Market Update

Last week we saw the gradual progression of a reversal process off what I'll just call the August oversold base,  we also saw all of the averages stop out on the Trend Channel, which usually means there's just a head fake move to come before a downside reversal.

Last night I showed you some of the very creative, somewhat silly ways they were trying to support the market as there's no actual strength left which is apparent just from the lack of follow through and fragmentation of the averages/transports, but this 1-share and odd lot new record was obviously an attempt to get the cycle done without expending much in the way of funds/energy. It seems the False rumors of a permanent cease-fire did the trick this morning and even held after they were refuted, until the open that is , in this case we didn't even have to wait for the European close.

How quickly we fall from ATNH's...

5 min Russell 2000 futures  3C chart from new highs on the week and SPX ATNH's to a nasty leading negative divegrence right in to those new highs.

Right now there's not much in the way of LEVER support,  for instance...

 This is the USD/JPY falling about 1 a.m. EDT after the nomination of the former Japanese Pension fund manager too Health which sent the Yen higher and USD/JPY lower, but look closer intraday...

 ES has been tracking USD/JPY lower intraday so no support at that carry trade.

 EUR/JPY also tracking with ES lower since the open (green), no support there. It seems Citadel didn't reprogram their algosto track AUD/JPY as it is the only carry trade support and ES is ignoring it.

 ES vs AUD/JPY 1 min

HYG,  as I have been saying since early August, leads the market, it was the upside lever, it was the first to lea the market in to the reversal process by about a week and as you saw yesterday, it fell and seems to now be leading the market to the downside, I don't see much chance here for HYG to pull anything serious together.

ES broke through VWAP, note it waited for the US cash open.

Almost all of the averages have a very nasty bearish reversal candle and while it's too early in the day to say this holds, it doesn't look good, this is the IWM, but it's in the SPY and QQQ as well.

A bearish Engulfing Candle which is an effective reversal because it opens at new highs, a kind of head fake move and then eats its way lower. The thing to watch for here is rising volume, if volume rises above yesterday's this is almost certainly a downside reversal pivot signal and the August cycle moves from stage 3 top/reversal process to stage 4 decline which as I have shown several nights including last night, BREADTH has stalled, it looks like the market has run completely out of gas which is why levers like the carry trades and HYG were so important to any head fake upside move which we technically have, it's just was not as convincing as they usually are.

As for the averages...

 These shorter term timeframes at this point are good for timing, as you see, the IWM never had a chance from the open, there was pure distribution on the open.

The 3 min chart looks a lot like this is the pivot as the longer strategic charts are already in trouble or as I discussed last night, already set for probabilities to the downside.

The QQQ 1 min also never had a chance on the open with distribution, but there's a small relative positive that "could" form here, that doesn't mean much in the bigger picture unless it does and adds to it, otherwise it would just be some intraday consolidation/correction.

And the longer QQQ timing looks near perfect as it moved from short term confirmation to a very clear leading negative divegrence at the highs.

The SPY with some short term 1 min accumulation at yesterday's lows where other means were used as well as detailed last night, this could also put in an intraday consolidation.

TICK looks bad with some very deep >-1250 hits.

In the trend of the reversal process(lateral trade), this has been one of the worst intraday breadth/TICK days ...

SPY Custom TICK Indicator.

I'll probably spend about 1/3rd of my day with an eye on the market, we do have the ECB tomorrow, and the rest on the watchlist candidates.