakness.