As of Monday we had clear, but not very large, positive divergences in all of the averages, I wanred that because of increasing volatility, even a normal bounce could look quite impressive. Toward the end of the day price moved above the lows set on Friday in most of the averages, that's when we saw some 1 min negative divegrences acting as resistance to not allow prices to move above a level in which it was likely stop losses on shorts would be triggered, it almost seems like they were intentionally driven back down as to not allow those stops to be hit which would make sense as I posted last night, if you were trying to get more "Bang for your buck " on a short squeeze.
Given this morning's news from Russia and Putin on the Ukraine, I'd say we'd have to be purposefully naive to think that this rumor (or more) wasn't what caused Monday's divergence, it's the right size in that a good chunk of change could be made off the news, but it's not of significant duration to represent much more than that.
Then overnight and this morning at Putin's press conference we saw one of the most surreal, bi-polar collection of statements from lambasting the Ukraine to supporting the Ukraine's democracy, it was as if two or more people with absolutely conflicting views wrote the statement on the day John Kerry landed in Kiev and the US State Department said sanctions against Russia were only "A matter of days".
Here are just a few excerpts from the Kremlin/Putin...
- PUTIN SAYS UKRAINE SUFFERED COUP
- PUTIN SAYS UKRAINE GOVT OVERTHROW UNCONSTITUTIONAL, ARMED COUP
- PUTIN SAYS YANUKOVICH AGREED WITH OPPOSITION TO SURRENDER POWER (so was there a coup or an unconstitutional overthrow of Yanukovych or did he agree to depart and surrender power?)
- PUTIN SAYS UKRAINE’S YANUKOVYCH DIDN’T GIVE ILLEGAL ORDER TO SHOOT
- PUTIN SAYS UKRAINE USED TO ONE SET OF CROOKS REPLACING ANOTHER
- PUTIN SAYS YANUKOVYCH IS UKRAINE'S LEGITIMATE PRESIDENT (How could he be the legitimate president if he agreed to step down?)
- PUTIN SAYS YANUKOVYCH ASKED RUSSIA TO SEND TROOPS TO PROTECT PEOPLE (Anyone familiar with the Ukrain post Soviet Union knows that there has been an attempt by the US and NATO to encircle Russia and to pick off former Soviet sattelite countries and bring them in to the western fold, the Ukraine is one of the most notable examples. Russia has played a heavy hand in Ukrainian politics trying to keep them from aligning with the west and the EU, no doubt he saw a chance to really shake up the balance of power there)
- PUTIN SAYS YANUKOVYCH HAS NO POLITICAL FUTURE
- PUTIN SAYS UKRAINE POLITICAL LIFE HAS BECOME FARCE
- PUTIN SAYS NO NEED TO SEND TROOPS TO UKRAINE YET (However according to the Ukrainian ambassador to the United Nations, there are some 16,000 Russian troops already inside the Ukraine, we know there are some first hand as we saw them firing toward un-armed Ukrainian soldiers today as they marched toward their own air force base that Russian troops had overrun and taken control of Friday using percussion grenades).
- PUTIN SAYS RUSSIA’S MILITARY EXERCISE HAD BEEN PLANNED LONG AGO (Obviously this is ridiculous, the Ukraine apparently was not notified of their joint military exercises with Russia and just today Turkey scrambled (8) F-16's to track a Russian military plane, one would think Russia would have notified the Turks of their presence in the area conducting drills to avoid any potential mishaps)
- PUTIN SAYS RUSSIA WOULD SEND TROOPS TO UKRAINE ONLY IN EXTREME CASE (What does that mean considering they are already there?)
- PUTIN SAYS NO BLOODSHED IN CRIMEA
- PUTIN SAYS RUSSIA TROOPS IN UKRAINE'S CRIMEA JUST REINFORCEMENT (And here Putin admits Russian troops are in the Ukraine!)
