Market Update

As I said things are moving fast, so I'm not going to capture charts.

The initial negative divegrence that has held even though there had been some improvement was only enough to create a small move up in the averages.

As of now I think we have very clear short term/intraday negative divergence in all of the averages, in most of the 1 min index futures and where we don't have strong 1 min negatives we have them forming on the more important 5 min charts.

This should certainly lead to a pullback that seems to have been building most of the day.

Again, unless dealing with specific assets, for the most part I don't see much to do, at the lower end after a pullback there will be or should be long entry positions that look favorable and as we move lower there's an opportunity to cash out of short positions or ETFs if you intend on trying to trade around them.

Market Update

I wasn't going to originally start this post with the market averages, but since there's been some movement since the last market update, I figured I'd start with the averages first.

 Here are the positive divergences in SPY from yesterday, remember Monday night and early hours Tuesday morning it was clear to us that the market would be heading toward the lower end of the range, the reason for that is generally to accumulate at the best prices with the least risk and the move lower creates supply (which large institutional orders need to be filled without moving the market against their position) as stops get hit and traders throw in the towel.

Of note is the resolution of the earlier "non-confirmation signal" as we see 3C made a higher high with price, confirming the market which is good,

Since then, there's a clear intraday divergence (leading negative), whether a gap fill, a move to the bottom of the range, a head fake move or just a slight pullback, it should create opportunities for trading positions; longer term trading opportunities will be created on a market move above this week's trading range.

 We see migration of the divergence and confirmation in the 2 min chart. The divergence looks intraday in scope and does not look like the kind of signal that denotes possible failure of the range.

 QQQ 1 min also gives a similar negative divegrence, note how the divegrence develops as they sell in to strength, not with weakness. 

There appeared to be a small positive divegrence forming, but even so, it is still within the confines of the larger leading negative position of 3C.

 QQQ 2 min shows yesterday's accumulation at the bottom of the range, just as we saw in the SPY which is good confirmation. This morning 3C and price are in line until the 2 min goes leading negative at the intraday highs.

 Even the 5 min QQQ has a smaller leading negative divegrence, although I think the more important signal on the chart is the larger positive divergences at the lowest end of the range yesterday.

 This is a larger trend view of the same 5 min chart; (from left to right) we have a leading negative sending prices lower and Friday the initial movement that hinted at a range forming this week as posted Friday, Sunday and ever since. In Yellow we have the range and above that in white we have the leading positive divegrence that suggests the range (already a probable base just by the price pattern, although Technical Analysis would teach the opposite) is a small base to launch a bounce higher (also expected this week),

IWM 1 min showing the same accumulation yesterday, sending the market higher with 3C confirmation (green arrow) and now a leading negative divegrence.

 IWM 2 min with the same concept, the move lower Wednesday that is accumulated and this morning's move has 3C confirmation which has turned negative implying a price pullback.

IWM 3 min shows the larger trend since pre-range with multiple leading negative divergences, accumulation of the range area and a signal currently, consistent with a pullback within the range or perhaps a head fake, but it does not imply os support the failure of the range.

 ES / SPX Futures (E-mini) 1 min has the same type of leading negative divegrence, very sharp , however since then 3C has recovered a bit and moved to approximately the same level.

We'll have to wait on another signal to get the probabilities of an intraday pullback.

 There are smaller negative signals in TF and NQ, both of which have moved to an inline status so the earlier concerns of a lack of confirmation seem to be dealt with. As of right now, TF's 3C location is now at a new intraday high, just above the divergence.

NQ is similar with some recent 3C positive activity, not as positive as TF 1 min.

ES's 5 min chart shows 3C/price are in confirmation now, yesterday's pullback is clear as part of forming the range which is not a coincidental price pattern, not when you can predict what it will do in advance because you know what it needs to do to create that range. THINKING LIKE A CROOK!

  The 1 min Yen  went negative yesterday as mentioned last night,  then we had in line status or 3C/price trend confirmation. Currently the lateral move in the Yen from a downtrend is seeing some small positive divergences suggesting a small move to the upside, which is in line with the earlier negative divergences in the market (intraday).

 The $USD intraday 1 min is also leading negative intraday which suggests a downside move coming, especially with a lateral trading range developing after an uptrend - the exact opposite of the Yen, which is good confirmation. There has been a very slight positive improvement in this negative divegrence (the divegrence is still negative, but there is a small improvement, whether it is transitory or not will depend on what develops after, for now we don't have any evidence that it is transitory).

 $USD 5 min is still in line, this means the USD/JPY is still likely to move higher (short term probabilities) which supports the Index futures and the market averages.

