Market And VXX Update

Remember yesterday my opinion or interpretation of the charts was an early gap fill today, but the up/bounce cycle was not over? Last night I reconsidered that analysis because of the 3rd Hindenburg Omen, but it seems thus far today that yesterday's analysis was right on.

While the intraday averages aren't really doing much that has me excited (that's not to say they aren't doing anything, in fact almost all of the averages have some sort of very short intraday improvement, just not anything I'd make decisions from) the Index futures make near perfect sense with price action, but as I have been saying, I think they key to all of this is the VXX / VIX. So Index futures help to make sense of what's going on now and VXX and related VIX assets I think are what we need to be paying attention to moving forward.

For instance...

 ES 5 min... The 5 min charts ALL make sense to me since most have all continued to deteriorate overnight, this morning's downdraft makes perfect sense. It's the 15 min charts that are still holding up and the VXX charts that are the combo to watch in my opinion which is little changed over the last several days regarding the VXX as a barometer. 

This ES 5 min chart's negative divegrence makes sense with market action this morning, but...

The 15 min ES chart is not in bad shape, it needs to be watched, but it's holding up.

NQ 5 min is not very surprising, but again...

NQ 15 min is a stronger chart, it's not seeing deterioration so whatever this is, which I suspected a gap fill yesterday for early today), I don't think we are done with this sloppy cycle.

 The 5 min TF chart is screaming, "I'm going to pullback and I'm SERIOUS", but again...

At 15 mins, there's not much damage.

So perhaps yesterday's initial interpretation of some very sloppy charts (actually it's just dispersion across the market) was right on.

I still think the VXX is key. When the VXX is ready to be bought I think 3C will scream "buy", THEN I think the market bounce is over. While VXX has moved higher (REMEMBER I WOULD NOT SHORT ANY VIX DERIVATIVE LAST WEEK DESPITE THE INVERSE CORRELATION) , the 3C charts are not looking good, but only in the market bounce timeframes of last week.

 VXX 1 min

VXX 2 min

VXX 3 min

So, the point simply is, I think we probably due have some more market upside, I warned Sunday night to be prepared for a very volatile week, it's not just F_O_M_C, it's not just Quad Witching this Friday, but it's window dressing pushed forward because of the holidays and the T+3 settlement rule.

So, lets stay calm, I'm staying the course with the trading positions and of course staying the course with core positions. I think things will clear up, but I think we will have to look in unusual places.