CHANGES IN CHARACTER LEAD TO CHANGES IN TRENDS

I'll try to keep this short so you can enjoy your holiday weekend. Black Friday felt a lot darker in the market than usual, in fact most of the averages gave up a good portion of the gains on the week and on the day, not pretty...

 On the day, a pretty solid drift down, in fact to prevent people driving to the stores from hearing the Dow closed red today, there was a late day effort to secure the fractional gain, close to dead flat without the ramp it would have been red...Dow-30 in white JUST closes green.

There was NO positive divegrence in the Dow...

The white trendline is the difference between red and green , actually my charts are showing the Dow at 0.00% on the day, but it almost didn't get that.


And could this have been the work of credit? You saw the 3C charts deteriorating badly today...You've also seen the HYG support, accumulation turn distribution this week leading to today.

 HYG (blue) longer term vs SPX (green), the last negative divegrence between the two was at the September head fake highs leading to the October lows to the left, look  at the size of the divergence between the two now. You'd barely know HYG was ramped to support the market the last week looking at this chart, but it was.

 Here's the ramp in HYG on the 19th, it supporting the SPX and then today, it didn't just come out of nowhere. This is the detailed 3C distribution trend...

 After accumulation on the 19th, distribution just got worse and worse in HYG until today's break lower, perhaps stocks are already following credit's lead, but I sure wouldn't want to be long going in to Monday morning.

Here's a closer view of HYG vs SPX over the last week and a half, note the near perfect support...Well that ENDED today.

Not only in the HYG lever, but USD/JPY as well!

 Es (purple) overnight losing ground until the European open, then regaining in lockstep with USD/JPY, right in to the US cash open and then...

BREAK and hard! This is addition to a larger break between the two already in place and USD/JPY looking as if it too is ready to roll over.

As for other credit in the HY space... no better...

 Again on a larger timeframe the last time HY Credit and the SPX diverged was the September highs leading to the October lows (red arrow) and look at the size of this divergence!

As for near term, the past several weeks have seen HY credit pick up the pace of sell-off, I wonder why?

As for leading indicators, remember the VIX accumulation in VIX futures Wednesday on the 1 min chart, joining the longer term charts?

 VIX (blue) intraday vs ES, note VIX bid moving up WITH stocks early until stocks fall in the late morning?

 Here's where we had our VIX buy signal, note the uptrend in VIX until last week's levers needed to be pulled, and today VIX rockets back up on a half day!

In fact looking at our buy signal and Bollinger Band pinch, today almost looks like the start of that highly directional move the pinching bands are pointing to.

 Again yields lead stocks (red) vs SPX (green), this longer term chart shows a MASSIVE divergence after a very healthy set of treasury auctions this week.

And near term, what do we know about changes in character? Look at the change in the drop in 5 year yields remembering they lead price toward them!

 Even the longer term 30 year yield closed at an incredibly low 2.91% and has diverged massively with the SPX which tends to follow it even intraday.

And a closer look, talk about a change in character, SAFETY is BID.

This was an ugly market as you can see by TICK which has nothing to do with volume, it has to do with advancing and declining stocks...

Not only did it have a huge change in character and went negative on the day, but until the DOW's last minute save from red, it had not crossed above +500 for almost the entire day! That's a lot of stocks going no where but down.

After a record some 29 days, which last time it happened was followed by the Crash of 1929, the S&P CLOSED BELOW ITS 5-DAY MOVING AVERAGE FOR THE FIRST TIME OIN OVER A MONTH!

IT'S NOT MUCH, BUT IT IS A CLOSE BELOW THE 5-DAY MOVING AVERAGE, "CHANGES IN CHARACTER LEAD TO CHANGES IN TRENDS..."

Speaking of which, our SPX/RUT Ratio looked like this today...

Hmmm. it was warning of a move lower as of Wednesday and is far, far below the SPX's correlation above.

As for the might Transports, well they gave nearly EVERYTHING back today...

Transports on the gap up and sell off today, a couple more hours and?

Be aware of today's post, BEFORE THIS HAPPENED IN TRANSPORTS...

Be Careful with Airlines

Lots of recent trends have changed this week...

Today's

Important Intraday Update

First Two Alerts of the Day-Copper and Oil

Early Indications, HY Corp. Credit Smashed

Wednesday's

HYG Starting to Fail, VIX 2 Cents From Green

AAPL Update

Quick USO Update

Leading Indicators / SPY Arb...

