The F_E_D Doesn't Really Surprise

So just about exactly what was expected until we got closer to the meeting and people start hedging their bets out further, but F_O_M_C members made it pretty clear before last week's blackout. The initial December taper was right on size at $10 billion a month less, the only change to consensus was it split the $10 bn between MBS and Treasuries ($5bn each), which is a bit of a surprise because one of the reasons the F_E_D had to make a move sooner than later is the shrinking Federal Budget deficits that leave less room for the F_E_D to buy Treasuries that will see a lower pace of issuance.

Bernanke made sure that the bond market didn't pull a 100 bp move like the June meeting by assuring them that "accommodative policy", which in this context is taken to mean ZIRP or waiting longer before a rate hike, would remain EXTRA accommodative even after the unemployment level of 6.5% is breached. However this may be a little bit of smoke and mirrors, the new budget that is being hailed as a bipartisan victory for Congress, cuts out extended unemployment benefits, which means come December 28th 1.3 million Americans will lose those benefits and they'll no longer be counted as unemployed which should lower the unemployment rate on its own immediately, even though they are still unemployed. By the end of 2014, 3.6 million people will be in that category, no longer counted as unemployed even though they are and the rate should drop fairly quickly.

What is now unclear is how the market responds to the new policy "tightening", while the F_E_D is going to great pains to insist that scaling back purchases is not tightening, St. Louis's F_E_D president James Bullard says it is tightening and if you just look at the June reaction (in which the 10 year yield climbed 100 basis points on the talk of tapering), in Bullard's view it is clearly considered tightening and will likely be considered as such by the market. I tend to agree with Bullard. Imagine every month now we get better economic data or Initial Claims every week that look better or Nom-Farm Payrolls in which the unemployment rate is going to shrink by virtue of the labor participation rate alone, can you imagine the market's reaction every time something like that comes out and they know another $10 billion is likely to be stripped away?

I think what the F_E_D has done is not wind down one policy (QE), but create an entire new brand of  "Conventional monetary policy". You know how the market reacts to tightening in rates, should we not expect the market to view tightening in QE the exact same way? Bullard thinks so, even though the F_E_D is well aware of the issue and went to some length today to say, "Tapering is not tightening", but we all know it is as we have already seen the effects in the market this year and two hours of knee jerk trade does not "perception" make.

Speaking of perceptions, it's funny how much they differ, Unfortunately this was one of those days (only F_O_M_C days) that I have to listen to CNBC, all other days of the year I couldn't even tell you what channel it is. From the analysis I heard just after, they called the F_O_M_C's tone, "extremely Dovish", while Goldman Sachs found it more Hawkish than expected, perception moves markets.

Honestly I'm a little surprised how accurately we predicted this move yesterday, take a look at this chart from yesterday issued both during the day and in the Daily Wrap, F_E_D Edition...

" The longer term has shown the SPX lower and likely to pull up to what I thought would be the $1800 level to revert to the mean. Also note that Yields didn't make a higher high today so they are already starting to lead negative as they do so well. To the left at the white arrow, Yields were making higher lows and highs as the SPX was still making lower lows, it called the move up in the SPX."

And that's just what we got, reversion to the mean...

Today's SPX and the $1800 level. Yields spelled bad news after that today, but we'll get there.

Early in the day I assumed we'd have signals telling us what to do with the longs at least before the F_O_M_C as I said the last couple days, it was literally about an hour before, prior to that, we couldn't find anything as the market was in another one of those weird funks of total dislocation that has been described by the presence of a Hindenburg Omen so is it any surprise that today printed the FIFTH Hindenburg Omen?!?!

It's the clusters of them that have proven to be accurate in predicting at least pullbacks although they are really meant to predict crashes.

We'll have to let the knee-jerk fade and the dust settle to see what happens to the QE sensitive assets, the $USD, bonds and it use to be gold, but that has been popping back and forth and has long been out of the true QE correlation. However, although inflation expectations are played up by Bernie as being low and below the F_E_D's 2% target, others would disagree profoundly, we may get more in to that, but the point being is gold is bought on "fears" of inflation.

