Market Update

From earlier today in Quick Market Update...

"That means for a head fake move to be effective and worth running, it has to achieve a goal which is usually sentiment related. A higher high is what forms the chimney above the rounding top (Igloo), so when price moves enough to be convincing to traders to abandon short positions and go long, it has done its job, that's what I'm looking for....

Again, these moves have a purpose and function, there's no point in running them if they aren't effective, so when it feels a bit scary to be thinking about entering a put/short, that's when they're doing their job."

While a new higher high can sometimes be enough to hit stops and make a head fake move work, most of the time they are sentiment changers, just as was posted earlier, they need to be somewhat extreme and when you start to feel it, they are doing their job.

It's not too surprising that the last hour of the day is when this move starts to fail after having made a more substantial push higher, either way it was worth waiting until today for puts rather than yesterday.

Here's a quick chart update, as always, if you don't have some unique indicators, the much overlooked intraday TICK will usually give you an early head's up.

The early move just above yesterday's highs didn't seem like the kind of sentiment changing move we needed, the 1-2 p.m. move was more like it, but it has already seen significant distribution the last several days so I'm not very concerned about positions already entered and certainly not about new positions or put positions.

 There are several leading indicators that have been pointing toward this and a move lower, which I already went over in some detail, the SPX/RUT ratio was one and it was interesting intraday as well.

Here it is intraday not confirming the move above the earlier intraday highs, it's the kind of sentiment move we needed as a "Chimney" head fake, Wall St. doesn't usually do things half hearted as they know like any good trader, the market is largely an emotional animal.

 Since the HYG divegrence post, HYG has been lagging or leading negative, it has been just calling for a move lower, yesterday the signals lined up pretty well with HYG and today is just a bonus.

And intraday, again ZERO HYG confirmation.

As usual, keep an eye on TICK, it broke the uptrend channel and gave early warning before things got ugly on the downside. Those are some nearly-1600 readings on that break.

SPY is leading negative to a new low

As are the Q's

And IWM is pushing that way.

I still think this is an excellent area for inverse ETFs or short equity positions, as for puts, you'll have to see what kind of discount today's move created, but this is why I warned of this yesterday as it's a nice opportunity.