Tuesday's

Russell 2000 Map- IMPORTANT POST

VERY BAD Market NEWS...Richmond F_E_D, CONTEXT, SPY Arbitrage and TLT-30 year Treasuries...

Quick Index Futures Update-VIX Futures are SCREAMING (now higher than when posted)

Monday's

HYG CONTINUED DISTRIBUTION

Lots of good reading above that may take on a different light after the charts above today.

As for the Dominant Price/Volume Relationship...

The Dow, NASDAQ and SPX all were Close Up/Volume Down (remember these are the component stocks of each average, not the average itself) for each, 15 Dow, 70 NDX100 and 266 SPX-500. This is the most bearish of the 4 possible relationships.

The Russell 2000 was Close Down/Volume Down or what I call, "Carry on" as the trend tends to continue for the index, this was dominant at 1048.

The S&P Sectors saw a slightly overbought 6 of 9 close green, not good paired with the Dominant P//V relationship. Consumer Staples led at +1.277% and Energy lagged at -6.42%, Glad we stayed away from oil as we saw it as a crap shoot, not trading.

Of the 238 Morningstar groups and sub-industries,  115 of 238 closed green, an odd divergence with the S&P sectors.

A Couple Breadth Indicators...

Other than the larger divegrence in the NASDAQ Composite's Advance/Decline line, there was an extra near term one at the small white trendline.

NASDAQ COMP in red and the A/D line in green.

AlL NYSE stocks trading Above their 200-day moving average vs the SPX (red)...

Not only is there a larger divergence (yellow arrows), but the range mentioned, now near 3 weeks is looking like it's about to rollover as mentioned Wednesday.

There are quite a few problems above, remember my prediction in early October before the rally, not that we'd just see a face ripping rally, but it would lead to an even larger decline as the rally was  JUST A MEANS TO AN END, NOT AN END IN ITSELF.

HAVE A GREAT WEEKEND!

Important Intraday Update

For a half day/holiday , something is going quite wrong in the market today. I'll try to get leading indicators out as well. Many charts I haven't notated, I don't think they need them and I'm pressed for time.

If anything, you'd normally expect a higher proportion of retail traders (vs normal market days) to be active today and we know their bullishness is off the charts so the below charts are difficult to explain away unless there is in fact something very wrong here.

 My Custom TICK Indicator vs SPY, note how low TICK is, this has NOTHING to do with volume and everything to do with the proportion or ratio of advancing stocks per bar minus declining stocks per bar. Compared to the recent trend, today stands out like a red thumb.

 As does the TICK Index , not a move above 500 all day!

 IWM intraday just lost it at new leading negative lows for multiple weeks

 IWM distribution in to Wednesday's close and in line today.

 IWM 5 min with a very fast/deep leading negative through the week.

 Considering the macro trend and last negatives at the last major highs, this is a real problem -2 hour chart.

 QQQ intraday today has lost it 3C and now price.

 Deep QQQ intraday distribution

More QQQ deep

 Considering where QQQ price is on this 4 hour chart and the size of the last 2 negative divgerences that took it to lower lows, this speaks for itself. This is the epitome of the expected market move to come next.... very similar to ALL Leading Indicators

 SPY intraday

distribution in to Wednesday close

deep leading negative 15 min SPY.

Again, all things considered, it's not that hard to believe in a move much stronger on the downside than the up...

HYG Update

As I said in the first/second week of October as the market was still making lower lows in to the mid -October low/base, "There's only one reason to accumulate HYG", which is one of numerous reasons we knew a strong upside move was coming.

Along that same logic as we saw HYG distribution earlier in the week, there's only 1 reason and it's not institutional money thinks it and risk assets are going higher (HYG is the institutional equivalent to our 2-3x long leveraged market ETFs).

 HYG accumulation that bother me last week and it's support for the market, then distribution setting in this week with a sharp leading negative divegrence taking it down today significantly.

 This is what the HYG intraday chart looked like Wednesday.

 Increasing HYG distribution in to Wednesday's close...

This is what supported the October rally's start and the last week, when it has failed, the results for the market have been bad, it's in a massive month+ failure and the short term just failed as well, what we call a full house in multiple timeframe analysis.