To get back to what I was saying about pre-F_O_M_C analysis being tricky until about an hour before hand when I actually went ahead and filled out a long and added TQQQ (3x long QQQ) long, so I had some confidence in the analysis otherwise I would never have added an additional full size position right before such an uncertain event, which also makes me think last night's analysis was spot on regarding the initial reaction that had been set up days before mostly in the SPY arbitrage assets.

What gave away the market's knee jerk reaction was exactly what I've said all week and last week, VXX or VIX futures, they are where I said we'd see the first information and it turned out today, they were where  found the only information before the statement, after the statement, it was again VXX / UVXY and VIX futures that had me closing the short duration long trades set up near the highs of the day. If things continue as they did today, I'd say the trading portfolio as well as the core short positions and maybe even some options will be seeing short positions added to or initiated.

There were also a lot of stocks that had made a head fake low just before the F_O_M_C, I took that as another hint and then some divergences here and there.

We did have Dominant Price/Volume Relationship today, it was Price Up/Volume Up and dominant, the Dow had 25 of 30, the NDX 77 of 100, the R2K 977 and the SPX 380, so very dominant, it's the most bullish of the 4 relations, but ironically it tends to signal an overbought market and we typically see the next day down. Yesterday's relationship was the most benign and as I explained, means, "Keep going" or "Carry on", today's is a bit different.

As far as broad breadth, amazingly (I guess this is why we have a Hindenburg Omen again today) is the fact the NYSE Advance / Decline line still can't surpass the October highs. For that matter, the NDX's A/D and the Composite's A/D line couldn't break above November.

As for the Spot VIX, you may recall yesterday I warned that it's candle was getting weak and opening it up to a correction.

 Spot Vix in green vs the SPX has a lower ROC toward the end of the day, if it was increasing vs the SPX, I'd question it, but this is actually the start of something a bit bullish for the VXX, and as I've said, it's when the VXX screams buy is when I want to sell short.

This is VXX vs the SPX today, earlier it was much weaker, by the EOD it was at its correlation, considering the price move today, you'd expect it to be weak like it was yesterday.

I don't want to get ahead of myself, but we are looking for something like this in the VXX, it all depends on whether we have a knee-jerk move that reverses quickly or one that goes through the process, assuming the data keeps coming in the way it has been since 2 p.m.

 For a probable head fake move, the 30 min VXX didn't lose any ground.

This is what really surprised me, VIX futures (5 min) didn't budge either, it looks like that demand that had been missing the last several days which I speculated last night was being thrown in to risk assets for a move like this, the same as what we were doing. This "seems" to be early evidence that trend reversed as traders (smart) may have been doing exactly what we were doing, taking gains in to the highs.

HYG was showing a weaker correlation, but it did make a show, the only problem...

It was being used for distribution.

 This is the sentiment indicator I mentioned in an update today that was very bullish and another part of my analysis that led to me add a full size, 3x leveraged QQQ long just before the policy statement, but look at how it reacts after the gains were made, that's about the same time I was letting go of longs.

 Yesterday as you saw, Yields which are like a magnet for stocks and predicted a reversion to the mean of at least 1800 (SPX), actually $1805, suddenly fell and fell hard, no more positive bias in that Leading Indicator, one of my favorites that had also given me some bullish hints before the policy statement. Does anyone think that someone didn't know or set the market up?

So much for the risk asset, commodities, they weren't buying the move which I suspect (as I always warn) was a knee jerk move, they can last longer than 2 hours, but I do think that is what we are looking at.

The 5 Hindenburg Omens as well as the numerous other indications don't help the "solid bullish move cause" here.

I would have kept those longs if I thought probabilities were good, I kept them in to the most uncertain event of the year based on the charts, but after that, things went south.

 Take the IWM 1 min, about an hour before 2 p.m. it was one of my hints to stay long.

However the 5 min, another story.

There were a lot of these, one of the worst that stands out because of the FAS long position was Financials.

The intraday gave a bullish signal just before, thank you I appreciated it, but...

At 5 mins there's a problem and I mentioned this, I don't want these problems when just next door we have charts like this...

10 min XLF which I had drawn out as a likely head fake triangle, yet that 10 min is really ugly as are the longer charts, this is why I didn't take any chances with those longs.

And you may recall the trend I pointed out in the Black Swan (SKEW) Index, look at the move today (closed at the red hash yesterday), that's right in to the mid 130's where this indicator becomes trouble, a Black Swan and 5 Omens as well as all of out r other information.