 VIX Futures 1 min have a slight positive divergence, usually this would suggest a market pullback is likely as protection against pone is being accumulated. Since this capture this chart has deteriorated slightly with the Index charts and averages seeing slight improvement, but not so much that these charts should be cancelled.

The 5 min chart of VIX futures has seen some improvement as well, but is still in negative position which to me suggest the likely trend of the market remains to the upside as we would expect to see some money flow out of safety assets and in to risk.

AS YOU CAN PROBABLY TELL, THERE HAS BEEN A RESOLUTION TO SOME EARLIER SIGNALS THAT WERE SOMEWHAT PROBLEMATIC ON A VERY SHORT TERM. 

ALSO THE NEGATIVE DIVERGENCES SUGGESTING AN INTRADAY PULLBACK HAVE SEEN SOME IMPROVEMENT, BUT THIS IS HAPPENING SO QUICKLY YHAT BY THE TI,ME I CAPTURE AND POST THE CHART, THERE'S A CHANGE.

THERE'S CERTAINLY NOTHING BIG STANDING OUT EXCEPT THIS WEEK'S OVERALL POSITIVE MARKET TREND IN 3C WHILE PRICE HAS RANGED.

Quick GLD Update

While I don't know that I'd trade GLD long (that's pretty aggressive, most likely a day trade or close to it and very volatile), I do think that it makes sense to be out of GLD puts right now and to set some price alerts on the upside looking for a new entry for new GLD short term trading positions, whether those be leveraged shorts/inverse ETFs (poor liquidity most of the time) or GLD puts.

GLD does look like it's getting ready for a bounce and that would make sense on a market pullback (this is the same one we have been talking about this morning only and likely still within the range created this week.

The 2 min chart is not a strong signal as timeframes go, but it is a leading positive signal and it has the tell-tale flat trading range where we see accumulation and distribution most often.

Again, I would not consider gold for a long position here, but I would take profits in GLD shorts/Puts and look for a new short/put entry in GLD on any price strength if we are to get it (I believe it would be very short term as in a day).

Market Update

It looks like we are finally getting that pullback, however the real news is that many of the inconsistencies in the market earlier today have or are now resolving.

As a quick way of showing the market until I get my next post out, here's my custom tick indicator.

The NYSE TICK Custom Indicator from positive to negative.

I'll be finishing the larger post in a few minutes.

As far as actions, I don't see a whole lot to do, at least until we get a pullback with positive/accumulation signals, then trades like AAPL long/calls might be considered or others.

You might also consider taking profits or closing any trading short positions you might be thinking about trying to trade around. As far as I'm concerned, I think we have a big enough base that it makes more sense now than it initially did to trade around some of the shorter term trading positions.

As far as longer term trending or core positions/shorts, I see very little reason to move those.

We are on a very slippery slope and while there's enough base in place to expect a bounce and I addressed the intensity of the bounce yesterday, we also have more than enough damage in place to have an AAPL-moment when it seemed like trading around short term positions were a good idea, but there was so much damage short term signals gave way and AAPL broke to lose nearly half of its value. For core positions, I don't see the point in taking that risk, especially as more and more things go wrong such as Emerging markets which I think may have caused this morning's strange signals and certainly liquidity situations. Volatility will be extra high as we get nearly daily Central bank actions largely from Emerging Markets as they struggle to cope with the massive outflows of capital. We even have some developed markets that are HIGHLY SUSPECT, that's the kind of stuff that creates Lehman moments.

Trade Idea/Update: AAPL Calls

Yesterday I added some AAPL MArch $500 calls for a quick move, not a trending move, to the upside, this is why I chose the leverage of options.

In any case, so far so good, they are in the green, but I think we get a pullback in AAPL as well intraday and I'd be interested in opening a new call position if I didn't have one or an add-to position (I don't have much room, but if the opportunity looks too good to pass up, I'll likely go ahead any way).

The charts look great for a short term move, it could probably be traded as an equity long, I just would rather put those funds to use in higher yielding positions.

 First, my "DeMark-Inspired" custom "Buy/Sell" indicator gave 2 sell signals, both legitimate. The recent buy signal just given is small, but we often see these small signals and then a wider on, in any case the small one on its own is valid, but it does reflect the size of the move to some degree, take the two larger sell signals, that seems to have been a fairly major top area/distribution for AAPL and as I said above, I expect this to be more of a pop to the upside rather than a trend and that's the reson for the leverage calls afford over an equity position.

The 1 min AAPL chart looks great, although there is a relative negative divegrence forming now.

Here's the EXACT same chart just zoomed in tight to an intraday view.

 The 2 min chart is progressing with a leading positive divegrence.

