Daily Wrap

I'm not going to keep you long tonight, when I have interesting, useful or information that can be added to your tool box I try to share as much as I can.

I'll be honest, since Window Dressing ended in late December and ESPECIALLY since the start of the new year, character in the market has changed and continues to do so at a faster rate, but I'm not exactly sure what it is except a few things I suspect 1) the Carry Trades are becoming an issue and 2) when there's this kind of dispersion and we have seen it in many ways, from as simple as price performance for the average on a closing basis to yesterday and today's very strange market in which there seems to be no correlations, as I posted near the close, a market that seems like every fund manager is going in their own direction and not because of opportunities, it seems more out of panic because it is highly irregular for the herding mentality of Wall St. to break up, that's typically only seen when a fund feels threatened and is in survival mode doing whatever it is they think they need to do to get in to a safer position.

It's noteworthy that EU countries, PIIGS that weren't expected to be able to go to market for years to offer bonds are not only doing it, they are seeing over-subscriptions to their issues, Ireland yesterday, Portugal offering debt today, Greece's PM says they're preparing to offer which is just surreal. US bonds are catching a bid as well, I really can't think of a reason why except a flight to safety. After yesterday's minutes in which the F_E_D all but said the bang for the buck in QE just isn't there and they are now in real fear for their own capital losses, I think some attitudes on Wall St. that were already looking at QE tapering as policy tightening rather than simply ending a program like QE1/2 Twist and Twist light have probably hardened even more since the minutes.

I'm exceptionally interested in the reaction to tomorrow's NFP released at 8:30.

THE MARKET IS STILL AT THE WORST JANUARY / NEW YEAR OPEN IN 9 YEARS.

In a ton of assets and quite a few 3C signals, there's been barely any movement, for instance, the SPX...

With another paltry gain of only +0.03% today, it's also interesting to note that the "short duration bounce" that we first saw signals from late last week and expected to see a weak open on Monday (which we did) with that small bounce into the afternoon (which actually came 3 hours after expectations on the open Tuesday) did take place as the charts were clear about, but since then, the SPX has moved exactly 0.01% from Tuesday's close.

The NDX which closed today down -.42% (there's that dispersion again) has moved -.14% since Tuesday's close to today's. The R2K which was up +0.07% today has seen a move of a mere +0.05% since Tuesday's close and the Dow which was down -.10% today is the only one with any movement from Tuesday's close at -0.51% as of today.

Other assets have been in a range for 2-3 days like HYG or VXX, sentiment indicators, although the 20+ year bond ETF, TLT did show noticeable outperformance today as the market lost ground, almost as if there was a direct flow out of stocks and in to bonds. The NYSE TICK Index has shown 3 distinctly different changes in character over the same number of days.

Standing back and looking at this, I'm reminded that what we have is a tight range and what generally happens in tight ranges? So I looked around a little and came up with some interesting ES/SPX futures charts.

 This 15 min ES chart (as the 5 min charts are negative) is marked, at "A" we saw the indications of a short duration bounce on Friday, it was expected to develop late Monday because Friday's closing 3C action was negative. Instead Monday "B" stayed negative all day, not just the first half of the day and our move appeared on Tuesday at "C". However, look at the 3C readings, we can see the positive divegrence late last week which gave the expectation for a short duration move (short duration because the divergence was short in duration), the lows of "B" were positive and the next morning we are up "C". 

I always say, "If the 3C picture isn't clear, go out to longer timeframes" actually I'd say that with any indicator. So doing that what do we see in to today's ECB highs? Distribution and they look like a head fake move whether intentional or not. The Draghi press conference put a quick end to that Euro move which lifted the carry pairs (EUR/JPY especially).

So looking at the above chart, we have a cycle represented in 3C and pretty much in price: 1) accumulation 2) Mark-up 3) Distribution/Top and of course we were looking for a decline after the short duration bounce, which is why the trading portfolio is leaning short with hedges removed.

By the way, the performance there is +22.5% which is just over a month.

