Daily Wrap

Today's price action, full of closing candlestick Stars and Dojis (indecision/reversal candles), looked a lot more like the Dominant Price/Volume Relationship from yesterday which was Price Up/Volume down, the most bearish of the 4 possible outcomes and with a strong Morningstar performance, a97 of 238 closing green which may seem bullish, bit most often it leads to an overbought condition and next day correction.

Considering the SPX (-.12), the Dow (-0.2%) and the Russell 2000 (-0.05%) all closed red with only the NASDAQ 1000 +0.09% closing green, but for all intents and purposes we might as well call it a totally flat day, this is certainly a change in character.

Transports actually had the best day, at least until you look at it a bit closer (+40%). Transports short have been an open position and a favorite longer term core short position.

Here's what the averages in general looked like on the day...

Everything but the NASDAQ by a hair and Transports closed red, but nearly everything was almost unchanged, not the bullish story you want coming in to Black Friday on major media outlets.

For a closer look at transports...

 2 hour macro view was in line coming in to 2014 and then went negative in to 2014. We've looked at all of the charts and Transports looks like a good core short position in my view.

As for timing signals, the 5 min chart went sharply negative today and I don't think that was on  falling oil prices.

In fact, intraday look at the 1 min chart, insane.

The averages didn't fare much better. We've seen the longer term charts and trends, it's the short term timing chart especially since I think the head fake move already occurred, but is obscured by the "SURPRISE" PBoC rate Cut from Friday.

 IWM's 60 min macro trend showing accumulation through the first 2 weeks of October, although some didn't believe it, after this move I think nearly 2 weeks of accumulation is QUITE BELIEVABLE.

The distribution period has been larger, longer and more intense, but some of the other averages are even worse than this.

As far as the short term timing indication charts...

This is the IWM 1 min , remember what I said about those thin, quiet trading ranges, 3C is in decline all day through the IWM's flat range.

 The SPY with a sharp negative divegrence since the suspected head fake move (yellow arrow) and after the PBoC gap up, with a much stronger , faster divegrence to the downside, similar to the speed and timing of 30 year yields, or the Flight to Safety trade.

 And the SPY intraday, clearly negative right in to the suspected head fake move (yellow arrow) with a deeply leading negative divegrence since the gap up on the PBoC non-liquidity event, which the bank itself is warning that this is not the start of a loosening cycle.

And the Q's

Again, beware and don't fall asleep at the switch during flat, dull markets. The Q's intraday leading negative through today's range should be proof enough, but I suspect before long as this is a timing timeframe, we'll have more solid reasons to be diligent during boring, flat markets.

Cruse, which I posted on last week as a possible trend change here, Oil Trend Changing... will have to be watched closely oif we want to place a trade tomorrow before OPEC's Thursday meeting as the US markets are closed.

It seemed at first from the post above that USO will see a move higher on an OPEC production cut and I'm still watching for convincing evidence, but today intraday, oil was all over the place on OPEC rumors.

 Looking at Brent Crude futures intraday it seems as if someone knew what the first rumor/leak would be as they sold in to oil before the leak at #1 which was "No Cut", then at #2 the next rumor was an OPEC cut sending oil higher in to #3 rumor/leak which was "No cut, stricter compliance" obviously referring to Saudi Arabia adjusting production as they see fit or as the US sees fit in an effort to punish Putin.

However, overall the ending price action was similar to a rounding bottom and on a positive divegrence, perhaps all of that just to pick up crude shares/contracts at lower prices since everything today in oil was rumor/leak? This is one I'll be watching like a hawk tomorrow for a true potential leak.

USO's intraday chart today looks VERY similar to Crude Futures (Brent) above...

So were trannies following oil as they sold off in to the close while oil also moved lower? It seems illogical at best.

The $USD saw its second day of consecutive weakness on a stronger EUR (both macro trends), this "should" have sent Gold, Silver, copper and oil all higher, as well as stocks but...

Silver (white) moved higher, gold (green) slightly higher), copper (yellow) was slammed again and oil (blue) was slammed. We might give oil a pass on all of the OPEC rumors.

Dr. Copper is seeing an increasingly negative trend, however with a lot of the macro global growth data and opinions, it's not surprising, however for old-timers who have always believe copper leads the economy and the market, this is an ugly omen.

