DAILY WRAP

I'm thinking about everything posted this week and trying to think about what I can tell you beyond what has been posted, truthfully probably not much if you include the last post published, GLD, SQQQ & Head Fakes being that the late day signals and the overall concept have played out in to  after hours. A head fake here in this area would be spectacular as far as trade set-ups. I put out several today, but you probably noticed I left some room with each of them for a very specific reason which was covered in the posts and the last post linked above.

Overnight was another "managed" market amidst low volume. Then the template was nearly the same as yesterday's...

Then around the European close as has been the pattern (intraday trend changes) we saw some downside, but this was also about the same time Yellen made a statement that was clarified by the WSJ's F_E_D whisperer, Hilsenrath, that the F_E_D needs to hike sooner and that will mean they can be less aggressive rather than hike later and have to be more aggressive so , so much for the Retail Sales print yesterday that all the talking heads said would push the first rate hike in to 2016. As I've said 1000 or more times, the F_E_D isn't hiking for the normal reasons, there's something they are quite worried about and as you know I have my opinions as to what they may be, but they are hiking even if GDP goes negative and it snows in August. Then later in the day the market started feeling real emotional, which usually means you should refrain from joining in that emotion, keep a cool head and look for objective evidence as those emotional trades rarely turn out well. In this case it seemed to be the news coverage of Molatov cocktails in Athens in front of Parliament. In any case, as I showed late in the day and in the last post, there were already signals that the market was going to be heading higher even before earnings came out AH.

As you can see on the day the big losers were small caps/Russell 2000 and of course one of our favorite core shorts, Transports; everything else pretty much moved together.

Futures didn't look good as I showed a sampling of, the charts saw a lot of deterioration today, there was an attempt to support the market after the Yellen decline with HYG so that kind of tells me the reversal process which is very narrow at this point is likely not over, especially with no head fake move and if I'm correct in my thinking that the next move down slices through the 200-day (SPX), then a head fake move would be an even higher probability with such an important move to come right after.

Before I forget, I will say I like TLT as you've known and I think a pullback is a probability thus an entry at a better price point and lower risk looks to be a probability. There are a lot, LOT of others I like as well, it just feels like they are not quite ripe with the overall market and the reversal process.

TLT intraday 2 min chart looks very much like a near term pullback.

As mentioned above and earlier today, HYG was pulled out as a market support lever and used both earlier and in to the close to try to help support the market which is another indication that tells me we are in the reversal process, but it is a process, not an event.

HYG vs the SPX intraday used as support

In addition, the VIX/VXX which slammed higher (SPX prices in green are inverted to show the normal correlation and relative performance) as things literally heated up in Greece, was also Whack-a-VIXed in to the close, the same time we saw intraday positive divergences which were well before after hours earnings just in case you had that thought. So that's 2 of 3 of the main market manipulation levers that were pulled in some manor to support the market in to the afternoon. While I can't say price movement in TLT acted as the third lever (otherwise known as the SPY arbitrage manipulation scheme), there was a clear negative divergence intraday in TLT as you can see above. I suspect the concept of 3C signs picking up where they left off takes center stage and it's probable that TLT opens lower tomorrow or sees weakness early on in the day, again more near term data that points to a reversal process under way, but not complete. Interestingly earlier in the day when I went through all of the futures, Market and Futures Update, one trend I saw that let me relax a little about potentially having had missed the best entry in TLT, was the 1, 3 and 5 min charts were all negative for 30 year futures while the longer charts from 7 min and  beyond all pointed to TLT or 30 year Treasury futures rising so hopefully we'll get a decent pullback and entry in TLT long.

Also among the futures charts, VIX futures had some very impressive//strong charts, this wasn't the reason for the UVXY long position today, TRADE IDEA: UVXY (LONG), but didn't hurt and certainly points to the market seeing some serious additional downside as the reversal process wraps up. The Index futures were , as mentioned previously and in the A,M, Update, very ugly throughout. I also got the impression that EUR/USD has more downside coming and there's a decent chance that USD/JPY downside coming as well. I know that's a contradiction for the USD, but it can happen. Gold also had much stronger futures charts than it has had recently, which again wasn't the reason for the TRADE IDEA: GOLD (SPECULATIVE LONG) CALLS post, but it doesn't hurt the overall position.

