Just "After" Noon Update

Well the much anticipated if not telegraphed US sanctions on Russia via the US Treasury Dept. have been unleashed this morning, targeting Russian Financial, Defense and Energy sectors, including: Energy giant Gazprom, Gazprom Neft, Lukoil, Surgutneftgaz (lots of oil and gas in there) Rosneft. Several financial institutions have been added to the list and for the sanctioned financial institutions, refinancing operations of 90-days have been cut to 30-days.

In response the Putin government is drafting their own list of retaliatory sanctions that are said to not include travel bans or anything that would negatively impact Russia.

I'd say the market is taking this in stride for the most part. Brent Crude actually seems a bit relieved as it pushed higher after the release of the sanctions from intraday lows. The $USD has lost some ground, but I can't say that it is in response to the sanctions as it doesn't match the release, more in line with the cash open. The 10- year yield has backed off the 2.6% level (the first time it has broke 2.6% since July) and is back down at 2.585%.

As for the market, I don't think tonight's breadth readings are going to look much better unless something dramatic changes, yesterday they looked worse across the board despite a high beta R2K short squeeze seen in the MSI. This morning so far the MSI is inactive, I really don't think there are many shorts left that "WILL" be squeezed. I'm nearly praying for a head fake move on the upside now as the market is so hollow, it would be the gift of the year. Although several watchlist/Trade set up stocks are hitting alerts, SCTY has just hit several price alerts I have set as it closes in on my target range and FSLR is doing the same.

As I said earlier, it seems these are both being rushed (they are moving against the market) in order to pull off the much needed head fake moves with position sizes as large as institutional ones are. Perhaps the F_O_M_C is D-day which would allow enough room for a head fake move as the range is pretty darn well set and any break above it would get bulls off the wait and see fence as we have been in pure chop and chase the breakout (or "technical confirmation").

 The MSI's afternoon helping hand can be seen, this morning NOTHING.

My Custom TICK Indicator vs the SPY has been deep red all day thus far and...

The TICK Index has barely surpassed +500 on the upside while probing sub -1000 lows all morning,  again, I doubt market breadth at the EOD is going to look very good.

The two things that keep me hopeful for a head fake / false breakout are 1) the concept is so reliable, it's seen probably 80% of the time and the more defined a resistance or suport zone is and the more watched an asset is, the more likely the move is.

The second reason would be HYG's ongoing positive divegrence, although suffering some minor distribution intraday, it looks like it is set to fire which creates an arbitrage trade as correlated algos see the HY credit move as institutional risk on and start buying which has been why HYG has been used for such a long time as one of the ,most liquid ways to trade HY credit since the banks that use to loan it out emptied their balance sheets of it in the wake of the financial crisis.

 There's some very minute deterioration in HYG, I don't think it means much.

In context, the current HYG divergence is pretty small, these 60 min negatives are the divergences you don't ignore and it won't be long before HYG is making that lower low and changing it's sub-intermediate trend status, perhaps even intermediate.

At the same time this HYG positive divegrence (in context above) is going to fire off in my opinion. "IF" HYG's options had more liquidity I'd be buying some calls with next Friday's expiration, but the liquidity just isn't there. "IF" HYG were higher beta, I'd be shorting it either here or on a bounce from this divegrence as it has a much lower move to make and on this scale, it should be leading the market to a new impressive low. PErhaps that's why investors like Soros and Icahn are taking this very seriously and banks like BAC are stating the obvious, "There's significant downside risk ahead.

Intraday the SPY's charts have been following or confirming the downside move, however I suspect an EOD ramp job in to the close, it is a Friday after all and charts like this...

SPY 2 min are starting to improve ahead of the 2 p.m. max-pain pin release.

DIA, QQQ and IWM are following along to various degrees, but it's a change in character right about the right time in front of 2 p.m.

I'm continuing to set alerts and follow up on those triggered thus far.

Put SCTY on the radar as well as FSLR.