- PUTIN SAYS MARKETS REACTED NERVOUSLY TO EVENTS DUE TO U.S. POLICY
- PUTIN SAYS POLITICS HAD "TACTICAL", TEMPORARY IMPACT ON MKTS (Remember the Russian MICEX market was down -11% yesterday after the Russian Central Bank sent rates up 150 basis points to stem the outflow of capital and the destruction of the Ruble, something they have not done since 1998, 2 months before Russia defaulted on their debt)
- PUTIN SAYS SANCTIONS AGAINST RUSSIA WOULD CAUSE MUTUAL DAMAGE
- PUTIN SAYS CRIMEAN ADMINISTRATION IS FULLY LEGITIMATE
- PUTIN SAYS RUSSIA NOT CONSIDERING ADDING CRIMEA TO RUSSIA (Which sounds a lot more like Putin is adding Crimea to Russia, especially after today's events that were polar opposite of the attempt to calm nerves, say launching an ICBM when any scheduled launch could have clearly been put off to defuse tensions)
- PUTIN SAYS CRIMEA SELF-DEFENSE BLOCKED UKRAINE FORCES (That's not what we saw with our own eyes today as Russians fired in the air at unarmed Ukrainian soldiers marching toward the air base.)
- PUTIN SAYS WE DON’T PLAN TO FIGHT UKRAINIAN PEOPLE (Again, given what is said and what has been done since, it sounds he plans exactly that)
- PUTIN SAYS DOESN’T WANT TO RECALL AMBASSADOR FROM U.S. (Putin must be experiencing Cognizance of Dissonance)
- PUTIN ORDERED RUSSIAN GOVT TO RENEW CONTACTS WITH UKRAINE GOVT(The contracts with Gazprom were never the issue, the discount was which is not taken up)
- PUTIN SAYS WEST ASKED RUSSIA NOT TO BUY MORE UKRAINE BONDS
- PUTIN SAYS NO IDEA WHO UKRAINE WILL ELECT AS PRESIDENT
- PUTIN SAYS AGREES W/ UKRAINE PROTESTERS' DEMAND FOR NEW LEADERS(Again, Cognizance of Dissonance after all he just said about what happened to Yanukovych)
- PUTIN SAYS MET YANUKOVYCH 2 DAYS AGO, SAYS HE'S ALIVE
Kerry...
US Secretary of State John Kerry on Saturday warned that Russian military interventions in Ukraine, which have been justified by the Kremlin as protection for residents in heavily ethnic Russian-populated regions, could result in “serious repercussions” for Moscow.
"Unless immediate and concrete steps are taken by Russia to deescalate tensions, the effect on US-Russian relations and on Russia's international standing will be profound," Kerry said.
"We hold a decent amount of treasury bonds – more than $200 billion – and if the United States dares to freeze accounts of Russian businesses and citizens, we can no longer view America as a reliable partner,” he said. “We will encourage everybody to dump US Treasury bonds, get rid of dollars as an unreliable currency and leave the US market.”
“The Americans are threatening Russia with sanctions and pulling the EU into a trade and economic war with Russia,” Glazyev said. “Most of the sanctions against Russia will bring harm to the United States itself, because as far as trade relations with the United States go, we don’t depend on them in any way.”
PUTIN, XI DISCUSSED UKRAINE BY PHONE, KREMLIN SAYS...
* In December, China dumped the second largest amount of US paper in history.RUSSIA, CHINA SHARE SIMILAR POSITIONS ON UKRAINE, KREMLIN SAYS
Only hours after Putin's deescalation of events, Russian navy ships blocked off the Kerch Strait which separates Ukraine's Crimea region and Russia.
Shortly after today...
Via Reuters,
"The Turkish Air Force scrambled eight F-16 fighter jets after a Russian surveillance plane flew parallel along its Black Sea coast, the military said on Tuesday, amid increased tensions between Russia and the West over Ukraine.
The incident occurred on Monday and the Russian plane remained in international airspace, according to a statement on the website of the military General Staff.
Ukraine's Crimea peninsula, which juts into the north of the Black Sea, is at the center of the current standoff between Russia and Ukraine's new pro-Western government. NATO member Turkey forms the southern coastline of the Black Sea"
Later in the day Russia's Foreign Minister, Lukashevich, addressed the possibility of sanctions...
"We will have to respond...if provoked by rash and irresponsible actions by Washington... and not necessarily symmetrically."
Early this afternoon we received the biggest provocation and rise in tensions...
