Daily Wrap

Tomorrow's Friday so in addition to the usual op-ex pin in place until about 2 p.m., we also get some of the best 3C data for the following week, like last Friday's The Week Ahead,

" Looking at the 3C charts in to the close in both the averages and futures, my feeling is the head fake move above $1900 which was resistance of the 3 month range and the area we expected a head fake move which in my opinion is more than large enough to do what they are intended to do, will start being resolved to the downside next week, it looks from the 3C charts going in to the close that this will likely start early next week"

Transports are down -2.8% since Friday's close and saw the worst day in 4 months today, down -1.93%

IYT/Transports which put in a Doji Star reversal on 6/9 at the top (yellow box), the same day I posted, Transports / IYT Are Looking Horrible and Transports / IYT (both on 6/9), which said,

"the daily candle for IYT is looking like a bearish Shooting Star thus far, volume is already above Friday's which is something that tends to increase the likelihood of a reversal candle being effective...I think IYT is in a very interesting spot to consider it. If you are a bit more cautious, maybe see if there's a bearish confirmation candle tomorrow, I think there's plenty of downside and this would be an excellent entry area even if you have to wait on a confirmation candle of today's possible/likely bearish reversal candle."

6/9 was the absolute top, but if you are still interested, I think we'll get a second chance after today's high volume candle.

As for the SPX, since the head fake move started, measuring from the close of Friday to the next Friday, the first week above the 3-month range and 1900 (both psychological buy levels for retail/dumb money) saw a gain of 1.21% and the next week, as mentioned regarding the increased ROC of price, was up 1,34%, so far this week we have a significant change of character and they lead to changes in trends with a loss of -.99%, we just needed the reversal process as the distribution/head fake move was there.

Accumulation at the February lows for the February rally, which turned in to a 3 month range, the move above the range and SPX 1900 saw severe distribution, confirming our head fake. Last Friday's 3C information gave us a high probability of this move being resolved to the down side and we have the F_O_M_C next Wednesday, I have a feeling they'll pull out a hawkish surprise the market won't like.

As for the market, the earlier bounce attempt was run over, but I think we do get one, if not early tomorrow, perhaps toward the afternoon, we'll see if it's worth trading, here are some of the closing 3C charts for the major averages.

 SPY 1 min positive intraday divergence.

The 2 min is what was missing, toward the close it started going positive, I don't think this is enough for any move worth even day trading, but it may give us something to work with tomorrow.

However, while those small divergences were put together near the end of the day, look at the additional amount of distribution today, we are now leading negative at a new low, 3C is forecasting a major price decline, there are a few assets that need a few days to look like fantastic entries, I'll show you one at the bottom.

The Q's confirmed price action intraday.

The 3 min chart put in a positive the last 2 hours of the day, but still in the intraday timeframes and still needing some work, we had stronger divergences than this run over today.

The QQQ 5 min suggests a bounce which works perfectly for the trade I have in mind.

 However, on an institutional timeframe of 10 mins, this is how much distribution was added today alone (from the red trendline).

 And the QQQ 60 min since the February rally, this is the worst distribution we have seen and almost all of it at the head fake area.

IWM 1 min has a minor positive, but a 5 min positive was run over here today, that's indicative of panic-like selling.

IWM 2 min showed price trend/3C confirmation on the downside, so it was a solid negative day.

And the 5 min positive that was run over.

Meanwhile the long term 60 min is in leading negative position.

Another issue for a bounce tomorrow is the Dominant Price/Volume Relationship which was more than half of the component stocks of all the major averages, it was Price Down/ Volume Down, which is the dominant theme during a bear market, but has no next day short term implications, had it been Price Down/Volume Up, like Transports, the next day almost always closes higher.

Leading Indicators indicate a bounce is likely, this is probably why GLD, GDX and NUGT which tend to have inverse relationships, looked close to a pullback, although I decided to wait until tomorrow on the NUGT long before deciding, which fits with the broad market.

 HYG, High Yield Corporate Credit (a market manipulation lever) is leading the SPX a bit so a bounce to that area would not be surprising over the next day or so, however...

HYG's obvious distribution isn't going to allow it to support or manipulate the market for long, you see what happened on the last leading negative divegrence to the left, we have a worse one right now,

The VIX is leading the SPX's correlation (SPX price is inverted/green so you can see the correlation), this is a trend that was clear last week with VIX futures accumulation, now all the way out to the 60 min charts.

One of our sentiment indicators is forecasting a short term bounce, the other...

is in line with price /SPX.

