Daily Wrap

Today's bounce shouldn't have come as a surprise. I posted yesterday's comments earlier as bearish sentiment overwhelmed the market and talked about the boat being lopsided with too many people on one side and this just a couple percent off the ATNHs, that's easy money for Wall Street, it's an easy head fake set up.

The bearishness represented by the Fear and Greed Index was apparent in yesterday's internals (see last night's Daily Wrap). Here's a quick excerpt from last night's post on internals:


"All but the Dow had a Dominant Price/Volume Relationship, it was Close Down/Volume Up, a 1-day oversold condition...In this case, this is a 1-day oversold condition and makes sense given the SPX's support at the 150-moving average and "hammer-like" price closing candle...Of the S&P sectors, only 1 of 9 closed green,  again a 1-day oversold breadth condition...Of the Morningstar groups, only 23 of 238 closed green, AGAIN A MASSIVE 1-DAY OVERSOLD condition. I see no reason the market shouldn't correct from here..."

Wait until you see today's internals.

 The major averages today which much like yesterday, seemed to stall out not long after the European close. Transports in salmon were off on their own in the red while the other averages grouped together.

 This is a custom indicator I created to demonstrate the confirmation/Non-Confirmation between Industrials and Transports that's a large part of Dow Theory. The red histogram shows when Transports were a momentum group and outperforming Industrials to the left, then trouble started setting in (which you'll see more of on a larger scale on some breadth charts below) finally with Transports failing to confirm. However,  what may be most interesting about the two averages today is Transports underperforming so badly today, they are moving back to the lows on the histogram last seen at the May head fake / false breakout which failed and sent the averages lower.

 This is the major averages since last Friday's close, so we're essentially where we were last Friday except small caps are a bit stronger, Transports are a bit weaker.

And for the month of June, Transports looked like we might get a usable bounce to enter a new short, but that's fading although they and small caps are the only two averages that are green on the month with the NASDAQ, Dow and S&P all red on the month.


 Yesterday I posted several times how I thought they (Wall Street) would create support at the 150-day moving average in the SPX as it was already being watched by technical traders.

And I talked about how this would create a "percieved"support area, thus if price comes back down to the same area, it's less likely we see a strong bearish sentiment, but more of a "Buy the dip" attitude with stop-losses just below the 150-day (or at it), making it very easy to create downside momentum with a break below it.

Some have said it was the Plunge Protection Team today that held the market up. If that were the case, how could we have seen so many flags for an oversold bounce condition with a technical trader set-up as well? How could we have predicted the most likely scenario today would be a green close last night?

However there was a lot of signs today that serious money didn't participate at all today. The price action alone looked very much like a short squeeze which would make sense with yesterday's Fear and Greed index being so bearish, Wall St. is going to knock those guys out of position, it's just too easy for them not to. From yesterday,

"The one thing I don't like is the increased market perception and fear, that tilts the ship too far one way and it's very lucrative for Wall Street to rock the boat in the other direction quickly, stopping out or triggering trades, it''s short term maneuvering that has little to do with the bigger picture, but it makes them money."

There was evidence everywhere that Wall St. was not participating, at least not in the major averages, I wouldn't say they weren't participating at all, but in places most wouldn't expect. Here are some of the posts today that gave evidence of the above: The serious dislocation between professional risk assets and the stock market as modeled by CONTEXT. The Leading Indicators failing to confirm as posted in Pre-F_O_M_C Market Update. The internals that I'll get to are additional red flags.

Some of the Leading Indicators as signs of no Wall St. participation and otherwise a hollow short squeeze...

 The 30 year yield in red has recently been leading the SPX in green and divergences between the two have not ended well for the SPX. We have another clear one today after being in line yesterday.

 The same is true of 5 year yields which was the main Leading Indicator we used for "Yields". Again note the "in line" movement yesterday and remember yields move opposite bond prices. Today's price action ion the chart above would tell you that the flight to safety Treasury complex was being bid along with the short squeeze in stocks, not normal to have a risk on and risk off day at the same time, that's why it's a divergence of interest as something will change.

