Quick Market Update

I was just in the middle of putting out a broad market update, hint: Things aren't looking very good, but what would you expect with the bank's point man, Bullard, out in front letting institutional money set the pins up via divergences and underlying trade and Bullard coming in to knock them over. This is a new depth of market manipulation that I  haven't seen before, but given QE has ended and with it the stealth bailout of banks, I suppose they've gone to plan "B" to try to keep filling those balance sheet holes the banks have which appear to be close to a half a trillion dollars, at least judging by the last window dressing / F_E_D 1-day reverse repo facility usage.

It's no wonder that the Bank for International Settlements (the Central banks' bank) warned just over 2 months ago that the "Leading Central Bank's" (read as F_E_D) balance sheet is so extended (nearly 4 trillion in expansion since 2008 when it was under a trillion, I believe around 850 billion without looking up the exact number) that the BIS in it's yearly report says that it doubts this "Leading Central Bank" has the capacity to deal with even a "Garden Variety " recession which may be one of several reasons the F_E_D not only ended QE, but why they shifted from holding all assets until maturity to actually shrinking the size of their balance sheet (that's just one reason, if it were that simple!). In any case, the point being I have a broader update coming out that I'm working on, but very near term and only on a 1 min chart and thus far not all that impressive, we may get a bounce. If you could see what I'm about to post in the broader market update, this is the time I'd use ANY market strength to enter any remaining short positions you are interest4ed in. For my part, beyond the core shorts like HLF that I plan on leaving alone and letting them work over the course of a year or so, I'm more interested in trading around these large volatility sewings using leveraged ETFs, or at least ETFs as they don't have stock specific nes that might cause them to deviate from the broader market, thus something a bt more generic like SPY, QQQ, IWM, XLF, XLK (all short) or the inverse leveraged ETFs that give you short exposure by buying them such as SQQQ (3x short QQQ/NASDAQ 1000), SRTY (3x short IWM/ Russell 2000), SPXU (3x short SPY/S&P-500); FAZ (3x short XLf/Financials), TECS (3x short Technology/XLK), transports which I've decided to just short IYT and perhaps the NASDAQ Bio-tech Index, IBB short or the 2x leveraged BIS (2x short NASDAQ Biotech Index).

 IWM 1 min positive divegrence, intraday only, you'll see after the next update how bad things have fallen apart, to an extreme similar to the extreme at the October lows that led to the warning or "Anchoring expectations post" that this would be a face ripping, sentiment changing rally and apparently it has been.

My sentiment update pro has told me not only are retail in the "Buy the dip" mode, the entire point of this move, to change the ultra-bearish sentiment to bullish, but also he's getting bombarded with news letters and the like telling him they'll tell him what stocks to buy in a pullback..

Can you imagine something like that 3-4 weeks ago? Anyone sending anything out talking about buying stocks? Remember the Fear and Greed Index that runs from 0 to 100 and rarely is ever at zero, was pinned there for consecutive days, as bearish as it gets.

In any case, I don't think this divegrence alone is enough to do much with so watch for something like an intraday "W", I'll expand on that below.

 The Q's are in line thus far intraday, beyond that they are a lot worse. Actually since this capture about 10 mins ago there has been a slight positive divegrence, not as big as the IWM above, but remember these are still only 1-min intraday charts.

 The SPY 1 min has a relative positive divegrence above. Since capturing and uploading this chart, the right side of the divergence has begun to lead a bit, again not as much as the IWM above, but it looks like there's a buy the dip, toe-hold being sought out  and I'd use that to short in to and essentially, "LOAD UP THE TRUCK".

 The Custom SPY/NYSE TICK indicator shows some intraday breadth improvement to the far right and the NYSE TICK itself...

While not looking anything like a tradable upside move, not even day trade as of yet, it does look like it may try to put in a "W" base intraday and that looks like the gift that is probably as good as it gets as far as opening or adding to any short positions which was the fight plan before the first punch was thrown back in mid-October. Remember the post in which I said, "Bookmark this post because as easy as it is now to imagine shorting the market in to strength (because of the rampant bearish sentiment and market decline), you won't feel the same by the time this move is over, even with me warning you in advance" and... "This move is going to be a face ripping rally that will go to extremes to flip sentiment and that's what it's all about", thus when the time comes, as hard as it may be to short in to, this is what this move was meant for.

My custom SPX/RUT ratio went negative intraday yesterday, on anything longer than a 10 or 15 min chart you can see how terribly negative the larger picture is, but this works great intraday too. As you can see, negative in to yesterday's afternoon highs sending prices lower and the first of what I suspect will be at least two lows creating a "W" bottom before trying to move higher intraday and I don't mean anything exceptional on the upside, but any strength is useful at this point.

More to come...