Broad (cycle) Futures Update

These are 60 min charts of the Index futures, while I wouldn't call them tactical, I would say that their broad signals, especially when all confirming each other in a price pattern like an Igloo/Chimney are where you'll find the most likely answer to the question, "Where are we, what comes next?".

Distribution(and accumulation for that matter) is not an event that occurs and it acts like an immediate signal such as what many of us have been taught through technical analysis in which events trigger trades like a crossover of the 50 and 200-day moving average, that's an event and it's a bias that caries over to a lot of our analysis. It would be incorrect to apply a divergence as an immediate trade signal.

We know Appaloosa run by David Tepper who made his fortune by correctly going all in just before the market bottom in 2009, sold the following positions in Q$ which he held as of September 30th 2014, and I mean sold ALL of the positions: AAPL, FB, BABA, CBS, HAL, AAL and DAL. In a single quarter he brought down Appaloosa's exposure to equities, an approximate $16 bn under management, by 60% in Q4 alone and had been quoted as having been "Selling everything not nailed down" as early as Spring 2013. While this doesn't mean I'm going to change my opinions and analysis because of what Tepper has done, this guy is no joke, he made $4bn (his own income) in 2009 and in 2012 and 2013 he was the top paid fund manager and likely will be in 2014 as well once tax statements come out. Whether what he did has any immediate bearing on assets or not, it's a strong hand that is no longer supporting AAPL's price of RB's or any of the above and institutional sponsorship is one of the most important things a stock cvan have as we have calculated it takes exactly 2 days for retail to switch from bearish to bullish sentiment or vice versa, in other words they go whichever way the wind is blowing with no reason or rhyme unlike institutional sponsors.

In addition, the point should be made that while moving that much equity in a single quarter is pretty amazing, the distribution process is exactly that, I can darn near guarantee he didn't sell his 1.16 mn shares of AAPL in a single transaction, a single day or a single week, likely not even a single month.

That being said, there is proportionality to a divergence and the timeframe it is found on has a big influence, for instance a 5 min divergence is nowhere near a 60 min divergence, imagine the amount of stock that can be bought or sold in 5 mins vs 60 mins and extrapolate that out in to the large trend of a divergence.

Without further...whatever...

 This is the entire cycle from start to present. Dow Futures 60 min and the yellow area represents the "Chimney" which is typically the last thing seen just before a reversal as I showed earlier in the week at the September rounding top with a head fake (chimney) and price just about falling off a cliff just after.

Not that the market usually wants a red close on a Friday, it's just not helpful for limit orders in to Monday that can be sold in to unless you're trying to create a downside panic.


 ES/SPX E-mini Futures 60 min

NQ/ NASDAQ E-mini futures 60 min

TF/Russell 2000 Futures 60 min.

In other words, the chart here is just about as ugly as I could reasonably ask for and the reversal process is mature.