Quick VXX Update

Remember the SPY 1 min chart, it's a mystery to me, it doesn't make sense, but this is how Wall St. operates, making the most number of people wrong at any one time just as it did when sentiment was at a bearish extreme early this week, what did Wall St. do? flipped the boat as we expected Monday.

As for the 1 min SPY positive, it has a slightly confirming VXX 1 min, this is why I have not put out the trade idea for VXX yet, despite so many other timeframes looking great.

VXX 1 min intraday EOD negative divergence that confirms the SPY 1 min positive. This is VERY short term as in early next week, likely early Monday depending on the close.

This should bring VXX down a little which makes its reversal process that much stronger, I suspect that's where out entry will be. So despite all the Lehman / Greek Weekend" talk, I have to go with what I can observe, even if it defies logic.

As the Week Ahead post presents, I'm looking for some limited early strength in the market/weakness in VXX very early in the week/Monday and very short lived. I suspect the rest of the week we see a move that ends up slicing through the SPX 150-day moving average where all the stops are lined up.

The Week Ahead

Short term charts are definitely mixed, but this is more or less short term noise and in the case of a trade like VXX, that noise can be used to enter a nice long position, but if you don't need to thread the needle, I'd be fine with taking them here.

I think the short term chart craziness reflects knee jerk possibilities over Greek news. We've all been wisely conditioned not to expect much from Greece, but this is now a country with the clock ticking down. I can't figure out why the ECB keeps extending them just enough Emergency liquidity to just about even out the outflows each day and I can't figure out why after the horrible failure of a EuroGroup meeting yesterday, Tsipras would go to such trouble as to get an emergency meeting scheduled for Monday and why the Troika who clearly thinks or says Greece is not serious, would give them the chance. So the very near term looks a bit cloudy, although I doubt smart money is carrying much of anything in to the weekend which is largely what I think this week was all about, not just the close today.

As suspected on Monday, the second tag of support at the 150-day moving average set up the bounce of the level we expected Monday, all indicators show that risk was dumped in the middle of the week (yellow arrow),  that seems to have been one of the main reasons for the move other than a sentiment extreme which was bearish at the start of the week, which makes it even easier to flip the script and have demand to sell in to on a typical strong counter trend move. Remember, this week=COUNTER TRNED move.

As far as Leading Indicators, they are all still negative, pro sentiment, 

 Our first pro sentiment indicator...

And our confirmation secondary- neither bought the move this week, in fact the opposite.

HYG was used as a lever because the market needed it, no strength on its own. As for today...

 HYG has been nearly perfectly in line leading the market as a short term manipulation lever as seen last night, today it weakened from that position intraday.

As for the 3C charts, they never offered much HYG support at all, they may need to manipulate the market higher to exit positions, but they aren't risking much to do it.

 1 min intraday trend of HYG with some minor positive support early in the week as the SPX 150-ma was tagged for a second time, giving traders some confidence in a bounce off extreme bearish sentiment.

The stronger 3 min chart shows almost no support early in the week and distribution throughout the week, I do expect HYG to make its way to a primary trend lower low which is already significantly dislocated to the downside vs the SPX, in a bear market.

 Yields which have recently been acting as a good leading indicator are negatively dislocated to the downside, they tend to pull on the market like a magnet meaning SPX lower in to next week is the highest probability by far.

 And High Yield Credit can't keep diverging vs the SPX like this before the SPX has to move lower toward HY credit's reality. None of this week's move was chased by pros.

And of course longer term Industrials and Transports remain at a significant divergence or non-confirmation for Dow theory fans.

As for short term charts, I don't think anything overcomes the news and we really don't know what the news is going to be. However thus far I have not put out the VXX long call/add-to call, one of the reasons is this SPY chart (1 min), if we close like this then the concept of 3C charts picking up where they left off kicks in and the most probable outcome would be some early week/Monday market strength, but this is largely the SPY with little confirmation in the other averages. I suspected this would lead to an end of day bounce, but it's looking more like early next week/Monday morning price action.

SPY 1 min.

As for the IWM, the best it has was in line today...

 IWM 1 min in line-price confirmation all day today

That's about the best and don't forget, this is VERY short term.

The larger trends and higher probabilities are quite negative thus I think we see significant downside next week, but beware the Greek rumors unless sourced.

 At the next chart, 2 min SPY there's NO migration of the divergence so it is weak and stands alone. The 2 min chart shows the same as everything else, distribution in to this week's price strength.

 SPY 5 min leading negative

And IWM leading negative

As for futures, the short term charts are cloudy as well...

However the ones that matter....

 TF/R2K futures 3 min leading negative, so the short term 1 min in line or SPY 1 min negative, is trumped by the 3 min chart, it's just the 1 min chart is the most immediate price movement.

 TF 10 min leading negative

NQ 10 min leading negative

ES 15 min leading negative

TF 60 leading negative.

