Just another oddity.
Wednesday, December 4, 2013
Odd Index Futures
Take a look at this,
ES/SPX Futures have been in a 1.50 point range for about 7.5 hours and all the averages are doing the same. It's not because of the EUR/JPY, but it does look like an extreme version of transactions at VWAP, ultra thin margin VWAP.
Just another oddity.
Just another oddity.
Daily Wrap
I'm not going to make this as long as normal, because I don't see a clear short term relationship, but something started developing in to the close (futures might tell us more tonight, in which case I'll post again).
Don't you love the tidbits like "Gold has it's best day in 7 weeks" (I'm happy for that one as GLD/UGLD was a position opened yesterday) or...
"Market sees worst start to the month in over 2 years" (with a 3-day losing streak-only the NDX closed green today-it makes it the worst start of the month since September 2011). or...
"Heaviest S&P futures volume in a month"
I really I don't care (except for Gold as yesterday's analysis was right on and the position is up +6.64% in a day), however what we should point out is the last day for settlement (window dressing) last week I pointed out there was a lot of negative undertone (recall the T+3 settlement rule before month end).
The tone of the market has definitely shifted just from the headlines, from the worst start of the month in 2+ years or the 4 or 5 days just a couple of days ago with the afternoon ramp replaced by the afternoon sell off and of course the ":Lightest non-holiday volume in 3 years" being replaced by "heaviest volume in a month".
These are all "Changes in character, for most they are just factoids or reasons to justify positions, but for those paying attention, they are changes in the market's charter and that leads to... "Changes in trends".
As far as some of my initial impressions, there were a lot of closing candles in the averages that were near perfect stars or in the SPX's case, a perfect Doji, these are indecision candles and they have a strong probability of a 1-day reversal, the volume was there to give them more credibility, they weren't however true reversal candles like a "Hammer" or Hanging Man or Shooting Star, they are indecision candles and we see indecision after a trend, even 3-days down, the most probable outcome is a next day reversal.
One other thing missing from a strong reversal was a total lack of a Dominant Price/Volume Relationship in any of the averages, they were plain vanilla.
Here are some charts, I may add some more later...
First VXX Short Term VIX Futures, 3 min (but you know almost every timeframe is very positive)
I was looking at this late in the day wondering if I should close the UVXY long (2x leveraged VXX) which is up +12% and even considered an XIV or UVXY short as a hedge, but keeping the negative divegrence today in perspective vs the huge leading positive and perfect reversal process, I decided to wait on better information. I suspected the closer to the close, the better the information.
While a 1 min chart is weaker that a 3 min divergence, it is also the place where any new divergence will first be seen and what did I see? I saw VXX seeing accumulation in to the close so I looked around some more.
The 3 min SPY with a decent positive divergence (it's not that big at 1-day there's not that much fuel in the tank and only on a 3 min chart, but still...) and then I looked at closing information...
As the SPY bounced in to the close it too was seeing distribution, apparently the start of a new trend in the market.
The Q's showed quite strong intraday distribution in to the close, this was at odds with the character of the rest of the day.
The IWM with its 3 min positive...
However as mentioned, it doesn't go any further like yesterday, there's a big difference between 3 and 5 min charts, that's why 1-3 min are intraday, 5 min is where I usually count it as institutional.
However what was of interest was the close...
Again, the same thing, distribution in to the close? If they were bent on a bounce, Why?
Even Index futures...
TF/R2K futures see the same in to the close
As do SPX/ES futures.
Remember, whatever divergence is in place, deconstructing or changing it or it moving in to a new phase such as distribution starts on the earliest chart, the 1 min and then migrates to longer ones, this all happened in to closing trade as well.
The TICK today which I believe saw an intentional leak yesterday of today's ISM as the reaction was overdone, registered a high of +1100, but a low of an amazing -1600, that's a lot of negativity.
I think this 1:30 low was like mini-capitulation and was bought (market makers and specialists would be forced to) and that may be what shows up as apparent accumulation at that area.
