I must have received 75 well wishes, wondering what's going on, people offering to drive several hours to help me if I needed it and...
"Hey, you OK pal?
I am sure I am not the only one concerned. And, I am pretty sure your pipes didn't burst. Is your mom okay? Are you having any complications from your surgery?
Its a short flight from Ohio - if you need any help, just say so, seriously."
a member who considers a flight from Ohio to Florida a short hop to be of assistance. Thank you , each of you.
The truth is I'm not sure what happened, at 5 a.m. my dog was vomiting non-stop, my house-mate (soon to be ex-wife) called me from work at 7 a.m. asking for me to bring her medicine and before I could get out of the shower I was competing with the dog for the rest of the day to the point in which I couldn't talk, move or keep any medicine d own, it took me nearly all day just to be able to look at the market quickly and write 3 sentences. The only thing I can think of is we all went to her condo she purchased for the inspection, the inspector was wearing a mask and the place was in shambles, neither the electric or water had been on in 8 months as there was a massive flood that filled the neighbors condo and as such there wasn't even a bathtub in this 1/1. Perhaps some fungus or mold got us, but it was a horrifying day, I'm just finishing off my 6th bottle of Pedialite.
As for the market, I have two thoughts from yesterday; one is that yesterday was a continuation of broadening out the reversal process. The Dow Futures hit Wednesday's highs, took out stops or ran limits and then rolled over, that was the cleanest version of broadening out the top (just like with a bottom and its upside move, the larger a top, the more downside it can support). I'll admit when I initially looked at the Daily IWM chart it didn't look like that at all, but when I looked at where price had been much of the day on an intraday chart it made more sense.
DOW yesterday
The IWM with the tell-tale rounding top
While I haven't seen everything from yesterday yet, I see that HYG was under heavier distribution, I probably would have added to the Put position yesterday as it did what I was looking for or close enough. VXX held up very well and has a beautiful bottoming process/divergence
VXX / UVXY leading positive with a huge reversal process, larger than the averages.
HYG giving out relative performance vs the SPX yesterday
HYG's leading negative divegrence/distribution.
As far as my 200-day moving average theory, that we head down to the 200 day, likely break under it and have one more bounce, I think it's still on the table, but if they didn't let the 100-day pass which is no where near as popular as the 200-day or 50 day...
NASDAQ hitting the 100 day on a daily, forming a hammer/bullish reversal after the head fake move and swings sentiment, something that seemed impossible as bearish as everyone was just a week ago.
I think we're heading to the 200-day next for the SPX and it will be head faked, but again we are running out of time so intensity and volatility will replace duration as I pointed out Wednesday.
Again yesterday it was the most shorted stocks that outperformed everything else, I'd think they are largely covered, I'll have to check the updated short interest when it comes out, but as you can see, retail is fickle.
Pro sentiment also fell off harder again (last night's chart of sentiment vs the SPX in green).
TLT's flight to safety also outperformed its correlation as Yields fell hard leaving a disconnect between them and the SPX, Yields always win so they should be pulling the averages lower.
Overnight the USD/JPY lost its critical support from the last week at $102, there's 100 pips in a $1 move, with a carry trade each pip can be worth $10k or more, add 100:1 leverage and a move like this adds up to large losses quickly.
This is the intraday 1 min break of $102 which dragged the Nikkei down with it overnight.
Cross asset correlation is off again and as I suspected, the gold/SPX relation that worked so well and was so consistent for so long has flipped 180 degrees.
The 60 min USD/JPY has been in a perfect downtrend since the start of the year, now its rolling over to make a lower low. The Index futures have followed these carry trades tick for tick since November of 2011 and even through most of 2014, only on this last short squeeze from the head fake move have they come apart for the first time since November of 2011 and I really don't expect that to hold being market trades are financed by carry trades, there's more to it than just that, but it just gets worse for the market.
However as I said before the head fake move materialized, but when we expected it, Wall St. doesn't do anything without a reason and the reason here is to swing sentiment to bullish, WHEN I SAID THIS IT SEEMED IMPOSSIBLE THAT ANY LEVEL HIGHER WOULD SWING SENTIMENT OUT OF THE BEAR CAMP AND IN TO THE BULL, BUT THAT'S WHY THESE MOVES HAVE TO BE SO EXTREME, THERE IS A REASON FOR IT AND IT'S NOT THAT WALL ST. IS BULLISH.
THE CORRELATION BETWEEN ES (SPX FUTURES) AND USD/JPY IS SEVERELY OFF, ABOUT 80-85 ES POINTS RIGHT NOW, REVERSION TO THE MEAN IS GOING TO BE JUST AS VOLATILE AS THE SHORT SQUEEZE HAS BEEN.
My feel for the open is that the USD/JPY tries to bounce, but resistance at $102 is just above, that may be the early tone plus we have op-ex max pain pins, I do wonder if it may be a move lower as I'd guess most options are going to be higher calls rather than lower puts.
We'll see what the carry trade looks like after the first couple of a.m. hours of trade burn off, but $102 is a serious breach, the BOJ is probably getting nervous.
