Daily Wrap

All I can think of when looking at the NASDAQ Composite is, "Seriously?" The COMPQX closed at $3994.97, up +0.08% after having the $4000 ($4007.09) in the bag on a fractional gain and then it lost even that leaving it $5.03 away from this $4k psych magnet.

 First though a quick rundown of the week so far. Index futures opened the week last night on a mini tear right out of the gate and then stalled, although BOJ officials were jawboning around then it seemed like the Yen was knocked down twice right as it was clear Index futures had lost momentum and stalled. The Yen getting knocked down did its job and lifted EUR/JPY, but EUR/JPY didn't do its job in lifting Index futures and they drifted laterally to slightly down the rest of the night in to the open.

ES did follow EUR/JPY roughly through the day (ES in purple-1 min chart), but toward the end of the day, things started moving fast, there were positive signals in gold and negative in the market.

While there's some debate about what caused the late day weakness in which the COMPQX lost $4000

Some think Obama, some think Gold as I showed you the recent correlation (180 inverse) between gold and the equity market.

Besides, gold had already been moving by the time this happened.

Gold intraday, the market troubles around the red arrow.

Something definitely upset the market as it was noticeable in numerous areas, take the NASDAQ's pump prince, AAPL...

There were clear negative divergences on multiple timeframes, you can see the afternoon negative divegrence was it and AAPL headed down, but this was after the market already broke, AAPL was actually at its intraday highs when the market broke.

However, should we be all that surprised (other than the NAZ Comp missing $k again when it was a fraction of a percent away from the close) considering earlier market updates were already showing trouble.

An hour and a half earlier we were already posting signs of trouble in the market averages (all of them), VIX futures (and VXX/UVXY ) as well a some currencies in "Market Update"

Then about 50 minutes earlier, again more signs of trouble we posted in Leading Indicators including HY Credit, Sentiment, yields and VIX.  In fact by that point, I had seen enough and ended this post with,

"I'm going to look at some trades/management."

After that I posted a reiteration of VIX/UVXY long, GLD/GDX/NUGT long, MCP, etc. Something broke in EUR/JPY, but about 10 mins. later, although it had been hitting intraday resistance.

TWO THINGS I FOUND INTERESTING, 1 WAS THE SIGNALS WE ALREADY HAD IN FUTURES, THE AVERAGES, GOLD/GDX, ETC. AND THE SECOND WAS THIS...

ES, SPX futures were struggling with resistance at VWAP all morning, then they made it above VWAP , quickly lost it and around the time ES broke down through the lower channel was about the same time things went to pot in the market, I think this probably has more to do with it than anything, but this was forecasted at least two hours before.

In fact, as I typically say on Friday (or any day really), 3C signals usually pick up right where they left off, that's why I'm not that interested in 2-4 p.m. Friday price action, but very interested in the 3C signals, take SOPY for example...

SPY intraday was in line until the 2 pm op-ex pin is lifted, then started going negative and closed negative, I'd expect the signal and intraday action to pick up from there despite the weekend and developments and despite Index futures ripping higher on the open Sunday night, remember it's normal hours that these signals seem to effect the next day and here we see the gap up is immediately sold off as a SPY negative divegrence from Friday afternoon persists.

Right now the EUR/JPY is in a small downtrend since about 2 a.m. this morning with lower highs/lower lows, the Yen has been trending up since 1 a.m. and the Euro has lost some ground.

The Spot VIX for once actually punched up on the close, but after the market headed down as if there were some seeking protection, but we already knew that from posts earlier in the day and with a reiteration of my liking VXX / UVXY long.

Spot VIX was up after the market already started cracking in the afternoon. We still have a large, directional VIX Bollinger Band Squeeze to contend with, one of the reasons I like VXX/UVXY.

It's not like any of this is especially new, Friday it was clear that the same 5 min positive in  futures I saw and wrote about as likely to bring us some short term upside (recall AAPL and SPY calls for this move last week) were clearly negative the next day and out to 15 min charts.

 ES 5 min leading negative

ES 15 min 1-day positive mentioned above and a leading negative at a new 3C low on the chart.

The NYSE intraday TICK was abnormally mellow today ranging from +600 to -500 most of the day until the afternoon when more stocks were selling off and we hit some extremes of -1300 after 3 p.m.

I mentioned some market signals were getting pretty nasty too in the late afternoon...

 5 min SPY

10 min SPY, both deteriorated badly in to the afternoon.

30 min leading negative in to today near term and a fairly big volatility swing intraday as the afternoon downside took hold.

 QQQ 5 min saw a strong leading negative today and this was one of the stronger intraday averages.

