Quick Recap

As expected, USO made up some ground today on the pretext of the EIA petroleum report, but it was obvious the gap was going to be filled, this is why I chose SCO to ride out the longer term trend.

As suspected, AAPL is down from a bear market counter trend rally, I think it has a jiggle left in it (bounce), but I suspect the bear trend will re-assert itself so I'd like to add to the AAPL equity short on any price strength.

Gold and especially silver crossed below some stop out levels today so over the coming days I think it's likely to see a base form and an upside move, I have more respect for the SLV/AGQ long, Gold I believe will continue in its bear market trend, but both can make for decent bounces and SLV probably for a longer term trending position.

The USD as I mentioned last week as it was pulling out of its pullback is now making new intraday highs-we saw new closing highs yesterday- which were the highest since July of 2012, again I encourage you to read the linked "Currency Crisis" posts where the $USD making a new high and a much larger move up was predicted well over a month ago and the Yen, as we found out today, would be a major contributor to market action-I just didn't realize to what extent-intraday even! Even tonight the Yen and ES are playing mirror roles just as we saw intraday today and yesterday and checking back, even further, the Yen isn't the only influence, but its far greater than anyone imagined, at least for now.

From my extensive Yen analysis tonight, it's my belief that the Yen is on the second half, the upward half, of a rounding base that will take it much higher. From the correlation VERY clear today (whether BOJ asset purchase related or some carry trade-doubtful), this is a clear market negative, here's an example of the chart, a head fake move at this area is always a possibility, but I suspect not as high as with equities.

I'd say the rounding base with the first real 60 min accumulation is more than half way done with the second half having stronger upside momentum, not good for stocks.

All index futures have current negative divergences right now and the Yen correlation continues even in overnight trade, for example...

 ES lows tonight...

compared to Yen highs-exact match.

If it were this chart alone, I'd dismiss it to, but after this and this with several days and small intraday moves as well as macro moves proven, is it still so easy to dismiss? This is why "3C" is named as such, a reminder to "COMPARE, COMPARE, COMPARE".

Have you seen anyone else in the entire market or on any of the financial shows prove this high correlation? It's only by looking everywhere, where people don't think to look do we find our edge and now we have perhaps one of the sharpest edges in the market for as long as it lasts.

I'd remind you, you'd do well to remember this morning's European and US economic data, soon these reports are going to matter more and more and not in a good way as bad news use to be good news as it kept QE flowing. As a result, we'll be keeping closer tabs on the economic situation worldwide.
 to ready our next edge coming in to play sooner rather than later.

Spot VIX was interestingly higher today considering the market. For the most part VIX futures were mostly in line on the 3C charts, but interestingly as you get to the more important timeframes, there was substantial accumulation in to the afternoon, the trend is already hugely leading positive.

This is a 30 min leading positive divergence today alone-rare, but even more so, we had the same out to 60 min charts, the players in VIX futures are preparing for something not so market friendly.

While TLT showed early strength that quickly faded, I believe it was intentional to run stops as it showed remarkable resiliency on the intraday 3C charts...

 5 min strong leading positive divergence, but more interestingly...

The stronger 15 min chart shows a clear negative on the gap up open until the stops were run in a small head fake move with a strong closing leading positive as well, it seems the other form of protection was being more aggressively bid than is revealed by price alone-there's a market message there, you just have to listen for it.

If you are unsure of that message, look and listen a bit closer, where price moves is important, but whether price is supported, in line or being sold is the real message, confirming the safety trades above, take a look at the risk trade in the SPY...

 SPY intraday- at #1 there's no accumulation for the late day move, not even on a 1 min chart, the only reason for the move was some light Yen weakness at the time and while I subscribe to market manipulation as I have seen it day after day, the EOD ramp that people love to accuse the market of manipulating, I do not believe was in play here, just simple Yen weakness for a moment at the right time.

We can't be all one sided, we have to look at the evidence and find the truth, not just assume everything is manipulation, today we know it was the Yen correlation, a new one replacing the Euro and AUD and most surprising, except I wrote about it for 10 hours over a month ago.

Even SPY arbitrage bears out the EOD "Ramp" wasn't so much a manipulated ramp as pure chance catching a jiggle in the Yen at the right time.

SPY Arbitrage is near the lows of the day at what many are calling and end of day ramp, there certainly wasn't any of the typical manipulation driving it, but the Yen correlation fit perfect, right to giving enough time for traders to accumulate for a divergence in several 1 min charts/averages.

SPY 15 min

 In my currency crisis series I predicted the DOllar would move to new highs, this is in direct relation to the expectations of tapered and ended QE.

