TYP Update

 TYP vs the NASDAQ as they are similar, its trading pretty much inversely as an inverse short on tech.

 The 1 min showed a negative divergence which seems to be playing out now.

 The 5 min shows a larger base and what appears to be a pullback .

 The 15 min is still leading positive and not really negative as the red arrow indicates, but in line.

And here's the 60 min which again seems to show a decent size base in a leading positive divergence, yet to break out.

Data Leak?

Did anyone else just see a trade go through on the SPY at $122.83?

Market Update

DIA

 DIA 1 min was negative right off the open, around 11 a.m a positive divergence and currently a negative divergence for intraday movements.

 DIA 5 min showed problems yesterday, the gap up today was also negative right at the open, again a positive divergence around 11 a.m. and currently negative-this effects the intraday trend, but a bit longer then the 1 min chart.

 DIA 10 min shows a negative opening gap and in line status.

 DIA 15 min reflects the negative opening gap, the same 11 am positive divergence and the same negative divergence now, this is a close up view.

 DIA 15 min The wider view shows a lot longer term trouble here.

 DIA 30 min has seen a lot of damage done in the last day and a half by way of a leading negative divergence.

 DIA 60 min the long term 60 min chart is leading negative and as price is near new highs for the last several months, 3C on this VERY important timeframe is near new lows, a VERY strong negative divergence effecting trends that can last weeks and even months.


QQQ

 QQQ 2 min shows the negative opening gap-a perfect fade and in line status now.

 QQQ 5 min chart shows the same on the open and a slight leading positive divergence intraday, the QQQ has taken the worst hit today so profit taking and consolidation aren't surprising.

 QQQ 10 min shows several days of problems and is in line now.

 QQQ 15 min chart has been in line on the way down, there was a slight positive divergence yesterday at the close, which played out in an opening gap up that was distributed almost immediately, currently in line.

 QQQ 30 min chart shows long term trouble.

 QQQ 60 min also showing the major trend as being in long term trouble.


SPY

 SPY 1 min a negative opening gap this a.m. and a negative divergence on the intraday bounce.

 SPY 5 min-several days of trouble, another negative divergence on today's open and the same 11 a.m positive divergence.

 SPY 10 min also showing a few days of distribution as we made new highs, not surprising, this is how Wall Street operates, currently leading negative, short term in line.

 SPY 15 min This chart shows clearly distribution in to price highs, as I always tell you, Institutional money needs demand to sell short/distribute and new highs create that demand as Bulls chase break outs, Wall Street is able to go under the radar selling short simply by taking the other side of the Bulls' trade and no one notices anything. Again, currently leading negative.

 SPY 30 min this is another fantastic example of my comments above. This is a visual map of Institutional distribution and short selling. There's a lot more to price then just price if you know what to look for. A rally is not always as bullish as it first appears.


SPY 60 min And we have long term and short term leading negative divergences.

The Summit Has Started

It is nearly impossible to follow all the news and decide what is moving the Euro from here to there. The one thing that seems clear is that plans should have been in place long ago and it seems th Finance ministers are flying by the seat of their pants. Angela Merkel's most notorious statement to the German Lower House in getting them to vote to give her negotiating authority was, "We shouldn't take another 50 years of peace on the European continent for granted", that's pulling out the big guns of hyperbole, but may not be that far from the truth at some point as former Core countries like France have now become the target of bond vigilantes just like Greece, Ireland, Portugal, Spain and Italy.

If the S&P downgraded the US over its ability to work together regarding the debt ceiling, what would they do to European countries, it would be much easier to imagine if the EU was more akin to the United States rather then 17 or so sovereign nations using the same currency, but it doesn't look good for France.

As far as the banks seeming resistance to take hair cuts on EU member countries (mostly PIIGS) bonds, this creates two dilemmas. 1) Their is no credit event triggered in which the banks take write downs from anywhere between the originally agreed 21% to the now talked about 50-65%, this would blow out banks capital reserves and many weaker banks would fail.

#2) A Credit event is triggered and the banks get some form of insurance relief from Credit Default Swaps meant to protect their bond holdings, the problem is many of these banks have written the swaps and sold them, so they take an immediate hit. In either case, it seems almost inevitable that the EFSF has to bail out banks and the current $110 billion is a drop in the bucket compared to the over $1 trillion dollars in exposure, BUT NOBODY KNOWS FOR SURE because after 3 bank stress tests in the EU, the EU still doesn't know which banks have exposure and how much. How they can form a recapitalization plan which is riddled with mines is a pretty scary question when they don't even know what they are up against. Why don't they know this by now?

