Daily Wrap

ALMOST THERE?!?*?!?!

The Dow is there, 16k is in the books, today although the SPX almost lost it around 1:30-2 p.m., a late day ramp after most contracts were closed and the pin released was ramped in to the close and the SPX of $4k and missed it by just over 9 points!!! Unreal, with a ramp they can't get 9 stinking points?

The EUR/JPY was still the ramp of choice today as the Euro was able to maintain some strength...

 Euro intraday today

And the EUR/JPY vs ES (purple)  intraday today so as you can see the SPX followed the pair, but I don't think this is going to go on much longer.

Even with 3 BOJ officials and the PM of Japan all singing the same song, "The Yen is not too weak", apparently currency traders and/or carry traders feel differently.

This is the Yen 5 min and even without the positive 3C divegrence, the lateral movement today is a huge change in character from the downtrend the Yen has been in, the EUR/JPY could only rise because the Euro was stronger than the Yen, but once the Yen starts to rise, that's it.

However even with the carry pair carrying the SPX to 1800, they still needed a late day ramp to get things done, HYG which was trading at a loss most of the day was ramped in to the close to hold on to SPX 1800.

 Even with the distribution seen all day in HYG Credit, the very close was ramped (white).

However High Yield Credit which has no arbitrage value wasn't buying what the market was selling as it closed again for a second day at its lows and failed to follow the SPX (green).

In addition to using HYG, the VIX too had to be smashed lower in to the close to get the ramp off and maintain +$1800, it really sounds like a lot of work for a half percent.

 VIX slammed in to the close to ramp the market, note that most of this didn't happen until after 2 p.m. (op-ex pin).

However for a second day the short term VIX futures were flying, yesterday with a near vertical 2 or 3 min leading positive, today with a stronger 5 min.

The VIX is still )loitering and jigling as I mentioned it would likely do) right in the mouth of a big Bollinger Band squeeze, implying a highly directional move.

If the action in Short Term VIX futures has anything to do with it, then expect the VIX to sail upwards (the market moves opposite the VIX, thus today's closing smash of the VIX).

This is exactly why I went ahead and re-opened the VIX call position as I said I would after closing it early this week for an 8% loss rather than take a bigger loss.

I also closed the AAPL call, I just don't trust this market to hold a call in AAPL as you could probably tell by some of the positions today.

The P/L came t a loss of -6.35%

Among other Leading Indicators, Sentiment which was shown in an earlier update never recovered today, it has no arbitrage value so there's no reason to ramp it unless the pros believe in the ramp which the apparently didn't as both closed lower and were out of sync with the SPX all day probably for the first time this week (both).

Gold ended the day pretty much flat so the Taper On sentiment seems to have dissipated as the initial F_O_M_C minutes knee jerk wore off, but gold hasn't shown any gains yet, there's a good chance it needs more lateral time (bases).

However Treasuries, 10 and 30 year, did rally today modestly, the $USD gave back most of the knee-jerk reaction which is killing the USD/JPY carry. 

Other than that we had a short squeeze and with shorts as low as they already are, things could get very interesting if today's underlying trade was representative of what we should expect next week. I have a feeling the early Thursday shopping (Black Thursday) and Black Friday) may be more than a little disappointing with everyone on edge over OB-Care.

The MSI hit a new high (red) Most Shorted Index and the linear nature of the move with no natural pullbacks screams short squeeze, but how much can truly be left after the graphic we saw last night (and think of the cost as market structure and natural defenses against extreme volatility are all gone).

As for odds and ends, we did have 2 averages today with Dominant Price/Volume Relationships for the first time in 3 days (although not all of them), they were the SPX which made 1800 and the R2K which doesn't have a similar target, both saw their components dominant in Close Up/Volume Down, this is the most bearish of the 4 possible combinations and suggests a 1-day overbought condition, typically the following trading day closes down, but that's more when all of the averages share the same relationship, perhaps we see the SPX/Dow/R2K down as they have hit or don't have targets while the QQQ needs about a +0.20% gain to hit its target.

A quick look through the Breadth charts and we find even with the SPX 1800 today, the NYSE Advance Decline line hasn't moved at all and still hasn't past October's highs, this is trouble,  in fact it actually closed even lower than it was earlier in the week when I pointed it out.

The NASDAQ 100 A/D line also hasn't made a higher high for the month, although not as bad as the NYSE's. The NASDAQ Comp's A/D line is the same as the NYSE's still hasn't made a higher high, still hasn't passed October's high.

Stocks above their 200-day has remained flat despite the ramp as has even the percentage of stocks above their 40-day moving average, it makes you wonder where the stocks came form for the R3K MSI squeeze? You'd think it would be the momo stocks, but both the % stocks 1 and 2 standard deviations above their 40-day ma also haven't made a new high and are in fact lower..