I'm not saying I expect a crash tomorrow, clearly the VXX needs to go through some process as do thousands of other stocks, but that's the time I'll be using to collect objective data and entering positions if appropriate.

 Again, 1 min ES tonight, it's not even so much 3C, but the rounding process that's bothersome, I would not sleep well tonight having left all those longs open, even though you know I believe in a reversal process, I just saw too much like XLF above.

And ES 5 mins, this is where I look to see what the market is likely to do, that's not a bullish signal.

After 2 pm I mentioned the 3C divergences in the Nikkei futures, take a look now...

Well, what can I say, it may be a very interesting night. If not, just be patient and we'll do what we always do, collect the data, wait for the trade to come to us.

I'll check back in if things get more interesting in futures later.

P/L For Today's Positions

These were all entered for the most part last Thursday after closing short position in the trading portfolio which was started early December.

I took profits on those positions because I did not like the way the market looked, if I look at it tonight, I like it even less in After Hours. I'll likely go through some more of what I didn't like, but it was a lot. You know that I always warn about the F_E_D knee-jerk reaction, this is to anchor expectations so no one sees a move like today and freaks out. Decisions are made based on objective data, not a long held tradition of a knee jerk move that is seen at almost every F_E_D event that is almost always the wrong move.

This felt too much like a knee jerk move and I didn't see any reason to hold overnight to wake up in the morning to losses when I had no good reason to hold overnight in the first place other than greed of expecting more.

 First it was difficult deciding whether to hold the longs in to the F_O_M_C, but like many times in the past, the last hour or so gave us enough information to make an objective decision, hold.

However, as you see tonight, a 3C negative divegrence is well entrenched, I would not feel good about the prospects tomorrow morning with this overnight signal, but that's only because it's just another data point on top of a pile of data collected after 2 p.m.

 Secondly, you probably recognize this pattern we look for, even in parabolic moves.

 Without going in to too much detail in this post, this would be the third point, the 5 min 3C chart did not confirm any of the upside movement, as it sits, ES is not well supported. While I did expect more from our long positions, you take what the market gives.

As for our position P/L, I don't know how you did if you followed my lead on PCLN yesterday, the short was closed at a slight profit, but the fat finger trade today cost me some gains as this was meant to be a long in the trading portfolio, it would have been worth at least +2.5% for a day.

Instead because of the fat finger, it cost about -0.70%

UDOW was recently added and it came in at +4.7%

URTY came in at +7.765%

FAS came in at  +5.7%

And TQQQ which was just added came in at +4.8%

This brings the trading portfolio to total gain of just shy of +19% since inception about 3 weeks ago and there's no options used here at all, just equities, so I like how it's doing so far, already at three times the return of the average hedge fund.

I'll put together some charts for the Daily Wrap, but I'd like to let the dust clear a bit before going too far in trying to analyze two hours of knee jerk data, but there's nothing here that's all that surprising (except that our trading longs didn't do better) and there are quite a few indications that have us right on track.

Nikkei Futures Not looking Great

Keep an eye on PCLN, Our target is >$1200, it's very close

This is one fat finger trade that REALLY aggravates me, I spent a lot of yesterday agonizing over whether or not I should close the PCLN trading short and open a long, I decided to do so, but apparently pulled a fat finder and just opened another short so Im missed all of the gains from yesterday afternoon.

Leading Indicators Not so Hot

First HYG is not only missing 3C support, it's underperforming the market. High Yield Credit is absolutely underperforming and interestingly, at least 1 sentiment indicator looks like it was in on the F_O_M_C, it moved up significantly before the F_O_M_C and down significantly after the parabolic price spikes, which you know I never trust, especially when we are looking at what may very well be the initial knee jerk move.

Yields that were leading the market have been decimated, they are no longer in  a positive leading position, in fact the opposite.

VXX is still underperforming its correlation a bit, but I'm now seeing the 3C signals in VSS start to come alive, the ones which would have me calling for a long there. In fact, I'd be tempted to open a VXX call position here.

Commodities are also failing the market and there was one other I don't recall off the top of my head. This "may" be a great lesson in what I ALWAYS warn about, the F_E_D inspired knee jerk reaction.

