I've been watching the charts develop today both very short term and stronger charts. I have believed that we would not see too much movement until options expiration, in fact this entire move this week may be in part, related to options expiration considering since the head fake move in the broad market forecast on April 2nd failed and the trend has clearly been down...
The Daily SPX and 100-day moving average with the head fake move forecast specifically above triangles in the major averages and most popular stocks and just before that by a week or two, a warning that "this market will not make any significant downside moves until there's a head fake/false breakout above clear 2015 resistance" as it's too juicy a target and easy money.
Since the breakout was proven to be a head fake move and resulted in not only a move back below the triangle's resistance trend line, but also a break below the triangle's apex and the SPX 500's 100-day moving average.
That makes it likely that the last couple of weeks have seen a lot more put buying and short selling than normal making this week's move in to options expiration, useful for seeing those either squeezed or expired worthless.
Over 2 weeks of downside since the head fake move failed, which is common to see a clean reversal just after a head fake move as they tend to be transition points.
In any case, watching the charts of the averages, it looks like they want to hold the market in place for options expiration tomorrow,
but there's still longer term underlying movement and even the intraday movement is getting a bit messy and difficult to decipher. Nonetheless, these are very short term charts and price action we are talking about.
As you probably have seen, the max-pain pin is often very close if not exactly at the close on Thursday. As you've also likely seen, this tends to last until about 2 p.m. on Friday before the max-pain pin (
the level causing the greatest dollar amount of options to expire worthless) is released and price action does whatever it wants which is often random, but
we usually get the best 3C data of the entire week the last 2 hours of Friday once the max-pain in is released.
I may have to update this again by the time I finish the post, but the NYSE TICK's channel has been broken after a brief tag of the +1000 level.
The 3 min SPY intraday chart has added some additional leading negative divergence,
not as much as yesterday because there's not as much to sell in to as we saw yesterday.
This 2 min chart, weaker than the 3 min chart above, but also more sensitive to smaller moves picked up this afternoon change in 3C, I would say it is an intraday positive divergence, but upon zooming in on an intraday basis it was no better than in line (
moving with price),
However the even more sensitive 1 min SPY chart that was showing a slight in line status as well earlier (about10:30-12:30) turned down. Remember all new divergences will start on the earliest or shortest time frame, thus the 2 min chart's in line status is in danger as the 1 min chart has the latest signal and it is no longer in line.
My initial take on all of this was the options expiration theory above.
This is a close-up or intraday chart of the exact same 1 min chart above, it was negative at the gap up opening this morning sending prices lower and then in line until about 12:30 where it went negative i to the market's attempt to add some upside.
HYG is always of interest for additional color, here's what the intraday chart there looks like.
A leading negative signal intraday and at the market's gap opening which is the clearest, strongest divergence of the day, then moving in line which would offer the market some intraday support, but again as a reminder from above, we are talking about very short term intraday charts.
As to what's happening with the bigger picture of this particular move, the 5 min charts are seeing some deterioration, but I was especially surprised to see this.
A 10 min chart on an intraday basis (zoomed in) showing a deepening/strengthening negative divergence as it has moved or migrated to the 10 min chart within a day.
I saw the exact same on the QQQ 10 min which of course made me wonder about HYG's longer term charts which we already know were not in good shape...
It too is seeing a worsening of the larger (
accrued) underlying flow/signal.
As for intraday, the QQQ 1 min is probably the best looking of the averages as you see above.
To me this looks like there's a max pain op-ex pin in the area or a bit higher for the Q's.
Not all averages are alike though. Yesterday our custom SPX:RUT Indicator showed there was some divergence in relative strength between the SPX and RUT, this is a sensitive indicator as usually the Russell 2000 would lead a risk on move, today we are seeing the SPX outperform 2:1 as the Indicator projected...
Like 3C or most indicators, the red indicator should move with green price if there's solid confirmation. Yesterday there was not confirmation, today there is not confirmation. This is a seemingly meaningless indication, but more often than you might believe, it's an excellent leading indicator.
The IWM intraday 1 min chart also looks very different from the SPY, but more so the QQQ.
And again the 10 min chart has seen some interesting damage (consider where price is in this 3C divergence compared to the previous moves down in 3C on this chart.
VIX futures are also busy today...
Intraday positive divergence, same as yesterday.
As for the TICK chart I started with, no improvement, not too much worse yet either. I'd keep an eye on it.
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