Today was an unique day in that the op-ex pin seemed to coincide right with the basing area, I'd normally expect that on Thursday as Friday's max-pain pin opens close to Thursday's close, but all those divergences make it sort of overkill just for a weekly op-ex pin.
Nothing about the short duration analysis of the last two days changes any of our other standing analysis in the least, this is just what a normal market acts like and we are so conditioned to seeing a one way market over the last 4 years, when we see normal it looks odd.
The daily closes alone suggest that we have reached a short term correction point in the major averages...
Add to that the VIX-based derivatives at stall speed just as they were going in to last Friday's NFP, it looks even more like a short duration correction. Any movement is good, on days like today there's not much you can do that's a high probability position, yesterday was mainly the day to do that, but movement, even up in to bearish indications means opportunities, I'm thinking about PCLN and TWTR right off the top of my head as I write that.
Leading Indicators shows HYG outperformed the relative strength of the SPX today and it had that small divergence on the 2 min chart, actually a strong divergence, just a weak chart, but similar to last week. VXX also underperformed the SPX intraday relatively speaking as well so that's a clue that they're working on the SPY arbitrage, again a rise/wash/repeat of last week, however the carry trades are seemingly broken as I suspected they would be 2 weeks ago as they showed more and more trouble.
Yields which have been such a great leading indication are positive meaning the SPX should move up toward them, they have been positive for 3-days at an increasing pace, the last several reversals they called were 2-days negative in to December 9th SPX highs, 2-days positive in to December 5th lows.
HY Credit was almost perfectly in line today (sideways) so no big indication there except it wasn't negative. Commodities have been almost exactly the same over the last 2-days, I think the PMs will need a day or two more, then GLS and NUGT longs should be working again.
As mentioned before, the major averages have short term bullish reversal set-ups (weaker ones) across the board, but you could guess that with the SPX almost unchanged, the Dow +.10, the R2K +.37 and NDX-.12%, almost no movement. With price movement or lack of it, as you might imagine there were no dominant P/V relationships today.
Compared to former VIX breakouts and big moves, the price action there is quite normal.
There was absolutely nothing remarkable about today's breadth charts.
It was actually quite a dull day, the real near term probabilities are right here in the Index futures.
The bearish probabilities are in the same place, just stronger charts.
There really isn't much more to say about the market that hasn't already been said. I suppose if I were the invisible hand I might want to set up one last hurrah if I could before next week's F_O_M_C in which the consensus is for a December (partial) taper, it's really how the bond market reacts if they do taper that will be most interesting and may cause the biggest fuss. The meeting starts next Tuesday and by 2 p.m. Wednesday we'll know what the answer is to the most anticipated F_O_M_C meeting since QE began in late 2008.
I'm working on a new indicator based on the reversal process, the amount of accumulation/distribution and targets based on that and several other factors, if I can work it out and test it, I'll post it, I think that would be a great addition to our toolbox.
Have a good weekend, I have talked with most of you and know how most of you are positioned and I wouldn't be losing any sleep, so enjoy your weekend.
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