As mentioned with the VIX BB squeeze, price tends to loiter, none of the past squeezes are as big as this one, but every one pulled back to the 20 day before taking off after the initial breakout, as I said, price loiters.
Looking ay ES with VWAP, you see the initial "overreaction, but I think that's the 1:30-2:30 accumulation we saw yesterday on a leak of the ISM employment sub-index, people are willing to pay a lot for employment data ahead of the NFP.
Note how price acts as it breaks below or above VWAP, but remember what I said on the TICK chart about the extreme low which was held at VWAP's channel, I don't think this was specific accumulation as much as a mini capitulation event. That may be why there was selling in to the bounce after the low in to the close, shedding those shares market makers are forced by law to take at market.
And ES in purple breaks away from the EUR/JPY only at the rally on the ISM data and at the close where I think they may have been trying to sell the shares picked up at 1:30.
HYG intraday
HYG in context, it's weak.
Sentiment intraday had no interest in following the market in to the close.
I'm not staking my reputation on all of this, I don't need to do much other than let positions work and pay attention. I'll check futures, but what was murky earlier in the day seems to make more sense in to the close.
Don't you love the tidbits like "Gold has it's best day in 7 weeks" (I'm happy for that one as GLD/UGLD was a position opened yesterday) or...
"Market sees worst start to the month in over 2 years" (with a 3-day losing streak-only the NDX closed green today-it makes it the worst start of the month since September 2011). or...
"Heaviest S&P futures volume in a month"
I really I don't care (except for Gold as yesterday's analysis was right on and the position is up +6.64% in a day), however what we should point out is the last day for settlement (window dressing) last week I pointed out there was a lot of negative undertone (recall the T+3 settlement rule before month end).
The tone of the market has definitely shifted just from the headlines, from the worst start of the month in 2+ years or the 4 or 5 days just a couple of days ago with the afternoon ramp replaced by the afternoon sell off and of course the ":Lightest non-holiday volume in 3 years" being replaced by "heaviest volume in a month".
These are all "Changes in character, for most they are just factoids or reasons to justify positions, but for those paying attention, they are changes in the market's charter and that leads to... "Changes in trends".
As far as some of my initial impressions, there were a lot of closing candles in the averages that were near perfect stars or in the SPX's case, a perfect Doji, these are indecision candles and they have a strong probability of a 1-day reversal, the volume was there to give them more credibility, they weren't however true reversal candles like a "Hammer" or Hanging Man or Shooting Star, they are indecision candles and we see indecision after a trend, even 3-days down, the most probable outcome is a next day reversal.
One other thing missing from a strong reversal was a total lack of a Dominant Price/Volume Relationship in any of the averages, they were plain vanilla.
Here are some charts, I may add some more later...
I was looking at this late in the day wondering if I should close the UVXY long (2x leveraged VXX) which is up +12% and even considered an XIV or UVXY short as a hedge, but keeping the negative divegrence today in perspective vs the huge leading positive and perfect reversal process, I decided to wait on better information. I suspected the closer to the close, the better the information.
However what was of interest was the close...
Even Index futures...
Remember, whatever divergence is in place, deconstructing or changing it or it moving in to a new phase such as distribution starts on the earliest chart, the 1 min and then migrates to longer ones, this all happened in to closing trade as well.
I think this 1:30 low was like mini-capitulation and was bought (market makers and specialists would be forced to) and that may be what shows up as apparent accumulation at that area.
Note how price acts as it breaks below or above VWAP, but remember what I said on the TICK chart about the extreme low which was held at VWAP's channel, I don't think this was specific accumulation as much as a mini capitulation event. That may be why there was selling in to the bounce after the low in to the close, shedding those shares market makers are forced by law to take at market.
I'm not staking my reputation on all of this, I don't need to do much other than let positions work and pay attention. I'll check futures, but what was murky earlier in the day seems to make more sense in to the close.
The Close Provided More Information
Recently we've been talking about how important closing trade is, we had 4 of 5 days (only Black Friday, a half day didn't make it) in which the market closed down in to the close, this is a change of character from the normal closing ramp and while not a smoking gun on its own, it is a change of character and changes of character lead to changes in trends.