It's a bit of a mystery , if we don't rally in to the close, why the SPX would bounce early in the week, I'm NOT playing it, but will use it to enter VXX longs or additional shorts.

The longer term trend charts through this week look horrible, it was a hollow counter trend bounce off the 150- I suspect we slice right below it next week.

Quick Market Update Before I Go Through Charts...

I'm getting ready to go through my "Week Ahead " charts so I'm going to give a quick update before I do.

The market doesn't look good to me and nothing from last night's Daily Wrap has changed, which is probably what the Week Ahead forecast is going to look like, but intraday, as the op-ex pin ends, we get some noise and in the case of a bounce intraday, this noise would be a big help for the VXX long position.

This is by far the best intraday reversal set yup I've seen, but it is a change of character and that usually means a chance of trend, just be mindful that these bounce signals are on the weakest intraday charts, they are not something (at this point) I'd consider a move in to next week.

 1 min SPY intraday,  this has not moved to a 2 min chart so it looks like an intraday bounce. maybe gap fill, only. While I doubt it, it could also be a string divergence just to hold the SPY in place for op-ex, but I'm leaning more toward an end of day bounce,  nothing I'd consider as something going in to next week.


 The intraday DIA chart (today only) is also showing a similar positive divergence, again it hasn't moved past a 2 min intraday chart, so I wouldn't expect much more than an intraday move.

ES intraday with a positive divergence in to this flat range-isn area.

 NQ with a similar intraday 1 min divergence. Again, the weakest timeframe of all of the ones we look at.

The 15 min Es chart shows the bigger picture and trend of distribution, much stronger, this is more what I'mm expecting in to next week, but I need to go through all of the charts for the Week Ahead before saying that as if it were the Week Ahead forecast.

The NYSE TICK has broken the early down trend and is above the channel.

Our Custom TICK indicator shows the early weakness today with improvement in internals this afternoon coming up on the 2 pm hour.

I'll have more shortly.

VXX - VIX Futures

This post has been hours in the making, I apologize.

Yesterday I covered VXX here, VXX / VIX Futures. The gist is I like the way it looks, I like the relative price performance VIX/VXX has been showing vs the SPX all week, I just don't believe in sharp "V" reversals holding up and there's a particular reason for that. We enter trades at 100 shares at a time or whatever the case may be, but it's much different than the size Pros trade in and the support for these moves is coming from the pros. For the size of their positions, they need time to enter without triggering the supply/demand dynamics that send price up and away from their position ( a bad entry), thus they have to do it in smaller chunks, but much larger orders. This is essentially what the reversal process is if I had to describe it in a paragraph. Of course there are many more subtleties involved, but that's a rough description and reason for a reversal process.

I also said I wanted to see the 5 min VXX chart at a new leading positive high, this is the evidence of pros accumulating through the reversal process.

As I'm writing right now I see the TICK is breaking the intraday down trend change, which believe it or not, I actually like for VXX and setting up a long position/add to, etc.

So lets take a look at where we are now...

 VXX (VIX Short Term Futures) 1 min showing the negative divergence that suggested a knee jerk reaction pre-F_O_M_C on Wednesday, here's the post showing the change just about an hour or so before the 2 p.m. F_O_M_C on Wednesday, Market Update and Initial Trade Plan.

Note the rounding-like reversal process in VXX, this is what I was talking about yesterday. A bounce in the market in this area would bring VXX down a bit and fit a bit better in to the reversal process so it's  actually a good thing for the bigger picture.

 XIV is the inverse of VXX, it moves with the market rather than against it like VIX or VXX. The 1 min negative divergence is confirming the VXX chart, this too is a reversal process, but to the downside.

 At the VXX 3 min chart we are cleaning up some of the short term noise and unveiling more trend, it is leading positive so that's good.

 However, the chart I specifically mentioned yesterday was the VXX 5 min which had been leading positive, but not at a new leading positive high which is one of the criteria I wanted to see before entering or adding to a VXX long position. Today we have that new leading positive high.

 However there's an even bigger picture to this chart, VXX 5 min.

This shows (to the right) a "W"-type base or reversal area, the divergence in the area has progressed and become stronger.

 The 5 min XIV (the inverse ETF of VXX ) is showing a confirming 5 min leading negative divergence that is hitting a new leading negative low today which is confirming the VXX 5 min above.

 UVXY, the 2x leveraged long of VXX and is hitting a new leading positive high as well, confirmation of VXX 5 min. There's a small head fake/stop run at the yellow arrow, although this is not the kind of head fake I'd use as an entry as it is so limited in scope and the volume-stops/shorts was noticeable, but not anything that gives us as an edge as to the head-fake entry concept.

The VXX 10 min chart is one of the majors I have been watching and it is leading positive after a period of 3C confirming the downside price action. I highlighted the area of the SPX May head fake area in yellow.

The 10 min chart of XIV, the inverse of VXX is confirming with the same trend confirmation to the left, except it is the inverse of VXX so it's an up trend, and then the leading negative in the area.