Speaking of Omens, not that I personally subscribe to them, but there was a near spot on a Hindenburg Omen today. Again, while I don't think they are a prerequisite, they do often accompany bearish turns down, however they are not a necessity for bearish turns down. The last H.O. was around the September high leading to the October lows.

As for leading Indicators, as I posted and predicted here, VERY BAD Market NEWS...Richmond F_E_D, CONTEXT, SPY Arbitrage and TLT-30 year Treasuries... the SPY arbitrage was likely to be levered up in to the close.  VIX as expected, was slammed a bit in to the close and HYG pushed higher as posted, but it had no effect other than to perhaps keep the one average in the green and the rest from slipping, as I showed earlier today, they were approaching a "Slippery Slope".

 VIX slam in to the close sends SPX lower or about in place.

HYG was ramped in to the close to no effect, however...

HYG distribution in to that ramp was carried out.

The failure of the SPY arbitrage was in the fact they couldn't push TLT lower, in fact it looks like there was a large block trade buying or covering TLT and selling TBT (at the exact same time), our trade, Short TBT giving us a TLT 2x long position.

 Note the volume in TLT this afternoon and the jump higher which is why I suspect a block trade and at the exact same time in the inverse TBT...

TBT was sold in a large block trade causing it to fall. You don't see these often, but when you do, apparently someone is in a hurry to get out of the position to take that kind of fill.

Both trades would be exactly in line with what we've seen during the TLt pullback/accumulation which is why we entered the trade.

On a 60 min chart TLT has a large positive divegrence and is already moving up sending yields down, which has already pressured the market as posted in last night's Daily Wrap.

The 30 min chart shows a sharp move higher, apparently the result of recent strong accumulation and likely the catalyst behind the block trade.


As for yields which are a leading indicator and act as a magnet pulling equity prices toward them...

 The higher TLT and 30 year bonds go, the lower 30 year yields go. Toy can see for yourself the last time there was a divergence between 30 year yields (blue) vs the SPX and you can see how big this divergence is now.

 I mentioned the ROC in yields to the downside last night, but this is even sharper.

Even our 5 year yields made a sharp move lower and these have been one of our favorite Leading Indicators for some time.

Today also had an immensely strong 5 year treasury auction on top of yesterday's very strong 2 year auction.

There seems to be a clear Flight to Safety  trade in the works.

Pro sentiment stayed almost exactly in line with the SPX, however on a trend basis like the 30 year yield chart 3 charts up, both look almost identical trend-wise, in other words, not good.

HY Credit sold off in to the close for a second day in a row.

As for AAPL, it looked like it was heading toward a trade at the last update (not quite there)...SPY Underperformance/ NASDAQ Divergences & AAPL.

Today AAPL's timing timeframes moved a lot closer and this too will be high ion the watchlist.

 AAPL positive 5 min divergence to a leading negative.

And the intraday chart looks horrible.

This is interesting both as a trade and as the heaviest weighted stock in the NASDAQ 100, you can find out the exact weight for a $10,000 a year NASDAQ subscription, but in the past it has carried about 20% of the weight of the index, that's about the same as the bottom 50 weighted NASDAQ 100 stocks combined!

Also interesting as we saw the break up start last week, the ES vs.USD/JPY correlation failed even worse after the EU close, it had been in line until then intraday. When even the ramping levers break!

As for internals today...There was absolutely no Dominant Price/Volume Theme among the component stocks of the major averages.

Everything else was luke-warm. Five of 9 S&P groups closed green, but the leader, Consumer Discretionary (again) was a mere +0.31%, Energy was the laggard at -1.63.


Of the 238 Morningstar groups, a very luke-warm 130 of 238 closed green, it was as if  the whole market were one big Doji indecision candle today.


Breadth was along the same lines, luke-warm with the % of NYSE stocks > 200-day moving average stuck right at the 50% area now for the 18th day in a row, but just thumbing through them quickly, whether breadth indications or breadth indicators, nearly all have a look as if they are about to roll over. We'll see, but I'm use to seeing Rates of change, just like I saw a week or so before SKEW shot up and this has the same look.

I'll take a look at futures and post anything interesting before I hit the sack.

Gold has had some interesting volatility tonight, but it is volatility, not trend so we'll see how that pans out (no pun intended).

I'll catch up with you in a bit if there's anything else to report.