DAILY WRAP

Today wasn't all that interesting unless you look at a chart of ES's volume and whether it's trading above average or below average. From 10/9 through 10/16 ES volume was above average and every day it trended lower. Over the last 2-days ES volume has been below average and it obviously has trended higher.

The Dow closed at +.12%, under-performing the pack as Big Blue shaved -80 Dow points off the index on earnings. As I had said earlier, the NDX looked like the best performer as far as 3C went intraday and the NDX moved in a diagonal line with few ;pullbacks almost as if it was in a short squeeze, apparently in front of AAPL's earnings in which they came in right at the whisper number which was about $.15 above the consensus on $1.30 (actual $1.42). Rev beat, EPSe beat, sales of everything beat except Ipads which missed  at 12.3 mn vs 13 mn consensus. There was an additional $17bn in buybacks bringing the 2014 total to $45 bn vs fiscal 2013 at $22.9 bn in buybacks.

AAPL seemed like it was destined for the psychological $100 before earnings, closing just off at $99.76. One thing of note in one of the world's largest hedge funds you never heard of, AAPL's short term marketable investments (stocks/bonds, etc.) fell from $24.8 bn to $11.2 bn... Is AAPL calling a market top some wonder?

For ES's part, it was glued to EUR/JPY all day...

 ES (purple) vs EUR/JPY carry. However, how long can this hold?

This is the 1 min Euro (/6e) chart with a negative divergence right now and...

The 15 min Yen with a negative mid-last week leading it lower, but a positive building now which would send EUR/JPY lower.

T/he averages were mixed on the close as far as 3C charts intraday, but interestingly, not so much in Index futures.

 Es 1 min with a sharp negative divegrence in to the close and after hours...

NQ/NASDAQ 100 futures with the same

And the 5 min charts are still in bad shape, TF/Russell 2000 above...

As well as the 7 min charts as shown earlier, NQ/NASDAQ 100 Futures above and...

ES as already mentioned earlier, pointing to a near term pullback as forecasted for the early part of this week in Friday's "Week Ahead " post.

It looked like they were huffing and puffing all they could to get the SPX back up to its 200-day moving average, it fell short by a couple of points as it sits at $1906.39 and this on a BELOW AVERAGE VOLUME day in ES.

The Ultimate Oscillator in the middle window on the daily SPX chart, but note how close the SPX came to its 200-day after breaking below it last week.

Transports once again diverged from industrials today, up +.98%, but Big Blue , as mentioned, shaved 80 Dow points off on their miss. The NDX, as suspected by intraday 3C trade was the leader at +1.43%, Isn't it great to have volatility back? Remember just several months ago , weeks and months on end with nothing above or below +/- .50%?

I'm still looking and trying to decide whether to play a short term trade, it's a heck of a lot easier to keep your chips than it is to make them back. I'm sure you've hears this, but a 50% loss takes a 100% gain just to get back to break even so I'm cautious in what trades I take on at this point, especially shorter term.

bThe $USD was whacked lower by .4%, mission accomplished F_E_D as they jaw-boned it lower Draghi style last week with mentions of QE3 not ending too early although that statement was retracted in hours and an earlier, "Perhaps QE4", of course it's a;; jawboning the $USd lower and that's it. We could have saved them some trouble as we have been forecasting a $USD drop right in the midst of 12 consecutive weeks of gains.

$USDX 4 hour 3C chart/negative divegrence. This should benefit dollar denominated assets like oil and gold at some point as QE ends and we return to the legacy arbitrage relationship between $USD and dollar denominated assets.

Most of today's $USD weakness was on the back of $EUR and GBP strength.

As for leading indicators, other than what you've seen, not too much too interesting, of course the SPX/RUT Ratio and VIX term structure, calling for a short term pullback and higher prices followed by a new lower low.

The 1 min chart of the last several days as SPx/RUT ratio fails to confirm SPX prices and the VIX Term Structure falls out of inversion, but the buy signal is still active.

One of my other favorite leading indicators, yields which tend to pull prices to them like a magnet are leading the SPX lower here.

And the very spot on Commodity correlation of late vs the SPX also calling for a short term move lower...

Commodities in brown negatively diverging vs the SPX...

As for breadth indicators, the New High/New Low Ratio as well as the 4 week, 13 week and 26 week version are all higher, but other than that, nothing too surprising. As for NYSE stocks,  only 27% are above their 40-day moving average and only 37.46% are above their 200-day moving average...OUCH!

As for S&P sectors, 9 of 9 closed green today with Materials leading at +1.52% and Industrials lagging at +.29%. Of the 238 Morningstar groups we track a whopping 219 closed green. BOTH OF THESE ARE 1-DAY OVERBOUGHT INDICATIONS AND THE MARKET TYPICALLY CLOSES LOWER THE NEXT DAY AND OFTEN DAYS TO COME.

Adding salt to that one is the Dominant Price/Volume Relationship with 23 Dow stocks in the same category, 80 NASDAQ 100, 1001 Russell 2000 and 328 SPX-500, a VERY solid Dominant P/V relationship which was PRICE UP/VOLUME DOWN, the MOST BEARISH of the 4 possible relationships, ALSO often resulting in a 1-day overbought condition and a close lower the next day.

I'm not a big fan of 1 min Index Futures' charts over night, but with them as negative as they are right now with the 5 and 7 min charts negative and the VERY dominantly overbought (1-day) breadth conditions, tomorrow should be interesting and we may need to make some quick decisions as to whether it is worth making a fade/pullback trade.

We'll know soon enough!