I had mentioned that a 60 min divergence (negative or positive) is rare on Index Futures, but we have had a negative divergence in Index futures and still do (longer than can be seen on this chart). What I find interesting is the state of the divergence and how it gets worse right as Window Dressing ends which I believe was the 27th of December.

ES went through a little trouble again today for the 3rd day in a row to end the day at VWAP, I'm not saying anything more than that, it's a bit strange that it's seemingly so important to end the day at VWAP, yet gains are essentially ZERO.

The one asset that has been very important to me to keep an eye on as it helps to determine when to take action and what kind of action (you have to understand how little information there has been here) is one of the first to really start establishing some kind of trend, it seems to be a bid for protection, but there's no gains in the market to protect as January is still red on the year.

Short term VIX futures

 1 min

3 min was just reaching toward a new high in to the close

10 min which saw a large 1 day move this week

The overall 15 min.

This is confirmed in the actual VIX futures as well, which were diverging quite positively in to the close.

There was no real or insightful Dominant Price/Volume Relationship today among all the averages, the Dow and NASDAQ 100 both had Close Down/Volume Down which is the most meaningless of the 4 relationships, but is the thematic relationship in a bear market. The R2K and SPX had no dominant relationship at all.

That's really about all I have for you as of now except futures are a little interesting. I would never pay much attention to 1 min charts at this time of day with a long overnight session (you saw what can happen today with the ECB's policy statement followed by Draghi's press conference...

EUR/JPY at the 4 a.m. (EDT) ECB policy statement and the 8:30 a.m. Draghi press conference. Interestingly ES followed the Euro up right on cue, but waited until regular hours opened for the decline seen here at 8:30 a.m., but in ES at 10 a.m. (just enough time to run overnight and pre-market limit orders).

In any case, it may be nothing, but with the 5 min and as you saw the 15 min and 60 min charts already negative, this would normally be the timing flag we'd look for in that chart/timeframe configuration for a move to start so in that spirit...

 ES intraday 1 min (this is the deepest divergence I can find on the chart for as long as it will let me scroll back, about 2.3 days)

NQ, the exact same including scrolling back.

Remember that QE and rate hikes are now tied to the unemployment rate which is why I found it so interesting that the first QE taper was right as Employment data starts its seasonal adjustment which always ramps it for the first quarter.

For example...

 Over a 10-year period, the averaged Non Farm Payroll data with a seasonal adjustment applied looks like this, heavily ramped in Q1 and especially January and then fades in to April as the adjustment period passes.

Since Extended Unemployment benefits were not part of the most recent budget deal, they are over and that means everyone who falls off the unemployment benefits  cliff which is now significantly shorter, is no longer counted as part of the labor force which means the unemployment rate will drop even if there's an increase in unemployment because fewer unemployed people are counter.  This will likely have little to no effect for the January NFP, but come February, I believe well over a million people will just disappear from the labor force, lowering the unemployment rate significantly based on nothing but accounting gimmicks.

This is why I thought it was so interesting that the F_O_M_C decided to start the taper when they did when it is seemingly so obvious they want to extract them,selves from accommodative policy, even admitting for the first time I've ever heard that "Capital Losses" for the F_E_D are now part of the equation.

As usual, if anything of significance occurs in futures, I'll let you know.

USO Update

This is the original , long awaited position, it went from a negative divergence at "A" which was a nice trade to a positive at "B" and a head fake move just before that base moved up at "C".

At "D" we had a signal negative enough that I expected price to pullback, but it seemed to want to consolidated sideways at "D" and then things got worse for the pullback signal at "E" and we finally got the pullback in price, however since then there has been accumulation in to the pullback which is a very important signal and why movement is important to understanding what is going on. At "F" it seems like we have another head fake move that may be allowing a base/reversal to form and USO still has quite a large upside target.

 On a 3 min chart this is the initial pullback area and signal for that at "1" and then the consolidation instead of pullback at "2", finally a worse 3C signal at "3" and the pullback we were looking for (although deeper by this time) at "4". It seems a base has been being put together at "5".