The 10 min is even worse at a new leading low for the month

The IWM intraday looks like someone knew exactly what was going on and when

This is a closer look at the same chart, look where it goes leading negative.

And the 3 min was already bad, but added to it today, you've seen the 5 min IWM which is worse and the others, making this one of my favorite shorts among the averages.

The funny thing and I don't know if this was for COMPQX $4k or not, but they tried to ramp the close.

HYG 1 min intraday, but look at the ramp attempt in to the close.

However real demand could be found in the reach for protection VXX and UVXY (VIX short term futures)

 3 min and a move at the close, I had already made the case for why I liked these Friday and earlier today and reiterated the trade idea.

The 15 min chart is near vertical, it's signals like this in numerous timeframes of both VXX and UVXY, while their inverse, XIV is confirming with a clear negative leading...

The divergence on the inverse 15 min XIV should be quite clear, that's an asset about ready to come crashing down, it fits perfectly with SPOT VIX's BB squeeze.

The Dominant Price Volume Relationship wasn't dominant among all of the averages, some weren't dominant at all, the SPX and R2K however were both dominant as Close Up / Volume own which is the component stocks, not the average itself. This is the most bearish of the 4 possible relationships and typically is followed by a close down the next day on a 1-day overbought condition, however the other averages were mixed, perhaps we see dispersion, even though the market was about flat today we did have the SPX down -0.11% and the others around +0.07, +0.08 and +0.017%.

Among Leading indicators, as mentioned, HYG credit (an asset used for manipulation and one of only 3 assets that make up the SPY Arbitrage model) was used to try to ramp the market at the close, I'm guessing to get the NAZ Comp. to $4k as it is getting ridiculous now with 5 trading weeks in striking range.

 HYG EOD ramp attempt vs SPX in green (as with all leading indicators).

FCT,  this was seen earlier in the day, thus the reason we use these as LEADING INDICATORS.

Don't forget to check the earlier update linked above showing FCT longer term vs one of our breadth indicators for an interesting couple of charts.

Yields were negative on the day as were seen in the earlier update linked above.

And it was again, thee non-correlated (non-mamipulative) asset High Yield Credit, so we get a good feel for what risk smart money is or isn't taking.

HY Credit is NOT buying what equities are selling, actually equities are barely buying what they're selling.

For the full view see today's earlier Leading Indicators update linked just above.

Other than that and perhaps the changes in gold and oil which are welcome, there's not a whole lot more to go on today as it was a pretty flat day and I don't just mean price, but even the TICK, very little movement in the market. I am however shocked that after the Yen moves, the EUR/JPY, HYG and what ever other tricks they pulled out of the bag today that they couldn't get a lousy 5 points in the NASDAQ Composite to close it at $4k, this morning no matter what happened to the other averages, I figured that was a shoe in- 5 trading weeks of sitting right under it!

As for breadth indications, they don't change that fast, at least not daily, but again the NYSE A/D line still can't get above  October's high and that's a bit of a problem considering other breadth signals we've seen and the 2007 breadth comparison I put out last night. 

The NASDQ 100's daily A/D line is also below the October reading, as is the NASDAQ Composite's and the Russell 3000's.

The Absolute Breadth Index is a bit complicated to explain, but high numbers are often market bottoms and extreme lows are often market tops, this is the second lowest reading this year and the ROC on the move down is impressive.

At the right you see an extreme high is at a market low or reaction low, the red arrow is an extreme low that shows a market pullback, but can often be a top. March/April was the lowest reading for the year, but if you compare the most recent move, it moved a LOT further, a lot faster and likely isn't done, I'd think at minimum we are at  Stage 4 of the 10/9 cycle, however this could also be the most extreme reading for the year and it may not be done, so this is one to keep an eye on.

There's not a whole lot more to go on, although I don't want to diminish the value of the signals in VIX futures, the averages, the Index futures, gold, GDX, individual equities, etc, 

I think if anything really stands out today it is what I've been suspecting the last several weeks, the levers of market manipulation are becoming less and less reliable whether the Yen slam down, the VIX that just won't move any lower, the short half-life of central bankers words and even actions like the ECB's surprise rate cut, the SPY arbitrage ands individual arb assets like HYG and of course the carry trades.

I may take a look at the intraday NASDAQ 100 breadth, but that takes a while and I'd like to get this post out. I'll check futures for any abnormal activity later tonight and let you know if anything pops up.

GDX/NUGT/DUST charts

GDX is gold miners , NUGT is 3x long gold miners and DUST is 3x short gold miners so GDX and NUGT should look similar in signals and DUST the opposite.