Well again as the afternoon trade got more insane, even more diffused among the averages as we have been talking about (another change in character) and just about everything else including the VIX, leading indicators, sectors and individual stocks, I was hoping closing trade would provide some clarity.
I'm not comfortable to the level of yesterday when I thought virtually for sure there would be a small intraday bounce, however I think whatever happens tomorrow, there's likely to be a lot of profit taking in to the close before Friday's 8:30 a.m. Non-Farm Payrolls.
I'm going to try to show you some of what I saw and think may be important, but I'm not making any case for the very near term tonight unless futures provide additional information. I also am not making any changes, no hedges, no counter trades, etc. I don't see a high probability reason to change any of the positions that all had high probability reasons to open, if I did so it would be simply reacting out of emotion.
Charts coming
Well again as the afternoon trade got more insane, even more diffused among the averages as we have been talking about (another change in character) and just about everything else including the VIX, leading indicators, sectors and individual stocks, I was hoping closing trade would provide some clarity.
I'm not comfortable to the level of yesterday when I thought virtually for sure there would be a small intraday bounce, however I think whatever happens tomorrow, there's likely to be a lot of profit taking in to the close before Friday's 8:30 a.m. Non-Farm Payrolls.
I'm going to try to show you some of what I saw and think may be important, but I'm not making any case for the very near term tonight unless futures provide additional information. I also am not making any changes, no hedges, no counter trades, etc. I don't see a high probability reason to change any of the positions that all had high probability reasons to open, if I did so it would be simply reacting out of emotion.
Charts coming
Index Futures
None of their 5 min charts have the kind of signal for a positive divegrence, more in line than anything.
The 1 min charts in 2 of 3 show the same thing as the QQQ/IWM, distribution in to the close.
The 1 min charts in 2 of 3 show the same thing as the QQQ/IWM, distribution in to the close.
Another Market Update
Remember dispersion between the averages, we saw it this week with the Russel down big and everything else moderate. It looks like the SPY wants to bounce and maybe the DIA, but the QQQ and IWM are not confirming that same signal.
As a matter of fact as we approach the close, it looks like the QQQ and IWM are seeing the pros come in and sell the afternoon strength off the afternoon lows.
I was thinking of putting in some hedge, close UVXY and maybe short it, but the signals for VXX and UVXY don't support that.
I think this is going to come right down to the wire as charts develop even faster in to the close.
As a matter of fact as we approach the close, it looks like the QQQ and IWM are seeing the pros come in and sell the afternoon strength off the afternoon lows.
I was thinking of putting in some hedge, close UVXY and maybe short it, but the signals for VXX and UVXY don't support that.
I think this is going to come right down to the wire as charts develop even faster in to the close.
Market Update - Craziness
Once in a while we get in to a muddy area when underlying trade is difficult to pick out, it usually doesn't last more than a day, today started (after the 10 a.m. run) as more of an "unsure" or unconfirmed day, but over the last hour or maybe 2, it's as if something completely unknown publicly is being discounted by half of smart money while the other half goes on with what they were doing.
It has just gotten harder to make sense of as the afternoon session comes to a close, perhaps near the close where the pros are trading we'll see something useful, but there's so much dispersion as we have talked about recently regarding the averages themselves, but this is kind of everywhere.
I checked leading indicators to see if I could get a sense there, Sentiment was in line with price today then at the 1:30 low and subsequent bounce, sentiment failed to follow the market, staying more negative. VXX also shows more weakness in that area, however it's possible with the downdraft that some longs were closed and the corresponding VIX hedges were closed with them, this isn't significant activity, but it's in the mix.
HY Credit also was in line with price, but refused to follow it north after the 1:30-ish lows.
I thought maybe the choppiness in EUR/JPY might have something to do with it and it might, but I don't know if that's it by itself.
I'm still looking around, but as I said, it's as if one half of the market is discounting something the other half doesn't know about.
