Market Update

A lot of assets are just falling apart and looking worse, I can't go long anything that's market correlated or short either for instance VXX, there's just too much risk. It almost seems like the markets of old before the Bernanke Put was in place, selling off late Friday because they have no idea what will come out of China over the weekend, that's something we haven't seen in quite some time.

In any case, earlier I mentioned how the IWM looked the worst from a 3C perspective earlier and added, sometimes it's the ones that look the worst that perform the best as the market is like a pendulum swinging way too far one way and then way to far the other.

It's ironic that the assets that had been holding up better like SPY are now looking worse and the IWM that looked the worst is now looking better. In any case, this is a serious break in the market's character, things won't be the same, the BTD's are not going to be the same after today.

Here's a look at a few of the averages with emphasis on TF/IWM in to the close which may just be a function of the pendulum effect. Also if you recall the chart I posted of the USD/JPY correlation vs SPX (ES) futures and how around Tuesday the carry pair was showing gross underperformance, remember that was the same day we had the knee jerk upside pop because of the PBoC liquidity injection that we were so suspicious of and now we know why. Watch those charts in that area as well, you'll see something that was giving away the distribution I was pointing out this week (earlier).

THE PLAN REMAINS TO STAY IN THE SHORTS ESTABLISHED, USE ANY PRICE STRENGTH WITH CONFIRMED SIGNALS FOR NEW OR ADD TO POSITIONS AND TAKE SELECT LONGS THAT ARE SHOWING STRENGTH FOR A MARKET BOUNCE OR AT LEAST THAT ASSET, BUT IN NO WAY IS THERE ENOUGH OR EVEN CLOSE TO ENOUGH EVIDENCE TO SUGGEST A LONG IN ANYTHING MARKET CORRELATED.

 MAJOR SELLING IN THE TICK, TONIGHT'S DOMINANT P/V RELATIONSHIP SHOULD BE CLOSE DOWN/VOLUME UP WHICH WOULD BE A 1-DAY OVERSOLD EVENT, BUT WHEN A MARKET BREAKS, A LOT OF RULES GO OUT THE WINDOW.

 SPY 5 min still holding its positive divegrence, remember the USD/JPY chart vs ES, the FX pair was underperforming the correlation right there where we see distribution in to the bounce, we already know for sure that BAC's main analyst is looking at the same things as he put out today.

 QQQ 5 min is still holding, but again that same area on the PBoC liquidity injection bounce shows 3C distribution in to the move.

My point about BAC's head technician/traders is that they saw the same lack of correlation in ES and the carry cross, so it would be obvious they'd be passing along "Sell" notes to their trading desks, that seems to be what 3C is showing us, it's showing distribution there, but it makes sense that BAC would have been a seller, THIS IS WHY IT'S SO IMPORTANT TO LOOK AT AS MANY PIECES OF THE PUZZLE AND NOT JUST A MOVING AVERAGE OR MACD.

 IWM is outperforming near the close and just as important is the rounding process with the 3C signal.

This is the Russell 2000 futures, like the IWM they also have the rounding price pattern which is usually a reversal PROCESS, not an event, and the positive divegrence there is really the only one as ES and NQ both lost theirs on this timeframe.

I'm going to say if there is a bounce, there's going to need to be more work on a viable base so Monday would likely see more chop, but likely more sideways and/or rounding, maybe a "W".

I can't see a "V" reversal unless there's a fundamental even like the F_E_D comes out and says they won't taper at the end of the month meeting.


So, let positions work, be patient and wait for the set up.