The overnight price action in futures was quite interesting, a really flat market that as I said this morning looked like a managed attempt to keep it from doing anything on the downside they may not want quite yet being the SPX had not broken above the 50-day moving average which is a bare minimum in the market's current position for a counter trend bounce. The Dow 30 had not closed above the psychological $18k level, and several other things traders will watch and key off. Plus we have Yellen in front of Congress the next 2-days.
People seem to think Greece matters here or that one of the worst Retail Sales prints this morning since the entire Lehman fiasco should send the market lower, not higher, this just isn't the way the market operates anymore. We could see the bounce coming last week, well before we knew anything about the Greek outcome as that was not a sure thing (as sure as it gets) until after 6 a.m. yesterday when it was almost scuttled. The market surely didn't know what this morning's retail sales print would be, not that it doesn't matter and that the market won't discount it, but a bounce scenario was set up last week and Wall St. very rarely walks away from a set-up which they put together (as I mentioned, they have their reasons-remember RISK OFF bounce?).
In any case, we still have a decent amount of gas in the tank as you can see by this 10 min SPY chart.
SPY 10 min bounce base positive divergence.
However keep this in context of the larger picture on the same timeframe.
10 min SPY chart's trend, a clear counter trend bounce after several lower highs and lower lows have been made and the last ditch support of the 200-dma has been hit. Remember your last bounce forecast off the SPX 150-ma and the slice right down through it as it concluded. The bounce off the 200-day shouldn't be any different and this isn't this week's forecast, this is the forecast made for the market on April 2nd as to what to expect moving forward.
S&P-500 after the May head fake/false breakout forecast April 2nd with a move lower, first below the triangle's apex, then below the 50-day (yellow), finding support at the 150-day (pink) and bouncing and then slicing right through the 150-day, with next support at the dark blue 200-day with a bounce off that which should end the same way as the bounce off the 150-day, except when a 200-day moving average is broken in a major market average, psychology changes rapidly and fear grows exponentially.
As you can see yesterday the bounce failed at the yellow 50-day moving average, that's a minimum to take out when trying to change psychology and get traders buying so pros have demand to sell in to.
As far as keeping the market in the green rather than collapsing as Yellen is in front of Congress the next 2-days fielding a lot of questions about rate hikes and why would she be considering hiking rates this year with the market in free-fall which it likely would be once it takes out the 200-day, I'm sure that probably has something to do with the timing of the current bounce which is counter trend and is still at a level in which we have a second primary trend lower high along with a second lower low.
Intraday breadth hasn't been extreme, but has been on the positive side, at least until very recently.
TICK is not hitting extreme prints, mostly in the -300 to +1000 range, definitely more positive than negative, but no insane +1500 or higher prints and it looks like it may start to break below the channel.
3C charts look generally better intraday today vs yesterday, more in line than the solid distribution of yesterday. However once again, keeping things in context and not getting wrapped up in intraday trade, especially during a counter trend bounce helps keep your eye on the ball.
The QQQ's 10 min 3C chart since the May head fake area in most averages and the trajectory of 3C with bounces and counter trend bounces eventually falling back in line with the 3C trend.
So far today things are a bit more boring than yesterday which was really off to an ugly start, however one item of note I picked up on is the first lever of market manipulation, High Yield Corporate Credit. As I have said in the past, it's not the 3C divergence in HYG that supports the market, only we see that as early warning something is up or coming, it's HYG's price itself that fools altos in to thinking institutional money is in risk on mode. Today HYG's price is slipping which is just a preliminary indication, but one that's going to happen and this may be the start of that leading indication.
HYG was accumulated well over a week ago which is why I expected some bounce last week which was strangely derailed last Tuesday as if smart money knew something that we didn't, it appears it was Greece at that point in time. In any case, it has clearly been enlisted to help support/manipulate the market higher for this bounce.
Once again, keep this chart in perspective, the exact same timeframe in context looks like this...
HYG 10 min, note the 3C trajectory and what happens at each bounce, you don't even have to look at the specific divergences.
Here's the same chart without all of my scribble, I'm sure you can see the trend clearly for yourself.
In any case, as I said, it's HYG's price that moves the market, not the divergences, but we did see distribution there yesterday...
As you can see above in to a flat range where we most often see divergences whether positive or negative, it seems to have more to do with stable fills like the concept of filling orders for institutional clients at VWAP.
The net result is a lower HYG today, the red line is yesterday's close.
This is just part of the process in a counter trend bounce, but it's one of the more interesting things I've seen today
And just so you know how much HY Credit is used to manipulate the market...
SPY in green vs. HYG in red at our current bounce with HYG in line, then leading and recently in the yellow box having some trouble which is significant as a ramping lever. As a long term Leading Indicator, well... this is sort of much bigger picture...
SPY in green and HYG in red with HYG leading the market to the far left, in line with the market at the green "=" and leading the market again at the red "-".
So while seemingly small and meaningless today, it's not.
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