As shown in this morning's , Futures Update  the probabilities on the 3C charts were for the 5, 10 and 30 year Treasury futures to rally, as you can see, the 5 year did as yields dropped and the SPX followed along as is the correlation.

Also as you saw later in the day, our TBT short (2x TLT long) trade, TLT Long / TBT Short Position Update, also rallied and the trade is in excellent position, if we get a little pullback I'll look for the entry on the intraday 3C charts.

Commods were up on Oil (Iraq), Gold and Silver, I have a feeling GLD will pull back, thus the add to on the GLD puts today, Closing 1 GLD Put, adding to another.

As far as the trade that fits with a bounce in the QQQ, AAPL is one I've been watching for a little while, it hasn't been quite ready,, but I think this is going to be our favorite kind of trade, the one that comes to us...

 This is what I was waiting for, the 60 min chart to lead negative, it finally migrated out from the 15 min chart.

 Here's the 30 min leading negative

And that strong 15 min chart I've been watching, while waiting to see if the distribution reached the 30/60 min levels.

Intraday the 5 min confirmed, but short term, much like the averages...

The 2 min below and  1 min above are both starting to lead for an intraday move, we just need to get the bounce and look for intraday distribution since the strategic institutional charts are already there, this should make a beautiful set up.

AAPL 2 min positive starting to form, we may even have a decent call trade.

If anything pops up overnight I'll let you know, but so far so good, we just need to keep filling out those positions as they become available, PCLN, AAPL, IYT, really I have a good 400+ on the watchlist with sell/short signals.

GDX/NUGT Position Update

This one has been tearing at me all afternoon, I feel pretty confident that there's going to be some kind of pullback, but is it worth possibly missing the bigger picture that we have been involved in and tracking/trading for months? Maybe tomorrow there will be some further information that will cause me to take some action here, but for now I have to stick with the probabilities which are strongly bullish.

 1 min negative NUGT

2 min negative GDX

3 min negative NUGT

5 min negative NUGT. If the 5 min chart were a deeper divergence, I'd probably take action for a pullback trade with full intentions of re-entering NUGT long.

However, with a leading positive 30 min chart like this (and there are a lot stronger/longer charts), it's very hard to go for a pullback trade and possibly miss the big picture.

On a daily chart, there's no reversal candle at all, just solid bullish candles with higher volume every day, that's what a strong move is suppose to look like. As I said, we'll see what tomorrow brings, but for now, I can't see leaving this position.

TLT Long / TBT Short Position Update

First off, I'm looking at a lot of charts and seeing a lot of confirmation, in VIX or its derivatives, Safe haven Treasuries, in the averages themselves, there has been some serious damage done on the way up and it's being felt now and this is just the start.

Remember we do have options expiration tomorrow so look for the max pain pin, typically somewhere near Thursday's (today's) close, at least until about 2 p.m.

In any case, we entered a TLT long, but used its inverse ETF, TBT (2x short 20+ year treasuries) to get some leverage on the TLT long as the leveraged long 20+ year ETFs have very poor volume.

It was just this morning I posted the 30 min charts of the 5 , 10 and 30 year Treasury futures, Futures Update,  and their positive divergences, it didn't take long for them to make some solid gains today.

 30 year gains since about 8 a.m. this morning...

10 year Treasury futures gains since this morning.

 And the 5 year gains since this morning.

As far as the TLT long which we used TBT short to get the leverage with decent volume, Treasuries / TLT Trade and TBT Reiteration (short) / TLT (long) , the idea was this...

 TLT had fallen out of its channel, a Channel Buster, typically these make sharp moves to the top of the channel and above before falling, so it's that move up we are looking to play and we'll see what TLT looks like at that point.

Today was the first serious move in that direction after about a week of small stars and dojis forming a reversal process.

As for TLT intraday, it has been leading positive making it an interesting trade, but it needed some leverage to make it worthwhile, thus the TBT short.

 The 5 min chart leading positive and today is the first day responding to 3C's forecast of higher prices.

And a leading 15 min chart so this should be a decent swing+ move.

As for TBT, the actual asset we are short, here's the short term 2 min going leading negative and price responding to 3C's forecast.

And the larger 15 min leading negative, confirming TLT's leading positive.

I think we have a great looking trade here and rising yields should pressure the market lower.

If there's a slight pullback within the next day or so, as long as you can enter around the lower trendline of TLT's channel, I think you still have a decent entry.

Closing 1 GLD Put, adding to another.

I'm closing this GLD put,

19th/$120 and adding to the GLD 21st/121 Put which is at a speculative 1/4 position, I'll bring it up to half size.