Remember the Carry trade is typically leveraged 100:1, every pip thus has the potential of carrying 100 pips in losses, thus the CT can fall very quickly as it has done throughout 2014 and it has been the main driver of risk since 2011.
There's a lot in transition right now, whether it is temporary which after 6 days it never feels like it, but 6 days is a drop in the bucket or whether it is a change we need to take seriously we'll know soon enough, the Carry trade is a big one, the USD and of course the Yen and right now, gold as it has flipped 180 degrees, but as they say, "Everything is planned out and ready until the first punch is thrown".
One defining feature of this shift in sentiment is that it has sent investors who are unsure to 11 year highs, THIS IS EXACTLY WHAT WALL ST. WANTS AT A TRANSITIONAL PERIOD, they can't do what needs to be done with full on bearish sentiment, but investors are also nervous with this move which makes the falling wall a lot easier on the first sign of a move a little more aggressive on the downside than they've seen the last week.
I'll be checking on all indicators I missed yesterday si I'll likely have a lot of updates as I sip my electrolytes like a 1 year old.
I THANK EACH OF YOUFOR YOUR CONCERN, EMAILS AND SUPPORT, I LOVE YOU ALL AND WANT NOTHING BUT THE VERY BEST FOR YOU.
The IWM with the tell-tale rounding top
While I haven't seen everything from yesterday yet, I see that HYG was under heavier distribution, I probably would have added to the Put position yesterday as it did what I was looking for or close enough. VXX held up very well and has a beautiful bottoming process/divergence
As far as my 200-day moving average theory, that we head down to the 200 day, likely break under it and have one more bounce, I think it's still on the table, but if they didn't let the 100-day pass which is no where near as popular as the 200-day or 50 day...
I think we're heading to the 200-day next for the SPX and it will be head faked, but again we are running out of time so intensity and volatility will replace duration as I pointed out Wednesday.
Again yesterday it was the most shorted stocks that outperformed everything else, I'd think they are largely covered, I'll have to check the updated short interest when it comes out, but as you can see, retail is fickle.
TLT's flight to safety also outperformed its correlation as Yields fell hard leaving a disconnect between them and the SPX, Yields always win so they should be pulling the averages lower.
Overnight the USD/JPY lost its critical support from the last week at $102, there's 100 pips in a $1 move, with a carry trade each pip can be worth $10k or more, add 100:1 leverage and a move like this adds up to large losses quickly.
Cross asset correlation is off again and as I suspected, the gold/SPX relation that worked so well and was so consistent for so long has flipped 180 degrees.
However as I said before the head fake move materialized, but when we expected it, Wall St. doesn't do anything without a reason and the reason here is to swing sentiment to bullish, WHEN I SAID THIS IT SEEMED IMPOSSIBLE THAT ANY LEVEL HIGHER WOULD SWING SENTIMENT OUT OF THE BEAR CAMP AND IN TO THE BULL, BUT THAT'S WHY THESE MOVES HAVE TO BE SO EXTREME, THERE IS A REASON FOR IT AND IT'S NOT THAT WALL ST. IS BULLISH.
THE CORRELATION BETWEEN ES (SPX FUTURES) AND USD/JPY IS SEVERELY OFF, ABOUT 80-85 ES POINTS RIGHT NOW, REVERSION TO THE MEAN IS GOING TO BE JUST AS VOLATILE AS THE SHORT SQUEEZE HAS BEEN.
My feel for the open is that the USD/JPY tries to bounce, but resistance at $102 is just above, that may be the early tone plus we have op-ex max pain pins, I do wonder if it may be a move lower as I'd guess most options are going to be higher calls rather than lower puts.
We'll see what the carry trade looks like after the first couple of a.m. hours of trade burn off, but $102 is a serious breach, the BOJ is probably getting nervous.
Remember the Carry trade is typically leveraged 100:1, every pip thus has the potential of carrying 100 pips in losses, thus the CT can fall very quickly as it has done throughout 2014 and it has been the main driver of risk since 2011.
There's a lot in transition right now, whether it is temporary which after 6 days it never feels like it, but 6 days is a drop in the bucket or whether it is a change we need to take seriously we'll know soon enough, the Carry trade is a big one, the USD and of course the Yen and right now, gold as it has flipped 180 degrees, but as they say, "Everything is planned out and ready until the first punch is thrown".
One defining feature of this shift in sentiment is that it has sent investors who are unsure to 11 year highs, THIS IS EXACTLY WHAT WALL ST. WANTS AT A TRANSITIONAL PERIOD, they can't do what needs to be done with full on bearish sentiment, but investors are also nervous with this move which makes the falling wall a lot easier on the first sign of a move a little more aggressive on the downside than they've seen the last week.
I'll be checking on all indicators I missed yesterday si I'll likely have a lot of updates as I sip my electrolytes like a 1 year old.
I THANK EACH OF YOUFOR YOUR CONCERN, EMAILS AND SUPPORT, I LOVE YOU ALL AND WANT NOTHING BUT THE VERY BEST FOR YOU.
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