Random Market Charts & Thoughts

I'm being a bit cautious on filling out the partial short positions (today) which I've been waiting for an opportunity to do so and as the earlier post, MARKET UPDATE made clear from a post back on May 16th, Market Update and Some Probabilities, this is the move I've been looking for to do so.

So why am I waiting? For one we have options expiration tomorrow which tends to be stagnant until about 2 p.m and 2, tomorrow is May 30th, the last trading day of the month which means the market is doing its best not to stumble as Window Dressing is nearly over, Monday it will be. It will be interesting if we see the F_E_D lending money to the banks again as they did at the end of April to fool investors and regulators in to thinking their cash position is much stronger than it is, it was, for a day at the end of April.

As far as some charts, I have been saying how strange the 10-year (actually across the entire treasury spectrum) yield falling with the market rising is and what happened last time this happened...

 This was the last time treasuries rallied with the market and yields (which move opposite treasuries) fell

 The chart above is the current situation.

However the 10-year benchmark just fell to a fresh low of 2.4% for the first time in 11 months, breaking key support from October in the process.

The result of the 2011 Yield/market divergence?

The market fell nearly 20% just like that, however the F_E_D was still there supporting the market and giving not a single hint that they'd ever let up at the time whereas now they are backing out of policy.

Also strange has been the Spot VIX Green the last several days despite the market (the two usually move opposite each other. Last week we saw the divergences suggesting VIX wasn't going to be used to ramp the market because of real, actual fear and demand for VIX's protection and it was posted in the "Broken Levers" post.

Here's The VIX today vs the market...

 VIX is in blue, SPY/SPX in green, both are moving up again today, this isn't normal and the only explanation from the 3C charts that forecasted this move, is institutional traders know the jig is about up and are accumulating protection, enough that it's moving the VIX not only sideways, but up.

 This is the same chart with SPX prices inverted, normally VIX would follow the SPX inverted prices nearly tick for TICK, here though you see massive outperformance in VIX.

Even VXX, short term (2 month) VIX Futures are moving up with the market SO IT'S NOT THE VIX SUPPORTING THE MARKET.

WHAT DID I FIND...

 You already know there's a massive dislocation between Yields and the SPX as seen above and Yields tend to act as a magnet and pull equity prices toward them (down), however, on an intraday basis (and I'll look at TLT closer as well as T Futures)...

There's some support intraday coming from Yields, you can see it on TLT's chart as well, as far as I can tell, other than an intraday bounce in USD/JPY, this is about it.

This is TLT's longer term dislocation with the market, again this hasn't happened like this since 2011 and you saw how that ended.

However intraday there's some weakness in TLT, one of the SPY arbitrage assets and that is just enough to keep the market in place it seems.

However, don't imagine there's any broad strength...

 Intraday NYSE TICK breadth is about as flat as it gets (the number of advancing NYSE issues minus declining issues), it has been flat at +750 to -500 most of the day, that's about as flat as it gets.

My custom NYSE TICK/SPY indicator shows a trend intraday of weakening breadth.

As far as the Risk sectors that should move the market, Financials...

 Financials in red today vs the SPX in green

And Tech...

XLK in red vs SPX in green. 

Even Utilities are dragging, so don't imagine that this is out of any strength in stocks, in fact...
THIS LOOKS TO BE NEARLY 100% OP-EX AND WINDOW DRESSING INSPIRED just to keep the market in place, rather than declining.

I'd think after 2 p.m. tomorrow would be the best time to fill out short positions as the op-ex pin wears of, even better Monday as the month end window dressing ends.

As for the second estimate of Q1 GDP that came in from +0.1 to -1% on consensus of -.05, the first decline since q1 2011; if you subtract Obaamacare, Q1 GDP comes in at -2%.

Remember two back to back quarters of negative growth = recession.