If you haven't noticed already, the market moves in cycles, for the most part they stick to the 4-stages, but they occur in multiple timeframes and whether you are long or short the market at any one point (you can be both long and short at the same time, but for two different reasons) depends entirely on what timeframe you are trading.
For instance, without going in to the much larger Primary cycle from 2009 to present, we are in the middle of a cycle ending from early February through present, we are toward the end of another cycle from last Thursday to present, then there are smaller ones like the SPY puts entered today for even smaller cycles, so depending on the timeframe you trade, you could have very different positioning on the market and that's just a function of your preferences,
but it is important to understand multiple timeframe analysis as a cycle tells you where you are in the grand scheme of things and being able to interpret the charts to read multiple timeframes gives you a sharper edge in understanding other cycles that you may not be trading, but are important to the timing of the one you are trading.
Some of the charts below are going to be an hour or so old, if there's anything significantly different since the close, I'll update that chart, if it tells the same story I'll leave it as is.
Lets just jump in.
First you just saw the stronger 15 min Futures, these were negative on 5 min yesterday, today they are negative on the stronger 15 min charts, they aren't quite there in my opinion even though I think we see a short term move down (SPY PUTS today), I do think we are very close, VXX is my ultimate timing indicator.
The averages...
DIA 1 min
DIA 1 min in the smaller cycle from last Thursday the 27th to present.
DIA 2 min lost a lot of ground today.
You may recall on the 27th not only the 1-day 5 min accumulation, but the triangle in place as well...The distribution on the 5 min chart in the DIA since then is intense.
The 1 min IWM saw mostly distribution today, but did have an EOD positive-ish divegrence, it gained a bit of ground off that, but it didn't change anything.
Take for instance this IWM 2 min leading negative.
Or the IWM in line on this 3 min except the current divegrence which is negative as we see this smaller cycle start to fall apart, it should trigger the break of the larger cycle from the start of February as well, I would think VXX accumulation should be done by that time, which really doesn't look far off.
The IWM 15 min chart shows the February (larger) cycle, there's stage 1 accumulation, stage 2 mark up , stage 3 distribution/top and stage 4 decline.
Early in a stage 4 decline (think of a H&S top) one of the first moves is to shakeout new shorts entering on the break of the support trendline, this is "price confirmation" in Technical Analysis, however more often than not it is chasing and you can see how easy it is for the VSO (Volatility Shake Out) to knock those new shorts out of their positions. The ramp in a VSO is the last place of 3 areas I'll short a H&SS top and the same concept applies to this market as well.
You can start to see how the multiple timeframes can fit and work together.
The QQQ 1 min acted the same way as the IWM toward the EOD
and gained a bit from it as well.
However this didn't change anything of importance.
The QQQ 2 min shows a trend of increasing deterioration with a sharp leading negative divergence
This is the same chart throughout the smaller cycle from last Thursday's 5 min positive.
The QQQ 5 min has made a lower 3C low, it is leading negative which is a new development, from here things can fall apart very quickly.
And the totally in line 10 min chart shows the only divegrence on the entire chart being negative right now, this is EXACTLY the same as the IWM 3 min above.
The SPY 1 min showed incredible distribution,
even in to the EOD ramp.
This is the same chart in scale for the smaller cycle since last Thursday,
I THINK YOU CAN SEE WHY I CHOSE SPY PUTS TODAY.
THE SPY 2 min saw migration of the sharp 1 min negative, this is telling us the divegrence is healthy/strong.
Even the 3 min chart saw migration of the divegrence today
The 5 min chart is where this cycle started, now we have a 5 min leading negative starting as well, all today.
As mentioned on a lot of 1 min charts, there were some smaller divergences toward the late afternoon to ramp the EOD, HYG was used as you can clearly see so the HFT algos are still out there, but I'll have more to say about that later.
HYG (red) vs SPY (green) intraday... HYG was seeing 1 min positives too in order to try to tramp the close.
There's it is on the 1 min chart, but as far as anything that can really stick, it's not there.
HYG 5 min leading negative.
As you know, the VXX has been extremely important to me for timing purposes, in fact usually a market move is typically for a head fake, I think this move is more to push the VIX futures lower rather than set a bull trap.
Ever since VXX broke /gapped down on the first day, accumulation started,
there seems to be some real urgency, also the reversal process is forming up well in this case and is looking proportional, THIS IS WHY I THINK WE ARE VERY CLOSE TO BOTH CYCLES ENDING AT THE SAME TIME.
Intraday the 1 min accumulated lows, it looked like it would head lower again to accumulate more, but there was barely a negative divegrence to send it lower as they don't want to let go of many shares they accumulated to turn the asset.
In any case, it worked and we should see these divergences just increase in strength.
The 2 min chart shows the exact same, accumulation at lows (which was why we wanted to see VXX move lower in the first place) and again, very little to almost no distribution to turn it, as I said, it's about accumulating and the fewer shares they have to feed out to turn the market, the faster they can accumulate their position.
The 3 min chart is fleshing out that "Flying" quality, it wouldn't take much from here to create a full flying positive divegrence,
Look at the 10 min chart, like others above (the averages) the asset is totally in line until recent accumulation, that's a very vertical 1-day move for such a long timeframe.
Maybe most impressively, the 15 min chart where the underlying trade/trend accrues, is in a leading /flying positive divegrence, it just needs to add a bit to the current signal to be where I want to see them to start taking action in earnest.
As for Leading and other indicators... Some of these will show you why I went with a short term SPY Put position.
VXX vs the SPY (SPY prices inverted) shows outperformance in VXX after underperformance most of the week.
This is HYG vs SPX around 3 pm, you can see it is giving a leading signal that I believe will continue to deteriorate as HY Credit is sold off harder in front of a market fall.
This is the larger cycle from early February to present, HYG was in line tick for tick early on and is clearly dislocating negatively with the SPX, yet you can see at least 3 different timeframes/trades in HYG/SPY.
What got me to move on the Puts today for a short term trade was pro sentiment, it clearly fell off in both versions of our Leading Indicators...
Sentiment vs SPY.
Also commodities fell off vs the SPy, even though pm's had a good day,
UGLD and NUGT finished with 2.31 and 7.25% gains today, I THINK THERE'S A LOT MORE TO COME AND COME QUICKLY.
TLT WAS IN LINE WITH THE MARKET.
I believe we will likely see some short term downdraft, but whether we do or not, both the longer cycle and shorter (week) cycle are both in the late stages, I mentioned the short term being like a fuse setting off a chain reaction to move the larger trends, I think that is what we are seeing in multiple timeframe analysis.
I'll be checking on some other assets as well as futures in a bit, I'll let you know if anything interesting is standing out, but we are making good progress.
