Quick Market Update

I've been gathering charts for a Leading Indicators update which at this point we might as well call cross asset correlation update as that seems to be the dominant force. I wanted to show the averages quickly before I started putting the post together (I have all the charts captured, hopefully they'll still be relevant at the time of the post), but there's one thing I need to read up on in the news right now that may explain a few things which would relate not only to currencies, but to equities, gold, commodities in general and oil specifically.

This could be a rather complicated issue, but has to do with recent developments over the last couple of days so I'll get that out ASAP.

As for the averages, the gas in the tank scenario hasn't changed much , which means SPY and QQQ really didn't get too much in to the green to offer the ability to sell in to higher prices. It's not just about higher prices, but about sentiment at the moment, if there's no demand and you are putting not a full size position, but a fairly large chunk out there, without demand which comes with higher prices, you usually get a bad fill which can be all the difference between a profitable trade and a loss. At the same time the IWM pretty much spent its fuel coming in to this week as we forecasted with a rotation from IWM to QQQ/SPY which was seen yesterday as they doubled the IWM's performance, a mirror reversal from last week.

As for the averages, a lot of little levers were pulled, HYG, TLT, VXX, etc, but the ones that have shown such strong correlation through last week are still in effect this week so far and in what I'd call a change in character, for the first time in a long time, these assets are beating out the typical market ramping levers even on a short term intraday basis.

 SPY 1 min intraday has lost some of that earlier shine.

SPY 2 min is weakening as we speak. The ramping levers were tried earlier and they didn't get too far, I suspect its one of the same two options mentioned earlier, 1) the Cross asset correlation is too strong even for the ramping levers and or traders are unwilling to put out the risk needed to maintain the ramping levers like buying HYG, selling VIX futures (protection), etc.

Or #2 was the same concept we saw in to NFLX earnings which stunk, but the market action which is nearly speed of light now with HFT defines the perception of earnings long before anyone can actually read what happened. We read what happened and knew it was a perception set up to allow middle men to get out of losing positions on a previous big gap down, thus NFLX was a trade set up that we were just looking for an entry as we knew the price reaction was bunk all created by price perception rather than the horrible earnings which led us to a NFLX short position on Feb. 26th at the highest highs, the best entry you could possibly ask for, but the set up was started the day after earnings came out on the big gap up.

That's the second possibility that the market is set for an F_O_M_C perception rally. My argument against this is the IWM was out of gas last week, the rotation among market averages is not healthy market action and nearly every leading indicator is against the idea and instead pointing lower and we have seen some signs of early panic. It's a possibility and we ALWAYS expect some kind of knee jerk reaction on anything F_E_D related and we know that these knee jerks are almost always wrong.

That was the second possibility I put out, I just don't see the evidence in that corner like I do in the original simple bounce before the F_O_M_C.

 The SPY 10 min chart is still intact, not a surprise as there has been nothing to sell in to, not just a lack of price strength, but demand that would support a decent fill on a larger than 100-lot order.

 The QQQ's earlier short squeeze looking move has lost its divegrence which is going negative intraday here.

 While the 5 min chart does have a negative divergence started, it's not far enough along yet that I would say, "Let's re-open QQQ puts here".

 The QQQ 10 min and bounce base, with an early morning sign of some panic before they got a little lever inspired upside intraday.

The IWM other than being negative at the close yesterday is in line intraday, however the same chart on a trend basis looks very different.

?Here it goes from positive to in line at the bounce to leading negative in to price strength.

The IWM 10 min chart has a good amount of damage, but I'd still rather wait on any new positions there until SPY and QQQ clear up and/or IWM grows an even worse divergence.

I'll have Leading Indicators or Cross Asset Correlations out soon, which were textbook last week to the point in which I don't recall the last time I ever saw them so correlated and effective.