Yesterday's strangeness started with GLD when I posted in the afternoon, Trade Idea (speculative) GLD / DGLD
"This is an interesting one, especially ahead of tomorrow's F_E_D minutes.
It looks like GLD is going to see a quick move to the downside, I suspect after that, it makes a move higher. I am opening a speculative half size DGLD (3x short GLD) trading position)"
This after a sharp, but small gold divergence (negative) formed. I don't think the above analysis could have been any closer to reality today than it was as our 3x short GLD position, DGLD quickly made +5% in an hour and a half, we closed it at the bottom or lows of the day and it did exactly as expected yesterday, rallied back up.
GLD's move this morning at the lows by 10:50 followed by the return right back to where it was, that was impressive even to me.
However, the strangeness yesterday was not only in GLD, in fact just after I posted F_O_M_C Minutes Shakeout in which additional assets were identified to make similar moves including:
"I'm seeing quite a few strange charts, the Futures are one...the averages intraday are another, Gold and it's very interesting divergence, now in treasuries."
Looking at futures, from 7 a.m. until just before the European close at 11 a.m., the same time as GLD, they too dislocated from the USD/JPY and headed lower...
For no apparent reason at all, Index futures (ES/SPX futures above) dislocated with USD/JPY (candlesticks) and headed lower just like gold in to the 11 a.m. lows as if on perfect timing and cue together.
The dislocation in USD/JPY now looks like this vs SPX futures.
In the first paragraph of yesterday's post above I mentioned treasuries too (remember yields move opposite treasuries) and this is what happened in 30-year yields today vs the SPX (green)
Yields first pumped as bonds dumped in to the open and seemed to hit their highs by 11 a.m. as well until the minutes release when they dumped and then pumped once again.
To make this easier to visualize, I mentioned "TBT, 2x short TLT looks like it is set for a small pop, perhaps pre-minutes release"
TBT (2x short 20+ year Treasury bonds) saw the same "small pop" pre minutes release on the gap up open and further volatility the rest of the day as the minutes were released.
As for the Averages I mentioned with the additional notation...
"Whatever it is, Leading Indicators and the charts today would imply VERY strongly that it doesn't end well for the market and several asset classes"
You already saw Index futures this morning and their failure to catch back to USD/JPY and to rally with it as it broke $118, but on the day as a whole, after also noting
"TF (Russell 2000 futures) doesn't look good today either, nor do the charts of the averages."
This is how the averages and specifically the Russell 2000 ended the day...
Small caps were hit the hardest again as the Russell 2000 in yellow sees the worst close at -1.09%, but that's not the extent of the damage...
As the Small Caps/Russell 2000 (typically the market leader) is now RED for the year!
The Nikkei 225 was also mentioned, "The Nikkei 225 futures have seen distribution through them intraday, but more importantly was the dead cat bounce off Sunday night's carnage."
The same dead cat bounce we were looking for around 11 p.m. on Sunday night, Abe and Kuroda'a QE-Zilla Sends Japan in to a Triple Dipp Recession, when we called a low in the Nikkei on a parabolic move...
Sunday night's drop in the Nikkei 225 and the dead cat bounce expected in to more 3C weakness.
All of the above assets and their expected moves today, as strange as they were, were from one post and all of them played out which is what the 3C charts were suggesting, but it was a strange set of signals as I mentioned several times yesterday and upon seeing them come to fruition today (especially in our gold short).
These were small signals, that were dead on accurate...
Yesterday's 2 min GLD divergence from the Trade Idea (speculative) GLD / DGLD.
What are we to make of the large signals/macro trends in the Averages, Futures, Currencies, Credit, Leading Indicators, Volatility and Breadth, such as the Averages' macro QQQ update today, Market Update-NASDAQ Broad Upate ? I know what I make of them.
VIX short term futures decoupled with the market toward the afternoon and in to the close...
As for the VIX...
It continues to trend higher vs the SPX (not inverted) ever since our Custom Demark inspired Buy/Sell Indicator gave the first buy signal of the year on 11/10/2014, only the second VIX signal of the year. I find it interesting that VIX has trended higher ever since that day...
And now in addition to the buy signal...
VIX Bollinger Bands are pinching indicating a highly directional move is about to take place, remember that VIX trades opposite the market, this is the "Volatility" mentioned in the F_E_D minutes today, synonymous with "Market Decline".
