Early Market Situation

Yesterday I closed the VXX Dec. $45 call position and I'm ok with that, it wouldn't be worth any more today and it was a nice gain of +31% and +90+%, but I held the UVXY long because it's not going to face the same drawn down pressure and at this stage in the game, a divergence that is on intraday charts can get run over pretty easy (that AAPL lesson is still fresh), especially on something as big as a sudden shift in the BOJ's jawboning from more QE a week ago or less to backing away from that stance when it's already priced in.

So looking at the market this morning, this is what we have...

 The SPY 3 min representing the intraday divergences formed yesterday, you might recall my ES VWAP chart last night showing where most of the buying would have been done, 1:30-2:30, but HYG was supporting the market well before that.

The point is, this is either going to build on the discount this morning or get run over. Either way, it's not meant to last long.

 This is HYG which is part of the SPY arb. which was being set up to support a bounce, they don't buy HYG for any other reason these days. So what happens here today will be an early clue.

 The VXX calls did so well because this bottom is ready to pop to stage 2, note how small yesterday's divergence is (red as VXX trades opposite the market).

So we may see it here or in FX or in Bellwethers like AAPL, MMM, IBM, stocks with weight on their averages.

However the clock is running out, this VIX Bollinger Band Squeeze is just about at the point where the cat is out of the bag and there won't be putting it back in, that's not going to be helpful for the market.

The biggest event though is the NFP Friday.

Considering the way the F_E_D is ignoring the real unemployment data as a million people fall off Extended Benefits and off the work force, of course the Unemployment rate shrinks, you have a million less people in the labor pool, however the F_E_D isn't accounting for that, they are content going along with BLS numbers which are quite arbitrary at times, I think the F_E_D wants out and Obama doesn't want his presidency to end with high UE, etc.

My guess is the market doesn't have much time here, but with a bounce the size of what has been put in place, we're not even talking about that in this case, that's just normal market jiggles.