Daily Wrap

As of Friday there was really only 1 chart that told me the market's likely direction early this week or rather the one direction the market was least tlikely to move in early this week, that was AAPL ansd we'll get to that.

The market charts themselves were and remain weak, looking at those alone, I'd never have guessed that the market would even hold its ground, but that seems to be what this is all about. Overnight Chinese fundamentals saw the USD/JPY and Index futures lower, then they were saved to essentially hold the market in place, which may sound like it serves no purpose, but that may not be the case.

In another example of "Holding the market in place", the carry pair, USD/JPY opened regular hours at $102.42 and closed regular hours at 4 p.m. at $102.43, one penny difference.

If you think it serves no purpose to pin the market in place, let me remind you of an observation from Friday's "Daily Wrap".....

"As for the EOD ramp FAIL, look at it vs VWAP which has been very steady which is what we see when there's large scale distribution.

A nice steady VWAP and EOD, FAIL all the way down through the lower standard deviation."

Now, note today's ES VWAP...

A very similar VWAP Pin early or overnight with a better fill during regular hours, but just like Friday, a dump at the EOD when the pros come out to trade. 

As for the market averages and Index futures, today looked like early confirmation to get the market up, but as soon as it was, distribution made itself very clear.

 ES in line overnight and through the first half of the day and then pure distribution after VWAP comes close to the upper standard deviation and a high volume sell-off below VWAP.

(2 min).

The IWM has a similar theme intraday  (2 min)

The same is seen on IWM 3 min

And IWM 5 min shows how quickly early confirmation was created and then sold in to, it seems like someone was trying to fill at VWAP or better again today like Friday, this can be selling or short selling, but considering events of the last few weeks I'd say short selling has the edge.

QQQ intraday shows nothing but distribution today

Q 2 min also showing pure distribution,

QQQ 5 min trend.

 SPY INTRADAY PURE DISTRIBUTION.

SPY 2 min distribution.

 The same with the 5 min scale after early confirmation.

As far as the most telling chart from Friday and today as well, AAPL...

AAPL's 15 min chart suggests as it did Friday that there's a bounce coming in AAPL, it was no where near enough for me to take the trade with such heavy probabilities stacked against  the broad market.                                                                                                                          

 AAPL's 5 min chart with more details makes it pretty obvious that AAPL's near term probabilities didn't include severe market weakness.

AAPL'S 2 MIN CHART SHOWS ITS MOST RECENT accumulation cycle, it's obviously not very big, but enough to suggest the market wouldn't see any severe downside today, considering AAPL still hasn't fulfilled the divergence, I don't think the overall market is ready to make a downside move quite yet, AAPL is essentially the proxy for the market right now.

Leading Indicators...

 Sentiment hasn't moved, it looks to me to lean toward a flat day tomorrow, at least for the first half of the day.

 YIELDS were perfectly in line intraday, remember these are a leading indicator so if we go with the signal as leading, it suggests a flat day tomorrow.

The larger picture for the entire rally out of the head fake move from the 2nd week of February is clearly negative and should resolve as such, these are the kind of leading signals that really make Yields shine as a leading indicator.

 VIX futures were seeing demand all day (especially as the market made its gain, then the market lost ground in to the close and the two reverted back to their correlation (note the SPX's price-green- has been inverted to show the correlation).

 TLT also saw better relative performance today.

High Yield Credit was flat all day, it didn't buy in to any SPX exuberance over a new all time high move.

We did have a Dominant Price / Volume Relationship among all the major averages today, that was Close Up / Volume Down which is the most bearish of the 4 possible relations and reflects the SPX's inability to hold on to new reduced highs which were set intraday, but failed to hold in to the close as major selling took price below VWAP.

Typically this relationship results in a 1-day overbought condition and the market closes lower the next day, but I don't think we are in a normal market right now. This is the same relationship we saw Friday. Despite SPX setting new intraday highs and then losing them...preventing the SPX from closing green for the first time on the year; I don't think this had anything to do with strength and had a lot more to do with exiting or selling short near VWAP, the charts are in such horrible shape, this is why I said Friday in the Daily Wrap, "All I can say moving forward is, "I hope we have at least a day to add core shorts, PCLN and NFLX are high on my list with many others."

BofA did make a bullish call on AUD/JPY (another carry pair), ES did correlate with it for a while, but I have a feeling that they are stuck in a position and are seeing the carry trade that can be leveraged more than 100:1 failing all around and AUD/JPY is the weakest of the carry pairs. AUD/JPY failed back in April, the USD/JPY just started failing Jan 1st.

Also pour position in DGAZ (+14.59%)  is looking good today as UNG took nearly a -6% hit.

I'll have more on specific stocks and futures later.