For now I'm not making any changes to any positions without a clear reason to support that change, I'm going to have to assume this is just one of those days we get once in a while that is just sloppy.
It has just gotten harder to make sense of as the afternoon session comes to a close, perhaps near the close where the pros are trading we'll see something useful, but there's so much dispersion as we have talked about recently regarding the averages themselves, but this is kind of everywhere.
I checked leading indicators to see if I could get a sense there, Sentiment was in line with price today then at the 1:30 low and subsequent bounce, sentiment failed to follow the market, staying more negative. VXX also shows more weakness in that area, however it's possible with the downdraft that some longs were closed and the corresponding VIX hedges were closed with them, this isn't significant activity, but it's in the mix.
HY Credit also was in line with price, but refused to follow it north after the 1:30-ish lows.
I thought maybe the choppiness in EUR/JPY might have something to do with it and it might, but I don't know if that's it by itself.
I'm still looking around, but as I said, it's as if one half of the market is discounting something the other half doesn't know about.
For now I'm not making any changes to any positions without a clear reason to support that change, I'm going to have to assume this is just one of those days we get once in a while that is just sloppy.
Index Futures Update
The 5 min charts for the major averages ES (SPX Futures), ND (NASDAQ 100 Futures) and TF (Russell 2000 futures) are all in line with the downtrend. While I use the 1 min chart, it's typically the 5 min chart where anything of substances is going to show up.
So since those are all in line, there's not much to see. Here are the other timeframes.
ES 15 min
NQ 30 min
TF 60 min, remember the areas I was mentioning in which , above them it's almost all pure distribution? This is an example of that.
As far as that Bollinger Band Squeeze in the spot VIX, I've never seen the actual VIX futures with such a large leading positive divegrence and never on a 4 hour chart so if you ask me if I had to be my life on which way the directional move from the BB squeeze goes, this chart is my answer.
However, as I frequently remind, there's a difference between the probabilities and a high probability position with a great entry, low risk and good timing.
I'm not there yet with the VXX, I'm still just making sure we're not on the other side of a trap.
In any case, shorts are working so let them work, the next opportunity won't be far and just like yesterday, when you see it, you know it.
So since those are all in line, there's not much to see. Here are the other timeframes.
As far as that Bollinger Band Squeeze in the spot VIX, I've never seen the actual VIX futures with such a large leading positive divegrence and never on a 4 hour chart so if you ask me if I had to be my life on which way the directional move from the BB squeeze goes, this chart is my answer.
I'm not there yet with the VXX, I'm still just making sure we're not on the other side of a trap.
In any case, shorts are working so let them work, the next opportunity won't be far and just like yesterday, when you see it, you know it.
Market Update
Right now I'm mostly trying to confirm that this is the end of yesterday's accumulation which was nice and clean, an easy trade set up as long as you could move quickly this morning.
Because we are in a transitional area for both price and 3C coming from yesterday's intraday positive divegrence, which I would say was about the right size for the kind of move we saw at 10 a.m. making me think it's highly probable ISM was leaked and yesterday's buying or accumulation was for today's release. If that's true, then what I said about POMO is nearly certain, it's been reduced to sponsoring counter trend trading opportunities, a far cry from what it was.
In any case, there's no opportunity to short the market here, that's why I left trading shorts in place, yesterday was the last good trade opportunity (long/closed this morning).
So for now, I'm just trying to confirm market direction and what's going on there and then I'll look for the opportunities that best fit that.
For example, IWM was one of the best looking divergences and started a day earlier than any of the others.
IWM started late Monday, then through yesterday and now in line on the downside intraday 1 min.
The 3 min chart puts yesterday's divergence in perspective and thus far we are pretty close to confirmation. This is where we want to just let our short positions work for us and wait for the next opportunity to pop up.
Since the divegrence never made it to 5 min on any average, it had a roof on it and this is leading negative.
I would guess that if today were adding to yesterday's divergence (if it is it's very sloppy) then this 5 min chart would start to improve, it hasn't.