After the $USD pullback ended, something we saw in 3C before price, the $USD is making new breakout highs to stage 2 mark up-the market won't be able to ignore the $USD for much longer and if I'm right about the Yen analysis, then my entire thesis, on well over a month ago is about to converge to the perfect equities nightmare and there are a LOT OF RETAIL TO HOLD THE BAG.

With AAPL down over 8% over the last 3 days, I believe our short there will bear fruit, but first I'm looking for a bounce-that will likely be a put position and an add to on the equity short as the bear continues.

 The AAPL short was opened at the perfect time, this bounce should give us a nice add to pop and a nice put position once it turns negative.


The bigger picture represented by the core equity short should be quite clear below, there's a lot of opportunity ahead...
AAPL weekly 3C chart.

As for my claims that risk is being sold and safety piled in to, credit alone makes this clear and it's one of our best leading indicators as, "Credit leads, stocks follow"...

ES in blue, HYG in green, HY in red and IG in brown, a pretty clear dislocation, not to say HYG can't bounce, it has the gas in the tank, the question I'm fond of answering is whether it is sold again immediately upon thee hint of any strength as seen this week already.

JUNK credit, also HY and an apparent choice for a risk on posture wanted nothing to do with the market's move, a rare posture for  institutional traders way to express a risk on sentiment.

This is just intraday, JNK is down quite a bit more over the last week.

And HY Credit...

Not biting either, people don't give credit enough credit, it has confirmed several profitable tops and surprising bottoms for us with 3C.

That's it for tonight, the Yen was an exciting discovery today- at least to the degree it is moving even intraday trade, we'll be looking at a lot more Yen 3C charts, if we know what the Yen will do before price does it, we have an even further head start on the market.

VERY IMPORTANT POST- Experiment Results

There's little doubt in my mind that arbitrage effects the market, divergences, CONTEXT to some degree, but I think the degree to which they effect the market largely depend on where the Yen is and what it's doing, at least for now.

The Yen alone cannot account for all of the market correlation, but it does account for a large part of it. In my earlier post when I fist figured out the Yen was having a larger impact than previously thought, I put a number of different timeframes, not only are the long term Yen charts accumulating, but the shorter term ones are now too for an upside reversal.

Take a look at the evidence.

 This is the Yen Futures and 3C for today, the green arrow is the 9:30 open, the Yen falls shortly after on a negative 3C divergence, in the early afternoon the Yen accumulates and rises around 1 p.m. or just before, then another pullback, but this time still on a leading positive divergence and an attempt to move in to the close that didn't go far.

Now take a look at the zoomed in closing trade, the red arrow is where the market moved up late afternoon, the yellow arrow is where I hoped to see the Yen move up and the market down, it didn't move that much though.

Now the Yen in red vs the DIA, click on the chart to enlarge and look close, the same minute the yen breaks under support (red trendline), the SPX breaks out to the upside, just before 1 p.m. when the Yen reverses, the market loses ground. I said I saw small positives near the close, the Yen is leading the market as it already turned down before the market allowing time for the divergences to form, then the market moved opposite the Yen again and in to the very weak closing move, the Yen is slightly higher, the DIA slightly lower.

It Gets better...

 Yesterday we didn't see today's loss of significant gains, this is a 5 min chart of the Yen with the 9:30 open in green and the 4 p.m. close in red

Looking at the SPY (green) and Yen (red) for yesterday alone, the Yen falls hard at the open, the market also has HYG supporting it, then HYG gives out as support before 11 a.m. and around noon the Yen's downside mellows out, the market goes sideways with a mellow yen and no HYG support-in fact the opposite may explain why the market is flatter than they Yen's decline, because HYG losing ground is negative for the SPY arbitrage.

Just before 2 p.m. the Yen heads higher, the market heads lower at the exact same time, then the Yen heads sideways in to the close, the market does too, but remember all the ;levers being pulled yesterday?  At 3:47 yesterday I posted, "Desperation" because it looked desperate when you saw how many levers the market was pulling, I assumed to reclaim NDX 3000, all of that lever pulling allowed the market to move a bit higher than the Yen correlation at the time-IT WAS DESPERATION!

Now, here's the Yen after the close, it's now moving up a bit...

And here's ES after the close, it's finally moving down a bit, so although it didn't occur before the close, it is occurring right now!

I have a lot of Yen analysis and correlated asset analysis to do.

The Yen is Seeing some Upside

We don't have much time, but wouldn't it be interesting if in to the close the market saw selling pressure as the Yen rises

**Important Market Update

As I mentioned a little bit ago before the Q's and SPY bounced after 3 p.m., that the divergences(positive) were small. Here's why they were small and what exactly moved the market although I suspect the Q's got a "little" help from improving AAPL.

