DESPERATION!

I don't think I've ever seen anything quite like this. We've seen a lot of manipulation, we know most of the tricks, but this was just flat out DESPERATION.

And for what? So the SPX could close up a meager +0.22% to say "The S&P-500 Hit Another All-Time High Today", but if you see what they did to get those 3+ points (less than a 1/4% move) both yesterday and today, it just doesn't make sense? Was the headline that important? I realize it's the last day of the month and all, but REALLY? And they had this hard of a time doing in on this miserably low volume? REALLY?

First off, as you know the Japanese data overnight was QUESTIONABLE at best, European data was downright ugly and US data wasn't much better, sending Bloomberg's US Macro Economic Data Indicator to its worst level in SEVEN months.

Lets just jump in and look at the charts.

First currencies because here you just can't ignore how ridiculous the manipulation is and we did call it right in the pre-market update. However, I had no idea the move/manipulation would be this obvious.

First, single currency futures- The EURO

 The vertical lift-off in the Euro which is market supportive took place around 9:15 and through the late morning.

Even when distribution sunk in, the Euro was still called upon during that last hour of trade to do anything to get the SPX up less than a 1/4 of a percent! That alone looks desperate.

The $AUD made no secret of it's positive divergence pre-market and shot straight up just after the Euro finished firing around 10 a.m., almost so there was overlap to keep momentum up as a higher $AUD IS A MARKET POSITIVE.

Again, at those prices, distribution sank in, but still the AUD was called upon the last hour of trade to ramp higher and help the SPX do the same!

The $USD had a negative divergence pre-market and fell almost straight down on the US open which is about as supportive of the market as you get, it saw accumulation at the lows, but that  didn't stop them from pushing the $USD down the last hour of trade, that fishy hour I showed you twice.

 Rarely do you see pairs signals past 1 min, here's a EUR/USD negative divergence on the 5 min, but note the ramp at the US market open, of course a market positive.

The Carry Pair of EUR/JPY had a positive pre-market divergence, it shot up just around 9 a.m. and through noon, again market positive, it saw distribution and then a move to lift it the last hour of trade.

 The other carry pair, the AUD/JPY also saw a 10:30-early afternoon lift, again, market positive on the 1 min and...

We even have a negative divergence on the 5 min chart, in essence these were ramped to areas that they were just being sold.

What else....

Well the SPY...

 This was the odd trade the last hour of the day and heavy volume, it seems someone took to selling on the buying of the SPY itself, but if that volume looks heavy, let me roll the chart forward 1 minute to the close.

And the SPX just makes it to the New Nominal high, which is just the kind of action we expected from a move like this, remember they have to make you believe and this one still hasn't done that.

Other ramping devices were obviously used, I've never seen the SPY Arb this high.

 Here's the SPY Arbitrage which is telling us 3 assets or any one or combination of 3 assets is creating an expectation based on the asset's performance that the SPY should be almost a full point higher, $0.80.

The SPY only closed $.40 higher, so this asset which we know is 1 or more of 3: HYG, TLT os VXX was telling the model that based on its performance intraday, the SPY should have been up approximately .75% rather than 0.25% today, that's how hard the lever was being pulled to try to tickle this market higher, I've never seen anything like this; typically on a low volume day like this an algo alone could lift the market 0.25%, why so much lever pulling? The only reason I can think of is the selling was just as or more intense.

CONTEXT for ES (SPX futures) has many more risk assets, but it was headed the other direction with the majority of those saying the market is at least 8 points too high according to the way other risk assets were trading, so what was the lever?

EASY, HY CREDIT/ HYG

 As I mentioned late afternoon, even HYG has its limits and it was seeing distribution that sent price from up to lateral and started to move down until even HYG was blasted higher for the last few minutes to support the market's close!

Take a look at volume, there seems to have been a big seller and then a moderate buyer for the ramp.

This is a 1 min late afternoon chart of HYG after the negative divergence as volume picked up, then volume picked up once more to ramp HYG in to the close.

