Market Update/ SPY/ XLF/ BABA

It looks like more ugliness as support for the market pre-BABA launch is getting more difficult to maintain. HYG is still the key, however with a SKEW at 142 (which SKEW has only seen this number 3 times in all of 2014), and more telling, the 16 point gain or strong upside ROC in SKEW right after the F_O_M_C, someone is very scared.

The CBOE's SKEW Index is about tail risk or what might be considered the probability of an outlier event, a "Black Swan" or market crash. To protect against one or to take advantage of one that you may suspect, deep out of the money puts are bought, when their premiums rise because of strong demand, SKEW rises showing protection or speculative bets that a market crash is around the corner (as these are deep out of the money puts that need a big fall to be profitable). It'a not just the highly elevated level of SKEW above $142 which is a rare reading, but the 16 point gain in two days starting Wednesday, the F_O_M_C, so it's not a hedge against yesterday's SPX/DOW moved because it was in place before that.

In any case the ugliness continues this morning and from the looks of things, I think my post yesterday about HYG and Alibaba as its the IPO of the century more or less with some very strange circumstances regarding the lock-up period or lack of one, may have been right on.

Here's this morning, although they are fighting to right the ship as BABA starts trading.

 The 5 min SPY chart is leading negative and has added this much leading negative divegrence this morning alone.

 On the 1 min intraday chart (steering for intraday), they are trying to right the ship, it can be seen in the TICK Index as well.

 My custom SPY TICK Trend with yesterday's late day VIX smack move in the afternoon for the new highs, but that has seen breadth fall off this morning. A closer look...

TICK opened around +1000 and trended down all morning to -1200 readings before breaking the channel, see the 1 min SPY positive divegrence.

Other than SKEW on a larger scale, one of the most surprising bearish events on an intraday scale is the Most Shorted Index, you'd think they'd be squeezing it, instead it's squeezing them...

MSI has seen a sharp decline, the most shorted stocks are falling hard this morning rather than being squeezed to help keep the market afloat for the BABA trade.

 And Financials seem to be taking the brunt of distribution here on a 3 min chart and...

On a 5 min chart with a VERY sharp leading negative divegrence.

I sometimes say, "This is the kind of chart I don't ignore", I'll see how BABA influences the market, but otherwise, I'd be taking at least a trading position in FAZ, 3x short Financials.