 This intraday chart would show the start of the base at "5" on the chart above, note the recent extreme leading divergence that only appeared once the same head fake move that started the uptrend was psased on the downside.

 Normally I'd say a reversal process that is proportional would take maybe 4 days, but ther are a few things that may make it shorter, in any case I'll be patient on this, I have been for a long time, no reason to stop now.

The candlestick reversal (bearish) at the top is an evening star reversal, almost a shooting star reversal. What I see on the daily chart that makes me wonder about the size of the reversal process is that the last several days it has put in a rounding process and we know there were positive divergences there. Today's bullish Hammer candlestick is another reason, volume should be higher today on the close which makes the candle more effective.

I still think I'll wait, maybe just until tomorrow morning and see if there's a little more on the process, a little more on the divergences.

In any case USO is finally back on the map.

Market Update

I had just been talking with a member who has picked up 3C very quickly, much faster than I originally did, but I had to unlearn years of Technical Analysis dogma and look at the market without that bias hanging over me.

We both agreed we were seeing the same things and I had written,

"3C works really well because hedge funds and others all herd together, they buy the same assets, sell the same, the reason being is because no one wants to underperform the herd, if they strike out on their own (generally speaking) and try to do the best they can for their clients and fail and have a year that is below the average of the herd (even if that average is worse than the SPX's yearly return-I think the average fund performance for 2013 was 6%), then they (the fund managers) run the risk of losing a multi-million - or more job.

Point being, that is one of the reasons 3C works well. When I see stuff like this, I assume there's fracturing of the herd, panic and an every man for himself attitude, thus things go in all different directions." (And correlations are lost).

What I see in to the closing hour is starting to make more sense. The negatives are becoming more defined. One of the most important assets I've been watching in this situation is the VIX futures, earlier in the week they were very active, today we saw some activity, but they were missing the normal multiple timeframe confirmation. During this last hour multiple timeframes that had been out of sync have moved or have at least put in initial string moves, this is probably one of the best or most observations I've seen since we expected the move up early this week.

Tomorrow we do have Non-Farm Payrolls which I think are going to be interesting (weather?), but they should give us a window in to smart money's thinking, not that they haven't already made much of that clear, but their thinking since the minutes.

I'm going to follow up next with USO, finally some signals that are either actionable or VERY close to being actionable.

Market Update

I've never tried to pass myself off as a market guru, although people love it and they'll buy it everytime no matter what their performance is and the reason for this is very simple, in a very unsure and often illogical market, epople love to hear certainty and to be a market guru means nothing more than saying everything with conviction, certainty and if it doesn't work out, people are very forgiving because what they really crave is someone giving them a sense of certainty in about the least certain environment you can imagine.

I'm honest with you, if I don't know the answer I'll tell you I don't know, but be darn sure I'm doing my best to find out. This has a lot to do with the kind of people a site like this attracts, those who can tolerate underrtainty and think forthemselves vs those who can't tolerate it and want to be told what to do every step of the way which serves no useful purpose either during the trade or when people move on, at least here I think you can take something away with you that you can apply, whether concepts or the bravery to think for yourself.

That being said, last night I said that there's this ineffable character to the market, I can't show you on a few simple charts because it's much wider than that, but it's a change of character since the new year and one I don't understand, but suspect it may have to do with carry trades. Even though most of us don't trade currency, it's an important part of understanding the market.

Earlier today I put out another piece on the Yen and why I think it's so important to watch.

As for the market, there's a very strange disconnect that changes nearly daily, take the NYSE TICK data, Tuesday it was as thin as could be on the move up we were expecting, yesterday it was wide and wild on an otherwise flat day and today it seems to be working as it normally would. I'm not seeing the normal migration that I'm use to, in fact I'm not even seeing the kind of confirmation I'm use to.

Even Leading Indicators are all over the place. The net effect seems to be a market pinned in a range the last 3 days, but I think the reality is something much deeper  and to be honest, by best "GUESS" at this point is it's carry trade related.