HYG had already worked hard enough today...

HYG vs the SPX (green) and I thought yesterday's lever pulling of HYG was impressive, darn it, look at today's, nearly diagonal.

What about the other two, VXX and TLT?

 The VXX (Short Term VIX futures) actually was showing more fear than it was being used as a lever, once again this week, last week and the 2 days before the market fell -2.3+% in a day, VXX held up better than expected, at a new SPX high VXX should be at a new low. That's demand for protection, bidding the VIX, someone is worried.

TLT was used as yesterday's lever (see price action), early today it was used again, but then someone liked it there and started buying the "Flight to Safety" asset.

As for Commodities, they could have been used to support the market...

 Not only did commodities under-perform , they looked pretty stinky and even worse when you consider the following...

The $USD you may recall was pushed down hard on the US open, this is very supportive-the most supportive move in currencies you can ask for to help risk assets like commodities and the SPX. Yet commodities couldn't even make a new high with that nasty fall in the $USD!

 HY Credit started with a higher low, but then refused to make a higher high all day, this is not as liquid as HYG so it often sees divergences first.

Finally the NYSE TICK was apathetic all day, but look at that tight run the last hour, I swear I think they gave in and just started buying the SPY straight out, the question is why was it so important, it didn't seem to create any interest?

Resorting to Just Buying It?

As I showed in the last post, HYG which has been an exceptional lever today (wait to you see currencies) looked like it was going to back off, enough is enough on the risk there and it has.

The divergences I showed you earlier in the SPY and IWM, well they have went positive on the SPY in the 2 min timeframe, still negative in all the others and TLT looks like it's not helping either. If you look at the SPY price action, you'll notice it looks a little strange and volume is surging, I can't help but wonder if they haven't just resorted to finally breaking down and buying the SPY to try to force it higher?

Take a look for yourself.

Note how strange price action looks, no pullbacks at all, solid volume.

THEY MAY BE FORCED TO ABANDON THE MOVE FOR TODAY

The main lever, HYG is seeing distribution, longer term distribution has been in place for a while, HYG has just been a play thing to move the market. TLT is joining it as well. I suspect the SPY Arbitrage will have a dip in it near the close.

 HYG intraday distribution

TLT intraday accumulation

They Want That New High

Just take a look...

a $.70 positive differential, that's the largest I've ever seen for the SPY arbitrage, they are pulling on every lever they can to get some interest in this market. Wait until you see my post showing the currencies and what they did on the open, although our pre-market futures post called it, you'll still be shocked, we can answer the question, YES, CURRENCIES ARE BEING MANIPULATED TO HELP THE MARKET.

AMZN Still Looks Good

I was a little surprised, I expected AMZN to be a bit negative, but stronger on a relative basis as far as the 3C charts go, instead I found a bunch of positive charts, in fact I'd say that if I were just looking at AMZN for the first time as a potential long, there's nothing that would stand in my way from opening the position, other than maybe the F_O_M_C tomorrow, but that's a coin toss.

Quick Market Update

There are some 1 min positive divergences, I'm not sure yet if they are supported by any levers or not because they are new, they SPY arb is 30+ mins delayed and it takes several minutes to switch layouts to leading indicators and then interpret them, the fact is it doesn't matter and I'll show you why, but it may give you upside momentum to short in to.

The SPY and IWM as examples...

 At the far right among all the distribution you can see 3C moving up, it's odd because it's not a typical accumulation area where price is falling or has fell and is lateral, it's more rising.

 However if you look on the next timeframe -2 mins for any migration of the divergence to see if there's anything behind it, you get this resounding answer.

The same in the IWM< except this looks more impressive on the 1 min chart.

The 2 min chart pretty much answers any other questions

And the 3 min chart at a new leading negative low.

Financials

Here's a look at Financials which have coverage in FAZ long positions...

 XLF 1 min intraday dumping hard


Same with the 2 min intraday

We have good migration of the negative divergence with the 3 min intraday hitting all new leading lows for this chart. Note the accumulation area, this tells you A LOT a bout how smart money accumulates and distributes.

