A FEW EOD Charts...

You saw a lot of these already earlier, Leading Indicators was an enlightening look at the multiple dichotomies in the market such as bonds and stocks moving together or VIX and stocks, or USD/JPY failing stocks when it was the last of the levers.

First, here's how we ended the day, typically the market will pick back up the next day where 3C left off...

There were varying degrees of negative divegrences in the averages, interestingly quite a few picked up in to the close where VIX was used to lift the market even though spot VIIX closed green today, up 1.76%

 DIA worse in to the close

IWM worse in to the close

QQQ worse in to the close

And SPY worse in to the close.

As for VIX...

 SPY intraday in green vs VIX intraday in red, VIX closed green on the day despite the market gapping and closing up, only at the EOD did VIX get a little monkey hammered which seems to be the only thing that sent it higher.

TLT in red vs the SPY is moving opposite of what is the norm, it's a Risk on and risk off trade at the same time or as I suspect as we closed TBT (TLT 2x short) last week, money is flowing from equities from the bear flag boomerang momentum as it loses what momentum the bear trap and Crazy Ivan could create and flowing in to the safety not only on Treasuries, but VIX as well.

The USD/JPY surely wasn't supporting the market in to the close as it was the last lever left as of Friday.

USD/JPY 1 min (red/green) vs ES (SPX futures in purple). Every time we've seen a dislocation of ES/SPX futures from the USD/JPY correlation, ES has been brought right back to the correlation which would mean downside and the other issue is USD/JPY looks like it has about had it as it has been loitering after a severe break of several forms of support last week.

 $USDX was in better shape this morning, but by the EOD, it was negatively divergent on multiple timeframes which isn't good for USD/JPY.

 And the long end of $USD/JPY where probabilities are at 60 min, leading negative.

The Yen for its part is leading positive so if USD/JPY loses even more ground as its loitering period ends, that's even more dislocation for ES to revert down to.

Credit as you saw in the Leading Indicators post had given out, I mentioned I'd get a chart of the liquid High Yield Credit, a smart money risk on asset...

Just like HYG and DHY, High Yield Credit didn't trust the market to move any higher today as we saw last week as well.

I believe the momentum that was scraped together last week was largely from a bear flag and a large head fake based on a Crazy Ivan used for short squeeze momentum, I think that's about used up, the week before last was the set up that we had pretty much nailed as far as forecasting, last week was the move, this week seems to be the resolution of the move.

The way I had imagined a possible resolution Friday was a bearish reversal candlestick pattern, the DIA is a good example of what I'd be looking for and I also put out the SPY 5/10 min chart negative divegrence resolution (Broad Market Update) that I believe will lead to excellent timing as we saw set ups already starting to form in assets like NFLX, NFLX Trade Set-up

This would be an Evening Star Doji, similar to the last failed breakout, the only thing missing was broad market confirmation and volume, but these often show up in pairs or several which are often called "Spinning tops", I believe increasing volume on one of these days with a bearish reversal will be a key element.

So I intend to keep looking for assets that are looking like excellent set ups like NFLX out today or FXI also out both Friday and today, FXI / FXP Trade Set-up.

Ultimately the watchlist will really tell the story, a few more set ups like NFLX and you really don't need to see much more.

This also gives the head fake move I thought we'd see as we see it on 80% of all reversals right down to intraday, so how much more on a large multi-month range/top?

In this case it's not just a range bound head fake breakout, but an ascending (bullish technical analysis price pattern that traders buy on the breakout like today (yellow) that sets up a real bull trap or the entire reason for a head fake move just as the bear flag set up the upside momentum, the bull trap sets us the downside momentum,

However what's really screaming "Something is not right", is the divergence in credit, the rally of the "Flight to Safety" bond trade, the VIX ignoring the market and moving with it rather than against it, Yields dislocating negatively and of course, "CREDIT".

Leading Indicators

Earlier I mentioned I hadn't seen leading indicators yet, but with the way everything else is looking, I couldn't imagine that they looked any better and I was right on that count.

First one of two markets is wrong or there's a fundamental shift occurring in the Treasury market correlation, Treasuries are acting like there's a massive flight to safety trade, from everything I've seen I'd agree with treasuries because when T's and equities are both up, I'd go with Treasuries, but we have so much more evidence than that alone.

It's not just the US, but German safe haven Bunds are bid as well.

Here's a look at some of the Leading Indicators telling us that our earlier analysis of this week starting off pretty ugly, is not just skin deep.

 We were talking last week about "Broken Levers" in A Few Broken Levers ; HYG which has been the go-to manipulation asset of choice among credit was showing signs of a breakdown there, it certainly seems those signs were right on target as you see HYG above today completely diverging with the SPX to the downside.