Of course the intermediate cycle 15 min is very ugly, a Channel Buster, the distribution expected with a Channel Buster and IWM moving down toward the downside momentum area inside the channel.
So there's a lot to look at, but I don't want to make any assumptions.
Because we are in a transitional area for both price and 3C coming from yesterday's intraday positive divegrence, which I would say was about the right size for the kind of move we saw at 10 a.m. making me think it's highly probable ISM was leaked and yesterday's buying or accumulation was for today's release. If that's true, then what I said about POMO is nearly certain, it's been reduced to sponsoring counter trend trading opportunities, a far cry from what it was.
In any case, there's no opportunity to short the market here, that's why I left trading shorts in place, yesterday was the last good trade opportunity (long/closed this morning).
So for now, I'm just trying to confirm market direction and what's going on there and then I'll look for the opportunities that best fit that.
For example, IWM was one of the best looking divergences and started a day earlier than any of the others.
I would guess that if today were adding to yesterday's divergence (if it is it's very sloppy) then this 5 min chart would start to improve, it hasn't.
So there's a lot to look at, but I don't want to make any assumptions.
GLD Part 2
To save some time, here are the charts for GLD from yesterday including gold futures.
I liked GLD enough that I put it in as a trading position in the trading tracking portfolio, which I'm still experimenting with, but so far is up +11% and hasn't been open for more than a week and this doesn't count some of the more aggressive positions like the ones I wanted to take yesterday for today and there are no options either, just equity positions.
I added UGLD yesterday because of the charts above, I held NUGT which was the only position of 7 in the red.
Obviously I'm not going to be opening anymore positions in either, but I wanted to show you what's going on as you may be interested.
Since yesterday with GLD/gold...
First I consider GLD to be under the head fake area so it has not completed a head fake move, that's where the momentum comes in.
Here's the initial second touch of support to create what I suspected would be a larger "W" base, good for gold longer term, the base looks complete so a head fake move right before a reversal is the norm, you can see stops were hit and volume increased, part of the reason for these moves as institutional money trades in size and needs 2 things in this situation, supply and lower prices, a break through an obvious stop level provides them with both. Watch how 3C reacts below this level.
In white is yesterday's UGLD position opening in the trading tracking portfolio, again, another buy right at the very bottom.. We have a move through a second break that I didn't expect, but it was short lived and provided a better entry with less risk.
This is the "W" base, the first half to the left, then some distribution to knock prices back down and the second to the right followed by the stop run, that's where 3C sees the strongest divergence as it is where the most supply at the best prices is to be found.
Since late yesterday, look at this insane, nearly vertical divergence and on a longer 10 min chart, this is really impressive and it's no surprise we saw a move like today's, but ultimately this is pointing to a much bigger move.
The 5 min is at a new leading positive high so near term action looks healthy.
I'd rather buy a pullback, but I think anywhere below the red trendline is ultimately a very good price.
The 2 min is quick to reflect the market and it looks healthy
The 1 min is in perfect confirmation so I am really happy with yesterday's choice and I continue to like the asset, I just prefer not to chase as you know.
Gold Futures
Look at the accumulation (extra) at yesterday's dip, that's important and I wouldn't have entered gold unless I saw signals like that.
I liked GLD enough that I put it in as a trading position in the trading tracking portfolio, which I'm still experimenting with, but so far is up +11% and hasn't been open for more than a week and this doesn't count some of the more aggressive positions like the ones I wanted to take yesterday for today and there are no options either, just equity positions.
I added UGLD yesterday because of the charts above, I held NUGT which was the only position of 7 in the red.
Obviously I'm not going to be opening anymore positions in either, but I wanted to show you what's going on as you may be interested.
Since yesterday with GLD/gold...
First I consider GLD to be under the head fake area so it has not completed a head fake move, that's where the momentum comes in.
In white is yesterday's UGLD position opening in the trading tracking portfolio, again, another buy right at the very bottom.. We have a move through a second break that I didn't expect, but it was short lived and provided a better entry with less risk.
I'd rather buy a pullback, but I think anywhere below the red trendline is ultimately a very good price.
