Daily Wrap

Where does one begin on a day like today?

It seems a lot of market downside was either during or directly proceeding broken markets, reasons? Well beyond the tinfoil hat theories which might not be far off when you consider some of the hyperbole coming out of China as to who's to blame for their markets, lets just say, remember those very low volatility/low volume days with markets breaking every week and I said, "Just wait until things get really volatile"?

Well volatility is here.

ES 7 min chart of "V" shaped volatility, this is why I never trust "V" bases/tops or parabolic moves, not because of the broken markets, just in general.

Both the Dow and S&P closed back under their 200-dma, however that's where we started to see late-day improvement. We couldn't get through some of the timeframes I'd like to see being we had half a market half of the day.

However the SPX put in what was pretty darn close to a Tweezer bottom the last 2-days.

USD/JPY dropped by the most in over 2 years, remember this week's charts suggesting $USD moves lower on a carry unwind?

USD/JPY 2 hour chart.

USO/oil put in a larger reversal process on Iran deal problems and is starting to looking interesting for an oversold bounce trade.

 USO putting in a less sharp reversal process for an oversold bounce, the reason we exited USO short on Monday, Closing USO Equity Short

USO's 3C chart is showing more positive divergence in the area.

As to the market itself, I entered a late day SPY call position in speculative size, Trade Idea: SPY Long SPECULATIVE , I would have entered in full size if the market had more time and built stronger divergences, but afternoon trade was by and large on the positive side and I suspect the overnight charts should improve as well as tomorrow's. If that is the case, I'd add to the IWM and SPY calls, otherwise they remain speculative in size with the full core short positions all still open as the primary underlying trend is clearly to the downside despite even an impressive bounce.

Here's the way some of those charts looked...

 SPY 1 min intraday improvement in to the close.

SPY 2 min still in a positive divergence.

SPY 5 min from in line to positive this afternoon

SPY 10 min 3X trend looks like a base for a bounce here.

QQQ 1 min latte day improvement.

 QQQ two minutes chart late day improvement

 QQQ 10 minute chart from a leaving negative divergence to a relative positive divergence

 The IWM and looks like it hit stops today at the white arrow as broke below previous support

 IWM one minute chart with late day improvement in 3C as well as a positive divergence on stop run at the yellow arrow

IWM two minute intraday finally showing some movement and improvement into the close

 IWM 3 minute also showing improvement into the stopper on and close

IWM five minutes relative positive divergence

 UVXY one minute negative divergence into the close

  UVXY two-minute negative divergence leading, into the close.

  UVXY 10 minute negative divergence looking like there should be decent pullback.

VIX futures intraday also leading negative into the close.

VIX futures 30 minutes chart with an overall positive divergence but looking like strong pullback with a 30 minute negative divergence to far right.

 XIV which is the inverse of VXX showing a positive divergence into the close

 XIV positive on a five minute chart as well

 XIV and positive on a 10 minute chart looking like it should make a decent bounce.

 And ES/ SPX futures with a nice leading divergence into the close. I would like to see this on three and five minutes charts as well but that can happen quickly overnight.

 The three minute chart is in confirmation which means you can go positive from this point pretty easily

 As well as the five minute ES chart

This 10 minutes ES chart is reflecting a positive divergence from earlier in the week.

I'll be looking for additional strength to give me reason to add to the short-term bounce positions, but don't forget I do not consider this a risk on move but rather any bounce would be a risk-off move allowing Wall Street to unload shares and /or short into price strength which is the same thing I would be doing. All core / trend shorts are still open.

If Futures should improve dramatically tonight I will post them.