Early Update

I usually refrain from watching the market too seriously early, over the years I've met a number of professional traders who sleep in late, well at least they don't get actively involved in the market until 10:30-11 a.m. after early a.m. trade burns off, this is because of the game playing resulting from retail traders who hold "regular" jobs and place orders for execution when the market opens or at certain close by levels as they head off to their normal job, there's quite a bit of money to be made by market makers/specialists by hitting and fading these orders. There's also the older day traders' a.m. range, but that is another subject that is not as relevant today as it use to be.

In any case, I was interested in what VIX and the Most Shorted Index were doing, usually I'd wait until later when more of a trend for the day has established, but so far they are somewhat interesting and this may serve as a baseline for posts later in the day.

As for VIX...

 As mentioned this morning, it was not whacked at the close yesterday, in fact it gained the entire last hour, forming a small area of support here, just above the Feb 2007 lows hit earlier in the week.

And this morning, rebounding a bit in early action.

However what was more interesting to me in early trade is the Russell 3000 Most shorted Index because nearly every up-side move since mid-May has been the result of a short squeeze, which is something we were looking for in mid-May when we encountered a larger bear flag with some accumulation in it, we correctly predicted a Crazy Ivan that created a small bear trap that served as ignition to a short squeeze that led to the top of the range and psychological magnet of SPX 1900 in the same area which changes neutral sentiment to bullish and the rest takes care of itself, but we've covered this several times already.

 This is the MSI in red vs the Russell 3000 in green, note the F_O_M_C 2 p.m. squeeze that runs tick for tick with the R3K. Since it hasn't performed as well, I noted with regard to the F_O_M_C knee jerk effect, that buying to cover is not the same as strong hand buying and someone is selling for that squeezed short to cover. In any case, that's the near term trend, the trend this morning or start as it's too early to call it a trend has been interesting...

MSI this morning going in the opposite direction of the R3K

That seems to be putting some pressure on the Index

The gap up saw a couple of higher highs, but just saw a lower low.

This is definitely myopic considering all that's going on today, but seeing how the MSI has been so influential recently, it's worth checking in on and as I said earlier, may serve as a baseline for later posts.