Desperation

Overnight the market was headed lower when someone stepped up, some assume it was the Plunge Protection Team, it could have been options sellers looking to cash in today on all of the worthless option contracts that will expire today, allowing them to keep the premium, but there was an attempt to hold the market off from an overnight decline and we opened just as we almost always do on an op-ex Friday, right near Thursday's close.

Over the past few weeks we've heard some pretty amazingly ridiculous stuff from Central Banks such as the San Fran F_E_D saying, "Perhaps QE4 is in order" or Bullard's, "Perhaps we shouldn't end QE3 so quickly" when it's just a fraction of what it was and on track to end this month. These weren't serious comments, they were jawboning and I suspect largely to drive the $USD down as the F_O_M_C minutes from the last meeting show, the F_E_D is concerned about a stronger dollar and its impact on the global economy, however there's one group of people who will be happy with a stronger dollar, the Americans who did the right thing and saved money which they saw evaporate in terms of buying power during the F_E_D's accommodative policy, however with that ending, savers will be rewarded, funny that the responsible ones were the ones punished, but as I've ALWAYS maintained, QE was not about the "wealth effect" as most Americans have no exposure to the stock market with employers cutting benefits like 401ks, QE was nothing more than a stealth bank bailout because we saw how unpopular the real bank bailouts (and AIG) were in 2008 with the voting public, NOT AT ALL.

Today it was the Jaw-Boner in Chief, Mario Draghi of the ECB's turn to come out and try to tickle stocks higher with several comments like...

 CALLS FOR STIMULUS: CNBC
DRAGHI SAYS JOINT EFFORT NEEDED TO AVOID RECESSION: CNBC
DRAGHI SAYS INFLATION TO REMAIN LOW IN THE NEAR TERM

Which is all subterfuge just as ridiculous as the F_E_D last week. I've spent a lot of time in Europe and understand the peoples' perspective of becoming part of the European Union, but what you have to understand is it's nothing more than a German Free trade zone as Germany is the manufacturer and exported of Europe unless you call olive oil a major economic export. The EU created a free trade zone for Germany and the ECB is essentially run by Germany just as the IMF is run by the U.S.

All of the above spouted by Draghi, master jaw-boner, is an absolute "NO" from Germany meaning it won't happen, but that wasn't the point, the point was to lift equities enough as they had been slipping in the overnight session.

As for where we are now... THE SPX/RUT RATIO IS NOT A PERFECT INDICATOR, BUT IT HASN'T GIVEN US BAD GUIDANCE SINCE WE RECENTLY INTRODUCED IT AS A NEW LEADING INDICATOR.

As we approach the 2 p.m., hour in which price can and will do strange and meaningless things, it's the 3C signals the last 2 hours that give us the greatest edge to forecast the next week, but I think we already have the signals in place.

On several timeframes....

 Near term for the Put Contingency plan, we have a small SPX/RUT Ratio positive, but the main trend is negative and it has shifted negative since yesterday's move higher and continues to make lower lows today.

 Longer term we have a stronger or larger VIX term structure inversion or buy signal, so far it has not been as long as the August cycle, but darn near as volatile in a shorter amount of time. If you follow all of the individual signals of the SPX/RUT ratio indicator, each one has been right on and is now calling for a move lower after calling very clearly for a move higher which we have already seen.

 Closer, intraday you can see the deterioration in to the SPY's higher intraday prices, non-confirmation which is a signal that this move won't hold, but we already expected that, which is why it was put put to use as an area to enter puts or additional inverse / short ETFs.

 The most important and highest near term probability signal is on the SPY 15 min chart with a leading negative, recently in line.

Intraday we are seeing deterioration in the 3C charts as well.

And intermediate between the two, deterioration or distribution, so I'm quite confident next week's theme is lower, thus all of my positions (Short) are in place already.

 QQQ 10 min is the most important signal for near term trade and it is negative.

Intraday it is negative as well and...

in between at the 5 min charts, negative.

 IWM 10 min negative is the most important near term signal and highest near term probabilities, this has even migrated and just about cleared on to the 15 min chart.

IWM 15 min going negative as well

Intraday it's in line, but...

inbetween at the 3 min chart there's a clear negative/distribution trend. This is the highest near term probability going in to early next week.

Finally intraday the NYSE TICK has broken down as well like many of the 3C charts, we'll see how we close as far as what Monday morning might look like, but I have no problem being nearly fully loaded for bear.