High Yield credit which is one of the institutional assets that go in to the creation of the CONTEXT model that was at a -40 ES point differential today, meaning ES was trading about 40 points higher than the model based on institutional assets, another sign of non-participation in a risk on move.

Some of the Leading Indicators as seen earlier with some interesting areas I think Wall St. WAS participating, just not in risk on, but protection  which makes a lot more sense given the Greek situation and tomorrow's F_O_M_C at 2 pm with a press conference to follow.

Both VIX and short term VIX futures (vs inverted SPX prices in green should normally be in line with SPX prices) carried a strong bid today.

 VIX outperforming its normal correlation which would be down where the green SPX is, not only today, but yesterday as well.

VIX short term futures seeing the same stronger relative strength the last hour of yesterday and all of today.

Even last night I had said, "...a corrective bounce off the 150 (sma), remember there's a roof on it with the VXX 5 , 10 and 15 min charts...."

I think the performance of VIX above is evidence of that unwillingness to take on risk, but to move toward protection which was even seen late this afternoon, Sentiment Flip-Flop, with VIX futures seeing positive intraday divergences as the Index futures saw negative intraday divergences in to the close and closed off the highs the last 30 mins and dead flat since 2 pm.

QQQ intraday with typical looking short squeeze behavior at "A", dead flat at "B" and down in to the close at "C".

This is no smoking gun, but it's putting the pieces of the puzzle together.

I still think the EUR/USD sees more downside as it did today (forecast yesterday)...

 EUR/USD moving down today (normal cash hours between the green and red arrows).

I think it sees more downside because of the divergences in the $USDX and the Euro futures, these are both 30 min charts so they have decent strength...

 $USDX positive and...

A confirming Euro futures negative, that would send EUR/USD lower.

The question is why? The $USD "should" strength on any hawkish tone from the F_E_D tomorrow or a rate hike while the Euro should see downside over the Greek situation so which is being reflected, one? If so which? Or maybe both?

We have found F_O_M_C leaks in the past, they were on the same day as the policy announcement and they stood out like a sore thumb, that being said, it is extremely rare unless we are staring at a large one in the face above, but the ones I'm talking about were on the F_O_M_C Wednesday and VERY clear in front of the announcement, so clear we traded them which is something I usually wouldn't do in front of a wildcard, total unknown as I want to retain as much control as I can and that's pretty hard with an event that could go either way.

That being said, I'd be a LOT less surprised if there were a rate hike tomorrow than most. I think this is a path the F_E_D has laid out in advance and not a spur of the moment decision, just look at the way they talk around the economic data, dismiss it or create scenarios in which they can hike even with bad data so long as they "Feel" a reasonable chance it will get better.

I also just want to remind you, Beware of the F_E_D knee jerk reaction. There hasn't been a single meeting in 4 years I haven't warned of that in advance. We usually see a knee jerk move and it's usually the wrong move. One of the best examples was the announcement of QE 4 on September 13, 2012 with a knee jerk move higher until the press conference and why wouldn't you expect the market to move higher on the announcement of QE3? We had negative signals and held some shorts rather than close them on the news,, the market topped the next day and lost -8% over the next couple of months and didn't return t the Sept 13th level until Jan 2013.

This is just one of numerous examples of a knee jerk move, they can last days, sometimes a bit longer, but they are almost always retraced and you'll know them when you see them.

As for Internals today, THE COMPLETE OPPOSITE OF YESTERDAY'S 1-DAY OVERSOLD CONDITION. 

OF THE 4 POSSIBLE DOMINANT PRICE/VOLUME RELATIONSHIPS OF THE MAJOR AVERAGES (This is the number of component stocks that make up each of the averages were counting, not the price/volume f the average itself), THE DOMINANT RELATIONSHIP WAS CLOSE UP/VOLUME DOWN... THE MOST BEARISH OF THE 4 RELATIONSHIPS and additional evidence there was no institutional participation today.

There were 21 Dow stocks , 56 NDX 100 stocks, 769 Russell 2000 and 278 S&P 500 stocks all in the Close Up/Volume Down. Just like any market, you want to see volume up on higher prices, not down, that makes this the most bearish of the 4 relationships and often sees a next day close in the red as a 1-day overbought condition, the opposite of yesterday's Dominant P/V relationship.