Although stocks below their 40 day moving average increased this week, the normal ones and the 1 and 2 standard deviation variants.

Breadth is pretty strange given the TICK Index today, not extreme's but in the upper half most of the day.

I'll take a closer look at internals this week, but it's clear there's been a lot of work to meet these goals that started with accumulation on Tuesday, Wednesday maybe through the plan off track, but they didn't accumulate anymore, in fact the opposite, just used anything they could to lever the market higher.

I'll post some of these charts as you can see the desperation in them.

In any case, the MAX Pain of SPY 178.50 which needed a close above that level as we speculated $1800 would do it this morning, saw a successful pin.

Have a great weekend, talk to you soon (posts to come)

GOOG Update

I wanted to get this one out, but I think we still have plenty of time with it.

The last time I covered GOOG I mentioned that I would have wanted to look at GOOG as a core short or add to > $1000, but realistically I had no idea how it would get there until earnings ramped it right to that level, ironic?

I also mentioned that it would be highly unlikely for smart money to chase GOOG in that area to buy, they'd much more likely use the area to sell or short, even if they thought GOOG was fairly price because it's such a rapid "apparent" mis-pricing, in any case the point is, if they were buyers, it was below $1k, there's simply too much risk and not enough profit potential to even seriously consider GOOG up there especially in the size they trade, their orders alone could knock it in to the gap.

I went further and showed you the trend of distribution while GOOG has been up there. I like it as a core short, it has only been a matter of finding the appropriate time to enter so we're not stuck in that lateral range.

GOOG looks to be entering that tactical stage now.

 This is the underlying trend on a large scale- 60 min chart, so it's obvious institutional money hasn't been buyers or even hold, but have been using the gift to unload,

The chart above this would be a strategic view, the tactical entry is just as important so that's something we've been watching and waiting for, on a very short timeframe of 2 min intraday, there's really clear distribution so this looks like the fuse.

In a mid term timeframe like 15 mins, we have the same. The idea with a stock like GOOG that has a 60 min negative is to get the intermediate and short timeframes all aligned, that's what is happening now.

I haven't had enough time to look VERY closely and see if there's a likely opportunity to sell in to strength, but above $1k I think qualifies, beyond that I'd truly be getting myopic. However the time factor does matter as I said above, I don't want to be sitting in  a huge pile of opportunity cost.

I'd say the tactical charts are either coming or are in alignment and the fact they are in alignment with the market makes it that much stronger of a case.

Adding To TECS (long) as well

TECS is  3x leveraged Short Tech, I've kept a trading position there, but I'll increase it a bit like FAZ.

I wish I had more time to show these charts.

 Tactical 3 min XLK (Tech Sector)

5 min XLK, note that it has been in a range during most of this divergence. These are the frothy areas in the market, the head fake areas, the 16k, 4k and 1800 areas.

 This is the entire XLK 10/9 cycle, every stage is there except 4 (decline) and that 60 min leading negative looks like 4 in knocking on the door.

TECS 3x short Tech... 60 min just as confirmation...

The 10/9 cycle in near mirror opposite

Adding a Little to FAZ (long)

I was considering some calls, but I like the idea of hanging in there for the longer term position.

We have the Igloo as well. Some of these charts I think are self-explanatory and even feel drawing on them lessens their impact.

Remember I was only interested in adding to XLF > $21

 XLF (Financial sector) intraday falling apart

3 min, note where it falls apart, there's a reason I was only interested in adding >$21, this is it, this is the justification I suspected and this is the objective evidence.

 The stronger 10 min chart, again, note the price level where things really get ugly.

This is the strategic view, for timing we look toward the tactical, that's the short term charts like the ones I started with.

 XLF 30 min is a very strong timeframe, look at what happens, how fast and how deep >$21

FAZ 3x short Financials, I like this long and will add to it to bring it almost to a full position from a trading position.

 The short term tactical for timing, 2 min FAZ

The 5 min is where institutional action starts for the most part, we have a head fake I just wanted to point out because they are there we just don't see them and we have that chimney, look at the divergence on the chimney.

 The strategic view, FAZ 60 mins, pretty darn clear what's going on.

This is FAS, Financials 3x long, check out the intraday chart, it's almost 2x worse since I captured it.

Closing AAPL Calls for a small loss

It's just not worth it, I'd likely go short or use puts if I didn't feel there were better trades, UVXY long or VXX calls, PCLN short, Financials short.