In addition, as mentioned in yesterday's list of assets (TBT-3x short TLT), TLT was expected to lose ground today...
Add HYG and TLT together (all you are missing is VXX) and you've activated the additional market lever, SPY Arbitrage...
As you can see, Capital Context's SPY Arbitrage was active today adding about $.60 to the SPY's price.
Otherwise High Yield Credit continues to run the other way as the macro trend has shown.
Pro sentiment was rather muted today, but still in line with its downtrend.
Although some intraday movement similar to SPY, it closed red.
Just in time for Asian trade, there are $USDX negative divergences and Yen positive divergences, it looks as if USD/JPY is going to back off current levels and I don't think that will be helpful to the Nikkei 225 which also has a negative divegrence, you saw the larger one above on the "dead cat bounce" chart.
At the moment US Index futures are INCREDIBLY in line, similar to what a Bollinger Band squeeze might do as they won't stay that way long, I suspect they'll look very different in the morning, especially if the Nikkei and USD/JPY take a dive from here.
There are also some strong timing or short term signals for the 30-year treasury futures macro trend, they are very positive at the moment even though these are futures as the bond market closed as usual at 3 p.m.
I mentioned today that UPRO-3x long SPY looked very ugly today and that the leveraged ETFs often show signals earlier and sharper than others, I suppose because of the urgency of the leverage, but I wanted to make sure to get the post out so I'll include it here.
The trend of the 5 min chart looks like this...
And the recent 1 min trend, also a sharp leading negative in to and at the suspected head fake move and beyond through today.
And as I like FAZ-3x short Financials so much, here's a look at Financials and 3x long Financials, FAS (not FAZ-3x short Financials which is what I like long and have been holding).
FAS 3 min.
Thus I really like FAZ long.
As for internals tonight...
There's no Dominant Price/Volume Relationship like last night's, none at all, but last night's...
"Today for the first time in about a week we had a Dominant Price/Volume Relationship in all of the averages except the Russell 2000, it was Close Up/Volume Up. This is the most bullish P/V relationship, but ironically it is also the most likely to cause a short term overbought condition in which the market closes lower the next day.
This is why I follow some of these more obscure breadth indications which I have to write custom scans for.
While there was no Dominant P/V in the major averages, one thing I did notice is the Russell 2000 has less than half its stocks trading above the 200-day moving average, 956 to be exact. You may recall that when I taught Technical Analysis for our Public School System's Adult Education Program, Dow Theory and the multiple classifications were one of the more difficult lessons to teach new students to trading/Technical Analysis, but I found that the 50-day and 200-day matched exceptionally well with Dow theory's Intermediate and Primary trend classifications. A Primary trend is a bull or bear market, then you have Intermediate and short term , but many technicians have added a 4th category, "Sub-Intermdieate".
In any case, using the moving averages, this would mean a majority of Russell 2000 stocks are in a Primary bear market.
Unlike last night's S&P Sector overbought status with 9 of 9 sectors closing green, tonight only 3 of 9 closed green with Energy leading at +.52% and Tech lagging at -.65%.
As for the 238 Morningstar Industry/Sub-Industry groups I track everyday, again unlike yesterday's strong number of groups closing green, today was weak at only 80 of 238.
Breadth Indicators are finally starting to show some movement, except where they should be showing movement, for example the % of All NYSE Stocks Trading Above Their 200-day Moving Average...
The NASDAQ Composite's Advance/Decline line has not only been torn to tatters, but it's also starting down and in to one of the strongest days in weeks (yesterday).
The SPX put in a bearish reversal Harami Candlestick pattern the last 2 days on volume. The Dow has a bearish Doji star and the NDX also has a bearish Harami Reversal candlestick pattern, also called an inside day.
I'll check on futures later and update if necessary, tomorrow I hope to update some of the core shorts we are in and whether they are worth an add to as I like pyramiding up positions that are working and margin for shorts is unique allowing some of the gains to be used without having to close the position like longs.
Some of these include: FSLR +29%; UGAZ +26% (UNG as well); NFLX @ +12.75% and +23.75% (two entries); HLF +40%, SCTY +24.25%, FB +7%, DE +3% (but I like this one) and update MCP , GLD and URRE.
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