Market Update

 far there's really nothing that looks too troublesome, even though a couple of the averages are doing some massive retracement, they are doing it on the typical levers and a whole lot of BOJ help (I think $104 is the target for USD/JPY) as well as SPY Arb, which is not in the best shape, but they managed to hold most of it together yesterday.

Here's what we have thus far... First as mentioned first thing this morning, since there was so much downside/panic yesterday, it left the 5 min Index futures some room to move, we'll see what they look like at the end of the day, they certainly weren't leading by any stretch.

As for the averages...

 IWM 1 min is still in line.

IWM 2 min showing some distribution near the intraday highs

 IWM 3 min picking up that same distribution

Put in context, this is the IWM 5 min chart so it has a ton of damage and isn't anywhere near what you'd think by looking at 1-3 min intraday charts alone, all of the averages are like this and the further out you go, the worse it gets.

QQQ 1 min with late day small accumulation yesterday, in line earlier and distribution setting in

 Some migration to the 2 min chart, a small relative negative divergence, it may just be starting or it gets run over. To the left you can see the massive leading negative divegrence/distribution that caused yesterday, the accumulation is no where near this distribution.

QQQ 3 min looks as it should considering the 1 and 2 min.

QQQ 5 min in context again, like the IWM, nothing much is happening in underlying trade today.

 SPY 1 min with the same late day accumulation yesterday as the carry trades turned around 3 pm and some distribution setting in

The distribution to the left leading to the fall yesterday, note you can't even see any accumulation here vs the distribution on the left so that tells you a lot and just about all you need to know about today's move.

 SPY 3 min, again distribution at the highs yesterday, accumulation is very very small relative. Otherwise, this chart is close to in line, give it some time as they are starting to deteriorate.

TICK Data

 Today's TICK is fairly mellow considering the R2K and NDX, about +1000 to -500 range

Yesterday's added to the mix with -1500 . Today's TICK really isn't even trending, just range bound so you might watch it, draw a trendline on the lower end of the range and pay attention for the TICK to drop below that -500 area. This is NYSE intraday TICK data.

My custom TICK indicator, nothing special, it's about in line with the SPY 3C charts intraday.

As far as the arbitrage move which is a big part of today's move with the carry trades...

 HYG's price is up, that's all the arb. algos can read, but you can see there's distribution in to HYG so how long it can stay up is questionable.

VIX Futures (not spot) are seeing accumulation so there are still some worried traders out there bidding up protection which is great because this is one of the maion areas we are paying attention to.

TLT is the 3rd asset, it needs to be down for the arbitrage to work, I told you yesterday there's short term negative divergences, I think it ran a bit too far, too fast and too parabolic so it should work some of that off, I'm still very interested in a long term long position here.

Point being, any downside in TLT (so long as HYG can maintain) will help the Arbitrage mechanism.

This is the SPY Arbitrage model, you can see it's losing it's umpgh, it was near +$.80 but the move in the SPY is bringing it to reversion to the mean.

If HYG falls suddenly or VIX futures pop, the arb is over and look out below.

The real movers though are the carry pairs, I haven't put up an Es comparison, but I don't need to, I can see it.

 USD/JPY, note it's  starting to move in a parabolic way and you know what happens shortly after that. Again, I think the target here is $104, they may hit a short squeeze so watch for that, but this is probably the most effective lever moving the market, but we know it's still short term as they are moving out of the carry, in fact the Yen's price action would make you wonder how the carry pairs even pulled this off today.

USD/JPY the same, so you can see what's driving the market, it's not demand.

I can see some rotation out of 5 year bonds, the notes yesterday were where the money was flowing to , so much so the yield went negative and people were paying to get their money out of equities, not sure where they are today, but the 5 year's yield is up so there's a little rotation to risk.

 The 5 min Yen, you'd think this would be a straight drop the way the carry pairs above look, but it's not and that's because there's demand here still despite the BOJ's efforts, the move is to coiver the carry, even if it's not at an advantageous price, they are apparently willing to take whatever they can get and that makes the BOJ's job difficult as each time they try to knock the Yen down, fund managers are buying the Yen back to close their carry positions, I was very surprised to see this price action in the Yen.

The 30 min Yen chart which has been driving it since the New Year low is still in line and powerful so no damage being done, as far as I can see, still lots of demand for Yen.

Finally just for kicks, the Context ES model. Note it was near 18 points positive, this was from the overnight carry pair move higher, now you can see it's down to the $8 point area as ES moves up to the model, it's not the model moving up, so once the carry pairs lose momentum, we should see this flip red.