This is interesting because the divegrence as you saw yesterday, last night and this morning, did form, it wasn't very large, but enough to get the strongest SPX move in 7 weeks underway yesterday which we could see as of yesterday afternoon, was going to see some weakness thins morning.
Word on the street is that a large institutional investor dumped over 200-stocks this morning on a massive sell-order. My gut feeling is that order was given to the market makers and specialists who'd be executing it as early as yesterday afternoon and they were selling in to higher prices, thus the shorter term negative divegrence in to the last 2 hours of yesterday and they likely forced the rest through this morning, however, this is almost exactly what last Friday's forecast was and even last night in the Daily Wrap I had said whatever yesterday's move was actually for, it wasn't to correct the massive breadth deterioration as there was no movement or improvement in breadth.
In any case, that still leaves us where we are and how we want to proceed which also depends largely on how the market and underlying trade develops.
The SPX broke it's 50-day on this morning's dump, my gut feeling would be they'd want to encourage retail to buy the dip and send the SPX back above the 50-day...
As for the other averages this morning...
They look like they want to bounce higher, although I'd normally expect a sideways process before that could happen, in this case I might make an exception.
I figure if there's an institution out there that big dumping that much at once, they likely have more to go and their action is going to create a reaction among other institutional / hedge funds.
TICK is "trying" to improve, but it saw a massive all out dump at -1500 or worse through almost the entire morning, it's struggling just to get above zero.
I think the bottom line, no matter what happens from here is the same as forecasted last week for this week, the major theme is weakness and to that end, although I'll be watching any new positive intraday divergences try to develop or develop, I don't think we can let this throw us off the path of action for this week and that's still looking for the best candidate and getting positioned for the next major swing...DOWN.
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