Multiple Asset Update: Market, VXX, TLT

So far everything is going according to our forecast on Friday for the start of the week, The Week Ahead. I expected weakness early in the week, Monday specifically. There are some divergences that suggest this weakness will cool off and we'll see an attempt to bounce higher, but in the meantime, we opened Trade Idea-EXCEPTIONALLY SPECULATIVE...VXX Short Term Calls Friday and they are already in the green.

The long TLT/Treasuries, Trade Idea: Long Bonds / TLT from last week is still in place although I expected a pullback today to widen out its base.

I'm going to attempt to show you our expectations for these assets in multiple timeframes and how I'd like to play them as we let the trade come to use, just like the new positions entered last week.

First the intraday Index futures for ES/SPX, NQ/NDX and TF/Russell 2000 futures...

 ES 1 min is seeing intraday weakness in 3C and price has already begun to drop off as expected in Friday's forecast for the very early part of the week, thus the VXX long/Call position as it trades opposite the market.

NQ/NASDAQ 100 futures 1 min intraday falling off badly pre-market and in to the cash open (9:30 a.m. EDT).

And TF/Russell 2000 futures 1 min intraday also seeing a sharp 3C negative divergence.

The averages: SPY, QQQ, IWM

This is the 2 min SPY chart with a deep 3C leading negative divergence which is one of many reasons I was looking for weakness early this week. I suspect a gap fill, maybe a second , small bottom to form a "W" as these sharp "V" bases rarely support much of a move.

This is the SPY 10 min chart , the slightly longer term with the "V" base and accumulation (small accumulation) at its low. I suspect , as I said above, a gap fill, but we'll be watching for signs of accumulation suggesting it is a gap fill and not a total breakdown. It's too early to see any signs of accumulation at least until we get in to the gap area.

This is the QQQ 10 min positive as well, note again the sharp "V" base where the 3C positive divergence was, these are not stable and can't build much on them so it is not surprising that it failed or is failing. I suspect we come down and make another low around the same area creating a wider "W" base, but again we'll need to see confirmation of that with 3C accumulation in the very short term charts before taking any positions based on that theory.

And this is the IWM 10 min leading positive, all of these 100 min charts suggest the market wants to bounce more, but couldn't do it off such a sharp base with little support. Thus my belief we are seeing early week weakness to broaden the area. However that is theory, we need to see actual proof which as I said above, I wouldn't expect at least until we get in to the gap.

All of the above expectations led to Friday's Trade Idea-EXCEPTIONALLY SPECULATIVE...VXX Short Term Calls and those calls are in the green today. At last look they were just moving to a double digit gain.

VXX/Short Term VIX Futures...

 This is the VERY near term 3 min leading positive divergence in VXX which confirmed what we were seeing on the major averages late last week.

 Intraday thus far, VXX is seeing perfect confirmation of the move since the open.

However on a longer term/big picture basis, this large 15 min positive divergence suggests that no matter what the averages might do, create a larger "W" base, attempt to bounce from it, etc... they will fail as this is much larger, much stronger and trades opposite the market. This is a divergence that jumps off the chart/screams and the kind I don't ignore so I'll be looking for an entry longer term for that as soon as this near term trade of gap filling in the averages, possibly a wider base and bounce are complete.

As for the signals in the SPY confirming the same...

 The big picture, longer term trend SPY 60 min leading negative with the worst distribution during the month of April.

TLT/20+ year Treasuries, which are related to this recent trade last week...Trade Idea: Long Bonds / TLT.

Treasuries are breaking down on the primary trend and have seen some deep losses the last 2 weeks, but look ready for a significant counter trend bounce, thus the trade idea above, long TLT/Treasuries.

 This 5 min TLT chart shows the divergence for just such a counter trend bounce. I expected early this week we'd see a pullback (yellow arrows) and so far we have. I believe we'll see a wider base as we only had a "V" base in place as of Friday's close, not enough to support a counter trend bounce as I believe that is what we are seeing right now. The pullback today really was not worth the effort or risk/reward ratio to  try to trade around so I just left the TLT long call idea open and will ride this out.

As for TLT on the pullback intraday today, it is showing the kind of positive divergence/accumulation in the pullback suggesting the pullback is constructive or base building, this is what we'll be looking for in the averages as they reach the gap fill area.

There are at least 3 multiple timeframe trends above, this is what I meant earlier in saying, "Short term" is getting more and more difficult to define, but hopefully this will give you a bit of a road map as to what we are expecting very short term, perhaps to mid week, and the rest of the week.

However these are expectations, I always want to confirm them before entering new positions.