The reason why is because the market usually has excellent confirmation and excellent correlation, meaning funds on Wall St. herd much like retail does, but when a panic sets in, it's every man/woman for themselves, everything else goes out the window in a chaotic way. I've seen it a few times, AAPL was the most recent memory when it fell from all time highs.

I can't be sure and seeing market internals after the close when they update will help I think.

For now though here are some charts...

 ES intraday has been following 3C signals, so has NQ, TF has been a little more off on its own.

Here's the SPY intraday, but the migration I expect to see has not been there in ANY asset the last 2-days, instead as you'll see in VXX below, there has been these strange trends of an intraday and maybe an intermediate chart.

Migration of a divergence is an orderly process, it's a planned cycle, a 10 or 15 min chart showing a divergence almost out of nowhere is heavy underlying activity that is not part of that process, it's more chaotic, but in those timeframes, they are large underlying movements.

 QQQ intraday

IWM intraday-again this is not as bad off just like TF.

 DIA intraday

Now I'd use GLD as ONE of my confirmation assets, but...

Gold's confirmation isn't there.

Here's another intraday chart, it isn't there, but at 5 mins...

Perfectly in line.

This however is where you can get the best feel of the overall character I'm talking about (which is difficult to define because it's so different between assets that are normally highly correlated).

 VXX intraday is ONE of the assets I've been watching for confirmation so I know what is likely in the near and intermediate term. This was not moving much yesterday, but suddenly today comes alive.

What was moving though...

The 10 and 15 min charts. This is highly unusual, yet suggests large trades have been going through at the time for protection.

The only thing I have suspected would be a problem and we have seen an actual transition are the carry trades themselves which we can't underestimate their ability to wreck a market very quickly when dealing with leverage on that level.

This is the USD/JPY and ES in purple, again it seems that ES is leading the carry, maybe because it's following the more leading Yen, maybe because the assets have to be sold before the carry can be covered, I'm not sure, but so fart this to me is the most probable culprit.

I'm not assigning responsibility to the carry situation, but as I said, it's the most sensible thing at the moment.

I'm still looking hard, I'm still leaning bearish in all positions as I want to be in line with the highest probability underlying action, especially when there's any uncertainty.

Something is very different since Jan started. I personally think the wisest course is to be careful, to reduce risk or any new positioning and be patient, look for anything that seems to fit. I ALWAYS expected that the market's character would change when QE is taken away and the market has to justify these prices based on fundamentals and not fundamental flows and I have always thought, "Whoever figures out how to trade this market first, is going to do very well".

I'm not sure if that is what we are looking at, but there's something much different and this is more than just the occasional couple of days of market opacity.

UNG / DGAZ Trade Update

UNG is a long time favorite that I think will enter a secular bull market and has been in the process of carving out a long base that will support such a move (multiple years).

However, it looked very much to me like UNG would pullback, at first not very sharp, but then it looked like it would be larger so DGAZ was entered as a way to play the pullback in UNG as it is the inverse or 3x leveraged inverse Natural Gas. At first DGAZ was down pretty well in to the mid-teens, but the signals still remained strong as UNG chopped volatility in a H&S top, now DGAZ is at a +15% gain in the trading portfolio and I think for the most part, the volatile chop I said we may see for a few more days, is likely over as UNG has broken decisively under the H&S top.

 This is the UNG daily chart and the little H&S top is clear. I talked earlier about H&S tops and we actually got good positioning on this one. As far as the head fake move associated with a H&S top, I think this is more of a pullback in UNG, while the typical H&S shakeout could occur, I put the probabilities pretty low and even if it did, it wouldn't change the fact UNG would still be expected to see the downside move (the head fake is just a shakeout, not a change in the underlying tend). I'm really not worried about a shakeout here.

This is a wider view of UNG's total base, the initial changes in character in 2012 that caught our attention and a much bigger base than anticipated, but in the long run that makes this a much more interesting asset. As for the current action, to put it in perspective, it's to the far right in that little yellow box so it's not anything that I'd consider to be trend changing, in fact it may turn out to be a timing flag that is trend changing in a positive way for UNG after this pullback completes.