Adding to the weak relationship and 1-day overbought condition, again the opposite of yesterday,  9 of 9 S&P sectors closed green and a whopping 201 of the 238 Morningstar sectors.

I said I'd show you some Breadth charts, which I have done every week or two showing deterioration in the market, but this time I'm going to show you vs. a previous top, 2007. The 2000 top was very different than the 2007 top and I suspect the current top is very different than the 2007 top, but there's one constant, breadth failures.

On the charts below, the breadth indicator is  green,  the comparison symbol is the SPX in red. In  normal , healthy market breadth should advance with price much like volume should advance with price. The indicators are made up of all NYSE component stocks as the largest market average.

 The Percentage of NYSE Stocks Trading Above Their 40-Day Moving Average,  note they normally peak around 85% in a healthy market, they haven't been anywhere near there for a while, but more interesting is the deterioration most recently around the yellow box on the time axis.

Looking at the same indicator at the 2007 top (remember each top is different)...

 They did the same thing at the left shoulder and were near 50% as the market was near its highs, only declining below 20% on a market decline. The current % of NYSE stocks > than their 40-day is less than half at 39%

 The Percentage of NYSE Stocks Trading 2 Standard Deviations Above Their 200-Day Moving Average,  again the crest during a healthy market is around 30%, these are longer term momentum stocks. The current percentage is around 10%.  Again, note the severe decline through 2015 and the larger overall decline from 2014. Compared to 2007...

 We see a similar decline and bear the highs the percentage in 2007 was double what it is now around 20 to 25%.

 The McClellan Summation Index has deteriorated since 2014, but the more notable decline is the 2015 one like the other breadth indicators above.

Compared to 2007, we didn't see extremes below -2000 until there was a sharp pullback at the top, the current indicator has already been below -3500 on a sharp pullback and is below-2000 just a few percent off it's all time highs.

The point is not to compare apples to apples, but to note the deterioration in breadth at a major market top.

Finally as for oil, I posted the API update after the close, API Oil Inventories, however in addition to expected $USD strength (usually bringing commodity weakness), we have this Brent Crude futures chart among many others seen here, Crude Futures.

We have good downside confirmation of Crude futures with 3C and a negative divergence in the area, I'm still looking for lower prices in crude/USO.

I'm not going to speculate beyond what I've already said over a period of years with regard to the F_E_D, they have been slowly introducing measures that would allow them to tighten on an arbitrary basis, which tells me they are more afraid of something they haven't voiced than they are of damaging the economy with a rate hike as it is in terrible shape currently. I know a lot of you have theories as to what it is, I suspect we'll find out soon enough. Other than that and what I've already posted on the subject, we'll just have to wait and see like everyone else unless we get lucky and find what stands out as a leak, which hasn't happened in a while with the F_E_D, but I'll be looking as always and I'll be watching the press conference and how 3C reacts as that was the first inclination I got in 2012 that they were already looking for an exit or preparing one on the same day they introduced QE3 believe it or not, that's what stopped the knee jerk reaction dead in its tracks the same day at 2:26, the answer Bernanke gave to a question about the exit strategy and those highs weren't seen again until 2013.


As to Index futures right now, ES has an interesting divergence in a very flat range, this is where we most often see divergences.

 ES 1 min leading negative at a flat range.

R2K futures don't look great either going in to the overnight session...

 Russell 2000 futures and...

The NDX futures after confirmation earlier today.

These have already started migrating to longer charts.

 ES 3 min leading negative in the same area, but a stronger timeframe...

And R2K 3 min futures show in line on the decline and today's bounce with no support, which is exactly what everything else above told us today.

I'll be very interested to see what they look like in the morning.

Have a great night, tomorrow should be very interesting and hopefully some fun.

API Oil Inventories

Earlier today I wanted to remind everyone in USO how volatile recent inventory  prints have been especially the API inventory with the EIA tomorrow morning, often reversing whatever SPI might have gained, not typically on the draw as this is the 3rd consecutive week, but on the increase in oil production.

