In Line (mostly)

After a downdraft like yesterday we "may" close higher, but we aren't going to make a "V" turn higher, there will have to be a reversal process "if" that's to happen.

I should have stuck to my initial plans (likely, I guess we'll find out) and not let go of the SRTY (3x short IWM) position yesterday as I was closing it in to SRTY strength as I usually prefer to do. I still have plenty of short exposure even in the trading portfolio, SQQQ, etc.

There are some other assets that may be of more interest earlier today and that's what I'm going through now as well as trying to understand what is going on with the market, VIX, SPX puts, etc. It seems to me they've had a real hard time knocking VXX down, so those puts may have been a way to try to do that and with premiums collapsing earlier, maybe they've found another lever.

In any case, I COULDN'T close the XLF Put which normally I would in to weakness and it's up another +20% at least this morning to a +50% gain.

The XLF charts may not be an exact proxy for the market, but they should show we have time and in that way act as a proxy for the market, here's why...

 The 1 min XLF chart "could" be a relative positive divegrence and thus be starting the reversal process which could take half a day or a day and a half, it's hard to say and it's hard to say if this is just coincidence at this point as there's no migration , at least not yet. For example (and many charts are in similar situations among the averages)...

 This 2 min could reflect a pretty decent positive divegrence , but until 3C turns up and locks in the divergence, it could just be lagging price a bit which happens in a fast moving market, we will see shortly.

 THIS IS EXACTLY WHY I COULD NOT LET GO OF THE XLF PUTS YESTERDAY OR THE FAZ LONG.

THIS IS THE SAME 5 MIN CHART FOR FAZ, these are totally disassociated as far as volume, asset class, etc, there wouldn't be a divergence like this unless there was a true divergence like this meaning this is real.

CREDIT...

 EVEN THOUGH MOST OF THE EARLY PART OF THE WEEK WE WERE BUILDING POSITIVES, I MENTIONED OVER AND OVER THAT THE LEVER THAT SUPPORTS THE MARKET WHEN IT CAN'T SUPPORT ITSELF IS HYG AND THAT HYG HAS BEEN UNDER DISTRIBUTION ALL WEEK DESPITE GAPPING HIGHER AND BRINGING THE MARKET WITH IT FOR 4-DAYS IN A ROW.

 Here's the 5 min HYG chart for the last week or so, they've tried to push the market using this lever, but it seems there's a lot of fear and they don't even want to hold a small manipulative position, but rather take any opportunity they can to sell price strength in High Yield Corporate Credit.

This was the dichotomy this week and it was only a matter of time before one would tip the balance, possibly those puts yesterday were the straw that broke this camel's back, but we still don't know EXACTLY why they are there.

If it were me, unless I knew the market was going to crash tomorrow morning, I would not buy $200 million in May 1995 puts over a few hours, that's a tell, that's showing your cards and I find Wall St. will show you their cards IF they want you to see them, in other words, if you watched the Cramer video, they'll show you a transaction like that if they want you to react to it, if they are really trying to gather a position like that, the last thing they want is for you to know about it and try to piggy back them causing them to pay more for their position AND HAVING NO ONE ON THE OTHER SIDE TO TRADE AGAINST.