In any case, I was not willing to put those profits at risk for a move that I was not impressed with (underlying trade).

Also Closing TQQQ (3x long QQQ)

This is actually one of the positions I had the most faith in, however ,there's no point in being stuck monitoring a portfolio for 1 asset. PCLN, MCP, IOC and DGAZ are in many ways their own trades so those are being left open, but market correlated positions are being closed for the time being.

Also Closing FAS Long From Trading Portfolio

Taking Gains In URTY (IWM 3x long)

This is another long from the trading portfolio.

If I feel more comfortable with the asset in the days ahead, I may re-enter it. For now, I'm not very comfortable on a short term trading basis, especially with such negative charts so close by (10 min).

I WOULD NOT CALL THIS AN ENDORSEMENT OF AN IWM SHORT POSITION AS FAR AS TIMING RIGHT NOW.

Market Update

I'm actually watching the trading portfolio longs VERY carefully. If this is the bounce that we prepared for, I'd have to say I'm not that impressed. It's not the movement because the knee-jerk is a given and the pause during Bernanke's speech is a given, what however is not a given is the fact that charts that should at least be catching up with price, even for a short term long, are not.

Also, although it's too early to say while the dust is still kicked up, some of the more positive behavior I've been watching for in VIX based assets that hasn't been there, is starting to develop in a few areas.

Bottom line, for the short time we've had this move to the upside, I expected a bit more, so I'm watching these long assets carefully.

There is a high degree of splintering between different assets, say PCLN (which I have a >$1200 target on before a drop) which looks a lot better than Financials broadly, so I'm a bit more worried about the FAS long than I am the PCLN long trading position.

Again, it's too early to make any really serious assessments, but early indications are disappointing considering we essentially called this move on the F_O_M_C, if not by the posts which were tepid, but leaning that way, then certainly by the fact the trading longs were all kept in place.

More as it develops

DGAZ Long

I think this may be the last chance to get DGAZ a short term trade, but longer than the expected market trade. I think this will be a swing long.

Closing a Fat Finger Trade- PCLN

I thought I switched my PCLN trading portfolio short to a long yesterday, however it's sitting there as a short, I'm covering that, leaving the PCLN call from earlier in the week open and I'll decide if I will enter a new PCLN long, yesterday was where I wanted to be in, not sure about adding it now, but the TRADING short will be closed, core shorts positions will stay open.

Taking Profits on UDOW Long Position

I'm closing this position completely.

I may be wrong, but I got the gain, I'm happy, I'm not taking chances.

I think the FIX Was In

This was the thrust of last night's post, VXX was very useful.

However, let me say, although I think we do get this bounce we have prepared for, I WILL close these longs at the first sign of a reversal, short entries in the trading portfolio as well as add-tos in the core positions will follow.

HYG is up, but no support. This is one of the things that looks like a fingerprint of the "FIX".

Probably Last Chance to Buy PCLN for a Bounce

This is a short duration trade

Gold Looks to Bounce-Not Entering

I think this is a taper related bounce, I'm not going to get involved here, but I suspect it's going to bounce.

There seems to be accumulation in TLT

In a QE positive event, bonds typically rally. TLT looks like it's seeing accumulation.

Boilerplate F_E_D / F_O_M_C WARNIG

As always, watchout for the initial knee jerk reaction after a F_E_D event, we have 2, the policy statement in 10 minutes and Bernie at 2:30, each has the chance and probability of creating a very emotional, volatile move.

I NEVER make decisions based on price movement after a F_E_D event, only after I see what the charts say because 9 of 10 times the initial move is the wrong move or transforms.

Try to stay detached and if you need a constructive outlet for the emotional stress, put it to work looking for OBJECTIVE data.

Final Trades & Management

I can't describe this well enough because it ha happened so quick, but based on what I've seen the last week, this morning and especially when we just got some downside movement, the market doesn't appear to be acting as bearishly as you'd expect, in fact in many cases it looks like stops were hit and there's more of a bullish tone, so much so I'm going to add TQQQ Long (3x QQQ long) to the short term trading portfolio and fill out the IOC long position.

I'm leaving all core shorts in place and otherwise anything else, just the trading portfolio. If you aren't as aggressive, sitting this out is not a bad idea.

