That's a Wrap!

This is going to be short for a couple reasons (I know I can't make anything short except my account); first and foremost, you know exactly what the short term forecast is, market up in to underlying weakness which we will confirm and use to our advantage to enter new positions or add to positions at the right time which is when we have confirmation on the charts. For those of you who are long, I'll have my normal intraday updates and you should have plenty of warning. I expect that we will hit the last week's intraday highs as a bare minimum for an upside target. Usually we don't want to overreact too soon, usually there's a reversal process and a head fake move to sell in to. The one thing you want to be on the look out for and I'll likely see it before you, is selling in to price strength, that has been a very aggressive theme since the last bounce off the January 6th/short term oversold lows.

The second reason I have to keep this short is I need to get on the road for a minor family Emergency (actually Andrea's family, an unexpected surgery) so I have a good 4 hour drive ahead of me and lucky me... We'll be flying back down as Andrea will be bringing one of her company's back-up helicopters back down from the area we are going to so while I've been up numerous times, I've never flown several hundred miles, I definitely feel like a big shot!

Remember the market is closed on Monday (US) for Martin Luther King Day. I'll probably write something more detailed Monday.

The concept of 3C picking up where it left off, even over 3-day weekends will be tested on Tuesday as we did have positive divergences late in to the day and close, right along the lines of the bounce I expected to start today after the 2 p.m. op-ex pin is pulled.

 SPY 1 min extreme leading positive divergence in to the close, this should pick up on Tuesday morning (cash open) where it left off at today's close, meaning the market should be strong Tuesday morning. Of course it's a long weekend, very volatile and as this week evidenced, surprises are everywhere as the SNB's decision was one of the top 10 currency moves eve and put numerous FX brokers out of business in 24 hours.

The ECB will have their policy announcement the 20th, next Thursday and everyone is expecting QE, we'll get more in to that before that time.

 QQQ intraday positive at the close

IWM positive at the close.

The lever HYG to ramp the market, positive at the close

The lever VXX/VIX short term futures negative at the close (to ramp the market) and...

Real VIX futures negative in to the close, again to ramp the market.

Even 30 year Treasury futures seeing a negative divegrence. If you saw my evidence of a leak of the SNB decision last night, then you'll remember 30 year T's were also accumulated, it's likely those positions are being cashed out.

Even XLF which I showed earlier as stalling the bounce , closed with an intraday leading positive.

My custom indicator, VIX Term Structure has been giving a buy signal the last 3 days, it also gave one on the 5th and 6th when we last bounced.

All leading indicators are in line with a bounce and are reset to zero for new divergences to tell us when we are approaching the end of the bounce.

Interestingly the only thing I see a bit out of line is High Yield Credit. HY Financial credit is way out of line and it seems that there has been a reemergence of counter party risk among financial institutions, this is what caused so much havoc in 2008, who had what exposure to subprime and since everyone lied, no one would lend to anyone which totally locked up the financial system and led to failures like Lehman, even GE was within a week of not being able to make payroll, that seems to be reemerging  since we have seen just what Financial earnings look like once you take away the F_E_D's QE program. Every major financial that reported this week came in rotten, as I have maintained for years, QE was a stealth bank bailout and perhaps the F_E_D misjudged just what condition they are truly in or perhaps they no longer can afford to care, the F_E_D has share-holders too.

Crude was back up 5+% (USO) today so I still expect that bounce to continue and be part of the broader market bounce. I suspect UNG will also move higher.

The gist is, BOUNCE and with the SPX having the worst week of the last 5, it's in a short term oversold position to bounce like the last one the first week on January.

I'd urge patience and not chasing the trade, but let the trade come to you. We already know what the probabilities are and we are in a great spot to just let it come to us on our terms, the rest is your own issues specific to your trading style (risk tolerance, etc.).

So have a great weekend (3-day for a lot of us) and look for additional details on Monday  as I'll be back and have little to do than look at the market and post a nice long wrap.

All my best wishes for a great weekend!