 This is the 60 min chart of UNG, you can see accumulation and a 3C confirmed uptrend before 3C went negative in to the head of the H&S top, but there were warning signs before that like the ROC in price and 3C making a lower low and breaking upside confirmation before the first clear divergence was in place.

On an intraday 1 min trend, you can see there's excellent confirmation, that's why I hung on to DGAZ like a pit bull. As you saw yesterday, I'll move out of a position at a loss and take my lumps (AAPL was a 25+% loss, luckily offset by the SLV put's gains ), but when I have good reason, I'll stick around and this was part of good reason. You can see the top of the right shoulder and distribution there.

There's a lot of confirmation of current trends in both UNG and DGAZ.

The confirmation and leading on UNG go out further, but I think the 10 min chart is a good representation of the mechanics of distribution in a H&S top which can include short selling.

The yellow trendline would be the neck line for UNG.

This is the best representation of DGAZ on a 15 min chart, note distribution, confirmation of the downtrend and accumulation of an inverse H&S base. Also note the leading positive divegrence.

Initially I though I had an idea of where the pullback would be, but things have changed and I'm not sure.

The price implied target for DGAZ is $12.50, but considering the size of the divergence, I think it is significantly more so we'll let 3C tell us when it's time to get out.

I will likely not be trading around the position, even if I know there's a likely countertrend correction, I want to just let this trade work and not kill gains with transaction costs and perhaps miss parts of the gains.

If something really changes on the charts, well then I'll let you know.

So far, so good, I think it was worth the wait.

Possible Black Swan

I have mentioned that in the past when we've been in turbulent markets (or my nemesis trade, the AAPL short near the top ) certain events have the ability to roll right over divergences, that is to say, roll over Wall Street's tactical plans. It doesn't happen often, but there have been a number of larger events like 1987 or the Flash Crash and or even Sept 11 and then there have been lasting ones, but either way, when you see a position destroyed in minutes, it doesn't much matter what comes next, fear of the most intense sort takes over.

The one possible Black Swan I see on the horizon the effect of greed, the effect of leverage at insane levels and I've talked about paying attention to it, that is the carry crosses because of the kind of leverage they use and the size of the trades.

In any case, as I have said recently it's not just important to watch the pairs, but increasingly more important to watch what moves the pairs to the largest degree and that's the Yen.

The charts below are the single currency Yen futures, but you can also get a good idea by watching FXY (the Yen Trust). If this sees large, unusual moves to the upside or something that looks like a short squeeze which is a near diagonal line up with few to now pullbacks and very shallow ones, we will have the potential for a black swan event.

This is what the Yen futures look like now.

 Daily chart, note the symmetrical triangle and the move below, while we usually see head fake moves in much smaller size, they are typically proportionate to the preceding trend so this would be the right size and it would be VERY useful at these prices to cover that carry like we know at least BAC did with their USD/JPY exposure. The last step in covering a carry trade is to buy back the currency that was initially sold to open the trade, in that case, it's the Yen and to cover at these levels means they can get out at a discount. It's when the supply/demand balance gets out of whack because of fear that things get crazy and an AAPL event occurs in which everyone is trying to squeeze through the same small door at once; that took AAPL down 390 points or 45% when just weeks earlier it was the "Unstoppable AAPL, the AAPL that is going to $1000"

 There's the 30 min chart, it has been up, which is why I said the carry pairs would see downside, but I also thought they'd get a break which they did because the yen was showing signals of at least a consolidation which has occurred and it looks like the Yen is ready to make more upside gains.

The 15 min chart also looks like it's preparing for that move.

And the 5 min chart which is least important bigger picture, but tactically very important.

The idea in this case is covering the carry right now is very advantageous. If the Yen continues rising, profits start disappearing at a rate of (typically) 100:1 so things can get out of hand very fast and I think you can see how a number of large hedge funds, institutional investors, Investment banks, Private Equity, etc. might all decide at the same time, "We better take this while we can", which is it occurs all at once, you get the AAPL effect and few divergences are going to hold up to that kind of panic.