Most Leading Indicators were mostly in line, one of the Pro Sentiment indicators put in a slight positive divergence at the end of the day on an intraday basis, on a trend basis, they look as horrible as I have shown you all this week. 30 year yields which led the market higher earlier in the week as a Leading Indicator turned sour the last two days as seen yesterday and even worse today...

(30 year yields in red vs the SPX in green) However if the TLT 3C divergences are correct as well as the 1-5 min 30 year Treasury Futures, then yields should pop higher tomorrow and again support the market as the reversal process continues and perhaps we get a head fake move which sounds scary, it feels even scarier, but would be an absolute blessing to new positions getting ready for a downside pivot. 

Otherwise commodities are risk off and divergent with the market as a Leading Indicator and HY Credit is also in the same ugly spot as last night.

I'm clearly of the opinion that we have some more reversal process action, maybe a head fake move before we are in prime location for loading up the truck, but I did want and do want to have some exposure, especially going in to the Greek vote tonight which "seems" like a done deal, but the streets are ugly and who knows. Europe is quickly showing itself to be as corrupt as it is inept, who knows what flies out of Schaueble's moth tomorrow morning. The IMF is certainly an interesting dynamic, but once again I think we may be getting too much tunnel vision over Greece as it's right in our face. China is a Black Swan and F_E_D rate hikes seem to be almost forgotten, believe me, they won't be for long.

As for positions, I said earlier in the week in the Trade Idea: USO SPECULATIVE (Long) Bounce and the follow up post right after, that if USO were to come down a bit and show strong 3C positive divergence in to that pullback, I'd consider raising that up to a full size position. Interestingly as if almost by magic...

That's the 2 and 3 min USO intraday charts, positive in to a pullback in the area so this may be an add to or second chance opportunity trade if you like it. Of course there's more to objective evidence than just a 2 min chart, but it's pushing in the right directions.

So I think my opinion on near term trade is pretty clear, I know my opinion on the next pivot is very clear, it's the in-between and my opinion that we'l be pretty close to wrapped up by the end of the week, as I said last Friday, I thought this week would be taken up with a bounce inclusive of the reversal process and by then we should be pretty close to the next pivot. The pivots are the highest probability/lowest risk entries, what happens between pivots is trade management. 

As for Futures tonight, S&P and NASDAQ futures have made the move to the upside that reverse the afternoon emotional selling and continues the reversal process. Unfortunately as of yet, the average I'm most interested in, the R2K hasn't made the same move, but it has time. There's nothing about the intraday charts that tells me much about overnight action, I'd expect it to be managed again unless something really surprises with the Greek vote which just came in, I guess the surprises really would be more on the EU/Troika/German side. 

ES 1 min reversed the afternoon "emotional" selling as expected.

While the 3 min charts are still ugly, these could move toward positive if we are going to get a head fake move and it wouldn't be a bother, in fact the 5 min charts could as well and I wouldn't be too concerned about it as long as they are clearly negative by the time we are loading up the truck which is a PREREQUISITE anyway and I believe would give several charts I really like as longer term shorts like AAPL, to mature and "SCREAM" or jump off the screen if you prefer.

As for that Greek vote in case you didn't already hear, an overwhelming landslide victory for the Troika, I wish I had an Athens cam on my live stream. The vote wasn't even close, 288 yes to 64 no. It seems the Greek parliament also doesn't care about democracy as they just overwhelmingly voted to ignore the overwhelming desire of the Greek people as shown in the referendum vote in which they said NO to the bailout. Unreal, why bother to ask the citizens to vote and then roundly ignore what they have to say, which is how Syria came to power and I suspect how they'll exit power. Well as an EU official said, "Bailed out countries shouldn't even bother to have elections" and Syria proved that beyond a shadow of doubt.

Now since I suspect tomorrow will be a very busy day, I'm off to watch the riot cam in Athens, I'm sure they're all over the internet.

Have a great night.