Gold Futures
GLD & GDX
I'm glad I held NUGT (GDX-Gold miners 3x long ETF) and opened a 3x long gold ETF yesterday, both are looking good and both still look like they are under their head fake areas so while I wouldn't want to chase them, I do think overall they are in a decent area. I'll try to get some charts up soon, it seems like a lot of things are starting to happen at once.
XLK (Tech Sector)
XLK did not participate in yesterday's intraday positive divegrence which it appears we found out at 10 a.m. why it was set up.
Take a look at what XLK was doing and is doing.
Almost all charts were positive to the 3 min timeframe, XLK never got close to a positive divergence and on this morning's pop, it went leading negative, but it's the stabbing moves that have been successful lately, we saw them in VXX and had nearly a double on VXX calls yesterday (December).
This 30 min chart stabbing is a leading negative divegrence in 2-days only, that's fast and that's the reason XLK couldn't participate yesterday, it's hard to accumulate while your distributing.
This is the top of the 10/9 cycle .
Now the intraday 2 min is stabbing as well, you saw the 3 min so that migrated form this 2 min chart, profits or price gains seem to be aggressively under distribution.
I've been waiting for XLK to show fierce signals like this as VXX and XLF have (both market negative).
I still have an open TECS 3x leveraged short TEC ETF position open, I'll let you know when I would consider adding to it or establishing a new one.
Take a look at what XLK was doing and is doing.
This is the top of the 10/9 cycle .
I've been waiting for XLK to show fierce signals like this as VXX and XLF have (both market negative).
I still have an open TECS 3x leveraged short TEC ETF position open, I'll let you know when I would consider adding to it or establishing a new one.
Opportunities
I just heard from one of our members who took this post from yesterday seriously. He bought IWM weekly calls yesterday and cashed out this morning with a +70% gain.
I'm not sying to take risk like that, if I had opened positions yesterday I probably would have gone for monthly or leveraged ETFs, but there are opportunities to make money all around.
In any case, I'm going to update again very soon because the VXX calls closed yesterday in anticipation of today did very well and it's looking better and better.
Also there's some interesting movement in Tech which is now starting to catch down to Financials.
I still like Gold/GLD, still like USO (both long).
I'm not sying to take risk like that, if I had opened positions yesterday I probably would have gone for monthly or leveraged ETFs, but there are opportunities to make money all around.
In any case, I'm going to update again very soon because the VXX calls closed yesterday in anticipation of today did very well and it's looking better and better.
Also there's some interesting movement in Tech which is now starting to catch down to Financials.
I still like Gold/GLD, still like USO (both long).
Market Update
This is will way early to make any kind of assumptions, but these charts shouldn't look like this. I'll give you several examples, but there are a lot more.
IWM 1 min had the longest divergence, yes this morning it's not confirming the move, but rather starting a slight negative.
There's not much of a divergence there in total, it only goes out about to this 3 min chart, I'd like to see some other charts like 2 min go negative as well before I made a decision to take action.
The Q's with yesterday's small accumulation zone and today a small negative divergence, but they always start small.
The SPY has a larger intraday negative so far this a.m., I'd like to see if it migrates to the 2 min chart.
All Index futures have similar divergences as this 1 min ES/SPX futures
That's not good, it fell real quick.
As I said, VXX is starting to go positive now, this is what I'm looking for to replace yesterday's closed position.
And HYG was there for support yesterday, but today just collapsed.
The TICK is pretty weak as far as intraday breadth goes, barely +1000
I said 3 things about the spot VIX Bollinger Band Squeeze 1) it would be a highly directional breakout, 2) it would likely be to the upside and 3) that price often loiters around the breakout area initially, sometimes even head fakes.
What we are seeing today is that loitering.
This doesn't usually last long, but it is something I told you about 3 or 4 days before we even had a hint of a breakout.
I said 3 things about the spot VIX Bollinger Band Squeeze 1) it would be a highly directional breakout, 2) it would likely be to the upside and 3) that price often loiters around the breakout area initially, sometimes even head fakes.
