Leading Indicators

Although I really prefer looking at these on a closing basis because they move so much the last hour or in to the close, it's still good to know what's happening.

HYG 's correlation with SPX is in line almost perfectly, this is supported by 1 min intraday charts or chart, nothing past 1 min is even in line, all negative.

Like yesterday, sentiment is mixed, one is inline while the other now has a large relative divergence between the 1/10 and 1/13 high (SPX) and the current one, the sentiment indicator is at a large relative negative divegrence and added more to it today, these move a lot right at the close.

VXX is significantly outperforming it's correlation with the SPX, however as noted in the last post, there's a 1 min negative meant to push it down intraday and I think that's so that clear resistance can be  broken as it's becoming too obvious a target (orders lined up just above, that means money, even if just in volume rebates and spreads).

 Intraday VIX futures negative, but more of a steering divergence.

While the larger institutional timeframe at 5 is clear from in line to leading positive.

TLT as we knew looked ready to pullback as it has, I expect more, but there is a positive divegrence starting, it may just be for a gap fill, but if it keeps building, then a TLT long position ,may be coming sooner than later, for now I'm assuming it's a gap fill move until I see more evidence or stronger evidence otherwise.

TLT is outperforming the correlation with the SPX.

High Yield Credit strangely held up on Monday, it didn't do anything, but that's the point, it stayed in a range and didn't drop. Yesterday it started dropping, today it has made another lower low in this move since Monday.

As mentioned, HYG 1 min is inline with price, any other timeframe is negative.

 HYG 1 min

HYG 3 min


There is no SPY Arbitrage, it's actually $.40 negative.

The averages look something like this...

 This 1 min SPY to the far right is what I thought would turn in to a positive divegrence intraday to take out the range, but it's stalled for the moment

Then after 1 min charts, the damage is still there and not being fixed, 3 min

This 5 min shows the larger range which I was( and many of you emailed me about) wondering if there's be a head fake move above it because it is 5 trading weeks long, a VERY obvious target. It's perfect for all the reasons head fakes exist which is in my two links on the member's site, "Understanding the Head-Fake Move". Today is part of that.

QQQ 2 min in line

After that, no repair to damage, just worse, 3 min

5 min

IWM which was PERFECTLY in line on 1 min charts yesterday has changed character significantly, the yellow trendline is the range intraday I was wondering about and thought was going to be broken because of the VXX intraday divegrence and the 1 min SPY above.

This is also why I chose the IWM for the Put position, the rapid deterioration right above the range for the market; it's one of my favorite option trade set ups.

 IWM 5 min

The 5 min on an intraday basis is also leading negative and the range is clear, it's so obvious and so close, I can't see why they wouldn't hit it, that would at least open the door to some good opportunities as long as we can get quick confirmation, but as far as options, I don't think I'll enter any more puts unless we get a move like that which knocks put premiums down.

The Yen is still building on 5, 15 and 30 min charts positive, I've been waiting all day for the 1 min to go positive as it looks like a rounding /reversal process, but as far as timing and seeing a high probability that the Yen is about to move up, I needed that 1 min chart positiver and it now is.

This should be really interesting if the Yen signals are what they appear to be as the EUR/JPY and USD.JPY are both starting to deteriorate, FX traders know if there's buying pressure in the Yen like 3C is showing so they'd be making moves in the carry crosses as price action seems to suggest.