Once again the API inventories released at 4:30 p.m. came in at a 3rd consecutive weekly draw of -2.9 mn bbl, which sent Crude futures up and then right back down, perhaps because the draw was less than last week's -6.7 mn bbls. Tomorrow EIA inventories should give more clarity at 10:30 a.m.

A look at the immediate knee jerk reactions...

 The API print first pumped oil higher, then it dumped back down again.

Intraday crude futures looked like this.

For the other timeframes for crude futures, see today's update, Crude Futures.

CONTEXT

I was asked about this earlier today, I didn't take a look at it until someone else brought it to my attention, but if you look at all of the professional risk assets and their performance vs. the market today as posted earlier in, Pre-F_O_M_C Market Update , it makes perfect sense since CONTEXT for ES futures' model is built using institutional risk assets.

Here's today's model vs. ES, which is not surprising and exactly what was being posted yesterday in reference to when sentiment means too far to one side,

The one thing I don't like is the increased market perception and fear, that tilts the ship too far one way and it's very lucrative for Wall Street to rock the boat in the other direction quickly, stopping out or triggering trades, it''s short term maneuvering that has little to do with the bigger picture, but it makes them money."

The comments above from yesterday taken with the 1-day oversold condition and today's Leading Indicators linked above all fit together perfectly to explain the difference between ES futures and the CONTEXT model. A definition of the CONTEXT model:

The CONTEXT framework attempts to distill the world’s ‘risk’ asset-classes (interest-rates and curves, credit risk, FX carry, commodities, and precious metals) into a single-measure that can be judged against the US equity market in order to comprehend potential mis-pricings (or technical flows and liquidity impacts). Institutional and algorithmic clients tend to use CONTEXT as a confirmation tool for positioning against (or with) a trend. CONTEXT provides a 24-hour-a-day real-time indicator of the world’s risk appetite and whether US equities are over- or under-pricing that risk.

And today's model vs ES...

The CAPITALContext Model vs ES. with a -40 point differential, meaning ES is 0 points rich to professional risk assets' behavior today as already seen earlier in the Pre-F_O_M_C Market Update post. This is also right in line with a 1-day oversold bounce as illustrated in the Daily Wrap Internals last night.

VXX Trade Positioning

I couldn't be more thrilled with the way VIX/VIX futures (short term) held up vs the SPX today. If I had the opportunity to close out the VXX July 17th $18 calls this morning on a SPX pullback to yesterday's intraday lows early today (this did happen in SPX futures last night around 4 a.m. EDT), this is around the area I'd start rebuilding the position, likely in two parts. The first part as the reversal process gains a little more maturity which can be hours and the second and the additional intraday charts lead sharply. I suspect by the relative performance in VXX/VIX today, this will be ready sometime tomorrow, most likely before 2 pm.

 VXX 1 min-Even on a 1 min chart, the m,pst sensitive, therefore the most extreme looking the divergence, there's a very limited, very small relative negative divergence which is the weakest form.


The leading positive at the end of day is far superior to the top/negative.

Often the leveraged versions of the underlying will have stronger /earlier signals. Still on this 2 min chart of the 2x long VXX, UVXY, again, the negative divergence is very minor, almost nothing more than an intraday steering divergence.

 UVXY 3 min showing the same as well as a larger positive under construction.

 XIV is the inverse of VXX, it moved WITH the market, it is leading negative intraday and not a small 1 min divergence like VXX above.

XIV 5 min leading negative shows the problems were there well before today.

 VXX 15 min leading positive and what I suspect will be revealed as a head fake/stop-run below the yellow trendily where 3C is REALLY leading.

 VXX 60 min needs no commentary.

As for the reversal process, it is typically proportional to the preceding reversal and trend. To the far left the reversal process for a downside move and a larger downside move than today is a certain size. The bottom reversal process also is guided by this proportionality, although bottoms are often tighter than tops, but it is proportional to the preceding trend. Today's top reversal process is quite tight, it would be proportional to today's move.  Even though bottom reversal process' are tighter than tops, I still drew it a bit larger, although not much.