Since there's a lot of noise in such a new/short price trend, I'm using the trend version of 3C, it removes some short term signals, but it gives a better overall trend with less noise and you can see the 1 min is also reflecting a pullback, which is what I'd like to use to enter a call position as the pullback starts to accumulate and go positive (3C).

The 5 min trend is clearly positive

As is the 15 min.

This is what I find really interesting and may make AAPL worthy of an equity long...

The size of the negative divegrence on this 30 min chart makes sense, what is unexpected is a positive divegrence on a 30 min chart showing up so soon.

I think the accumulation of AAPL down here is a lot stronger than it first appeared.

Keep in mind there will be a lot of gaming of $500 as a centennial/ psychological number.

Closing out the rest of the GLD puts

Market Update

All in all the Index futures and market averages look much better, the Yen still looks decent, but the $USD is still presenting a problem.

I think we are getting close to an intraday pullback/consolidation and that will largely depend on the $USD.

Take a look at the intraday NYSE 1 min TICK chart, a pullback is coming

Market Update - Charts/ Explanation

Since it looks like we'll be dealing with this situation for a bit longer, I thought it would be best to show you what I've been following all morning rather than describe itt as I did in the last post being there are so many moving pieces.

Let me reiterate, from what I see, I believe our market expectations of a bounce are still on track and valid, however we are still very much within the range we expected for this week. There's a chance of a pullback in the market which would likely remain in the range and ultimately should make the bounce we are expecting, even stronger so if that becomes the case, we'll need to hedge more or just out right trade around this "corrective move" because it is not a trend changer, but the larger the base grows, the more it's going to move to the upside unless we have an epic failure which would likely be caused by EM (Emerging Market) trouble as the F_E_D inflated these markets and now that they are tapering QE out of existence, that free F_E_D money that went to the banks and then went in to EM will all be pulled and not only will we see more EM markets fail and fall, we will see their central banks do everything in their power to stabilize their currencies such as the Turkish and South African moves yesterday with interest rate hikes that initially did what they were supposed to and sent their currencies higher until shortly after when it didn't and the currencies fell BELOW the pre-Central Bank intervention so there is a panic of sorts and I wonder if this has anything to do with the liquidity problems we saw in developed markets (at least hints) such as the UK's 2 major banks (4 in all effected) seemingly having liquidity problems and the biggest EM ever, China, definitely having liquidity problems.

For future reference, the trouble in EM will accelerate and possibly cause wider problems like a Ukrainian situation (possible civil war) as these economies are knocked around, but the point is, the natural hedge to EM crisis is the USD/JPY and it sends the pair lower (the pair was fighting off EM problems all night overnight ) so in the big picture, this falls in line with our bearish expectations.

 This is why I think we'll be fine (part of the reason), 3 min SPY is looking as it should, leading positive inside the range we expected to develop which means it is likely a base and should hold together, but we do have a gap, it doesn't need to be filled now unless smart money wants to pick up more shares, as it can be filled on the way back down eventually.

This is the problem in regular hours that I had been watching in futures earlier before the open, I wanted to give it some time and see what regular hours had to say.

As you can see, the 1 min chart should have confirmed the gap up with a 3C move to new highs on this chart, it did not, suggesting a pullback or at least a consolidation. However as far as the resolution of the range, the chart above this one is more important unless this negative divergence migrates to longer timeframes and after looking at everything, I doubt it will. However, for now, it presents a delay at minimum.

QQQ 5 min and the expected range in yellow, 3C is leading so I think this is another example showing we will get the bounce we have been preparing for since Monday. However on a shorter term basis...

The Q's did not confirm the gap up either, in fact, even though it's a different average, a different version of 3C, it looks almost exactly the same as the SPY 1 min telling me there is a short term "disturbance" which had been seen earlier in futures this morning.

If we look at the same 1 min QQQ chart in scale you can see it is leading positive for this week's range so even this chart is ok for a bounce, it's just the very short term as in the gap up this morning that is causing some problems or delays.

 I have said the IWM and QQQ look the best of the 4 averages and the IWM 5 min chart looks great in our range as it leads positive.

In fact the 1 min chart that we are having trouble with on the SPY and QQQ charts looks perfect here as it has moved in confirmation with price. In my view this is just more proof of the stronger relative performance of the IWM among the major averages.

This is where the trouble started pre-market, in the Futures...

 ES 1 min looks great to the left as it accumulates overnight, exactly what I expected in last night's "Daily Wrap", however as this morning approached you can see the switch with 3C below price which normally doesn't matter and is an effect of zoom, but when it is above and below on the same chart, that's not a scaling/zoom problem, that's a relative performance problem.

