We started the open with a VIX whack-a-mole sending stocks higher and then a whack-a-mole of the averages.
There's some carry trade weakness in AUD/JPY which looks to be forming due to some intraday JPY/Yen strength picking up, but there are more than a few interesting charts and as we suspected, this would be a short cycle, a cycle not based on a head fake move in the averages, but the averages moving in response to a VIX accumulation move. It looks like we are VERY near the end of that cycle, although I don't want to jump to early conclusions on quad-witching,
but remember why this mini-cycle and VIX accumulation/signals were so important in the first place, AS A TIMING MECHANISM FOR THE BROADER MARKET TO MOVE TO STAGE 4 FROM FEB'S RALLY AND LIKELY TO A LOWER LOW IN THE PRIMARY TREND WHICH IS NOT QUITE ESTABLISHED BUT VERY WELL COULD BE ON A LOWER LOW.
AUD/JPY 3C 1 MIN DIVEGRENCE FROM OVERNIGHT TO PRESENT.
The underlying 3C weakness doesn't look to be so much in the $AUD, but more in Yen strength building.
Yen intraday positive divegrence which could send AUD/JPY lower and
"IF" the correlation algos hold up and stick to the AUD/JPY (EVEN THOUGH THEY'VE BEEN HIT HARDER SINCE THE OPEN), THEN THAT COULD BE A NEGATIVE MARKET INFLUENCE, ALTHOUGH IT'S FAR MORE LIKELY THIS HAS TO DO WITH A PIN.
SPY 1 min on the open carry's over some afternoon weakness in 3C (as is often the case-carrying over to the next day) and seems to have been behind the fading of early strength,
however, again this could have been set up yesterday in response to the max-pain level and moving the market to that level for quad-witching.
That still doesn't explain or excuse larger/longer term chart's for this week's mini-cycle and it doesn't explain away the VIX action which we predicted last Friday afternoon, in fact even earlier.
SPY 3 min leading negative picking up at new leading lows for the week, thus it is looking highly probable that we are getting the signals we were looking for and this week long mini-cycle is ending,
which makes me wonder about the possibility of a F_O_M_C leak as this cycle was set up last week well in advance of Wednesday's policy statement.
*Much like Financials unexplainable rally in the face of after market stress test results, that's not normal behavior for a wild card event.
The mini SPY cycle on the 5 min never made it that far as far as a positive divergence, HYG was used for the heavy lifting so this signal remains negative
The Q's were really slammed this morning thus far and again this is a carry over from a week long negative divegrence that accelerated a lot yesterday afternoon leading to the downside
, interesting stuff.
IWM 1 min positive as of last Friday, the reason we closed and took gains on puts and opened a QQQ and IWM long /call hedging position which we already took gains on this week, however the point is the leading negative divegrence showing this mini cycle seems to be near the end of stage 3 and moving toward decline.
IWM 3 min with the accumulation of the Feb rally which was Jan 27th through Feb 6th or so, distribution in to the mark up stage as it transitioned in to a stage 3 top and a sweeping, deep leading negative divegrence in the top's range, this is what we expected since Feb 4th as the latest as that's when I wrote about what we expected to see.
IWM 3 min close up for this week's mini cycle and distribution should be obvious as well as last Friday's small accumulation, that accumulation wasn't enough to hold the market this long alone, HYG was the lever for that.
IWM 5 min should be more than clear transitioning from the Feb. rally to the cycle's stage 3 top,
this is EXACTL:Y what we expected to see as this was a means to an end and that end being a bull trap set up for a pivot to the downside, likely (in my opinion) breaching SPX 200-day moving average at minimum.
IWM 60 min, "F" is the Feb. cycle, yellow is stage 3 top and the distribution through late stage 2 and all of stage 3 is very clear.
HYG's 10 min positive from March 7th-14th was why we expected a mini cycle up in the market off last Friday's lows, this is where the support came from, this is no longer a leading positive divegrence so the damage we needed to see is essentially there, it hasn't moved to very negative, but the positive has been neutralized as there has been HYG distribution nearly all week.
The point of all of this? VIX futures protection being bid on the cheap, you can see that has happened on this 15 min chart of VIX futures, not spot VIX.
And the VXX move I said I was looking for since the ramp on the F_O_M_C market decline, we are pretty darn close to that reversal process as I have posted this chart 5 times in 2.5 days now.
I'll be checking around for opportunities.
THE MARKET IS GETTING A FOOT HOLD NOW ON A SMALL INTRADAY POSITIVE IN THE SPY, BUT THE Q'S ARE ONLY IN LINE AND THE IWM IS ACTUALLY LEADING NEGATIVE WHICH IS WHY I KEEP GOING BACK TO IWM PUTS.
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