I'm usually not a big fan of early indications before 10:30-11 a.m. in the market just because of the game playing that doesn't have much to do with anything, however this morning it seems since the open, the markets have not been happy with what Draghi said during the press conference as well as the policy decision to leave everything where it's at, I'd think Germany might be a bit more enthusiastic.
Still there are some interesting occurrences thus far this morning. As always the short term intraday charts move so fast that they are often showing something a bit different by the time I capture, notate, upload and post them so lets start with Leading Indicators that are a bit less finicky and I'll capture and place the current 3C charts right at the end,. just before I post this.
First the TICK intraday shows the general tone...
Intraday NYSE TICK downtrend since the open, apparently disappointment that Draghi isn't going to antagonize Germany any further by going to an illegal (against the EU/ECB charter), all out QE, buying of sovereign debt. However I'd think any serious players in the market know this is not likely to happen as the lawsuits would tangle any program up, the EU/ECB would have to change and ratify a new charter, this isn't an easy process for the ECB to engage in sovereign QE like the F_E_D did, that's why they chose private ABS purchases.
Still, the market was not impressed by Draghi's press conference (when it is, it's usually short lived) as you can see by the TICK trend above which hit a negative -1550 at the lows this morning.
The Custom TICK Indicator shows the trend so there's some real selling going on like yesterday, the question is, are the buyers on the other side accumulating or just playing hot potato?
These are my two newest Leading Indicators, the SPX/RUT Ratio and the VIX Inversion, both have been very accurate thus far, although we haven't had a VIX Inversion buy signal since early August, but past signals have been spot on.
The SPX/RUT ratio on the other hand has been very useful. Above it would not confirm new or lower lows and that gave the market a lateral reprieve until the indicator started diverging negatively, sending the market lower and since yesterday it again is not confirming new lows or rather lower lows in the market and starting right where I suspected we might see something happen, at the first day of the new quarter (yesterday).
This is the SPX (green) vs VXX, which one is unlike the others? Note the underperformance in VXX/Short term VIX Futures.
If I invert the SPX's price, you can see what the normal correlation would be (moving together) and the VXX recent underperformance.
The same is true of spot VIX...
Here spot VIX actually out-performed to the far left and under-performed to the right .
Again if I invert SPX prices (as these two usually move mirror opposite each other), you can see the out and under-performance.
HYG has failed to make a lower low with the SPX and is looking like its offering some short term support, the last several times it has done this, the market has taken advantage of it with pops to the upside to varying degrees, depending on how much HYG was leading by.
And as pointed out last night, HY Credit, which was slammed last quarter, especially in the CCC and lower rated, is also posting a positive divegrence.
Now for the 3C charts... Based on everything taken together, I'm not concerned right now about the TQQQ and URTY 1/2 size (3x long QQQ and IWM) long positions added late yesterday, in fact the reason I left them at half size was to confirm a stronger divergence and then possibly add or to be able to move out with very little damage done should I see something worrisome.
Make no mistake though, these are TRADES only.
The 1 min SPY isn't showing much at all, which says something as it's not leading negative and it's not even confirming on the downside,
The 5 min chart is still in good shape, but SPY was not my favorite of the averages for relative performance in a bounce. The most important thing I'm watching for with the SPY right now is the 5 min chart which needs to lock in a pivot in 3C one way or the other so it will either remain in decent shape in which case I know there's not heavy distribution in to this morning's decline or something changes and I maybe have to take some action.
The Q's only confirmed for a short period this morning and then effectively remained in a leading positive position, it's not the kind of divegrence seen late yesterday, but again, it's not following price lower and taken with Leading indicators above, I'd say that's a net plus for a near term bounce and for lower prices to be accumulated.
The 2 and 3 min charts could easily be damaged in serious distribution,
but remember, smart money usually distributes in to higher prices, they typically accumulate in to lower prices.
The IWM 1 min is in line with price.
However again on the next timeframe, the 2 min which could be in a near vertical drop under heavy distribution, is still in leading positive position.
My take is that there's some light accumulation going on, but I suspect they are waiting for a low that hasn't been made yet to step in with size, they have the full depth of the order book so they'd know where those shares/stops are.
Keep an eye on the intraday NYSE TICK and watch for a break above this morning's channel.
No comments:
Post a Comment