- *RUSSIA TEST FIRES INTERCONTINENTAL BALLISTIC MISSILE: INTERFAX
- *RUSSIA TEST FIRED MISSILE FROM RANGE IN ASTRAKHAN REGION: IFX
- *RUSSIA MISSILE LAUNCHED AT 10:10PM IN SOUTHERN RUSSIA: INTERFAX
- *INTERFAX CITES RUSSIAN DEFENSE MINISTRY ON MISSILE TEST
“Armed persons in a boat came to the ship but the crew repelled their attack. There was even the attempt to board the ship, capture her, arms, and sailors,”informed Capt. 2nd Rank Vitaliy Zvyahintsev, Commander of Surface Ships Brigade, Ukraine’s Navy.
Now, the ships of the Russian Federation Black Sea Fleet continue blocking the Ukrainian Navy ships in Crimea.
All the military units and ships of the Ukrainian Armed forces deployed in Crimea follow the orders of the Ministry of Defense and the General Staff of the Ukrainian Armed Forces."
This is the large Intelligence gathering ship that was said to be under armed attack in the Ministry's statement...
I'd say if anyone was buying after taking a beating in the Russian markets, Putin and his cohorts were likely buyers of US assets before his grand gesture, however the words and statements did not match the actions on the ground, in fact it seemed tensions were escalated today.
You saw the negative divergences in the market today, the old "Buy the Rumor, Sell the news", except on Wall St. these days I doubt much is rumor. Very much in the same way it appears prices were held back from triggering BTC orders Monday so the market would get the most bang for the buck, it seems today there was a certain amount of support given to keep any stops from being hit to accomplish the same momentum goal, just in the opposite direction, I would not be surprised at all to see a volatile gap down tomorrow.
QQQ seing larger sell side volume in to the late afternoon.
To make matters more interesting (considering we have Non-Farm Payrolls at 8:30 this Friday)...
The US macro surprise index has started the year with its biggest fall since 2008.
And to think this is the period of Seasonal Adjustments in which macro economic data always outperforms on goal sought numbers that are then justified using seasonal adjustments, to think that the year is starting out as bad as 2008 would not be a comforting thought if I were a bull.
ALTHOUGH NEGATIVE DIVERGENCES GREW ALL DAY AND MIGRATED TO LONGER TIMEFRAMES, THE CLOSE SAW SOME SPECIAL WEAKNESS AND SOME INTRADAY CHARTS SURPRISED IN HOW FAR THEY MIGRATED.
Like yesterday, the SPY looked like the best relative 3C performer, however near the close things went badly quickly.
And the 5 min QQQ
However what was surprising for migration of a divergence was the QQQ 10 min chart toward the EOD.
We even saw the migration of the divergence to a 10 min chart, much, much larger than yesterday's divergence (positive) in which only the SPY made it as far as a 5 min chart, everything else was 2-3 min. which would mean today's distribution was significantly more than yesterday's accumulation.
The usual suspects like HYG also saw late day distribution in increased size.
As we saw yesterday, but in reverse as market confirmation of the positive divergences, today's late day action confirmed the market's in VIX futures and VXX, with a flying divergence in VXX as it is typically only seen there, I suppose because of the strength of the emotion of fear.
VXX with a huge leading positive divegrence in to the close.
The $USD/JPY is also looking a bit shaky up here, the Yen is showing a positive divegrence forming as well.
5 min Yen positive has just about the right amount of time overnight to put in a nice rounding bottom or reversal process as the $USDX is nearly its polar opposite.
A rising Yen and falling $USD mean a falling USD/JPY and ES has been tracking the pair very closely.
A closer look reveals that afternoon trade has seen ES fall below the USD/JPY correlation.
I posted leading indicators before I left for the doctors so they haven't changed much.
There's no one dominant P/V relationship today, as you might suspect there's a co-dominance between Close Up and Volume up and Close Up and Volume Down which is interesting because overall volume today was about 25% less than yesterday.
There's quite a bit there I'll let you chew over, of course if I see anything interesting in the futures I'll post them, but I'd say the risk premia of the Russian / Ukrainian situation that the market celebrated today is usually only a headline event that quickly passes, but in this case, it seems it may have been a bit early if you watch what Russia does rather than what Putin says.
No comments:
Post a Comment