Market Update

Things aren't looking so good for the market, just earlier I mentioned that as volatility picks up, so do the chances of short term (weak) divergences failing.

HYG looks to have failed completely as institutional traders move out of risk assets...

 It has been a while since we have seen a divergence run over like HYG's which was building positive earlier today and just run over sending it lower and destroying the SPY Arbitrage lever, but this is exactly what I warned of earlier and why I'm fully short and have been.

TLT's drawdown is showing a positive divegrence which only makes things worse once it reverses to the upside, further destroying anything left of the SPY Arbitrager and sending Yields lower and stocks following them, which are already at a huge negative dislocation.

 SPY 1 min is where the intraday damage is seen first on the negative side, this divergence is near run over, but not yet. The divergence (positive from earlier) did migrate out to stronger / longer timeframes...

Like this 3 min so I probably won't call this a dead divergence until I see this 3 min taken down as well as 1 min negatives increase and migrate to the 3 min chart, otherwise I can't be sure we aren't just seeing a pullback intraday to create a wider footprint for the bounce's base.

 The same with QQQ 1 min, which is showing negative activity recently as the fastest timeframes show the newest divergence first.

QQQ in context...

And the 2 min chart still in line or positive so I'll want to se that negative before I'm convinced this is a failed bounce attempt which at this area sitting on top of a Broadening top in a head fake move, would be VERY bad for the market on the downside. Broadening tops fall apart incredibly fast and this one has already had its downside shakeout.

The IWM 2 min is the timeframe I'll be watching as that's as far as its positive divegrence migrated intraday for a bounce.

All in all this is an excellent area in the bigger picture for shorts that have market correlation, like SRTY, SQQQ, SPXU, FAZ, etc. So I wouldn't be too worried about intraday chasing, I'd just want to be sure we are not going to get a better entry as I suspected we might this morning on a gap fill bounce.