Yesterday I said that Thursday's close is usually very close to Friday's open as we saw this morning.
This is a market concept: The concept is that we have always known that monthly options expiration has typically seen a pin of the market (prices pinned to one area for most of the day) and that pin is usually at what most traders call "Max or maximum Pain", meaning at a level where the most open interest is to be found in puts and calls, therefore closing in that area causes the vast majority of option contracts to expire worthless. There are calculators available on line now in which max pain can be calculated, but rather than going by open interest which may indeed be high, the calculators figure out where max pain is based on the value of the contracts, the highest open interest doesn't mean it's the most valuable position to see expire worthless.
The reason most options expire worthless is because most retail traders are buyers of options whereas most options are written by smart money. Writing options gives you an immediate advantage because the of the upfront premium, it's very difficult for an option contract to overcome the inherent bias toward the writer right off the bat.
Therefore, when options are pinned, they expire worthless and the writers of those contracts (usually smart money) are able to keep all of the premium.
How does this help as a market concept? As you can see price so far today has opened near Thursday's close (and these op-ex pins are not only on monthly contracts now, but weeklies as well) and has stayed well within the range from yesterday. One could write option contracts on a very short term basis, you also know what to expect of price going in to Friday most of the time so it may influence your trading decisions later in the week and you also know that most brokers want to wrap up contracts well before the close, my broker would call every hour after 12 pm on Friday to see what I wanted to do with any options contracts still open. Thus, around 2-3 p.m. Friday the market typically is released from the pin and then we see movement so as a day / intraday trader, you know that a range is highly likely for most of the day and the best time to get real movement is late afternoon.
So far not much is sticking in the market, at first the overnight Nikkei report that the White House will nominate Larry Summers to chair the F_E_D as early as late next week after the F_O_M_C meeting had an effect, but the denial from the White House this morning made it so any changes in the market didn't stick, remember that Summers is considered to be a hawk (the market doesn't like Hawks, at least not the QE-fed market).
Here's the movement as news broke via the $USD overnight.
Since we have seen a moderate rally in the $USD with a negative 3C outlook intraday.
This is a 30 min chart showing the larger view, price looks more like a potential base as the ROC declines in price trend, however still no significant 3C positive divegrence and that's not surprising as early as it would be in a new cycle. Distribution of the last mini cycle is clear to the left.
More importantly is the Yen because it addresses all combinations of the carry (AUD, EUR or USD)
This is interesting, because my articles written in April, "Currency Crisis" (linked on the right side of the member's page) make the case that the JPY will rise significantly and be part of the US stock market's sell off.
This is a daily chart of the Yen for the year.
Thus if the short term JPY chart keeps up like this with small positive and negative divegrences, as long as any one of the 3 carry currencies (AUD, EUR or USD) can get off their butt, the near term trade can stay rather choppy, BUT ALL SIGNS POINT TO EXPECTATIONS OF STRONG DISTRIBUTION AND A MAJOR MARKET TOP.
I wonder if the Nikkei / Summers rumor was floated overnight to either gauge market sentiment or to try to ramp the market in the low volume overnight session?
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Retail sales miss at .2% on consensus of +.5% and a prior of .2% that was revised to .4%
University of Michigan's Consumer Confidence Survey at 9:55 a.m. was the really bad miss, coming in at 76.8 vs a consensus range of 80.5 to 85 and consensus of 82 with a prior of 82.1, the actual print of 76.8 is the worst miss in CC since they started keeping records, yet the market didn't have that loving feeling. As mentioned before, the market looks a bit choppy in here with intraday 1 min 3C charts, this is often seen on Fridays as options expiration pins need to be maintained in a range so the majority of contracts expire worthless and we see this every Friday on the weeklies, at least until about 2-3 p.m. when most contracts are closed, then the market does what it wants. 
SPY 1 min shows a negative divergence at the a.m. intraday highs to keep prices in the op-ex pin area, we have several positive divergences as well, I call these, "Steering divergences", meaning they aren't made for actual accumulation or distribution intraday, but rather to control the assets' price range during the op-ex pin.
This is the real important information and has been this way most of the later part of the week, the longer intraday charts like 2, 3 and 5 min have been clearly negative, suggesting that the strong rally we expected (and I believe we are in the middle of now), is seeing the strong distribution expected to be seen, first distribution of accumulated assets in the accumulation range (this is not large scale accumulation, but a purposeful cycle to cause the market to move higher so the real plan can be carried out and that is to sell short in to higher prices.Yesterday I quoted a line from a movie about magicians who were robbing banks and the line was referring to magic, but works great for the market too, "The closer you look, the less you see", essentially meaning while you are focussed on this bounce or rally, the crooks on Wall Street are sneaking out the back door as they sell and sell short in to the rally, which is why we wanted to do the exact same thing as we planned well over 2-3 weeks ago.
Here we have a 3C 10 min chart with the accumulation range present to the left/middle of the chart, this is small accumulation (meant only to create a cycle, not a reflection of bullish sentiment) meant to send the market higher, these shares have likely already been sold as the true meaning of the accumulation was to send the market higher to sell short in to higher prices, but retail alone couldn't lift the market without Wall Street as retail was 70% bearish before the move even started.
The 15 min chart is showing a clear leading negative divergence which proves there's a strong divergence of distribution as it migrates through longer timeframes showing increased strength and size.
Now we have clear negatives on the 30 min chart which is proving that the distribution expected is in play, the gap that was there is also filled, ever since the rise of High Frequency Trading, I've seen about 95% of the gaps filled whereas before, about 30% would stay open as break-away or exhaustion gaps, those were fantastic support and resistance and now they are nearly all filled as this one was.
You can virtually predict where an asset will go according to where open gaps are, this is a useful tool for market analysis.
This is a 60 min chart of the SPY and the price pattern I think we will see form, a head and shoulders top with a slanting neckline.
The point of this chart is more to show the proportionality of a reversal, although many look to be "V" shaped, if you view them at the time, in context of recent trade, you'll find they are typically quite proportional. Bottoms tend to be sharper than tops meaning accumulation can be faster than distribution, we see sharper reversals at the bottoms and rounder ones at the tops.
This current price pattern would be the top of the right shoulder, with a market like this, I'd expect volatility to be high and reversals to be more dramatic than typical.
I still think we see a wide, choppy range, although I don't have the best evidence for that, it is what seems likely in the near term based on 3C charts, but as you see above, the divergence is progressing quickly so I'd be focussed on cleaning up short term positions and be looking at longer term plays you like, make sure you asset allocation in your portfolio is what you want (not too much correlation between assets) and the risk and cash or long exposure is appropriate to your risk tolerance.
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