Quick Intraday Update

I expected a fairly dull day today. For a half day and such low volume, there's a surprising amount of intraday damage being done, far more than the rest of the week. I'm gathering charts now and will post in just a few minutes.

TWTR

I have a lot of interest in several assets today, I'll try to get to as many as possible as the market still remains dispersed.


TWTR looks exactly like a stock that is behaving as if it were in a bear market rally, I've talked about these numerous times, it's one of my reasons I think bear markets are the fastest way to make money as fear is much stronger than greed, falling 2.5 to 4x faster than a bull market rises on average and the bear market rallies which can be seen a mile away are SOME OF THE STRONGEST RALLIES YOU'LL EVER SEE...The reason is the exact same reason the October rally had to be so strong as sentiment was near all time lows, everyone calling a bear market with the Fear and Greed index (0-100) pegged at zero for consecutive days. In other words, to overcome that sentiment and actually get retail to buy, because in a zero sum game someone has to lose for someone to win and you can't have everyone on the same side of the trade such as it was at the October lows, the rally has to be overwhelmingly impressive, not just to overcome the bearish sentiment, but to get retail to be wildly bullish again... teaching them a dangerous lesson about buying the dip. Even in a -10% decline, the dip should be bought which is like the Army Captain who came across a minefield and decided the best course of action was to close his eyes and lead his troops across. The fact they survived teaches a fatal lesson for the next time they encounter a minefield.

For the most part my gut feeling they'll try to pin TWTR to this area in to the close although there looks to be some fairly heavy intraday profit taking,.

Here's a broad look at TWTR, not EVERYTHING is roses...

It's difficult to see now because of the limited chart history, but there's a lower high, if TWTR makes a lower low, for all intents and purposes TWTR is in a primary downtrend.

The volume at the red arrow is bearish churning, the volume at the white arrows is bullish intermediate capitulation/selling climax.

Possible TWTR buy signal, 1 indicator off, but still pretty far off. The last two signals were effective.

 TWTR long term 4 hour macro trend accumulation around April/May and a move up in to very strong distribution. There's another accumulation area to the far right  (just passed), this looks like a counter trend rally.


 To the left 3C accumulation at the last selling climax where shares are abundant to fill institutional orders and cheap, however at the negative divegrence in the middle, this is seen on a 4 hour chart, this was VERY serious distribution of TWTR.

Again to the far right an accumulation zone just passed.

 On a 5 min trend, again the top/distribution was exceptionally strong, not like a typical wave down for a constructive pullback. To the right the accumulation zone mentioned, judging by both sizes, I'd say this is the equivalent of a bear market rally even though TWTR doesn't have enough history to create a primary downtrend yet- it is very similar to the market at the October lows.

 Recent intraday charts with what looks like market makers/HFTs perhaps accumulating Wednesday afternoon for today's move. Thus far this chart is holding which is why I think they'll pin the close around here, although some heavier sell side volume is picking up.

 Intraday 3C is showing distribution which is just passing the normal profit taking on a move like this.

 This 1 min chart "looked" like it was going to support with an intraday divergence, that fell apart.

And the 2 min chart is looking worse right now.

I checked several other indicators and versions of 3C to see if there were stronger signals standing out.

 Again a lot of damage at the last pivot macro high around September and recent accumulation,  but looking VERY much like a bear market rally does.

30 min chart showing the same as the 30 min above.

 Despite the September damage, this 15 min chart's accumulation is plenty strong enough to continue a strong bear market rally, however as impressive as these are and they are the most impressive rallies I think I have seen outside of a short squeeze which has its limits... They are there for a reason. Look at the 1929 Dow's first bear market CT rally after the initial break (before you'd have known it was moving to a bear market.

 Again intraday it looks like profit taking is heavy and by Monday this may be something more than profit taking.

However since there's such a large recent accumulation area I don't see the rally ending soon although it may get very volatile especially with not so great media out on TWTR users.

Remember how quickly the star stock of the decade AAPL broke at all time highs once Hedgies found out Dan Loeb got out.

 The tightest Trend Channel is holding with a stop at $41.50 on the close.

For the length of this move, this is the channel I'd use for now, stop around $40.85 to $40.90.

I'll update this Monday and if you need an update sooner email me.

While I think a CT rally is VERY likely, I don't think this ends well for TWTR.