SPY Perspective

After going through a watchlist and several different assets, there's one area of interest that keeps popping up, I'm looking at it in the context of the SPX / SPY, but it's throughout numerous assets and industry groups.

First I think there can be very little doubt that the chart below depicts a multi-month top...

 This meat grinding zone of chop, leaves very little doubt in my view that this is a fairly large, multi-month market top, a very difficult one, but one all the same.

 The 4 hour chart is used here for a specific purpose, to reduce signals, noise (even if they are perfect signals) and just follow the largest underlying trend, that would also make it very clear that this is most likely a large multi-month top.

 Although I notice this area on numerous timeframes, a 15 min chart seems to reveal the same pattern over and over again in different assets, some that I wouldn't normally associate with the kind of signals they are giving, especially TLT.

 Although the entire top and its size are very important, for our purposes there's an area I keep seeing pop up. I'm not entirely sure the entire pattern is as important (from #1 to the present) or if just the area from #2 to present is more telling, in any case there has been a leading negative divegrence through the entire area.

However I keep concentrating on the divergence in the area marked as something of a H&S-like top, although it's not a true H&S pattern, but I suspect the same psychology that forms a H&S top is at play in this market.

I was a little surprised to find the same deterioration in TLT, even though I believe long term TLT looks to be an interesting long, why TLT would move with the market at all instead of against it with its usual correlation as a flight to safety, which has almost always dominated, is unclear. All I can think of is the F_E_D's taper of Treasury purchases and the Chinese move away from US treasuries may be what's causing weakness in the long bond.

 TLT 15 min, not the exact same pattern as the SPY, but the same weakness in the same area.

This is partly why I like (and have a long position open in...) TBT, the 2x leveraged opposite of TLT.

Even the VIX futures have an interesting divergence of some size in the same area, although they also have it through the entire multi-month top area as might be expected.

It becomes a little more interesting and important as to how the market reacts in to the F_E_D minutes tomorrow, but the15 min chart (and I could go out even longer, these just tend to display the area I'm focussed on better) divergences are very difficult to overcome, especially trend ones such as the above or the 15 min SPY chart above.

This looks like an area of more than just more top and chop.