The SPY vs the Yen, again the Yen headed down first, allowing our 1-2 minute positive divergences to develop, then the market moves up EOD as the Yen continues pulling back.

The Yen negative was just intraday so that's why they didn't put a lot of money in to the EOD bounce (1-2 min. positive divergences), they aren't looking at 3C, but they can tell from the depth of the order book.

HYG and VXX Update

I believe I still have a UVXY (VXX leveraged) position, I'm happy to keep it.

HYG longer term is destroyed, the longer term charts have shown it happening and then price collapsed.

There was enough accumulation though this week for HYG to head higher, it single-handedlly lift the market yesterday, but as I suspected, was immediately sold off, this means some institutional longs still have long shares there that need to be sold, I think HYG under normal circumstances could and would move higher, which would likely help the market, although the Yen will have more to say about that.

On the other hand, what I wanted to see with the HYG accumulation was whether or not it was sold on any strength and yesterday it was, immediately.

VXX can block HYG to some extent, depending on what TLT is doing and now we know even more so depending on what the Yen is doing.

Here's what both look like, I have no problem holding VXX/UVXY long.

 There's a lot to see on this HYG 5 min chart, most makes perfect sense, the 5 min recent accumulation though is the one that didn't rise as high as it should have as it lifted the market immediately off the open and then was sold the rest of the day, for the market's part, it held its ground, but didn't add anything from the early HYG push.

The HYG 10 min chart shows there's nothing beyond 5 min, it looks like it was set up as a counter trend bounce to get out of some remaining positions at better prices.

However as the 1 min chart shows, as soon as there was any price strength in HYG yesterday, as I posted the day before (I suspected it would be sold prematurely), it was immediately sold.

 The 2 min chart is migrating the same way, but until the migration hits the 5 min chart, I'll be keeping an eye on HYG.

VXX 1 min leading positive trend

2 min

3 min-at this point we have good migration (health of the divergence)

5 min just to compare to HYG at the same timeframe.

USO / SCO

If you had a USO put, I hope you saw my earlier post about taking profits as it was likely to fill the gap and correct.

SCO long is still a great position, it will likely consolidate for a day or two, but it did fill the gap, it's longer term trend is very promising.

As the consolidation comes to an end, USO will almost certainly be set up again for another put position and SCO will be set for new longs or add-to positions.

Market Update

There are some small intraday positive divergences, I don't think they mean anything at this point next to the negatives and they are limited. As for Index futures, the same is only in ES, not NQ or TF.

 IWM 1 min looks stronger than it is...

This is the 2 min chart

QQQ 1 min is as far as this one went, this could lead to a consolidation only being on the 1 min.

SPY 1 min

SPY 2 min

GOOG Update

I'm definitely looking bigger picture here, which doesn't mean further away, it means in addition to what we already knew, today there was an additional glimpse of what appears to be one thing in plain sight for everyone to view, but is something quite different when it is put in to context of risk assets across the globe in dozens of different varieties as well as safe assets.

GOOG I still like, actually love, this entry reminds me a lot of our BIDU trade that was difficult to see close up, but when seen in perspective after it made us 30% with no leverage in a month, it was a thing of beauty that could never have been  put together looking at fragments like intraday or day to day trade. In fact all 9 core shorts were all profitable and double digit in a month with no leverage.

 1 min intraday has a slight positive divergence, but that might be missing the bigger picture on the same chart, still it's good to know for tactical and other reasons.

 The 2 min leading negative with a slight positive as well recently, very slight.

5 min leading negative really is what speaks for the position, this chart and longer ones-the longer the more it speaks to the position.

 10 min has several interesting features if looked at closely, it can clearly be seen what the plan was with GOOG and why we waited so patiently before adding/starting new positions.

15 min trend

15 min showing the extent of today's movement alone.

Ultimately the daily chart, people had trouble comprehending similar charts as AAPL passed $700, but that seems like a brief moment in time now whereas back then it was everything.

XLF-Financials including FAZ-Still Love Them

Here's the basic gist why, there are plenty of confirmation charts I can add, but trying to work through a lot of assets here.

 XLF 1 min leading negative

XLF 2 min with migration-leading negative badly

3 min also migration and leading negative badly

5 min also leading negative badly, both trend and local.

 10 min relative negative

2 hour-big picture, not only has the price trend seen a change in character, but the first divergence flattened out Financials, the second is a stronger leading negative in to a parabolic move.

Changes in character lead to changes in trend", even what appear to be bullish changes in character.