Market Update: Bounce? Gap Fill?

Normally this early in the day with a move this big (NASDAQ 100 -2.25%), I'd say we should expect a bounce and probably be looking for evidence for a fade trade (fade this morning's weakness on a gap fill / bounce.

Honestly, what happened overnight is still an unknown, I don't know if it's some sort of leak or perhaps some sort of head fake so I'm being cautious here and I still want to keep my longer term positions on the side of highest probabilities and that has clearly been bearish.

There are some strange charts that I haven't quite put together yet, there's some REAL weakness, but there are also some contrary indications as well and some surprising indications. There's also charts that are showing clear relative strength disparities such as the Russell 2000 (and futures) vs say the NASDAQ 100 (and its futures). Either way, Russell is still maintaining better relative performance as we expected going in to this week from Friday's Week Ahead post.

 Intraday NYSE TICK (1 min) from yesterday afternoon to today with a late ramp which we saw in HYG near the close, presumably to keep as many averages as close to unchanged as possible rather than red and this morning's decline which printed at -1300 on the open, an extreme, but not an extreme extreme; I was surprised this was so low considering.

Another look at the TICK from the same period shows an intraday uptrend in breadth.

As for my custom TICK/SPY Indicator, you see the short term capitulation event to the far left right at the base from 1/14-1/16 and then breadth move up and then kind of stall, reminiscent of the last bounce attempt.

 This is the 1 min intraday ES chart with the full overnight decline and a relative positive divergence forming right in the area now, however there's some strange indications on the other Index futures...

 This is TF / Russell 2000 1 min intraday which I'd say is closer to in line and maybe slightly leading negative and then we have NQ...

NASDAQ 100 Index futures with no positive divegrence at al, but near perfect downside confirmation with the Q's being the laggard, somewhere around -2.3% right now. However they are moving laterally so that gives them a better chance at building something they can bounce off, but without a positive divergence, I'd be very careful.

 This is the 1 min VIX Futures with a positive divergence, interestingly, right at yesterday's cash close.

The SPY daily chart is showing its relative lateral movement intraday with a Star (daily) candlestick, although volume is not very high , which i would take as a short term oversold condition that would most likely bounce, but we still have time.

This is where things start to get strange and I'll post some longer term charts that show some of the heavier damage that has been done, but this SPY 1 min intraday chart shows a negative divegrence Friday which guided our early Monday forecast for the market's behavior and additional negative divergences yesterday which were posted yesterday a couple of times including here, Market Update.

I thought (yesterday) these would lead to a late day sell-off, apparently they led to a decline today so it seems whatever we saw last night, may just have had roots in yesterday's trading activity, maybe even Friday's (this is if there's some leak or some insider knowledge that's not public).

In any case, you can see we are in line right now, although if the market can keep up the lateral trade, it has a better chance of forming a positive divergence and bounce, I'm not sure I'd want to be involved though at this point until I see the rest of the data as there are peculiarities as mentioned.

 For example, this 3 min SPY chart is in a relative positive divergence, it is similar to the ES intraday positive divergence, but doesn't make a lot of sense considering the price action.

However the TICK/market breadth doesn't make a lot of sense either considering market action except in the case of market weighting, only this time being used against the market, take MSFT which is down around -10%, that has a lot of weight on the averages of which it's a component.

 And back to strange again with a 5 min SPY chart, the positive divegrence at the base from 1/14-1/16 and a pretty clean and clear leading negative divegrence that seems a lot more in line with price action than the 3 min chart above. Being a 5 min chart and the 3C indicator sections chunks of volume, this would indicate more negative activity in larger chunk trades. I consider the 5 min chart the earliest timeframe in which we see the large intraday institutional activity.

 QQQ 1 min is negative and in line, no surprises here, but it does have some of the same strange elements on multiple timeframes as the SPY, however where it seems to count the most, on longer charts, there's some serious damage which I'll post next.

 And intraday 1 min IWM, leading negative, similar to its Index future.

I realize some of these charts are a bit old for intraday standards, but nothing has improved since their capture, in fact the IWM 1 min looks even worse now.

A more current look at the exact same IWM 1 min chart, note the worsening intraday divergence leading negative even deeper.

 The SPX:RUT Ratio indicator on the whole is negative, but today looks positive, this is because of the relative difference in performance between the SPX and Russell 2000, which I'd normally not be concerned with, but in this particular case, the charts are so different in certain timeframes, it looks like we can and will see massive relative performance divergences, just look at the market yesterday, Russell 200 vs any other average.

HYG intraday 1 min is still close to in line, probably "trying to offer support", however as I will post and as mentioned above, there are longer/stronger charts that have seen a lot more serious damage and I think you need to see those as well.