I'd just keep an eye on the Yen or on FXY and maybe have a Rate of Change indicator on it so you get an early warning of any changes in character.

Market Update

As far as I'm concerned, this is still "patience" time. The move witnessed this morning seems to be nothing much more than noise at this point, there are still some key signals that are being built, but aren't there yet.

ES for its part is seeing and feeling some of the drag of that 5 min negative divegrence I mentioned the last day or so.

ES 5 min

However while this movement may get some people to chase it or cause some trades in both directions, what I'm looking for are the tell-tale signs a viable move is in place. Much like yesterday there are hints of that building, but so far there's nothing jumping off the screen that is saying to me, "Don't ignore me".

So other than trade management, I think it's still patience time.

Tomorrow's NFP may be a key event the market is waiting on, a strong number should be taken badly by the market.

We're also very early in to the day today so I'm not saying today will be a waste and we'll just be watching, we have plenty of time for the signals that need to develop to do so, the ones I'm looking for have so far put in the initial signs in spots of about an hour each, then they wait and do nothing, then another big move in about an hour so they can, when they are ready, put in the signals we are looking for very quickly.

Until then, I'definitely leaning short in the trading portfolio and of course in the core shorts, but I'm not making new commitments.

TSO Trade Set Up

TSO is partly an interesting potential trade set up that can come to us or you can chose to deal with it in a different manner or not at all and TSO is also a great example of several concepts, some in play right now.

 This is where I like to start with new analysis, a 5-day chart going way back to get a feel for the character of the asset, any trading patterns. Right away I notice this can be a very volatile stock, much closer to a parabolic, tight top than most and it sees fear and falls faster than it rises which makes it an interesting short at the tight time.

I've laid out the 4 cycles of a trend on the chart: "Stage 1" base/accumulation, "A" Head fake move below the base right before a move to "Stage 2" Mark-up or the trending phase" then "b" the increase in price's ROC to the upside just before entering "Stage 3" top/distribution" and that is followed by "Stage 4" decline or bear market.

We seem to be in stage 3 right now, but that doesn't mean there's not a trade there.

Also note the volume in a healthy market as it rises with price and the volume in a F_E_D, liquidity pumped environment, volume doesn't rise with price. In any normal market that's not overly manipulated by Central planning, you should always pay attention to what volume does in a price trend, what it has done since 2009 is not healthy, it's not a stock I'd trade long under normal conditions, but the F_E_D put the Bernanke Put in place so it didn't matter, but it gives you an idea of how sick these assets are one that put is pulled which is what is happening now.

 As far as the current stage 3 top, this is the concepts we have and use with H&S tops. It looks tight and small because we are still using a 5-day chart, but you should be able to make out the H&S top and neckline.

I only short a H&S top at 3 places: The top of the head if I get lucky, the top of the right shoulder or if I miss that, I wait for the H&S to break below the neckline like Technical Analysis books have been saying for over a century and where 95% of technical traders will short a H&S top as the break below the neckline represents confirmation of the H&S top and that it has broken.

However, Wall Street knows these rules better than most technical traders and they know what technical traders will do when faced with just about any price pattern, in this case, they'll short the break of the neckline with a stop just above the neckline or they'll wait for the first bounce after the break of the neckline, then when they think that the bounce has failed at the resistance of the neckline, they'll short it there and place a stop above the neckline. Wall St. knows this all too well, this is EXACTLY why this is the one place I WILL NOT short a H&S top.

The third place I'll short this pattern is in this area, once the initial shorts have all been shaken out as their stops were hit when price crossed back above the neckline. We didn't use to see this before 2000 very much because technical analysis wasn't that popular until the Internet really took off and people started managing their own accounts. 

