BROAD MARKET UPDATE

After getting a feel for Index futures and the broad improvement being seen there, although not specific pin point timing improvement, Futures Indications I thought we'd go ahead and look at a market update and next I'll take a look at the leading Indicators layout, and we'll put the pieces of the puzzle together.

So far price action by and large today is acting like an options expiration max-pain pin with a roughly lateral range since the gap up open. If that's the case, then around 2 pm we should start to see much better data as the charts aren't being manipulated short term to preserve the max-pain op-ex pin.

The charts...

 SPY 10 min is showing a pretty clear positive divergence. We had a nice positive divgerence coming in to this week, which is why last Friday's Week Ahead forecast was looking for early strength in the market this week. We did get the head fake move we were looking for as of Monday on Tuesday when the SPX plunged below its 200-day moving average support and then short squeezed right back above to close with a bullish Hammer candle, but something wasn't right that day as you know, we have been very cautious with adding new positions.

Price did EXACTLY what we expected, we were left with a BEAUTIFUL bullish reversal candle, but we didn't see the accumulation of the stopped out shares below the 200 dma which was a red flag for us immediately even before the close. Since, it seems the overall trend has begun to improve again. If I had to select a base area in the SPY based on the above chart, I'd say from July 2nd to present with some dilly-dallying in-between.

 However short term and the reason I decided to close the SPY July 17th (next week) calls this morning is the lack of upside confirmation this morning which could absolutely be part of an options expiration max-pain pin management. Like Index Futures, the longer charts like 10 and 15 mins. are looking better, the short term timing charts like 1-5 mins remain unconvincing.

We can have a strong base area, but not know when the base is over and the move /bounce is about to begin, that's why the intraday charts from the 1--5 minute timeframes are so important, they give us a good idea of when we have reached that pivot point which I feel is crucial information for options trades especially.

 Again the QQQ 15 min chart is showing improvement leading positive to the far right, it doesn't look as impressive as the chart above because it's zoomed out just to keep things in perspective, You can see how negative the divergence was at the Q's high, that's still a dominant signal with the local signal being a short term signal like a bounce and then we return to the negative trend. In any case,  there has been improvement there to on a strong 15 min chart.

 Intraday o the 1 min chart, we have the same lack of confirmation as the SPY which again could be part of managing the op-ex max-pain pin level.

 Where the IWM 15 min chart is also confirming the SPY, QQQ and Index futures with niice improvement on this strong intermediate timeframe chart, a good chart for something along the lines of a swing trade.

The IWM intraday looks a bit better as far as price / 3C confirmation.

This is the IWM 2 min chart, while it looks better than the others, it still hasn't made the kind of move on this chart that would really get me excited and moving in to positions, but it's a process and it looks to continue to improve here.

As for the UVXY short/VXX put, this is the intraday 1 min UVXY chart with a leading negative divergence and prices starting to come down a bit more seriously as the divergence has developed in to a more serious divergence.

The 2 min UVXY chart has seen migration and you can see in the 3C/price trend a clear leading negative divergence. This makes me feel VERY comfortable with the UVXY short and VXX put position.

The more important VXX 5 min chart has a clear divergence/negative , there is a positive as well that's fairly large, but the interpretation here would be a pullback first and then VXX putting itself back together for a larger trend move higher.

As for the manipulation lever that is High Yield corporate Credit, which is one of the first levers they reach for when they want to bounce or support the market, so much so that just seeing divergences in HYG often give us an early heads up as to market direction long before HYG price actually moves.

The 1 min HYG trend is clearly positive, this lever has clearly been pulled and I can think of no other reason than to support a market bounce or support the market in general. Note the move higher in HYG today after the accumulation/positive divergence. It is not the HYG divergence that moves the market, it is HYG's price, it is the HYG divergence that gives us EARLY WARNING OF WHAT WALL STREET IS UP TO.

Here the 3 min chart is leading positive, you can see what the last negative divergence did to price (red), I would say we have  not seen the kind of market bounce that this HYG set up "could" support.

Even the HYG 10-15 min charts have strong looking positive divergences, this 15 min chart may not look that strong to the far right, but it is, I just wanted to make sure you are aware of the divergence within the context of the larger trend. HYG is in a primary downtrend or bear market and HY Credit leads equities so while it may be used right now for a market bounce, don't forget the dominant trend and how that bounce is most probably going to end which should give you some ideas of what you may want to use the bounce for.

As for TICK/Intraday breadth...

This is the NYSE intraday TICK channel as of about 30 mins ago, I have a lot of charts to capture and post so I can't get them all on at the immediate position. Since this capture, police has fallen out of the uptrend intraday. However more important is the larger trend unveiled by our custom TICK indicator.

As you can see yesterday the decline in breadth fir with price, but as I suggested, as price started to move more sideways and less down, we'd reach a flameout or pivot and start to improve,  that is what we are seeing today on the whole, IMPROVEMENT.

I think it's safe to say, on the whole, through a CRAZY week with the market having breakdown, acting very skittish and seeing some unreal events such as arrests of sellers in China, it's rather interesting that we can pull some kind of probability out of this chaos.

I'm still leaning toward a bounce off what I would call a very volatile base area this week. I do still want to see intraday charts improve before adding additional risk, but for now I am ok holding the remaining bounce positions including UVXY short, VXX puts and IWM calls.

I'll take a look at the leading indicator layout and if there's anything of note, I'll be sure to post it, but either way I'll give you some kind of update since we have already covered two of the 3 most important areas when trying to put the pieces of the puzzle together using OBJECTIVE EVIDENCE.