I'll bring you more, luckily it looks like the market will cooperate in to new positions, "Holding my nose and jumping"

EOD Market Update

I was obliged to collect more data and make sure that what I'm seeing is what I think it is.

As I've said early this week and the last day or so, the only reason I can imagine Tuesday's accumulation took place was to hit the magic levels, Dow 16k, NASDAQ Comp 4k and SPX 1800.

Dow closed yesterday >$16k
The Comp is at $3988.45, a +.45% move today was worth 19 points so it's not that far from $4k, the SPX is at $1802.87 on a +.39% gain, mission accomplished and it seems they had to use a short squeeze because there's no other manipulative tools left right now.

As I always say, the last 2 hours of op-ex Friday's price doesn't matter, it's the 3C signals that pick up where they left off the next trading day, Monday even though we have a holiday shortened week, it may be just what we need with Black Friday and all.

Here's the data, it's what I hoped to see even though price is trying to make those benchmarks, everything below is falling apart.

The Yen prevents them from using the carry trade and it looks like it's about to send the market down if the market's correlation keeps up.

 Again, 5 min Yen chart, if the leading positive pulls the Yen up, there goes the Nikkei and likely US markets as well as EUR/JPY falls apart.

They couldn't use the Yen carry trades today because of the basing in the Yen, so it's short squeeze, after this really how many shorts are left? Just about none, not a good scenario for a market decline as there are no natural, committed buyers (shorts have to buy and cover in the future, but they aren't there).

The R3K Most Shorted Index vs the SPX in green shows the short squeeze that resulted in today's move, the TICK index confirms it.

Here's the desperate attempt top get the N.COMP over $4k in the NYSE TICK.

They couldn't use credit, remember credit is a much better informed market, thus "Credit leads, stocks follow", then this is trouble.

 HYG in blue/SPX in green, this chart doesn't do this justice, but look at the closing levels (green for SPX and red for HYG) from yesterday, HYG is massively underperforming.

It's little wonder...

 This is the 3C chart for HYG, solid distribution in to a flat range as that's where we see distribution most often, in a flat range.

As for High Yield Credit, it's even worse than yesterday

 I showed last night how HY Credit was not biting on any market moves, today is even worse, also no wonder...

HY Credit's 15 min 3C chart, this is a hollow shell, it never recovered from the entire year's gains lost in 2-days during the Spring/early summer.

Pros are moving out, sentiment continues to decline.

 FCT is better for intraday, not biting on this move as they know what it is, headlines only.

HYG is better for trend, you can see the last 2-days, not biting, not taking the bait, but using the move to get the hell out of dodge (pardon my French).

VIX futures are still showing an extreme panic over there, I did go ahead and pick up UVXY long, it is a trading position, nothing more.

This was 2 and 3 min and this is a 5 min move in a single day!

They are racing for protection.

I'll show you the massive deterioration in ES later, for now the averages. I probably don't need to explain what they show, I'll just label them to save time.

 SPY 2 min intraday in to those highs, $16K+

SPY 5 min at the same

QQQ 3 min in to 4k

5 min, note previous confirmation.

QQQ 10 min

IWM 1 min, I love the IWM short, SRTY long or IWM puts.

3 min IWM, look at 3C and price, that's telling you something.

 Longer term IWM 15 min in to the bearish Channel Buster set up

And the 4 hour chart in to the Channel Buster.

I'm pretty satisfied.

AAPL Update

"If" I could, I'd be closing the AAPL calls (however I can't get anything to fill) and thinking about some shorts, it's not my favorite position, I like PCLN (short) a lot more here, but I'm thinking AAPL and the deterioration it's seeing now is going to increase exponentially like the rest of the market.

 The short term charts show changes in divergences or early new trends developing first so this 2 min chart is worrisome still holding AAPL calls.

 It's not a fluke because it has migrated over to the 3 min chart as well.

This has been the AAPL short chart, the 10 min leading negative, the 15 min chart doesn't look good either.

I'd be inclined to use puts just because I'm not sure how far they'll let AAPL slip (Icahn), but I'd think it will be among the "Rising tide lifts all boats" and an ebb tide...

Lots of Stuff Looking Real Bad

These are just a few examples,

 HYG Credit can't and won't support the market, you can see distribution in 3C, that leaves carry trades, but we saw that looking bad earlier.

The Yen has an even stronger positive 3C divegrence, this will kill the EUR/JPY and any other JPY carry crosses that support the market.

This is the EUR/JPY with a negative signal and these are hard to get on the pairs.

And the 5 min Es chart earlier didn't look this bad.

You know the areas I like, volatility long, VXX, UVXY, Tech short, Financials like XLF short (or FAZ long).

PCLN short, etc.

I'll add some others that I like.