 The first institutional timeframe at 5 min is leading negative near a new low.

 The 10 min chart shows accumulation to the left, distribution in to that run which really didn't have that much accumulation, another likely smaller accumulation area (at this point I think any accumulation is just to get the group to move, more than trying to buy low/sell high, in effect so they can load up short positions, you can't distribute a lot of shares and expect price to hold up while you sell even more to establish shorts-both actions are selling.

The yellow area is an obvious head fake area as the distribution confirms it.

 15 min chart showing the same areas, the same things, the same lack of any real accumulation at Mid-April and even early April lows.

the 30 min

30 min trend, here we see the last real strong accumulation zone at the november 16th lows and the weeks preceding them as we came down about 8% from the September 14th highs, the day after QE3 was announced.

The fact we have a leading negative low below anything on the chart art far lower prices reflects the short positions in place.

Additionally, if the leading negative divergence seems unbelievable to you, look where it really started, around early March.

Now look at the next chart.

This is a "Breadth" chart, it is literally the percentage of all NYSE listed stocks that are trading 1 standard deviation above their 40-day moving average which is normal for a rally. The SPX is in red, the indicator is green. Note the 71% highs as the rally gets going, then falls to 51%, then a low of 21% and now almost half of what it was in January and soon it will be. This should move up, not down in a healthy rally.

More importantly, look at the timeframe when it really deteriorated, March.

Adding More to UVXY

At this point, this position is larger than I would recommend for most people, I'd support about 1/2 to 2/3rds a normal size position (for me that is a maximum of 15% of portfolio before margin) and subject to the 2% rule and position sizing. 

The reason I still like UVXY as a long Equity position not options, is because it is still at a decent area, options are best entered when price is still moving opposite the position you are entering (For a call, I want to enter as momentum is moving down in a head fake area for example), yet it still has some decent leverage and it is said to track VIX futures better than VXX believe it or not, they are two different companies that manage them.

 10 min chart- a perfect timeframe for this kind of leveraged ETF...

1 min in gear timing wise it appears.

AAPL Update

Other than the parabolic move above resistance with distribution possibly or probably creating a head fake area right there... Here are the charts.

 The Daily chart with resistance broken at 11:15 a.m.- Head Fake? It's in a potential Head-Fake area, that plus the 50-day moving average was resistance for yesterday's highs, so at 11:15 it broke resistance as well as the 50-day average, two very closely watched areas on a VERY closely watched stock.

 Volume at the 11:15 break

1 min distribution, when? 11:15

The longer term 1 min chart's trend so there's been distribution in to the recent highs.

2 min chart

2 min trend.

3 min chart

5 min chart, I'd like to see this go leading negative, I may consider an add to if it does and the set up is still favorable.

This is the 10 min chart, I'm not thinking a long move, that's why it needs options to make the potential profit worth the risk, stock alone is not worth it for me.

The 15 min chart is still very strong, this is what I believe to be the gas tank essentially for the counter trend move which would be fairly young, the question is whether AAPL and this chart can hold up in a deteriorating environment?

As for the longer term counter t rend rally potential... I encourage you to look at the Dow-30 in detail from 1929 on, don't just look at the chart and miss the important stuff like a 40+% bear market counter trend rally that lasted 6 months shortly after the crash-that would be convincing to a lot of people who were then living at the right side of the chart, unlike us.

AAPL?

3 day chart with a 50-bar m.a. (150-day average) which held well. Notice as I often tell you, "Changes in character lead to changes in trends", EVEN BULLISH ONES AND IN THIS CASE AT THE WHITE ARROW, ESPECIALLY AT BULLISH ONES.

This is the volatility I often tell you about that precedes the end of a trend/the top. If you sold right at the reversal of that increased ROC to the upside, you'd be out at $650 and wouldn't have lost potentially 260 points from there.  They yellow arrow is a potential target for a counter trend rally, at the average that has worked so well and at a centennial number-$500.

That's another bridge, another day.