Early Indications-Multiple Asset Update

Here's an early look at what I expect from some key assets we are following. After this I'll likely be spending a good portion of the day looking at our watch list shorts and seeing if any are nearing a reasonable entry. I do not think the market will respond well to the jobs number after options expiration is over, it increases the chance of a June rate hike @ the next F_O_M_C meeting which is coming up mid-month. That being said, a weak bounce has looked likely, especially since yesterday's 1-day oversold condition. I should say weak as in the underlying position of the charts and the lack of 3C support.

For today, yesterday's sharp internals suggested a 1-day oversold event and a probable close in the green today, this "may" be a bit longer than 1-day, but I don't expect much longer if at all which we'll see later today as the charts further develop. From last night's Daily Wrap in internals and their next day reaction...

Although the Dominant Price/Volume Relationship was mixed...

"Tonight the Dominant Price/Volume Relationship is mixed. The NASDAQ didn't have one. The Dow and SPX were both Close Down/Volume Up,  with 22 and 249 stocks respectively. This is a 1-day oversold condition and usually sees a green close the following day. "

Much more importantly were sector performance indications suggested clearly a 1-day oversold condition (this is not the same as indicators' oversold, but based on breadth which is much more reliable)...

"Interestingly at the same time, 9 of 9 S&P sectors were in the red, Energy led to the downside. Among the Morningstar groups ONLY 14 OF 238 SOTCKS CLOSED GREEN. THIS IS AN EXTREMELY DEEP 1-DAY OVERSOLD CONDITION. ALL IN ALL, JUDGING BY INTERNALS ALONE, I'D EXPECT A 1-DAY BOUNCE OR A GREEN CLOSE TOMORROW."

In addition we have options expiration.

This is my initial take on what I'm seeing this morning (some of the short term 1 min charts may be already a little untimely, but still have a point to make).

As was seen and noted in the A.M. Update, 

" ES knee jerked lower, but looks ready for an intraday move higher."

So far, along with 1-day oversold internals, yesterday's 1 min positive and this morning's positives in Index futures...

 ES 1 min positive divergence as seen this morning after the payrolls data. The payrolls data won't be taken well by the market, which is one of several reasons including op-ex and the 1-day oversold condition from yesterday, that I expect it to bounce a bit which should open some short positions on our watch list, although we may need to wait until the op-ex pin wears off later this afternoon or early next week.

 NQ 1 min positive divergence this morning as well.

Since yesterday we have had this 1 min positive in the SPY, but it has not showed strength and migrated, made a larger base or divergence in the next longest timeframes, VERY MUCH INDICATIVE OF THE 1-DAY OVERSOLD CONDITION FROM YESTERDAY'S INTERNALS.

 SPY 2 min shows no migration of the divergence, thus suggesting a very short term, oversold bounce likely or move toward an op-ex pin. This is what I mean in saying that there's not much support here at all, a very small base from yesterday and a very weak divergence combined with a 1-day oversold condition. 

 However since the last bit of accumulation on May 6th and 7th, the SPY has not responded well at all.

The 2 min QQQ is in a similar position as the SPY, a short term, small 2 min positive divergence...

At the next timeframe of 3 mins, no positive migration or strengthening of the divergence.

This is why I chose UVXY (2x long VIX short term futures) yesterday rather than VXX calls, Trade Idea: VXX / UVXY Long , it gives me some leverage and some room on the wild card/unknown (as of yesterday) event of payrolls, but still allows me to hold the position without too much draw down in to next week where the market is shaping up to get even uglier.

 For instance, like the SPY troubles seen above on the 3 min trend, the QQQ 5 min trend is showing the same negative disposition in more important timeframes and through the last bounce from early May as the rounding top has taken full shape.

As for Treasuries/TLT... As you know I'm expecting a strong counter trend move once they wrap up their base/reversal process which I believe is nearly done. Remember we just closed TLT puts earlier this week for a near 40% gain on a short term trade, the reason why is I believe the larger counter trend bounce base was about to be finished up and so far it looks like that was the right call.

 TLT 1 min trend since out short term put position expecting a short term move lower.

The TLT 3 min chart's trend is much more clear, from our short term puts and negative divergence to the base-building positive divergence now.

 This TLT 10 min chart shows what appears to be 2 different bases, I believe they are one larger base with the break below TLT's long term trend line (Channel Buster) at the two red boxes on the 6th and 11th. Note the positive accumulation toward the low end of the base range.

As for oil, I closed USO's short term put position yesterday for a 40+% gain expecting it to see a short term bounce in which I'd like to open a new put position...

 The 2 min USO chart shows where it was negative and why we had open put positions and where it has turned very near term positive on the chart since closing the put yesterday.

Again the USO 3 min chart shows the same, the probability of a near term bounce allowing us to lock in yesterday's put gains and enter a new position at a better price with le

As USO's longer term 15 min chart still reflects more downside for USO before it is ready to finish up its longer term base.

As for the watch list assets/trade set-ups like the recent NFLX Trade Set-Up,  many, like NFLX, are moving in the right direction for the trade set-ups I was looking for and hoping we'd see before the market sees too much damage and downside.

 A break above this range was a prerequisite and part of the NFLX Trade Set-Up posted, today it is in the area and should soon be setting up that short position, one of many that are in a similar position, which is why I want to spend some time today checking up on the watch lists as the op-ex Fridays tend to be rather dull until the last 2 hours of the day.

NFLX's short term 1 min chart suggests it will move toward our short area, letting the trade come to us as the broader market and watch list charts are in bad condition.

For now I'll continue to hold UVXY long, I suspected some near term volatility and the UVXY long rather than VXX calls allows me to better weather that near term volatility, but still have a position in place and be prepared in case Payrolls went the other way and as you can probably tell, I am feeling pretty good about the market falling apart very soon, hopefully not too soon that we can't get off our new short positions like the NFLX example as we need the trade to come to us for the best entry, lowest risk and best timing.

So far we aren't far off from the projections posted this week and specifically yesterday.

Remember, one of the worst looking charts for the market is HYG's (High Yield Credit) leading dislocation in price vs the SPX, this is already on long term primary charts, intermediate charts and now shorter term timing charts.

HYG (red) vs the daily SPX (green), this dislocation is very serious considering how badly longer term HYG charts are already dislocated from the market to the downside.