I'd be looking for the process to complete and for the appropriate intraday divergences to accompany the reversal process. I'll update these as they build tomorrow.

Sentiment Changed, Mission Being Accomplished

Our Sentiment updates from the stream via one of our members just came in about an hour ago before the last post was published with the Sentiment trap, again I got this update AFTER the last post...

"FYI twitts are super bullish with today's price action"

(with some examples)

""So nice of ES futs to give us all another chance to buy the lows overnight"

"$SPX above $2098, clear skies for a few days or weeks."

"2 days of $SPY. The overnight session with new lows never happened."

"Janet is coming to town."

"the target would be in the 2115 "

"looks to me like market is saying to all these people that say let it go down 5%, then buy ...We gonna screw you"

Like I said, it doesn't take much, now where do you think all of the stops are lined up?

Sentiment Flip-Flop

I mentioned the overwhelming bearish sentiment of the "Fear and Greed" index, this as the market was just some 3% off the recent all time highs and actually, yesterday (June 15th).

This is part of what I was talking about in setting support at the 150-day sma for the SPX and how stops would line up there. Yesterday was pretty clear we'd get a 1-day oversold bounce and interestingly just as the Fear and Greed Index was registering overwhelming bearish sentiment. As I said just yesterday in seeing the market ready to shake-out the newly bearish traders,

"The one thing I don't like is the increased market perception and fear, that tilts the ship too far one way and it's very lucrative for Wall Street to rock the boat in the other direction quickly, stopping out or triggering trades, it''s short term maneuvering that has little to do with the bigger picture, but it makes them money."

This is the Fear/Greed Index form YESTERDAY, the 15th...

EXTREME FEAR just yesterday triggering the comments above also from yesterday, And What does Wall Street do when the boat is leaning too far in one direction? They take advantage of it.

The daily SPX chart with the failed head fake move in May and the recent support created at the SPX 150-ma which was already getting attention.  As I said yesterday, "Now all of the stops will be at the 150-sma".

Today's 1-day oversold bounce has created a short squeeze of all the newly bearish traders, on the squeeze and resulting sentiment shift as it only takes hours on a decent move, where do you think all the stops are lined up?

What is interesting today or rather this afternoon are the following charts...

 Last night in the Daily Wrap in talking about Index futures, I said,

"As for futures, it's a bit early, but the ES intraday chart doesn't look good here...This is an even narrower, sharper "V" bottom than we saw last week, however ES 1 min has gone deeper leading negative since the close, maybe it comes down overnight..."

That's EXACTLY what it did, see the ES 1 min chart overnight with yesterday's cash close (4 pm EDT) at the red arrow and the 3C negative divergence after the close which led to the statement above as well as price coming down overnight around 4 a.m. (just after the European open) to the intraday lows from yesterday. I was ho;ping the cash market would do the same today for trade management of VXX, but beyond very short term management of VXX, it's actually not a bad thing we didn't get the intraday lows in the cash market.

If you recall last week's price action, it was forecasted to be short lived because of such a narrow "V" shaped bottom, the bounce lasted 2 days before failing and that was a larger "V-shaped" base than this week (a little more like a small inverse H&S and a better 3C divergence).

Last week's "V" which was wider with a better divergence that lasted 2-days before failing and yesterday's "V" which I hoped would widen out this morning before heading higher to take VXX gains off the table, but it may have been better that it didn't make a wider base as this is weaker than last week's.

And intraday the ES/SPX futures chart going negative

The NQ / NASDAQ 100 intraday Futures going negative.

As well as the Russell 2000 intraday Futures going negative.

Price action is VERY reminiscent of a short squeeze with few if any pullbacks intraday, which makes perfect sense with yesterday's sentiment extreme (bearish).

However what is most interesting as the NYSE TICK Index starts to fail intraday...

NYSE TICK Index falling out of the channel

...Might just be the VIX futures, the real VIX futures...

These are the intraday VIX futures. You already saw how much better VIX/VIX futures are holding up vs the SPX and now they are turning from the pullback expected which is why I wanted to see an early SPX pullback to intraday lows to close the VXX calls, but that may have been short sighted as it should have created  stronger base area, as it is now  the VIX intraday futures are turning from the expected pullback to positive .