The longer term 60 min VXX is self explanatory as is..

The 60 min XIV.

It's the 5 min chart in VXX that shows a very interesting bottom formation...


This is something I can sink my teeth n to and the reason I have not been concerned about missing the short term exit in VXX calls earlier this week as I was willing to hold them if I didn't get the price concession Tuesday morning.

I do like VXX here a lot, however I do believe an intraday bounce as I expect from the market before the close, will make the trade that much better.

Intraday Bounce Likely Building

I apologize, I keep trying to get this VXX update out and I keep seeing things that are more immediate in nature, and in this case helpful for the VXX position. Now don't go panicking or anything like that, the price action from 2 p.m. onward to the close is pretty much irrelevant as it is often a false signal while the 3C charts the last 2 hours of an op-ex Friday tend to give us some of the best data of the week and it may not agree (usually doesn't) with price action in to the close. Which means I trust the 3C charts a lot more as to what Monday's open will look like than I do any price action from 2 to close on Friday, I consider it noise, most often deceptive.

This may not even be a bounce of any significance, but I want to show you as it actually would be helpful as you'll see in the VXX post for that position's reversal process.

You recall earlier I posted a possible divergence building that could either go to the noise side, or perhaps an intraday bounce, nothing more.

Here's what I have.

 This is an intraday 1min chart of QQQ, very minor, but there's a flat intraday reversal-like pattern and a small positive divergence here.

Note the negative divergence in to the close yesterday, remember the concept of the divergence picking up where it left off at the cash close/cash open and look at QQQ's a.m. price action, continuing with the closing negative divergence, just as a conceptual head's up.

 This is the QQQ 3 min intraday chart, very close (zoomed in), note the flat price range and the relative positive divergence 9the weakest form of divergence). Also note the concept of picking up where we left off with yesterday's closing divergence.

 The SPY 1 min intraday (zoomed in) has a positive divergence as ES was showing us first earlier and a flattish range.

 The SPY 2 min is leading negative so there has been no migration to this chart, this any bounce in the area is a weak one, it hasn't even migrated to the 2 min chart.

 As for the SPY 2 min trend, it's definitely negative.

Here's the same chart with no drawings, it's pretty clear yesterday's move saw selling.

As for the intraday TICK, it has broken the downtrend channel, not aggressively, but a change if character and changes in character lead to ...?

 Our custom TICK indicator has been deteriorating since yesterday, however...

Taking a VERY close intraday look, note the slight positive internals change to the upside.

This doesn't look like much of anything I;d be concerned about, but intraday it may be very helpful to positions like VXX long. It's not something I personally would trade, but that's me.

Intraday Bounce Likely

I'll follow up with charts next

Quick Market Update

Last night I recapped the week for you , what we expected and why and what I expect moving forward with links to all of the posts and excerpts, it's a decent run down of the week, but I think in retrospect it will also be a decent run down of our concepts, how and why. Here's the post, Daily Wrap.

The market behavior today looks like the expectations moving our way, I'm a bit surprised with quad witching, but I think the sentiment and perception that was recapped in the last post, Perhaps $USD Doesn't Pullback Intraday, explains a lot of that. It's looking like a VERY unsure Monday and that's essentially the reason for this week's/yesterday's move, someone was gaming the market as we expected Monday morning when support was made very obvious, so they could unload or short, etc.

I have alert after alert going off as the averages are tripping downside price alerts I set. Right now considering we should still be in the op-ex pin, I think it's a bit uglier behavior than we should be seeing until after 2 pm.

A quick look...

 ES 1 min is overall leading negative in a big way since yesterday's sharp leading divergence. There's a small possible positive intraday divergence to the far right, but I'm not putting a lot of faith in that as a signal as it could just as easily just be a transient movement, it's not screaming or jumping off the chart, but for the moment while we're in the area, I'd keep an eye on the NYSE TICK Index.

Thus far it has trended lower, no real extreme readings of any kind, not yet. Watch for a break above the channel, then there "may" be something to that small divergence.

TF/R2K futures are not showing the same, thus I don't put as much faith in it as there's not multiple asset confirmation and overall, this is an ugly chart that does jump off the screen.

As for the move this week, looking at a larger 10 min timeframe...

 NQ/NDX futures show a deep leading negative divergence at yesterday's move, which is what we saw intraday as well yesterday. Otherwise, other than a couple of divergences on the chart, 3C does a great job of showing in line or confirmation at the price trend, thus these divergences just stick out that much more relative to the inline/confirmation areas.

Here's the same chart without any of my scribble so you can maybe see it more clearly.

The same NQ chart as above.

I'm going to update VXX next and then I'm going to go through all of the Futures we track typically in every timeframe and start putting together the expectations for the week ahead, although I think the tone of last night's post, the Daily Wrap, pretty much makes my expectations pretty well known.