Limit Orders/Volume

Think about today for a minute, not good economic information on the whole, nothing out of Europe except decent market action and the Euro, the Bad news is good news effect doesn't seem to apply if you look at the QE sentiment indictor,GLD...

 The SPY's move in green, GLD's in red, or...

An easier way to view it is GLD's relative strength, not Wilder's Relative Strength (which measures one asset against itself), but just Relative Strength of GLD vs the SPX, it's pretty obvious the "Bad news is good news-QE hopes" are not behind this move. In fact looking at the move it seems very extreme, it's only a +.75% move which in normal markets is an average day that no one gets excited about, it's because the recent range market wide has been so dull, the last trading week before today in the SPY moved +0.24%, for all intents and purposes that is absolutely flat for a week, so a +.75% move seems huge.

In any case, not the point, the point...

 Drive volume, create openings and opportunities and apparently quickly, volume surged as SPY $142 was broken. If you look at the DIA, no psychological level was broken as far as numbers (the human mind gravitate toward whole numbers, thus everything in a store is $1.99 instead of $2.00).

The DIA saw the same volume surge, not on the break of anything technical, just at the EXACT same time as the SPY/SPX break of a psychological marker.

It will be interesting to see where the stops line up, I'd vote for $142 s being obvious and the $141.30-ish level as well.

The Sell-off in to the close?

That's what I was thinking several posts ago.

 They managed to get some volume in to this dwindling, record breaking volume-less market.

 However on a very parabolic move, seemingly on no news and no catalyst. I never trust parabolic moves up or down, they just don't seem to end well and the last 30 mins has been the most parabolic going in to the closing hour when the big boys come out.

Here's the most recent intraday parabolic move.

Risk Asset Update

 High Yield Corp. Credit...

 A longer view in which HYG is actually worse than the scaling shows as it didn't make a new high with the SPX at the red trendline.


 The high Yield Credit, Junk (JNK) on yesterday's sell-off

 JNK longer term as well with the same issue as HYG.

 $AUD


 Euro intraday seemed to get this party started, it's definitely  lost momentum. Over the course of history with FX legacy arbitrage, there's few times when the SPX and Euro or $USD don't revert to the mean, long term reversion to the mean is below.

 Euro/SPX

 The same has basically been true of commodities as a risk asset, but I think China is in more trouble than most realize as the port of Hamburg data showed this week.

 Energy intraday momentum v SPX


 Energy at major resistance, this is the pivot we are looking for, they're going to have to mke it scary though to get volume back in the game.

 Financials intraday have stalled v SPX momentum

 Again major resistance and the recent pivot, the big picture target is still the ascending wedge and a retrace of the base, ($11.50 area).

 TECH had a hot start, but is also cooling off here.

 Tech's pivot above major resistance, this is major resistance, still volume is really pathetic.

 Oddly TLT is moving intraday against the SPX -3 min chart.

Also another one of those leading positive moves in UVXY, I also find it a little strange it hasn't made a lower low today and is holding support.

NYSE TICK chart

You've probably seen me post the TICK chart for several different reasons, 1 reason is it acts as a breadth indicator and can be used as a leading indicator intraday for reversals simply by drawing channels and seeing is there's a divergence between the market and the channels on the TICK chart which is the sum of all NYSE stocks ticking up minus those ticking down.

I've put the SPY on the chart in white for reference, note the uptrend channel in the TICK chart is broken and a new downtrend channel has formed.

Market Charts

I'd guess we are setting up for a sell-off in to the close

 DIA 1

 DIA 3

 QQQ 1

 QQQ 2

 SPY 1

SPY 3

Quick Market Update

No more mushy signals, the divergences in the averages are very sharp now. I'll try to get some charts up soon, but I do want to look at the risk asset layout.

USO Update

Patience has paid off many times in the past, I think it will here too.