To me it looks like a knee jerk (not initially, but maybe the first day or so) moves up and the 10 min negatives are still there, it should set up the 1-5 min short term charts so they are clear shorts.

I think we get an initial move up and a crushing move down, that's my gut, that's what I'm going with.

I'll get as many charts up as I can after the press conference to show you why I made this decision beyond what you already know, in essence it's no different than when the longs were set up last Thursday, short duration long, leading to long duration shorts.

Take W/ A Grain of Salt

I feel like we should be buying this weakness right now. There are quite a few averages that look a lot better than they should.

If there was a long set up over the last week, then a last minute decline would be a boon for Wall St.

Closing AAPL January $550 Puts

I'll likely be back, for now I'm going to take the small gain in them and move on.

Leading Indicators

This is getting more interesting. HY credit is not performing today, it was not yesterday and recently it has been negative. As mentioned earlier the SPY arbitrage is NOT activated because HYG is acting far worse than it would need to for the arbitrage to work. However, VXX'x correlation is also far out of whack and not bidding up safety like it should, the fact both are down explains why the SPY Arb isn't working today (HYG would have to be up with VXX down, both are down).

The Sentiment Indicators are both BULLISH intraday so far, very interesting.

Yields are also up and give a bullish short term set up as out trading portfolio is set up for.

I'm going to look at individual assets, but leading indicators for the most part tend to confirm my "Best guess" from the last post.

Remember we did enter these longs because there were signals for them.

Back to the VIX

I have said all week that I thought the first place I'd see any signals would be in the VIX or more specifically in VXX / UVXY, so why should I abandon that logical thought? I'd think that right before an "unsure" F_O_M_C, there would be an unprecedented reach or bid for protection unless maybe someone knew something that allowed them to take some money out of protection and put it to work in yields grabbing assets, but I think you'd need to be pretty darn sure before you made such a move, especially just before the end of the year (although I can't even begin to contemplate how the limited time left in the quarter and year would develop on a chart like VXX which is the first several forward months so I won't even try).

If the VIX/VXX/UVXY essentially trade opposite the market and we have trading longs in place from market signals, that would be confirmation between the two broad assets theoretically.

If the VXX were screaming as a long, meaning protection was bid, it would look something like this...

 Past 2 min chart that is screaming, "Buy" and worked out. It looks a bit like the intraday PCLN charts right? I can't enter a VXX long until I see that, even though we have an amazing VIX (spot) Bollinger Band Squeeze, I need objective data and probabilities.

Right now the fastest charts (1 min) look like this, distribution of yesterday's attempted run, which activated the SPY Arbitrage and although there was a slight move today, it didn't amount to much.

Now take the same chart and put it in perspective.
 

From a leading positive and price up to in line on a pullback to a leading negative, this is not the screaming buy signal and if it's not there, where's the short term money flow going?

We didn't enter the trading longs from gut instinct, there was a reason, there were strong signals (remember the VIX/VXX, etc. trade opposite risk assets or bullish market/asset behavior).

Just to make sure it's not a fluke, there's nothing on the 2 min chart either, these are the fastest to register any new behavior just before the F_O_M_C, it's not there.

If I had to guess, I'd say either a cycle to protect the market has been set up like it was on the release of the Non-Farm Payrolls or there's a data leak or it's just so obvious to smart money that there's no taper or something to offset it, that's not obvious to me especially after what some regional F_E_D president's said just before this meeting's media blackout last week.

 Not too far away though, the 10 min chart is in line, no damage, remember that the market positives were 1-5 min only and their 10-mins were opposite this? The suggestion would be a short term bullish move like expected in PCLN and a larger bearish move, like expected in PCLN.

This chart has support, it doesn't take the long for the 1-5 min charts to go positive and the fact that this never saw deterioration suggests they will.

The 30 min leading positive is similar to the market's 30 min (plus) leading negatives.

If I had to make a best guess based on what I "KNOW" and have seen, I'd say the initial knee jerk reaction (I'm not talking about the first 15 minutes, but the first few days), is bullish and that shortly gives way to a bearish and I mean very bearish fade as is typical of F_E_D knee-jerk reactions.

