Market Update

I know it doesn't feel like much is going on right now, but it is. In fact I may add to the SQQQ (3x short QQQ) long trading position, or rather add a different inverse ETF as I opened that as a full size position yesterday.

If you throw a ball up in the air and are able to watch is slow motion, there's a point at which there's de-acceleration, a slight hang time and drop, kind of like a rounding top, less like the sharp "V" reversal events like we saw at the start of this last run up.

Some of the signs and signals are the same ones that told us we were moving higher last week when I was trying to anchor expectations and warn that this would be a sharp rally on the upside, I did that while we were in some of the darkest market days recently because it's easier to accept at that point then it is once you get in to the tick of things. Like they say, "Every boxer has a fight plan until the first punch is thrown".

In any case, some of the assets and indications that are giving us warning, other than the SPX/RUT Ratio and VIX Term Structure which I've posted so many times in the past day or so, I think you have it etched in to your memory, include the following...

There's some VIX Futures and spot VIX relative strength vs the normal market correlation, they look like they're being bid up vs. where they'd normally be vs the SPX. HYG is also slightly underperforming, but we'll get to both assets in more detail in a moment.

Professional Sentiment is falling off after having been right in line with prices...

 Pro sentiment vs SPX (green), this has been perfectly in line all week until today

Yields which tend to pull prices (SPX green) toward them, have been lagging.

Also commodities which have recently been acting as a risk asset are lagging badly.

 You may recall that I've posted Transports outperformance of Industrials every night over the last 4 days, in last night's Daily Wrap I said their move up yesterday looked like a "Flame Out" and the 3C chart, out to 15 min, is leading negative so I suspect they'll lead to the downside as well.

I posted an entire article on HYG's negative divergences as it has led the market, you can see the accumulation at the bottom and the continuing distribution today as it is also lagging price.

And VIX futures, on a 15 min chart are accumulating for a move higher, which makes sense as VIX futures are outperforming their normal correlation with equities.

Intraday breadth is also giving out from +1500 yesterday to a downtrend in to today in the -500/+750 area right now.

Plus there are the 3C signals in the averages, the leveraged ETFs and the inverses as well.

Just give it some time, a reversal should be a process, not an event. I'll let you know as always if I intend to add to the SQQQ position BEFORE I do so.