Leading Indicators

After a quick peak at Leading Indicators, the assessment of the last market update seems plausible if not highly probable, a pullback (see AAPL) to technical support levels or viewed as a consolidation with the probability of continuing the bounce.

The $USD analysis will be separate, but the longer term charts are pretty definitive as the strong confirmation of the $USD's uptrend has turned negative. I'll check on near term indications.

Interestingly out SPX:RUT Ratio once again led the market lower, also Yields led the market lower intraday after a strong UST 3 year auction today. However, interestingly with an important 10 year auction coming up tomorrow, it wasn't the shorter 5 year yields that had the most effect, but rather the 10 year and 30 year as they led the market lower by a good hour or more before the 3 p.m. sell-off.

There's still HYG / High Yield Credit support in the area, this fits with the pullback, bounce that was demonstrated best in the last Market Update post with the AAPL charts at the bottom.

Spot VIX and VXX are underperforming on the 3 p.m. sell-off, which also fits with near term expectations of today being a consolidation-type day and we should see some additional upside and break the positive divergences on the 15 min charts which represent this aspect of a breakout/bounce from the triangles I have been showing and that made up a large part of Thursday's analysis of what to expect this week with a directional breakout to the upside, like a Bollinger Band pinch (that was the exact analogy used).

So the bottom line is both intraday negative indications led the market and continue to move toward the last update's assumptions of additional upside as a 1-day breakout bounce from those triangles simply doesn't make sense from any point of view.

However there are still some strange implications with the IWM 10-15 min charts which have not been in line with the broad market which includes not only stocks, market averages, but Index futures as well.

The 7-15 min Index futures that were also part of last week's forward looking forecast for this week are largely in line right now, rather than positive as they were before yesterday's breakout in most triangles in various market averages and assets (again AAPL is a fine example).

I would expect to see these to also deteriorate in a very clear way before anything of significance happens.

Otherwise, it's just more volatility, choppiness and risky long trades while waiting for the right time to enter high probability/low risk short trades and a few select longs as well.

In other words, thus far it has been a continuation of the choppy market that has made short term traders' lives such a pain in the butt recently, but with earnings coming up, the second most over-valued market in history and a lot of good reasons to suspect things will turn south, like the NFP print Friday, I suspect we are very near something much more tradable, right now keeping your chips is the most important aspect and to do that, patience is key.

As to F_E_D induced volatility on these crazy dovish statements we expected since last week when the NFP whisper number appeared to be leaked, I suspect that will have a lot more to do with near term $USD analysis which I will look at.

I'll have more to say on the probable NFP leak as it relates to strategy from the F_E_D.