Time for Some Intraday Downside?

I want to take a look at the breadth chart, but I figured I should get these out now.

 DIA 1 min

 QQQ 1 min

SPY 1 min

Leaks Everywhere and that's the Market

This a.m. the possibility was raised here (raised yesterday in many venues) of Kocherlakota having seen a leaked NFP release from 8:30 this a.m. As Morgan Stanley said, "It's impossible, only the Fed chair sees the numbers the night before and wouldn't share it with other governors, much less regional bank presidents". Now the issue of Bill Dudley of the NY Fed having seen the same leaked material is floating around. The issue centers on his speech which was embargoed at news outlets, there was only and hour and a half between the time he could have filled in the NFP numbers for today which were mentioned and that time drops substantially when the fact that the speech was already at news outlets and embargoed so it is likely that he too saw the leaked numbers presumably from Bernanke.

It seems to be a question of semantics and who really cares if a regional Fed president sees a NFP release a day early. However, the more concerning question is the honesty and integrity of the news outlets like for example, CNBC who hold the embargoed speech in their grubby hands. Most of these guys are Wall Street alumni and you know as a reporter, being the first to break a story is a big deal. So whose to say they don't reach out to their former colleagues/golfing buddies on Wall Street with a little quid pro quo?

That's the reality of our markets. That was always the first issue I raised on the first night of my technical analysis classes, I showed them video coming from Cramer's own mouth of how he manipulated the market as a hedge fund manager and how others do routinely and best of all, his warning to all aspiring and current hedge fund managers, "If you're not willing to do it, you shouldn't be in the game".

This is why I follow the charts, I don't watch CNBC, and I use my time building indicators that help me understand what Wall Street is doing, why they are doing it is a question that won't be answered until it doesn't matter anymore.

Just to remind you, in the recent past, others such as PIMCO's Bill Gross have had some brilliant predictions the day before an economic release was due out so there's many roots to this garbage, although I suspect Gross is a lot closer to the trunk of the tree then down in the root system.

March ISM at consensus, inflation as expected.

ISM came in at consensus, but once again you miss the big picture if you don't take a look beyond the headlines. Prices paid on the last ISM (which was an increase from the previous report) was 82, consensus for this report was 82.9, actual print came in at 85!

New orders declined about a point to 63.3 and as you might expect, construction spending dropped (think LEN short).  Employment did grow at a decent pace, but as margins continue to contract, lay-offs are usually imminent.

Prices Paid has been trending up steadily since 2008, accelerating in 2009 (Bernanke's Quantitative Inflation) and now prices paid are only about 5 points off multi year highs, the chart I saw only went back to 2005 so it could be even longer.

Some Members / USO Traders Are Getting Paid

On March 17th, I said USO had enough accumulation in it that it should be able to take out the March high;  I've said the same thing 19 more times since then. Guess what USO just did?

 There's the March highs taken out, there are several traders who have been in on this move since then and have stuck with it (I believe some options traders too).

 We expected the pullback in February even as the trouble mounted in the Middle East. The Reason? Dynamics in the Middle East caused a shift in the outlook of oil and institutional money needed to get a position going to take advantage of it, so even while events got worse in MENA, oil pulled back and institutional money accumulated a fairly large position.

 Here's that accumulation and we saw the same again off the March highs (the divergence is there, I just haven't marked it).

On 3/23 a pullback for USO was posted, "Based on the closing action, the daily candle and the resistance zone of the March highs, this is an ideal spot for USO to pullback a little, it wouldn't endanger the uptrend and would be good to wring out any excesses."  The 23 is the doji candle just to the left of the white box. The target was the 10/22 day moving averages at the red trendline. Note that this was a 4-5 day pullback and it was completely normal and healthy, although during it I'm sure it caused some concern.


Now we have new highs. We could certainly experience some volatility as is usually the case when an important technical level is broken, it's just too rewarding for the HFT firms, however, just as we've stuck with this trade since February, I continue to believe USO will post even more gains so I remain bullish on USO and for all of you who held in there, congratulations.

LEN Follow Up

I posted LEN on Wednesday this week as a potential short saying the following,

" LEN has also shown less then ZERO relative strength. At this point a dead cat bounce would be most welcome in LEN and I think it's likely."


Today looks to be the start of that opportunity.

 Up 2.7% so far today....

Here's the 15 min chart, showing top side distribution and the positive divergence at the bottom for a dead cat bounce. I think it'll bounce for several days and I wouldn't pull the trigger yet, but I'd keep it on a watchlist and when the bounce momentum fades and negative divergences show up, I think this will be a great opportunity as the next leg down should take it out of the topping volatility zone.

Semis Once Again Showing No Relative Strength

The past few days I've been writing about the lack of relative strength in the semis and yesterday featured INTC.

 Once again, INTC is off on its own, wondering downhill.

Here's SMH (Semiconductor ETF), that's a waterfall on the opening gap.

Here's the SPY vs SMH (red) this a.m.

I think all the hawkish Fed talk this week has semis worried about rising rates which is a huge drain on many of these companies as they depend on borrowing for R&D. It remains to be seen if the market will show similar concern, I suspect it will.

Precious Metals

I'm not 100% sure what caused the PM's to gap up yesterday, but there were several warning signs with negative divergences at the highs of the day in both. SLV still remains stronger then GLD, presumably from increased demand in countries like India.

GLD

 GLD jumped back into the zone between resistance and support, it's now fallen back below  on some volume.

 Yesterday 3C didn't confirm any of the move yesterday.


SLV

 SLV jumped back above resistance to the breakout area, today it's in the same zone GLD was in yesterday and is likely to bounce around between support and resistance here for a bit.

 3 times there were negative divergences in SLV, each time at an intraday high or attempt at intraday highs.

On the 15 min chart both breakouts have shown distribution, 3C (compared to price) is now in the lowest position on this chart.

USO Early Look

USO is down a bit today, that can be expected on US dollar strength, but there was a gap created yesterday and filling that gap is not out of the question. If the gap is filled, USO still remains in a positive position; I would probably view it as an opportunity, however it's still very early.

Keeping it in perspective-USD

Yesterday afternoon I published this post after the Euro had seen an earlier parabolic move (it's worth reading the post again just to get a feel for some of the dynamics that caused this move)

After yesterday's late day accumulation and a signal in the Euro that often leads to a downside reversal, this a.m. the dollar is once again higher by .83% (UUP)

UUP has broken the first layer of resistance this morning, the second (the gap) isn't far off.

NFP Blows Out Consensus

Non-Farm Payrolls come in at 216k vs. consensus of 190k. Rumors are running rampant that Bernanke shared the numbers with Regional Fed Pres. Kocherloakota, which he presumably leaked and thus his hawkish statements yesterday about the Fed Funds Rate at 75 basis points in 2011.

Not that this is going anywhere, but only the fed chairman is supposed to see the numbers the night before. While pre-market is up right now, this is presumably not good news for the market and any hope of QE3, which would put an end to the speculative equity/commodity bubble. We'll see how it plays out. The report was not all good news as several sectors are lacking, manufacturing for example came in below expectations. Also the work force participation rate is the lowest in 25 years at 64.2%.