Levers Update

These are the assets we predicted would be activated Monday, Meet Your Levers, posted just over an hour after we saw a short term selling climax Monday morning which can be seen in this 11:27 a.m. Monday post, Market Update .

From that post, a quick concept that is useful in any asset and any timeframe relating specifically to Monday morning's action...

*In the context of an IWM 2 min chart*

"And the 2 min IWM is starting to build it's intraday positive, note all of these occurred AFTER the volume short term capitulation, so this is a macro/micro concept that can be used on any timeframe, it's especially effective on longer timeframes with bullish reversal (or bearish reversal) candles, such as the 60 min chart I showed earlier this morning."

As for the averages or at least the ETFs, there's some interesting behavior as large volume is not only a sign of a short term selling climax, but in the right conditions can be indicative of a churning/distribution top event. After Monday's selling climax we expected a bounce and at least a gap fill to follow...

*This post probably has a lot more charts than necessary, but I think it's essential for you to be able to identify when the levers of market manipulation are being used, when they are failing and what the message of the market is when the market can't get off a simple bounce/gap fill without the help of outside manipulation. Some may want to come back to the post later and for those who do, the bottom line is USD/JPY has already been shown to be set up for failure. HYG is seeing distribution, but it's not at the point yet in which I'd call it "OVER", although as a leading indicator we may gain more information. TLT/Bonds are interesting and maybe that TLt post will be able to be put to paper soon, it seems there's a reversal getting ready to take place there as well and VIX futures/VXX and VIX are also improving at a rapid clip. Some of the larger picture charts have additional information relating to 3C targets and more.

The averages and their selling Climax Monday morning...

 DIA with the climax (white), the gap fill at orange and recent flat trade with increased volume, often indicative of churning/distribution.

You can easily see using ROC applied to price, the divegrence in DIA's ROC as volume increases today with little upside, a hallmark of churning, a bearish event of smart money handing off shares to dumb money.

 IWM with 2 capitulation events Monday, the last at the close, the EXACT same time HYG was first accumulated as a lever to help. The increased volume is on a break above gap resistance, useful in distribution as demand for supply is high.

 QQQ capitulation, also note the long lower wick of the candlestick which makes the event multiples more likely to be a short term climax/short term low.

Since, Q's have done VERY LITTLE.

 SPY climax (white), gap fill in orange.

VXX-Short term VIX futures which are knocked down to push the averages up as well as activate the SPY Arbitrage market manipulation lever.

 2 min VXX shows the previous positive leading to a move higher, but also the 3C concept of where a divegrence is first seen. If you were to go long VXX where this divegrence was first seen, you can almost always count on a move that easily hits the target and often surpasses it by 100% or more.

The current leading positive divegrence now on the pullback is even stronger than the last positive.

 VXX 3 min essentially the same.


VXX 5 min showing a head fake move which we often see just beofre a reversal (up or down), in this case a failed breakout, other times they are stop runs.
Again we have a current leading positive divgerence.

I use multiple timeframe and asset confirmation, so here's the 2x leveraged VXX long, UVXY 5 min chart...

 It looks almost exactly the same.

Additionally the inverse of VXX, XIV which trades WITH the market.

It is confirming with a current leading negative divegrence

 At 10 mins, the last positive divegrence seen on the charts above at #1 is not seen here, it was not strong enough to make it to the 10 min chart, Likewise the negative at "A" is not as big. The leading positive at #2 is much larger than the last positive as it leads.

XIV (opposite of VXX) confirms.

And the long term 60 min VXX positive.

Even in futures, VIX futures are going positive.

 VIX 15 min futures positive

VIX 30 min futures positive

As for HYG, the lever that is used to move the market by moving up, fooling algos in to thinking smart money (whom trades HY Credit as a risk asset) is in the trade...

 Shows intraday distribution in to highs and some positives as it backs off, but it is above yesterday's close which is all that matters to the algos.

The same 1 min chart in context doesn't look so good. Note the closing accumulation on Monday near 4 p.m. just before Tuesday bounce?

 HYG 2 min also starting to lead negative, not good.

The 5 min chart showing HYG's collapse in to this week and about in line on the 5 min, this will have to go negative , but can happen quickly, within an hour.

HYG's long term 2 hour chart with distribution at EVERY pivot high and a new leading negative 3C divegrence low.

finally since we already have seen USd/JPY, TLT and 30 year Treasury futures. I was wondering about the longer term TLT, whether there was to be a convergence trade short bonds and SPX until yields and SPX met, or perhaps oil producing countries selling T's to sell dollars to support their collapsing currencies, I'm still not sure, but the TLT charts are looking a lot more close to being resolved toward a positive move up or Flight to Safety and Futures are agreeing.

 TLT intraday 3 min leading positive in a flat price range, a common accumulation/distribution area that looks boring  from a price perspective, but is often one of the busiest areas from an underlying trade perspective.

 The 10 min chart leading positive, finally starting to answer some of my longer term questions.

And the 15 min chart doing the same as it migrates to stronger timeframes.

30 year Treasury Futures agree...

 A SHARP move higher in 3C on the strong 15 min chart, like a hige buyer came in all at once.

And that's reflected on the stronger 30 min chart.

In essence, the levers are doing what they should, they are in their reversal process which will end support for the market making timing much closer.