The interesting thing about this theory as well is it would give the market "About" enough time to end the year on a positive note, but the window dressing set up (and the reason the internals are so whacky as shown by the Hindenburg Omens) is bearish so the start of the new year the market is more or less crushed.

That's my best guess considering the signals, considering the highs and lows all mixed up as evidenced by the Hindenburg Omen and the fact that the Omens have been in clusters of 5-7 or so before a move on the downside.

This is just speculation, but it's the best I have right now.

PCLN Update

PCLN was a tough decision, it was the ONLY of 7 trading positions from last week that was kept as a short, yesterday I wrestled with this all day, I probably sounded flakey in my updates, but that was me just wrestling with the management of PCLN AS A TRADING POSITION, AS A CORE POSITION, SHORT, SHORT, SHORT! (Yes, I'm yelling).

However, how can I not like this as a long? Every concept that we use is right here in PCLN and it's one of the few that has clear signals.

 The break down from a triangle as a top (one of our concepts) and then forming a well-known and visible bear flag right where technical traders would expect it seems like set up enough, but knowing technical traders usually won't bite unless there's "confirmation of price" we have a break below the bear flag as they'd expect and as Wall St. would do to get them to bite. Did they bite?

 This is a break of a simple trendline, lots of volume there, someone bit something.

 We have the larger picture (short) and the "reversal process"-rather than an event with the rounding top, but we also have a centennial number just a bit above at $1200, this would also be the head fake move that creates our Igloo with a chimney reversal, we have the igloo so far, the chimney should be to the far right.

So the 30 min bearish chart for trend/core positions is an obvious short, 3C is leading negative, but that head fake move would make this a perfect set up.

And wouldn't you know it, the charts needed to push the head fake move like this 2 min, are positive

This 5 min is leading positive with the slip out of the bear flag suggesting a head fake move.

How can I not like PCLN as a short term long and a long term short? If PCLN can make it to >$1200, how can I not take that short sale?

Market Update

OK, I'm just checking in and giving you the weather, PARTLY CLOUDY with a chance of showers, although.

I just love that forecast, you can't be wrong.

For 2 hours I've been looking at this market and so far the only thing I have to show for it is eye strain, this is just such an ugly, disjointed market, it's not surprising at all that there are 4 Hindenburg Omens clustered because which in the recent past has led to a substantial market correction (relatively speaking), but the true H.O. portends a market creash, it has just been difficult I suppose as the Bernanke Put has been there the entire time, but the situation creating the omen is still bearish no matter if the Bernanke Put is there or not.

I am NOT using the Hindenburg Omens as an excuse for not being able to get a strong feeling for the market. Yesterday there were some very strong signals, last week there were as well, then there are these pockets of complete nonsense.

I think it's important to understand what a Hindenburg Omen is in the first place, this is the mechanical definition...

"The Hindenburg Omen is a combination of technical factors that attempt to measure the health of the NYSE, and by extension, the stock market as a whole. The goal of the indicator is to signal increased probability of a stock market crash.

The rationale is that under "normal conditions" a substantial number of stocks may set either new annual highs or new annual lows, but not both at the same time. As a healthy market possesses a degree of uniformity, whether up or down, the simultaneous presence of many new highs and lows may signal trouble."

To sum up the above, the market should either be largely trending in one direction or another, this has been the basis of cycle identification since I started using 3C, actually even before that when I'd look at 500 stocks every night, if there were a lot more that looked like great short set ups, I knew the market was about to come down, if there were many more that looked like great buys, I knew the market was about to go up.

With 3C I'm checking all the major averages, there should be a theme among them, then I'm checking their leveraged ETFs, both inverse and regular and they should confirm. Then I'm checking industry groups and I'm checking all of these in as many timeframes as possible and they should confirm that the entire market is moving the same direction. 

However recently and especially this morning, there's no sense of cohesion at all, not even among the same average and its leveraged ETFS, much less other averages and Industry groups and certainly not among individual stocks. This is something I really haven't seen very often and it is literally straining my  eyes as well as brain.

The confirmation of 4 Hindenburg Omens in 5 days or so makes sense, but I'm not basing my analysis on the fact the omen is there, I'm basing it on the frustration of looking at this market.

Numerous times the market has given a signal an hour or two before the F_O_M_C so I'm hoping to see that.