On a side note, I saw the "Wolf of Wall St. " finally, that's the old days before the internet when brokers conducted transactions and long before online discount brokers. That's when you might pay $80 commission for a trade and brokers were NOTHING more than salesman, few had any idea what the stock market really was, they got their license, they got a job, they were handed a list of which stocks the firm was pushing that day and they jumped on the phone and called all their clients to sell that stock and make their commission, they didn't know (for the most part) anything about the market.

Thus the internet changed things and patterns like this on a H&S started showing up.

This is a 60 min chart of TSO, you see what I see, a large symmetrical triangle, assumed by TA to breakout to the upside because of the preceding trend.

I might make any trade here (long) contingent on a head fake move below the triangle first, verification of a head fake move and the reversal process of the head fake move in place.  That means I need price alerts on both sides of the triangle.

If I miss it, there's another bus.

This is the daily 3C chart, the distribution in to the H&S is clear, this is a top, it's just not totally formed in my opinion.

I have some concerns about how long the trade will last, I imagine it's worthwhile and likely would make a new high if it gets going.

Right now we are positive at the 10 min and recently so as the triangle moves towards a mature apex and a breakout or breakdown soon.

The intraday charts are also seeing a lot of recent improvement , 3 min

And 5 min.

So I'll look for a downside head fake, if it comes, then verification that it's still a long and an entry. If not, no worries, there's another bus coming.

The head fake below shakes out longs, traps bears, creates upside momentum, allows us to enter at a discount, allows us much less risk and better timing as well as additional confirmation that the move is strong (accumulation in to a head fake move), so set alerts if you are interested, if not,  there's still a lot to learn from studying this chart and maybe watching it going forward.

Opening Indications/Non Confirmation

Of course this is just the open and there are quite a few things I'm looking for, most of which are moving in the right direction, but still looking for.

 The 1 min SPY is actually a lot worse, but I wanted to zoom it to more of an intraday view since the open is what we are looking at, no confirmation of the Draghi induced Gap up.

The same for the QQQ

The IWM did show confirmation, but it has been total confirmation both up and down.

This takes out a little range of the last 2 days as a potential head fake move, although volume wasn't impressive enough to suggest it was an effective bull trapping move, but that has been part of this new character of the new year.

It's a start, we'll see where we go from here, VXX and VIX futures are going to be key to any new signals or action.

The Short Lived Genius of Draghi

I never really got a sense of Mario Draghi, perhaps it's because of US culture, turn on the news and it's US news for the most part unless a Tsunami hit somewhere, people are more interested in Miley Cyrus than the rest of the world. I've always noticed in my travels abroad that the news coverage was global, granted the US is a big place, but there's a distinct difference. Maybe it's because when he talks it sounds like he has a mouth full of marbles, but once again Draghi has done with words what Helicopter Ben does with well over a trillion in newly in cash.

Not including the fact that since Ireland returned to the debt markets, there's a wave of interest in buying up PIIGS debt. Portugal did follow through today with a 5 year issue that did fantastic, Spain had an oversubscribed Debt Auction and others INCLUDING GREECE are now talking about returning to the debt markets, a sign of the times? Out of equities and back in to peripheral bonds? Bunds even saw an outflow, likely to finance PIIGS offerings.

In any case, the name of the came is whack your currency as low as you can in Central banking. Bernanke does it with massive QE. Look at what Draghi did this morning after the ex-Golmanite (actually it's like Hotel California, once you enter you never leave) left ECB policy/rates unchanged...

 On the news that reates were left alone and no policy changes were made, the EUR rocketted higher taking all EUR crosses higher like EUR/JPY above or EUR/USD, etc.

Then at his press converence, he talked it right back down with a dour, downbeat assesment of the economy, economic risks, extended low inflation, extended period of stable or even lower rates, etc. It's amazing how fast the Euro dropped at 8:30.

Of course the Euro up sent the EUR/JPY up which sent the Index futures up...

Here's ES on the ECB statement, it hasn't fallen off as quickly on the Draghi press conference and Initial Claims did little to move the market.

I guess Goldman is better at writing policy statements than Bernanke, oops I mean Draghi...


That's pretty much what's going on with the market as of right now...