High Yield Credit is another that wants no part of moving higher and these are institutional risk assets, other larger credit markets look even worse, I'll try to get a chart of those up.

TLT, the 20+ year Treasury fund is moving up with the SPX, this is a "Flight to Safety " trade, this is not a normal correlation, it's 180 degrees opposed to normal, this is what we were seeing last week and why we closed out the TBT (TLT UltraShort) long position... Closing TBT (long) For now

As mentioned above, this is not just US Treasuries, but German Bunds that are bid as well.

 As for one of my favorite, Yields which move opposite the price of Treasuries and they tend to pull equities to them like a magnet, here you get a larger view of the dislocation (negative for the market) of Yields vs. the SPX, it's quite strong.

 And as I was saying last week, "Something changed with VIX futures", there seems to be real demand holding them together as they refuse to be pushed lower, another broken market manipulation lever. 

Look at Spot VIX today, it's actually up with the SPX and only seeing some EOD monkey Hammering to push the SPX, some small manipulation, but VIX is still green on the day, AGAIN, NOT NORMAL.

Also Professional sentiment is not willing to follow the market any further.

I'll have more shortly, but this is as bad or worse than I expected when I mentioned Leading Indicators earlier today

There's the set-up starting in NFLX

I'd set soem upside price alerts in the $400 area if you are interested in this one, I certainly am.

Earlier in the NFLX Trade Set-up an intraday move back toward $400 was expected based on the 1 min charts, it has started...

 There's the earlier divegrence on a 1 min chart that looks like it sets up some really nice short entries in to NFLX on a longer term trade, perhaps some options as well depending on where it moves to, but I don't see much reason in moving it at all if the $400 area isn't going to be hit, that's where most of my alerts are, right in and around $400, when the intraday chart goes back negative, I'll be looking at a full size position in NFLX short.

As you can see in the earlier post, there's already a lot of damage in NFLX.

FXI / FXP Trade Set-up

Friday I posted FXI / FXP update , this is a current June $36 put position, but as I said Friday,

"I still like it a lot and would consider adding here if I didn't already have the size position I want. Another way to play FXI short would be FXP which is the UltraShort (2x leveraged China 25)."

FXI short or puts or FXP long looked great Friday, we are getting a little intraday backing and filling and it looks like another opportunity.

Since Friday, FXI has lost ground and FXP (the UltraShort mentioned) has gained, but it's the longer term positioning I like here, I also think "Short China" is a decent way to diversify. FXI has significantly more volume than FXP (the Ultrashort) and I do like the 2x leverage, however I'm not crazy about the significantly lower volume.

We'll have to see how the charts develop as FXI moves lower, but for more perspective, here are some charts I didn't include in Friday's post, FXI / FXP update and today's.

 FXI intraday backing and filling 1 min

That chart is already going negative so it's giving a little better entry than earlier today, not quite as good as Friday, but still a great looking area for either an FXI short/put or FXP long.

This is the 3 min FXI chart so the backing and filling today isn't very strong at all, in fact it looks like it's just seeing heavier distribution in to that backing and filling.

This 15 min chart, leading negative FXI wasn't included Friday,

nor was this 30 min leading negative.

It's not surprising a little support was found to allow today's backing and filling considering gap support right in the area, but I doubt that holds very long.

NFLX Trade Set-up

This one is interesting because timing wise, it seems to fit just about right with the market.

First NFLX has been in trouble as far as the big picture goes, either a large top or perhaps already a break down and we've just seen the first counter trend rally....Either way, if I were long NFLX, I would be getting out.

 NFLX 4 hour chart.. You can see where NFLX's uptrend and 3C were in line or confirmation in 2012/2013, but into the end of 2013 trouble started to appear on a large scale at what may be a right shoulder of a large H&S top, then things got worse at the head area around February and in to March. As we moved to the next move up which is either a counter trend rally from the decline off the March highs or is the right shoulder of a large H&S top (Volume Analysis would confirm this as a H&S top) , in either case, 3C is making a lower high  as it should in a H&S top.

Assuming this is a large H&S top, the price pattern implied target would be a move down to approximately $150, this is a rough target based on the size of the top, they often tend to overshoot to the downside. This would also be a longer term target, not something that would happen in a month, although there could be a significant decline well worth trading from the top of the right shoulder which it appears we are forming now.

 Through some timeframes, this is the 5 min negative.

The 10 min leading negative, so it looks like we are right at the top of the last run up.

The 15 min chart also leading negative and getting a lot worse recently.

The 30 min leading negative.

The 4 hour chart alone suggests the direction of highest probability which is down.

VERY short term there's a 1 min intraday positive, pretty weak, but perhaps good for a short sale set up.

The psychological level of $400, a round number and centennial number was broken and then breached on large volume so longs chased the initial breakout and put a stop below $400 which hit a lot of stops as it moved below that this morning.

