It looks to me like we are still in an op-ex pin as there seems to be some control being exerted over intraday moves like the SPY, however it looks like after the pin, the market is ready to bounce.
There are also levers that have already been engaged.
We can also see where all of this stops and this continues to suggest like the last bounce from the 6th of January, that we will see a move higher, but it will almost certainly be a move we want to short in to and there's evidence of that before we have even really gotten under way.
However keep in mind the one thing I'm most concerned about which is the rising volatility and the potential for surprises. We just saw a surprise yesterday that put many traders and quite a few brokerages out of business overnight.
On the custom TICK indicator, you see the capitulation area in red and the base building area in white for our bounce.
The 1 min intraday SPY seems to be trying to keep SPY within the op-ex max pain range, but...
zoom out a bit and the 1 min chart is leading, this is a timing signal, it's ready to get started on its bounce, I'm guessing this happens after 2 p.m.
The 3 min chart is similar with a leading positive divegrence, looks ready to go.
And SPY 5 min
QQQ 1 min also is leading positive with a small inverse H&S intraday, but managed to stay within the range that I suspect is the max pain op-ex range.
QQQ 5 min over the period shown above on the custom TICK of where base building occurred.
IWM 1 min also looks to be trying to steer intraday for the op-ex pin , I'd guess until about 2 p.m.
And the IWM 5 min. Interestingly the IWM 2 and 3 min. charts don't look very good.
HYG 3 min looks ready for this lever to lead the SPX, however in what I'd expect to see on a bounce we can sell/short in to...
The 10 min HYG is leading negative.
As is the 15 min and so on. In other words, there isn't a large amount of support for the HYG lever, just enough to kick start a bounce.
The VXX lever is also being engaged, intraday 1 min negative
And 3 min negative
The 5 min chart is much closer to in line.
TLT is interesting.
It appears TLT is seeing some stabilization today rather than negative divergences to knock it down.
Although I'd usually expect TLT to be pushed lower to lift stocks, it wouldn't be surprising to see bonds move higher with stocks which would be confirmation of the bounce and the bounce failing as we'd have a negative signal right from the get-go of the bounce via Treasuries/Yields.
You can see the 2 min TLT also looking like it is repairing the early a.m. downside. We have seen Treasuries move up with stocks numerous times recently , all in bearish circumstances in which stocks have given up their gains.
The Custom VIX Term Structure Indicator is giving a buy signal which I have show the last 2 days, we have it today as well. The SPX:RUT ratio is not telling us much and otherwise in line with price right now, it is not leading.
Both Pro sentiment indicators are leading positive, but not sharply, just slightly better than the SPX's flat range the last couple of days.
Yields and the SPX are perfectly in line intraday, however that may change for the 30 year if TLT manages to repair this morning's damage.
There's not much more to tell.
My trading plan is the same as the divergence from the 6th of January and expected bounce, I'll continue to hold core short positions, especially in this market's volatility and look for areas in which we can sell (for any who try a piggy back long trade) and short as well as the assets that are in the best position to do so.
This should also be taken as the early "Week Ahead" forecast.
Once we get a bounce underway, we'll be able to tell what kind of underlying action/confirmation or distribution) there is. We have seen aggressive seeing of any price strength all of 2015 so it will be interesting to see if that remains the case going in to Thursday's ECB announcement.
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