The theory about the SPY Arbitrage, well I'm not sure what to do with that because HYG is getting decimated in 3C today while VXX is improving in 3C and there is no SPY Arbitrage present at all. There are signs of VIX futures being bid which they haven't been the last few days, but this would be normal in front of the F_O_M_C, they should be screaming which they are not yet.

A few things that do look more solid:

IWM looks like it's losing 3C momentum. XLK(tech) has an incredibly nasty divergence at 10 mins, I would not be planning on hanging around any Tech longs too long, I'm still a fan of TECS (3x short Tech ETF). XLF looks like an upside breakout and then the floor dropping from under it which would make sense from a price pattern/head fake perspective. AMZN has some neutral intraday charts, at 15 mins though it's a red-headed step child. IOC's dip yesterday looks like it was accumulated, I'm still holding that long and looking for a bounce. AAPL has been horribly negative on the 15 min chart, everything else has been in line, the 30 min is now deteriorating and the 1-10 min charts are deteriorating and catching down to price. I'd think a gap fill of today's action would be likely at some point, but this is bases on market behavior when the market hasn't faced any extremes, if it does because of the F_E_D, then I'd believe that break-away and exhaustion type gaps can stand. PCLN's price action doesn't hold with the 1-5 min charts, it holds perfectly with anything above those, I have to wonder if we have a head fake move going on or whether the longer term charts are just running over the divergences, that's a hard notion to accept when we have a 5 min leading positive, if it were a 1 min chart alone, then it would be easier to believe. DGAZ looks like it may fill a gap on the downside, but still looks like a strong upside trade not connected to the market and likely at least a true swing duration.  GLD and GDX are showing signs of putting in a bottom or working on it, I'm not ready to make a move there, but I am paying attention, these are the assets that should be sensitive to QE. I'm a bit concerned about the FAS long, Financials look horrible, it's only been the very short term "bounce" timeframes that have supported FAS long, other than that, I'd be and am long FAZ in the core positions.

I'll give you whatever I can find, but what is happening in the market right now is total chaos and the Hindenburg Omen is a way to show that. In addition because of the holidays and the T+3 settlement rule, I absolutely expect window dressing for the end of quarter and year to be extreme.

AAPL's Delayed Deal on China's Massive Networks

I don't know much about this and I don't care to, but apparently a deal signed between AAPL and one of China's largest mobile networks seems to "still" be in negotiation, apparently even after it was signed. That seems to be the reason AAPL did this today.

 And this has been good for our AAPL January $550 puts, they're still a bit in the red, but have recovered a lot today.

AAPL has had a nasty 15 min negative, but the 30 and 60 min had been in line which means I'm less inclined to look at AAPL as a core short. It's difficult to figure out if AAPL took a massive revaluation dive like MSFT did around 2000 and went in to a broad trading range, ironically after they declared a dividend much like AAPL recently did. So the question in my mind is, "Is this the new normal, AAPL has just moved from growth /momentum stock to blue chip, low volatility dividend stock like MSFT did. Take a look at MSFT in the 90's, it was every bit as much a momo stock as AAPL was before the -45% fall, the dividend seems to be what killed perhaps both of their momentum, but it remains to be seen with AAPL.

On the other hand I haven't made any new commitments in AAPL because almost all of the charts other than the 15 min are pretty close to in line. Recently the 30 min has slipped. So we'll be watching intraday charts today for any sign of what comes next for AAPL and how to teat those Jan Puts.

This is the 15 min negative, it has been screaming for a while now, but alone.

Perhaps today will shake something lose.

A.M. Observations

Other than Housing Starts this morning, the only other big event if the 2 pm F_O_M_C and Bernie's last scheduled press conference at 2:30, both events can be knee jerk movers, I think the Bernanke presser has the potential of being a lot more interesting than the policy announcement, it's always where I've gotten the best feel for F_E_D policy in the past and what the market thinks of it.

As for the Housing Starts, 3 months of data have been revised and caught up and it looks like a smashing success, but there's more than a few things that don't fot and because this is the seasonal adjustment period, it's almost as if they can input the number they want and have the data generated, I'll have to look more closely at this one before I swallow the headlines whole.

If I'm a little quiet today, you know why, I'll be looking for anything and everything.

Good luck to all.