Taken with the Leading indicators, the predictability of sentiment going to a fearful extreme with a clear  and defined support/stop area at the SPX 150 ma, this looks like the boat was rocked the other way, as I said yesterday, it's short term extra cash, it has little to do with anything and the market was already in a short term oversold condition as of the close.

Suddenly the close is getting very interesting pre-F_O_M_C.

Pre-F_O_M_C Market Update

There's a lot going on right now that makes it difficult to judge which assets are reacting to which events.

As I said yesterday, the $USD has a positive divergence and the Euro a negative divergence suggesting the EUR/USD moves lower. In the absence of any Greek trouble, I'd assume there's a pretty decent leak pointing to a rate hike tomorrow, a June Rate Hike would be most surprising for the majority as consensus is around September. However Greece is a factor and now this weekend is being called the Lehman moment for Greece. As I mentioned before, Lehman alone was bad enough, it was everything that was unexpected like the complete lock up of the financial system and interbank lending because no one knew who had what exposure to subprime, thus the entire interbank overnight lending structure froze and before you knew it companies like GE were less than a week away from not being able tomato payroll, I doubt most would expect GE to be one of the immediate possible casualties of a financial crisis that mostly effected banks. In the Greek case, this not only effects banks, hedge funds, the ECB, IMF, European governments and independent central banks, it's the default of a nation.

Thus the Euro could be reflecting that situation and since the $USD pretty much moves opposite the $EUR, its divergence could be reflecting the Hellenistic drama coming to a head. IF you really want something to twist your mind, imagine a rate hike and Greek default the same week explaining both signals!

In any case, the overnight futures did come down to yesterday's intraday lows as was mentioned in last night's Daily Wrap:

"As for futures, it's a bit early, but the ES intraday chart doesn't look good here.

This is an even narrower, sharper "V" bottom than we saw last week, however ES 1 min has gone deeper leading negative since the close, maybe it comes down overnight..."

That's EXACTLY what happened. Of course the internals were strongly pointing to a 1-day oversold condition in the market yesterday and a green close today, also from last night's, Daily Wrap:

"As for internals...

All but the Dow had a Dominant Price/Volume Relationship, it was Close Down/Volume Up, a 1-day oversold condition with 50 NASDAQ 10 stocks, 972 Russell 2000 stocks, 217 S&P 500 stocks...

In this case, this is a 1-day oversold condition and makes sense given the SPX's support at the 150-moving average and "hammer-like" price closing candle...

Of the S&P sectors, only 1 of 9 closed green,  again a 1-day oversold breadth condition...

Of the Morningstar groups, only 23 of 238 closed green, AGAIN A MASSIVE 1-DAY OVERSOLD condition. I see no reason the market shouldn't correct from here"

And then there was the "roof " on the bounce, again from last night and yesterday, it is the VXX 5, 10 and 15 min leading charts.

Today's price action makes PERFECT sense given the internals yesterday as they were massive 1-day oversold which almost always results in a green close the following day. I was hoping that the overnight tag of yesterday's intraday lows would also occur in the cash market, but so far not to be.

What is interesting about today (which we saw hints of yesterday, Leading Indicators Continue to Fall Off a Cliff and late last week), is the following:

 I have inverted the price of the SPX (green) so you can see the relative performance difference between VIX and the SPX, normally as they move opposite together, when you invert the price of one or the other they move exactly together. Here we see a much stronger relative performance from the VIX intraday for the last 2 days especially.

And we see the same which started late Monday afternoon and has carried through all of today, PROTECTION IS MASSIVELY BID DESPITE THE OVERSOLD BOUNCE OFF LOCAL AND MEANINGFUL SPX (150-day sma) SUPPORT.

In addition, Pro sentiment again refuses to chase risk/the market just as yesterday, just as the trend since May.

I'll admit there are some crazy signals here and there that are tough to make sense of, but this is the easiest to understand, Pros are not willing to chase the market higher here, instead they seem to be selling it.