Quick Update / Market /GDX & NUGT

We are getting some of those positive signals again, so I'm guessing our downside move is starting to find a toehold. As far as a bounce trade, there would have to be a ore substantial reversal process, even for an intraday move down, before I would consider it.

However, the divergences in GDX & NUGT are looking more serious now, not anything beyond a pullback, but it depends on how much you like to trade around your positions, or you might consider some kind of hedge. Finally, we just need to confirm the downside/pullback like MCP in the last post and we'll likely have that area where we can fill this one out. I have an 11% gain and am just thinking about what I want to do as the divergence is a bit more serious. I'll probably stick it out, but I thought you should know so you can decide for yourself.

MCP Trade Management

MCP was a fun trade last week, we waited most of the day as it bounced around $2.53-$2.57 until we got a break of $2.50 on 6/3 and then, Trade Idea: MCP Filling out Long Equity & New Calls Position.
The next day we had a 12% move in the stock, a nice move in the call options as well, but it was time to close those out for a decent double digit 1-day gain, Taking MCP Calls Off the Table .

Since then, we've just been waiting for it to finish up its reversal process from a head fake move we expected which came post earnings. So far that is looking like an Inverse H&S bottom, but the most important aspect would be the probabilities,

 Wit a 60 min chart like this that held up and even gained on the downside move, the probabilities are solidly positive which means short term charts are likely to resolve in a positive manner. The 12% gain was nothing compared to what stage 2 mark-up would look like in MCP, I'm guestimating on the conservative side, a move upwards of 600% from here.

We closed the calls tye next day because the short term charts suggested a pullback, I held the long equity position because it was filled at such an advantageous spot, there's no point in moving it. What we look for in  a pullback is accumulation...

 The 1 min chart is doing just that, from here we look for migration to longer intraday charts...

The 2 min is doing that. USually things get more serious around the 5 min chart...

And there it is.

I'm not saying this is the spot to buy if you are not in MCP and would like to be, I do think it's a very reasonable area to consider it long, but the signals could improve from here and give a slightly better entry. However, for the time being, this is what I would call a "Constructive pullback", the kind we want to buy in to.

Market Update...Getting Ugly Out There

I can't complain, this is what we forecasted Friday afternoon for this week and I'm not going to be too upset if I miss an intraday trade when my portfolio on the whole is up +3.08% vs the market's -0.81 to -1.18%

In any case, the earlier positive divegrence on the 1 min chart that was so clean and clear is now a mess, there may still be something to a bounce, but it's not anywhere near what it was earlier. You may recall in the "possible intraday trade post", Intraday Trade... I talked about the need for not only 1 min charts positive for a trade, but at least a 2 min chart positive.

The general feel I get from just about everything except the DIA (which I'm not interested in trading) is that there's negative distribution/migration.

Take a look at the charts, there may still be bounce trade that may shape up before the EOD, but as it stands, things got ugly quick.

 This is the 1 min chart, but by now, the 2 min chart should have gone positive for the SPY...

The 2 min chart is in line intraday with the decline, a far cry from positive, so at present, NO TRADE, but I'm glad I have my SQQQ, FAZ, NUGT in place.

The SPY 5 min has added to the downside leading negative today, this is an institutional timeframe, the first actually and the fact it's deteriorating is not good, especially in to downside (they don't usually sell in to downside).

The QQQ 1 min that was nice and clear as a positive has been run over and in now in line with the decline. If there's negative migration, we should see it soon.

QQQ 2 min positive, run over and heading for in line like the 1 min, thus far, NO TRADE, but again, I'm very happy to have held SQQQ.

And the 3 min chart is seeing the start of bleed through migration from the 1 and 2 min charts.

The 5 min Q's have added to the downside divergence just like the SPY. This isn't coincidence or random 3C noise.

 And the QQQ larger picture, we have the reversal process that I said we'd be expecting this week from last Friday as the upside momentum that "seemed" bullish, was the change in character that precedes changes in trends, the trend has CLEARLY changed since last week (remember there are 3 trends, up, down and lateral).

IWM 1 min is in line, but this isn't where the trading divergence was for a bounce.

It started on the 2 min, but as you can see, RUN OVER.

The more impressive was a 5 min positive, but again, RUN OVER, NO TRADE HERE.

THE DIA is the only one looking somewhat decent, 1 min'

 2 min

and 3 min, but I'm not very interested in it and the divergences here vs all of the ones above, just don't put a bounce trade on the right side of probabilities.

If you have entered shorts in to this head fake move, enjoy the day, I am.