 GDX 5 min

NUGT 60 min with the head fake move or stop run, note volume at the break under support.

Closer view of NUGT 5 min

DUST 60 min with the opposite, what would be considered a head fake / false breakout

DUST 5 min with a sharp leading negative.

Gold Signals

Futures are going wild, especially considering the way Gold Futures opened last night and the nearly morning ritual of a smack down.

First the recent Market/Gold correlation, it is inverse so these signals make sense (positive gold, negative market).

 SPY daily in green, GLD in red, note the inverse relationship, this is not the norm under a QE regime.

 The 60 min chart is more specific.

Gold futures 4 hours, when we first entered I thought there would either be a shallow pullback that was almost done or a deeper one, but the deeper one would allow for a stronger base and stronger uptrend in gold, you can see the deeper move was made with a head fake stop run just below the yellow trend line.

This is the 60 min chart, strong and impressive, but today's specific moves are more so.

 Look at how fast this 30 min gold futs. chart moves (3c).

And the 15 min chart.

As for GLD

 The 60 min chart is very easy to follow from negative and price movement to positive and expected price movement, pay attention to the difference in size of the two divergences.

The 15 min chart with a VERY sharp 1-day move up

Also Getting Very Strong Negative Divergences for the Averages (SPY, IWM, QQQ*)

This is why I kept SPXU, SRTY, FAZ, TECS, etc, the 2-3x short ETFs, we are seeing very strong signals very quickly develop. I'm pretty much set, but I do like the above .

There seems to be an inverse market/gold relationship as well.

Adding a smaller amount to GLD Dec. $126 calls

Again, stunning signals (positive)

Adding to GDX December $25 Calls

I initially opened a half position in GDX and half in GLD as a way to not have too much exposure, but exposure to both groups.

GDX is down significantly as is GLD, I decided to add to GDX and bring it close to a full position itself at these prices, I'll try to get charts up, something is going on with both assets in my opinion and quickly.

GLD, GDX and NUGT all looking impressive.

I want to get the note out in case you are interested or for management, they are seeing very fast, very positive divergences, really impressive.

I'm still holding calls in both. I may increase the GDX calls, but I also like NUGT long a lot as well.

Trade Idea / Management: MCP

I've been in MCP with many of you (long), it's down about -2.5% which is fine, it's the process it has been undergoing and it looks better and better with each passing day. Liking MCP (long) the way I do, I'd be VERY uncomfortable if I didn't have a position in place already.

 MCP 60 min

30 min

Closer to home, 3 min.

There are numerous timeframes in between that look just as good, it's the short term timeframes aligning that make MCP look like it's very close to making a strong move up.

ES Futures

While I suspect they will hold the NASDAQ Composite at the $4002 level (as I said, it was a fraction away, it took less than a 0.25% move to do what all the other averages have done) on the close, I don't think today being the T+3 last day trade for November settlement is coincidental either... ES is telling a different story. I think this also is important to other ideas like VXX / UVXY long.

 The NDX Comp daily with a long and tight range, this really seems to have been quite a struggle just to get to $4k which was never far away for 5 TRADING WEEKS!

The flow of funds in Mutuals may also have had something to do with timing.

Today's candlestick for the NDX Comp is also not a very impressive one, actually a bearish reversal "Hanging Man".

 I don't think you can dismiss last week's post of a 5 min positive in index futures and the prediction of the Yen smack down as they needed a little more help, that 5 min signal worked exactly as the post said it would. Now we have a clear 5 min negative starting Friday.

Moreover, the 15 min has a sharp move and these longer timeframes rarely move this fast.

Trade Idea: Reiterating UVXY / VXX Long

These can be tough to trade long, but every once in a while you get some really amazing signals, these are the ones I often say, "I don't ignore" and I didn't Friday, the UVXY long is only down 0.59% for a highly volatile, 2x leveraged position.

I also took out VXX calls, Dec. $45.

Here's one more look because I would add or start positions in these here so I want to reiterate the idea. The Bollinger Band Squeeze in spot VIX just makes these more compelling.

 VIX futures 15 min with a strong signal after what appeared to be a pullback.

Intraday VIX futures at a new leading positive high on the day.

UVXY, I suspected this morning may have been a stop-run/head fake, the volume at the break below support gives me grater confidence in that assessment.

 The 15 min chart from confirmation to a clear transition to a poisitive signal.

 VXX 15 min showing the same

VXX 3 min intraday, the rounding area has increasing volume or supply and this is what is needed for these positions to be accumulated, it's one of the reasons head fake move like today's apparent break under support exist.