From the downtrend, in the yellow box we saw what Technical traders would consider a bearish consolidation/continuation pattern called a descending triangle. Some traders will short the price pattern, but many will wait for a break below the price pattern with expectations that a second leg down will start, roughly equal to the first leg down. However, THIS WAS A HEAD FAKE MOVE, as I often mention, 80% of all reversals see such a move just prior to the reversal and this happens on all timeframes. We could see this was a head fake move before it even broke down, I'll show you. The counter-trend rally retraced about 50% of the original move down on this chart, but volume is running dry. The recent 6-7 day range created an obvious resistance level, while the range itself only moved +0.03% over 6 days. The break above the range will bring some longs in on a break of resistance and open up USO a bit to some repositioning. Generally, in order to create income in trading, you (or they)  have to have someone to trade against, everyone on the same side of the boat makes them no money and when volume starts running dry, it's time to shake things up.

 This is the simplest chart of what happened above, a 4 hour chart reduces noise and smaller divergences and uncovers the larger trends. USO went negative at the top, saw downside confirmation (green arrow), then a head fake move at the triangle which is at the yellow box-*Note the accumulation in to the bearish price pattern and break below it, these shares were accumulated, there was mark up and trend confirmation and then they were distributed/shorted.

 The 60 min chart is more detailed, here's the head fake bearish triangle break down in yellow with a positive divergence meaning those shorts providing supply by selling, were having their shares accumulated, this is a head fake move or false break. After a period of mark up to make money on the shares, they are distributed in to higher prices, the divergence is sharper on the 60 min chart.

 The 30 min chart shows all the same themes at the same time, but gives additional details and is sharper as well.

 After mark-up, here's the 15 min chart with distribution in to the top, USO breaks above some resistance areas bringing in longs or demand, which can be sold in to or shorted as 3C drops to a leading negative low.

 So now to the short term charts for timing, I was waiting for this 1 min chart to go negative to fill out the position, you can see where it did to the right.

 The 2 min chart also went negative providing confirmation of the 1 min chart and showing the divergence is stronger than just a small move on a 1 min chart.


The 3 min chart also went negative, the same reasons apply as the 2 min.

The 5 min chart never moved up to confirm.

I Think USO Time Is Here

I've been patiently waiting for this move in USO, I thin it's time now to fill out the equity short I've been waiting for which will bring the USO equity position to a full position, adding the final 1/3rd.

Market Update

 This is Financials, all of you probably remember me complaining yesterday about "Mushy" signals, not the kind of signals that stand out and those are the ones that really are where the probabilities are, some of you may also recall in the past that I have mentioned, "Often we need movement to get signals", this isn't a deficiency in the indicator, it's simple market mechanics. If you are a hedge fund manager and have a 10 million shares position in AAPL you want to move, but AAPL has stayed in a range of -0.14% for a week as it did between 8/6 and 8/10, you can't do much with those shares. Just try putting out a 10k block and see how price gets knocked against you, but when you have movement that brings retail and others in to the market, you have options, when you can trigger limit orders on a "conformed breakout" you have volume to work with, when you can run stops, you have supply and volume you can work with and this is why movement creates signals (in certain market stages this is not true, such as a trending market that is confirmed). Look at yesterday's signals in XLF compared to today's, mushy vs definitive.

 Financials 2 min, mushy vs definitive.

 Energy looks to be starting it's turn intraday- 1 min

 Not much strength behind the move as you can see on the 2 min which did not see any migration from the 1 min, this is market correlation and FX arbitrage or correlation.

 Tech making a very clear signal as opposed to yesterday's.

 Tech 2 min, again, no migration of the 1 min chart, no support for the move, just market correlation which is running as high as I've EVER seen it.

 DIA 1

 DIA 2


 ES making a new leading low

 IWM 1

 IWM 2

 QQQ 1

 QQQ 2-notice the same theme on all of the charts...

 DPY 1

SPY 2

The theme is market correlation, nice price strength, almost ZERO underlying strength.

The Euro will probably be one of the key assets to watch today, at least it appears to be the catalyst, however still remains severely dislocated from the SPX.