Quick Market / SPY Update

First, don't forget we have the ECB's policy announcement tomorrow, personally I think expectations are way too high, the press conference will be a big deal as well, although Draghi does a lot of talking and hasn't followed it up, but they're having a real inflation/unemployment problem so I'd think, despite lofty expectations, he has to do something, although I do have a gut feeling it will fall short. Look for volatility between the policy announcement and the press conference, in fact I'd suspect most of the day.

Friday we have Non-Farm Payrolls, another biggie.

Here's a look at the SPY, there are just divergences there that the ECB would have trouble budging. The theme has been the same most of the week, 1 min intraday charts as steering divergences with longer charts distributing. I did warn of the "Igloo top with a chimney", it looks like we have a little of that today.

 The Most Shorted Index saw a little bounce today and yesterday, it looks to have started to give way toward the close. HYG is still not able to support the market, there was a serious move out of that one, more than 2 weeks of gains erased in a day.

This is where the action has been all week, 2 min and up charts while 1 min charts have steered intraday trade to stay largely rangebound, this is pretty nasty, but put it in trend perspective and...

That 2 min chart looks even worse. Note the rounding top and the "Igloo with a chimney" look that is  are seen often at these reversal process. May 30th was when I had said we needed at least a couple more days for the reversal process to mature.

 This is what really matters, the bear flag head fake that gave the market a short squeeze (see the MSI index on the first chart above), distribution through that period is exactly what we expected before the move even started, it was kind of neat to see BofA's numbers showing institutional distribution right in to the hands of dumb money.

The 30 min charts are showing a lot of damage since the February cycle, that's what created the 3-month top/chop zone.

And from a longer, cleaner trend perspective, the 4 hour chart...