Market Update

I was trying to get this out ASAP, it's a lot of charts to capture though. I have one alert set for news updates in Google that come to my email, the keywords "Greece and Troika", that just may be the Lehman of this market. A market that already is stretched and stressed and I'd call this both (examples beyond the charts in actual hard number form that is not left open to interpretation would be nearly half of all stocks below both their 40-day and 200 day moving averages, or in other words, about half the market's stocks already in a bear market) takes very little in the way of an event that breaks it, in 2008 it was Bear Stearns and Lehman, the market wouldn't have broken on those events had it not already been stretched.

Some of the evidence that Greece may get to the market before the F_E_D rate hikes (either will do the trick) can be seen in the periphery of the European nations' and their bonds, there's renewed concern about contagion, but not like the contagion that's already taken place in which the EU is for all intents and purposes in a triple dip recession, but the kind of mass defaults starting with Greece and it looks like the countries that bond traders are worried about next are Italy and Spain.

In any case, earlier  said I thought the market wasn't done with early strength on a gap fill, but it looked to be "Technical" in nature (not much or any support, but technical trading/buying or selling ) and I thought that had to do with the need for a pullback in TLT and VXX so they could continue their recent trend of accumulation (at the same time the market was showing us that unusual weakness) and HYG being the 3rd asset (the first two move opposite the market so accumulated VXX and TLT moving higher pressure the market lower), with HYG it leads the market as a lever so HYG distribution sending it lower pressures the market lower.

I could see the technical pattern forming before I could get all of the charts captured, I'm hoping I can get this out before any price movement, but it's not really that important as it's exactly the same as the "technical" that was posted last night in Futures Opening... which puts it in perspective. Here's the chart from last night's post and the "Technical" forecast from last night for today, but in context of the broader market.

This is the 5 min NQ chart from last night's post linked above and this is what was said about the chart above and the white arrow to the far right, the "Technical feature":

" This 5 min chart of NQ is much more along the lines of what I'd look at, in fact I won't trade an average/Index unless I'd trading in the direction of the 5 min chart in Index futures, thus the leading negative divegrence in NQ through Thursday/Friday (in white below) is obviously of some interest. While I'd normally doubt an extended fall just from normal price action behavior from here, there is a small positive forming right now, but in the big picture of the charts I'm showing you, it's not a defining feature."

This is akin to the "Technical" I mentioned this morning, but having a larger purpose, which was related to HYG, VXX and TLT.

Here are how those charts have formed up this morning and the "technical" feature that helps VXX/TLT and should continue to turn HYG.

 This is the QQQ 2 min chart with a small intraday positive divegrence today forming a technical trading feature, it's a little difficult to see, but it's a small inverse H&S.

This is the same 2 min QQQ chart as above, just in context with the strange and strong weakness from last week, in yellow I did a bad job of trying to draw in the inverse H&S , a technical feature, meaning technical traders will react to it as a technical trading pattern, you can still see even on a short 2 min chart its size or importance in context, just like the NQ 5 min chart from last night.

It looks like a means to an end, but probably not the means or end that you might think as it does appear to be a bullish intraday pattern,  as I said earlier today, for VXX and TLT to continue to be accumulated, smart money is not going to chase prices higher, they'll look to pull them down lower and buy on the cheap, being VXX and TLT have a near perfect inverse correlation, it's not a surprise this technical pattern has showed up as even before it did, I said I thought the early strength today was not the gap fill, but would be of "Technical" nature, which is kind of like saying the only reason to chase or buy it is because it is a bullish technical price pattern, not because there's a strong reason or underlying support for the move, it's the means to moving TLT/VXX lower which I believe is the end( accumulating them at lower prices).

 If you want a broader, less noisy look at the trend, just follow the 10 min QQQ chart's price trend roughly moving like the green arrow and the 3C trend in blue or with the blue arrow. This is through the entire 2015 congestion or choppy trading range.

TLT 2 min with a strong leading positive divegrence, note that this is the same days as the unusual weakness in the charts from last week.

The larger, more important 10 min TLT trend with a much stronger positive divergence, beyond that and we get in to a more complicated discussion I've already touched on having to do with when the F_E_D hikes rates and the apparent move to reduce duration, that post is here...Treasury Futures/ TLT Update

 VXX 2 min intraday , as it trades almost perfectly opposite the market, has a small intraday H&S top as opposed to the market's small inverse H&S bottom, don't let the terms of H&S bottom or top cause too much concern or fool you, they are intraday.


However again, back out and look at the very same 2 min VXX chart and something different appears in context. Remember the dates for the bases in the market and bounce attempts (Jan. 6th, Jan 14-16 and Jan 29-Feb 2nd), look at the timeframe for the negative divergence in the VXX 2 min chart to the left, 29th through the 2nd and the positive leading divegrence now at a new leading high.

 Just like looking at the 10 min QQQ chart and 3C / price trends, take a look at the same for VXX/ short term VIX futures, price is rather flat, actually a large ascending bullish triangle and 3C in an uptrend, the opposite of QQQ and exactly what you'd expect to see as confirmation of QQ's chart.

 VXX's stronger 10 min chart showing the end of the market's base for its bounce on the 2nd with a negative in VXX and a leading positive at a new leading high in VXX, a lot of that during the last 2 days of last week with the "unusual" charts.

 As for HYG, it's a ramping lever, it tends to lead the market both up and down. Note how HYG has been activated through the entire time the market has formed it's bases and bounce attempts, I don't want to take this too much in to interpretation, but you do have to look for the message of the market and if HYG is needed to move the market and it keeps (the market) flipping back and forth between green and red YTD, there's some trouble in the market.

The bigger point though is HYG's leading negative divegrence on the chart and although I didn't want to draw across the entire chart, the divergence starts at the highs to the left and ends at the right arrow's point, a large relative divegrence.

HYG's 10 min chart, relative to the "strange activity" Thursday/Friday of last week, not only where the averages showing strong negative signals, but HYG is as well at the same area in addition to the larger trend for the 2015 range.