Looking at the 1 min intraday, I'd say there's a chance it runs up to about the same area which would make for a nice short entry, perhaps even a put position.

I'll be setting price alerts so I can keep tabs on this one and entry areas, the strategic short is there, the tactical is really there already, but we may be able to squeeze a little better positioning out of this one, although it's probably more than a little myopic.

Broad Market Update

I think this is a pretty good representation of what we are looking for this week. The Friday prior to last, we had a bear flag and expected some type of Crazy Ivan shakeout that gives the market enough momentum to make a break above the bear flag that formed that week, this entire scenario played out last week right down to the Crazy Ivan (SPX) on the bear flag. Since then there have been a lot of charts showing evidence of market manipulation levers failing, the last being the USD/JPY (I'll likely update those as well).

I think this SPY chart shows us where we want to be in position. The TICK chart below it shows us what is happening to market breadth on today's gap up which is a prerequisite for any number of good (bearish) candlestick reversal patterns.

The USD/JPY Carry trade charts fit right in there as well and even VIX Futures fit in neatly. Even gold's correlation fits well with the market and forward expectations/timing.

 This 3 min trend chart shows the Friday previous to last #1, that's when we had a bear flag and expected a Crazy Ivan shakeout on both sides of the flag, the one below the flag would be the momentum (short squeeze-which we saw last week in a lot of momo stocks). At #2 we have the actual Crazy Ivan in the SPX below the flag after an initial failed breakout and then the move above the flag the rest of last week. The 3C chart shows pretty clearly what was being done with higher prices.

However conceptually (our concepts), it had been mentioned numerous times that this multi-month range/top would be a VERY high probability area for a head fake move, especially because of the size of the downside reversal that the size of the range forecasts.

#3 is this week which I believe is the resolution of the entire bear flag/momentum driven move that has clearly been sold in to.

The 15 min chart's trend shows the distribution and accumulation right before and in to the February cycle and #2 is the actual stage 2 (up-trend) of that cycle. The lateral trade in yellow has been the large multi-month top/range that is a very high probability head fake move before what would be a substantial downside move just considering the size of the range alone, not to mention the continued leading negative 3C divegrence.

This is a close up view of the 15 min chart, this is where we are negative and beyond, the 1-3 min charts are negative, today is extra clear on that point in most averages, although each has a lot different relative performance, which seems to be an effect of the F_E_D weaning the market off POMO/QE as everything use to move together in lock-step.

 This is the SPY 5 min and below...

The SPY 10-min. I think as the 3 min chart continues to deteriorate, the 5 and 10 will see migration and that's essentially the key to timing.

 3 min chart with the bear flag which would not have shown a positive divegrence if it were a true bear flag rather than a set up for a Crazy Ivan/head fake.

This is what the SPY looks like today (to the right in red) compared to the NYSE TICK, more stocks are moving down than up and that trend continues to accelerate.

It's also clear on my custom TICK/SPY indicator.

As for the other averages, they are seeing the same intraday action on today's gap...

 DIA from the Crazy Ivan move down and what the market has done with higher prices based on the momentum from that Crazy Ivan in DIA

Note today's action especially.

This is migration of today's action in DIA.

 The IWM saw a very ugly earlier divergence, there's an intraday positive, I'm not sure what that is moving toward yet, but it's still intraday only.

And IWM wider negative divergence migration of today's action.

 QQQ intraday in to a flat range oin the gap up and a leading negative divegrence.

And migration.

As far as the VIX Futures...

 They are being accumulated, smart money seems to be getting a bit nervous, we saw this last week in VXX/UVXY, the timing is about right as well.

The new contract is positive out to 60 mins.

VIX futures 60 min positive already.

And spot VIX, as I said last week, it's simply not going down as demand is real.

This is spot VIX (green) vs SPY (red ) today, spot VIX is up +2.46% and up with the market gapping up, that's not the normal correlation at all.

As for the USD/JPY, as mentioned, the Yen is positive from 15-60 min

 Yen 15 min positive, 30 min is positive too...

 As is the 60 min.

$USD was negative from about 5 min to 60 min, none of this bodes well for USD/JPY, therefore it does not bode well for Index futures or the overall market.

Since earlier, now even the 1 min $USDX has gone negative.

And negative in a big way all the way out to the 60 min chart.

I think the timing key is simply the migration of SPY 5 and 10 min charts going negative and that links the intraday which are in very bad shape on today's gap up, with the longer term starting at 15 min.

The USD/JPY and VIX are confirming. I'll have to see what Leading Indicators show, but I don't expect anything different as this seems to be the resolution of the bear flag momentum move, which is pretty weak for the market in the first place that a sling shot short squeeze based on a bear flag had to be used as every other lever has broken down except USD/JPY and you can see that is quickly falling apart.