Furthermore, we are certainly going to hear how the member state are committed to raising the $440 billion dollar EFSF leverage, but I would bet a dime to a donut that there is NO specifics as to how, because they simply don't know. As one finance minister warned on Sunday, Greece alone could swallow the entire EFSF at this level. And don't think that Ireland, Portugal and eventually Spain and Italy will expect the same bondholder haircuts that Greece will likely receive.

While it seems that the PIIGS are the ones at the mercy of the ECB/EU/IMF/Troika, the core nations like Germany and France realize, it is in fact the PIIGS that hold all the cards.

What a mess.

That Didn't Take Long...

 The SPY at last update was green, not anymore.

 So was the IWM-"WAS"

 The Q' are leading the pack still

And the DIA isn't far behind.

And the Euro.... I think maybe the correlations aren't quite what they usually are.

In fact they are not

Looking at the red-EURO close yesterday, it has clearly set a new low, the DIA is pretty far from that.

In fact, judging be recent correlations of a 1 pip move in the Euro equaling 2 DOW-30 points, we should see the DOW-30 at $11538 as it stands now, it's $11737 a discrepancy of 199 points!

More News out of Europe

So far it's not shaping up well and what smelled like amateur hour Sunday is now being confirmed.

• EU Official Says Bank Heads Won’t Be at Summit Table Tonight
  
• EU leaders may frame agenda for more bank talks on bondholder losses in 2nd bailout
  pkg for Greece.                     
  
• Says IIF doesn’t entirely represent private bank

• Says Greek debt swap would take several weeks

How can bondholder haircuts, one of the centerpieces of the "Save Europe Summit" be decided if the banks refuse to come to the table today?

We have been led to believe that the IIF represented the banking interests in these bondholder negotiations. This second headline sounds a lot like some banks (who knows how many) may have been represented by the IIF until talk of bond holder haircuts (and they are a large section of the bond holders) started drifting higher then 21% to 50% and now announced today 65% or more. It sounds like the banks are saying, "We will not do this voluntarily, let a Credit Event be triggered!"

The last point sounds like they are just buying time on the previous point.

What have the Finance Ministers been doing over the last 2 years? It seems like nothing has been considered until Sunday night.

US Housing Data

The median US home price just saw its biggest 3 month decline EVER! This is the lowest number in 2011 and just above the decade low.

USO Update

Oil is down on the Wednesday Inventories report, remember who oil was tracking out of sync with the Euro/Dollar, it was strange. You can check out yesterday's late morning post on USO and see what I am talking about

Any way, look how much 3C damage was done especially late yesterday to USO.

 I've highlighted this 5 min chart only with the leading negative divergence from yesterday.

 The same with the 10 min chart

And the same with the 15 min chart, look how bad USO looked in to the close.

hmm?

The averages are all over the place

Except for the Q's they all opened at about the same relative level, however the SPY is +.32$ the DIA is +.80% the IWM is +.28% and the Q's are -.35% while the FXE/EUR is -.30%

So much for Dow Theory today.

Volatility

As I said yesterday, today and tomorrow's Bank of Japan meeting will be volatile, tomorrow is almost a guaranteed bad day for the Euro and thus the market as Japan is expected to try to save their currency.

Early this morning trade was flat and boring until the German Bundestag gave Merkel the authority she needed to negotiate in Brussels today sending the EUR and market higher on news that was priced in days ago.

The short lived lift to the EUR came as the world of finance realized these talks are nowhere near complete and they are still at an impasse over Greek bond-holder haircuts.

• EU TALKS WITH BANKS ON GREEK BOND LOSSES SAID TO BE DEADLOCKED 
• EU TALKS 'PAUSED' ON A DISPUTE ON INSURING RISKS OF NEW BONDS
• EU official says dispute centers on insuring risk of new bonds.
• Involuntary Greek haircuts can’t be ruled out
• EU Said to Consider Limits on EU-IMF Loans in 2nd Greek Rescue

Expect there to be a lot of these news items today and thus a volatile day.

Here's the Euro's reaction to both events.