This doesn't usually last long, but it is something I told you about 3 or 4 days before we even had a hint of a breakout.
Changes Already... ?
Yesterday I posted this, "For a Quick Trade"...
"I think (and was thinking about it, but decided not to just because of confusion it may generate) you can make a quick buck with a 3x leveraged long ETF like URTY or TQQQ, I prefer to focus on the IWM and QQQ.
That said, I'd make sure you are nimble.
You might get some traction out of XIV as well, although that's my least favorite."
"I think (and was thinking about it, but decided not to just because of confusion it may generate) you can make a quick buck with a 3x leveraged long ETF like URTY or TQQQ, I prefer to focus on the IWM and QQQ.
That said, I'd make sure you are nimble.
You might get some traction out of XIV as well, although that's my least favorite."
What I was saying yesterday was that I thought about making a quick long trade yesterday with a 3x long IWM or QQQ (any of the averages), but I didn't because often when I do it confuses some members as to where I stand, but I suggested that some of you who are nimble might want to do so and this is exactly why.
However, if I had taken that long yesterday, I'd have it wrapped up already, especially if I used options.
There's a hint now in VXX of a small positive just starting there, it shouldn't be there right now, it's still very early, but this may have been the reason for yesterday's intraday positive.
I'll keep you informed.
More on ISM
This ISM is services and as we were just talking about with regard to Dow Theory "Confirmation " between Industrials and Transports being an antiquated idea, because the US is more of a services economy now than manufacturing. What I suspected sent the market popping is not just the headline miss that is still in growth territory, but the sub-index of employment which fell to 6 month lows, that's what it's all about in front of Non-Farm Payrolls, if the NFP wasn't this Friday, the knee jerk effect would still be there, but the further we were from NFP, the less effect it would have, being we are only 2 days from it (Friday), any hint at what NFP might come in at is basically betting the farm on QE taper or not.
Glad I closed the VXX calls yesterday.
The question still remains, whether late afternoon accumulation, as you saw from 3C and VWAP, around 1:30-2:30 was on a leak or not. BLS data gets leaked, that's why they're building a new media center and have admited that's the reasons, I don't see why ISM couldn't be leaked just as easily.
As I said last night, if any of yesterday's POMO was a part of this...
" I'm not saying the POMO money did or did not end up in the market, but if it did, then it's another change of character as it is being used to set up brief fade trades, the same kind I would have taken by selling the VXX calls and buying IWM puts today for a 1-day trade."
(from last night's Daily Wrap...ironic)
Glad I closed the VXX calls yesterday.
The question still remains, whether late afternoon accumulation, as you saw from 3C and VWAP, around 1:30-2:30 was on a leak or not. BLS data gets leaked, that's why they're building a new media center and have admited that's the reasons, I don't see why ISM couldn't be leaked just as easily.
As I said last night, if any of yesterday's POMO was a part of this...
" I'm not saying the POMO money did or did not end up in the market, but if it did, then it's another change of character as it is being used to set up brief fade trades, the same kind I would have taken by selling the VXX calls and buying IWM puts today for a 1-day trade."
(from last night's Daily Wrap...ironic)
ISM MISS
I'm guessing this is what all the hoopla is about...
at 10 a.m. ISM was released
More in a moment.
at 10 a.m. ISM was released
More in a moment.
Released On 12/4/2013 10:00:00 AM For Nov, 2013 | ||||||||||
That's a pretty decent miss, I haven't seen the nuts and bolts yet, just the headline miss. The market sure responded to it though. Hmm... Afternoon accumulation, a pop on ISM, if I didn't believe in free and fair markets I might think someone was leaking to flush the banks full of cash before the Volcker rule kicks in. More in a moment |
Early Market Situation
Yesterday I closed the VXX Dec. $45 call position and I'm ok with that, it wouldn't be worth any more today and it was a nice gain of +31% and +90+%, but I held the UVXY long because it's not going to face the same drawn down pressure and at this stage in the game, a divergence that is on intraday charts can get run over pretty easy (that AAPL lesson is still fresh), especially on something as big as a sudden shift in the BOJ's jawboning from more QE a week ago or less to backing away from that stance when it's already priced in.