Interestingly as the first lever the market often turns to for help on the upside, HYG-High Yield Corp. Credit has maintained a deep leading negative divergence vs the SPX.

 60 min High Yield Corp. Credit (blue) vs the SPX (green) with a huge leading indicator negative dislocation.

However to get off today's oversold bounce (this is based on breadth and not indicators and usually a 1-day oversold condition) it seems HYG was used, although to a limited capacity.

HYG leading negative vs. SPX yesterday and while lagging, still helping out today.

As a long time Leading indicator that seems to be working again recently, Yields also are interesting.

30 year Yields led the SPX higher as it was leading at thee white area while the SPX was still making a lower low. HYG led to the downside a good day before the SPX followed to the downside,  which is what a Leading Indicator should do.

There was reversion to the mean at the small green arrow (short term any way) and today, 30 year yields are not participating, not leading the market higher, but rather leading lower.

Commodities which were also a fantastic leading indicator until QE distorted them and inflation in commodities caused the F_E_D to react to stamp out inflation in them several years ago, but recently with no F_E_D intervention other than rates, commodities seem to be working again recently like Yields as a leading indicator, in fact confirming yields nearly perfectly.

Again commodities (brown) vs the SPX (green) lead the market to the upside by at least a day (white), then lead to the downside by almost 2 days, then revert to the short term mean (green) and again today like yields refuse to confirm and are in a leading negative position.

Then High Yield Credit (not the same as HY corp. Credit), which will often move with the market on a very short term basis on a day such as this, has been leading the market to the downside since the May head fake move  or failed breakout above the SPX triangle.

 5 min HY credit leading the market to the downside since the head fake move in May, right where I'd hope to see them leading to the downside. However to the far right you can even see it today and HY credit will often make small bounces with the market just as pro traders will take short term trades like the middle men, Market makers and specialists, but not today.

A closer look at today reveals HY credit making lower highs and lows since yesterday.

Leading Indicators / Pro assets that retail rarely trades are not buying in to today's 1-day oversold bounce expected from internals last night. That tells us quite a bit, despite a lot of near term charts that could have double meanings or be reflecting one situation or the other.

And one average that I would have hoped would have bounced today, WILL NOT confirm either and remains in the red, Dow Theory's Transports vs Industrials...

Green=Dow-30 Industrials and Blue=Dow-20 Transports, the red histogram shows relative performance between the two.

Until I get clearer intraday signals, these charts are telling us CLEARLY, that smart money is not following the market even for a quick buck in some of the more humble assets that could follow such as HY Credit.

Protection is significantly bid today as seen above (the first few charts of VIX/VXX vs SPX) and if that wasn't enough...

There are interesting 3C charts such as Financials, one of the groups most say should be outperforming and thriving i n this environment...

XLF isn't only not thriving recently, but not today either which is one of the reasons for the very recent, Trade Idea: XLF Trend (short).

But even more telling in my opinion, the rock charts that aren't moving.

I knew VXX was likely to see downside today based on internals alone, but even intraday 3C charts, but it's the strong charts like this 10 min (between the 5 and 15 that are very strong) that not only is positive and leading positive, but looks like it put in its head fake move as well.

Or HYG, anything beyond an intraday oversold bounce should have seen HYG accumulation first.

 Intraday 1 min HYG has the sharp "V" base that the market has (cash), but it also shows the most sensitive chart to intraday underlying trade, the 1 min going negative through the entire day, doubtful it holds long.

Much more likely is the HYG trend which is already in a primary downtrend and headed for a new lower low (There are 3 lower highs and lower lows on a primary trend basis- HYG is in a bear market and moving toward its 4th lower low on a primary trend with 3C confirmation all the way).

THERE ARE SOME SHORT TERM CHARTS I DON'T COMPLETELY UNDERSTAND OR HAVEN'T FINISHED THEIR SIGNALS, BUT THIS IS WHY WE AREN'T LAZY AND WE LOOK AT AS MANY PIECES OF THE PUZZLE AS WE CAN.

I'LL LEAVE YOU TO DRAW YOUR OWN CONCLUSIONS ABOUT WHAT YOU SEE ABOVE.