Market Update

In the last Market Update this morning I said,

"As for the market averages... There's some early weakness in confirmation of the open (don't jump to conclusions yet)....early 1 min IWM non confirmation of the gap, however, when compared to the larger divergences I'm fairly well convinced that this won't last long and the market has more upside and the VIX more downside, in fact I think this mini-cycle is just starting."

And now as the a.m. trade burns off, the thought above is materializing...

 The early 1 min non-confirmation of the gap up created some lateral market movement and some price backing and filling, but it wasn't a serious signal to the downside as I pointed out above.

The IWM is finishing and starting to go positive intraday (our QQQ/IWM calls will appreciate that).

And the Q's as well, at the red box was the non-3C confirmation, you see what price did, virtually nothing.

As far as retail, the sentiment among these fickle "price only" based traders is that NO ONE was prepared for a gap up, they were too worried about the weekend and not following underlying price movements, remember how many puts we took profits in Friday thankfully as well as opened and expanded some short term long/market calls (QQQ/IWM?).

Thus they are bearish, which is funny because we have been tracking their sentiment and it can be changed in a mere 3 hours, they have no clue other than chasing price.

To be clear though, this is the move I had expected last week, the move in the averages isn't important to me at all and thus I was not willing to take on much long risk (only 2 call positions in the QQQ and IWM), what is important however is the moves in VXX; it needs to pull back and since it moves opposite the market it made sense the market would move up, however there is such a thing as relative performance meaning the VXX can move down faster than the market moves up which would suit me fine and if it doesn't, the hedging calls were added for that reason.

What I need to see before re-entering put positions or adding new shorts or adding to existing shorts is the VXX to move down enough that it starts accumulating, the larger position in VXX accumulation is there and huge, just like the larger market divegrence is huge and negative, but this is more about pinpointing the pivot to the downside now, timing and that happens on shorter term charts, thus the need for the VXX to move down and then start accumulating, it's the accumulating part that is the signal.

 This is the larger trend for VXX/UVXY 60 min leading positive, this accumulated position is already in place, smart money is expecting a major market drop as evidenced above, however we have to return to short term charts for timing, thus we need signs of accumulation in VXX for that signal and they don't accumulate strength or chase price, only weakness and let price come to them, this is much less about the market and much more about final preparations in protection.

 The 3 min negative pullback signal in VXX and...

The 1 min chart has lost ground, theoretically they could start accumulating now, it takes them a few days typically to accumulate enough and that's the REVERSAL PROCESS we see.

I can't be sure if accumulation via this 1 min chart has already started or this is just in response to this morning's non-confirmation on the market gap up, we'll have to see if this migrates to longer charts, but if it is,, then they may be a lot more nervous than though, perhaps Putin's speech tomorrow or the end of the cease-fire/peace deal between Russia and the Ukraine on March 21st (which is another brilliant Putin ploy).

In any case, that's what we have been looking for to start forming last week, it's here now and we've had a week to prepare.

There are a few positions that look interesting, no market correlation, but need a little pullback, I'll be bringing you those.