 NQ futures 1 min accumulated overnight as they should have and so far in early trade they are one of the few that are perfectly in line (at least as of this capture), so there's not a huge problem here.

ES 5 min shows the negative divegrence that kept prices from exiting the range too early yesterday, which was fine, but since , as we should be more positive coming off the lows, at best we are in line which isn't bad, but it could be stronger.

This, like the longer charts in the averages, is why I think this won't be a problem for too long, just a delay. The 15 min ES chart  is strong and leading positive, this is where the highest probabilities of the 3 ES charts resides.

Beyond that, having a 60 min leading positive is almost indisputable proof that we will get the upside correction/bounce we expect.

Currencies and the part they play...

 The 5 min USD/JPY is going what it should as far as price, you can see since 4:30 yesterday the $USD/JPY has moved higher out of yesterday's regular hours lateral consolidation (yellow box), however 3C is dragging a bit which fits the short term charts of most Index futures and market averages today.

 The 5 min chart of the carry cross looks great up until the move up and 3C not confirming it.

So far, as shown last night, the Yen has moved down as expected, the 1 min chart presents no problem as it is perfectly in line on the reversal to the downside after yesterday's move

 The 5 min Yen shows yesterday's regular hours range in the second yellow box and the 3C negative divegrence seen last night so once again this looks good for the USD/JPY to make higher highs and carry the market with it.

 As far as probabilities, the 15 min Yen chart is clearly negative so the probabilities of a rising USD/JPY as we have predicted and a rising market out of this week's range are very high.

The white arrow is Tuesday night's divergence, you can see it in my Tuesday night post, predicting a pullback in both USD/JPY and the market which we saw, since then it has done what was expected. This chart's behavior is not inconsistent with expectations since Friday/Sunday, in fact it's exactly consistent so again the probabilities remain with our analysis.

 However, there are two currencies in USD/JPY and we need the $USD to rise. Like the short term market futures and market averages, we have a negative divegrence in the $USD which can and will effect (has effected) the carry cross and thereby the market. Again this is a 1 min chart only so keep it in perspective.

 The 5 min $USD shows yesterday's lateral range during regular market hours as seen yesterday and the expected positive divergence sending the $USD out of the range and to the upside starting around 4:30 yesterday. This chart is close to in line.

And again the longer term (highest probabilities) 30 min $USD shows a leading positive divegrence so even though this morning's short term charts are a bit problematic, they are no where near the probabilities seen on every chart that matters, all suggesting we still get the bounce higher that we expect out of this range.

For strategic positions it likely makes little difference, for tactical purposes, it makes a difference, fo instance I took gains out of GLD puts because of this. We may be able to enter some new long positions (TRADING ONLY) and we may have to as a hedge if you decide to hold shorts (Trading positions)
.

So this will have an effect on what we do, but only in the tactical sense, it shouldn't change any of our strategic goals.

I hope this makes sense. As far as what it may signify, as I said earlier, at best a delay, and again probably at best a pullback inside the range which makes the range / base more powerful and allows us to pick up trading positions at better prices with less risk, so it's a win win as far as I can tell, just not the move we are expecting as soon as we were expecting it.

Taking Some Off the Table- GLD March Puts

This morning's move was a gift and to me it looks like it's as low as it's going to go for now so I'll take some off the table, between 1/2 and 2/3rds.

Market Update

Something doesn't look right this morning.

As we saw in the charts last night, the Yen fell and USD advanced ever since coming out of the entire day's range around 4:30 yesterday,  lifting the USD/JPY which itself doesn't look that bad.

It's more the Yen single currency I was worried about in futures, the USD so far is in line as is NQ futures intraday, but both TF and ES are a bit more negative than I'd expect.

I wanted to wait for the open and see what the averages do and they've had enough time, the SPY & QQQ are not confirming the gap up, IWM is.

EM markets have caused trouble all night with USD/JPY, even though USD/JPY has overcome that trouble and lifted Index futures, perhaps we're just seeing a momentary pause again around USD/JPY 102.80 which it pulled back from.

Just looking at the market today with no history, I'd say it will pullback to the lows of the range before making any move higher and it might need that. 5 min charts don't look as good as they should, a pullback might help.

Other than that, gold looks to be where I expected it and the signals are fine.

Don't forget we have an ugly situation in the Ukraine and all EM's are getting slapped around pretty hard as its clear the F_E_D money that has floated them the last 5 years is drying up and investors are pulling it, even if certain PMS in Turkey don't want to acknowledge it, just look at what happened with their CB action yesterday. Perhaps he's afraid they'll become the next Ukraine.

I'm going to look at more correlations and monitor early trade which I rarely trust for signals, before I make any moves of significance; I suspect this is temporary.