So looking at the market this morning, this is what we have...
The SPY 3 min representing the intraday divergences formed yesterday, you might recall my ES VWAP chart last night showing where most of the buying would have been done, 1:30-2:30, but HYG was supporting the market well before that.
The point is, this is either going to build on the discount this morning or get run over. Either way, it's not meant to last long.
This is HYG which is part of the SPY arb. which was being set up to support a bounce, they don't buy HYG for any other reason these days. So what happens here today will be an early clue.
The VXX calls did so well because this bottom is ready to pop to stage 2, note how small yesterday's divergence is (red as VXX trades opposite the market).
So we may see it here or in FX or in Bellwethers like AAPL, MMM, IBM, stocks with weight on their averages.
However the clock is running out, this VIX Bollinger Band Squeeze is just about at the point where the cat is out of the bag and there won't be putting it back in, that's not going to be helpful for the market.
The biggest event though is the NFP Friday.
Considering the way the F_E_D is ignoring the real unemployment data as a million people fall off Extended Benefits and off the work force, of course the Unemployment rate shrinks, you have a million less people in the labor pool, however the F_E_D isn't accounting for that, they are content going along with BLS numbers which are quite arbitrary at times, I think the F_E_D wants out and Obama doesn't want his presidency to end with high UE, etc.
My guess is the market doesn't have much time here, but with a bounce the size of what has been put in place, we're not even talking about that in this case, that's just normal market jiggles.
So looking at the market this morning, this is what we have...
The point is, this is either going to build on the discount this morning or get run over. Either way, it's not meant to last long.
So we may see it here or in FX or in Bellwethers like AAPL, MMM, IBM, stocks with weight on their averages.
The biggest event though is the NFP Friday.
Considering the way the F_E_D is ignoring the real unemployment data as a million people fall off Extended Benefits and off the work force, of course the Unemployment rate shrinks, you have a million less people in the labor pool, however the F_E_D isn't accounting for that, they are content going along with BLS numbers which are quite arbitrary at times, I think the F_E_D wants out and Obama doesn't want his presidency to end with high UE, etc.
My guess is the market doesn't have much time here, but with a bounce the size of what has been put in place, we're not even talking about that in this case, that's just normal market jiggles.
A.M. Observations
Overnight and where ES/SPX futures are now are pretty easy things to explain, we don't have to go in to Services ISM in China or Europe or even anything going on down under, although there are things happening, it's as simple as this.... The Japanese/BOJ are backing away from all of their recent QE chatter, putting some distance between their recent words and where they stand now.
The EUR/JPY has already discounted more BOJ QE so it has to be unwound and ES is in lock-step with the EUR/JPY...
ES vs EUR/JPY (purple) 1 min overnight.
See what I mean?
So it may be that those signals I showed yesterday of the single currency futures are quite correct, the longer ones and someone had a head's up before the BOJ backed off.
In any case, we still have the other levers from yesterday set up, I'd like to see yesterday's divergence run over, the ADP employment report coming in strong didn't help as the biggest factor for the F_E_D and tapering QE3 soon will be this Friday's non-farm payrolls and the ADP report was good news which is bad news for the market and although it is noisy ands I don't like it, the market doesn't like it beating so close to the NFP this Friday.
The EUR/JPY has already discounted more BOJ QE so it has to be unwound and ES is in lock-step with the EUR/JPY...
See what I mean?
So it may be that those signals I showed yesterday of the single currency futures are quite correct, the longer ones and someone had a head's up before the BOJ backed off.
In any case, we still have the other levers from yesterday set up, I'd like to see yesterday's divergence run over, the ADP employment report coming in strong didn't help as the biggest factor for the F_E_D and tapering QE3 soon will be this Friday's non-farm payrolls and the ADP report was good news which is bad news for the market and although it is noisy ands I don't like it, the market doesn't like it beating so close to the NFP this Friday.
