AAPL at a consolidation?

It looks that way thus far as first resistance tends to be the previous close.

ES / VWAP Update

So far, so good for the early stages of today, we had pretty broad indications and thus far they are playing out, if the other half of the indications play out just as well (and longer signals are more reliable), then we should have a great game plan. This is the difference between reading headlines that were long ago discounted by Wall Street and following price from moment to moment and reacting to situations in which you don't have any idea and having an idea, laying out a trading plan and trading your plan. Or to sum it up more succinctly, "Letting the trade come to you rather than chasing it", take that a step further to portfolio positioning and management and it's quite an edge.

Here's ES which is like a mini market update, except looking at what big players are doing, thus far there's no contradiction in the analysis...

 ES / 3C 1min is seeing some price movement a we expected to see early on, it's also seeing a lack to any 3C confirmation, also along the lines of expectations.

 Here's the ES 5 min chart, this is where we have an important dividing line with the market averages, the move straight down in 3C on this chart this morning is encouraging, it seems to confirm the entire thesis of the idea put together last week, yesterday and this morning, price strength is being used to dump by bigger investors.

 The daily ES VWAP...

The Weekly ES VWAP, I'm betting on a move toward the upper 2nd standard deviation of VWAP.

AAPL Update

Here you go, AAPL looks like it's going to be on good behavior for a short time, hopefully long enough to make opening the second half of Friday's Put position worthwhile, if I don't get the price concession I'm looking for I'll forgo the rest of the trade, I have enough coverage in AAPL.

For over a week I've been telling you that 89% of hedge funds are under-performing the SPX, this is bad and it means starting next month and through the end of the year, they'll be hit hard with redemptions, meaning giving client money back, but they need to sell assets to give client money back. If you were in their shoes and as is the case, AAPL was your biggest holding (it is the largest hedge fund holding) and you had a decent profit there now, but didn't expect to have the same in a week or month from now, what would you do?

This is why I said there's a small open door in AAPL right now that is and will be shutting quickly, the crowd can't all get out at once without doing major downside price damage, I expect we will see some of that before this is over if we aren't already.

Here's the AAPL update showing the probabilities of near term strength today as mentioned about the market earlier, going in to a big weak spot. In fact, it looks like it has already started, that's why I posted the last update without the charts so you'd be prepared.

 AAPL 1 min positiv divergence from late yesterday in to today, the price dip allows the market makers to accumulate some shares to put in a floor of support for AAPL to bounce off, then the market makers filling large orders will likely try to sell as much as they can in to price strength.

 The 1 min trend looks similar to the 2 min trend, it is leading negative with a slight relative positive since yesterday afternoon in to this morning, this is like a little sunny break in the middle of a massive storm. For those of you familiar with hurricanes, you might call it the eye of the storm, nice and sunny, but you know it won't last long.

 The 3 min chart is barely worth mentioning as far as the positive divergence, it's barely there.

 The 5 min is leading negative, if you watch the areas where 3C gets even uglier you will see they are right at breakout areas where retail is buying, they don't see what we see, they see price moving up and "$" signs, that's why volatility or fear has been so low, it's been replaces with greed, but he who laughs last...

 The 15 min chart shows no signs of anything remotely positive, this is a small divergence, short lived, this is where the probabilities are, right here on a 15 min leading negative divergence.

Remember a long time ago I said AAPL has one large accumulation area and don't expect to see anymore, those shares accumulated will be sold in to higher prices until they are done with them and then they'll short AAPL and down she goes, there was the large accumulation area to the left, there wasn't another since, look at the 30 min 3C chart's massive change in character as AAPL broke $650, that's a huge leading negative divergence formed very fat, that only happens when there's a lot of institutional activity.

I'll remain patient, see if the trade comes to me on my terms which means prices above the $680 area, if that happens I'll add to the second half of the intended position started Friday, if not, I'll sit with what I have.

If you have no coverage in AAPL and are interested in short coverage, today will likely be as good a day as any, I'd still wait and be patient, I'll keep you updated.

Will AAPL Act Better in the Near Term?

I believe it will act better today, maybe even give us the breakout that I've been waiting for to open the second half of Friday's put position. However acting better today and acting healthy are two different scenarios and two different answers.

Charts to follow...

GLD Update

First lets look at the currencies because these are what move assets like gold, oil, stocks, etc. Wouldn't it be interesting if the currencies aligned with the other indications put forth ($AUD already has)?

The $USD proxy, UUP...

 1 min $USD shows a late day negative divergence yesterday, this morning's gap down fulfills that divergence, but look at it now, it's building and a higher dollar means lower stocks, commodities and GLD historically. So early on we are seeing what appears to be the dollar accumulated in to weakness and at a level where there would be some supply...

Daily chart of UP/$USD under the support of a "Tweezer bottom".

 Longer term, does the $USD show the strength that would confirm 5 min weakness in the market, yes.
Remember the $USD trades opposite risk assets like stocks, gold, oil, etc.

 How about the bigger picture? The 60 min chart in it's largest leading positive divergence on this chart, that also doesn't bode well for QE3 at Jackson Hole or any other time this year.

 How about the Dollar's opposite, the Euro? It had the positive divergence late yesterday to send the Euro higher with stocks, but it can't confirm this morning. In fact...

 It's VERY far from confirmation as this 1 min chart makes no effort to confirm at all.

 Longer term, the Euro is in a head fake position above resistance, but with a leading negative 3C divergence, if I was interested in shorting the Euro, this would be the place, but since stocks and the Euro tend to move together, I feel I can get higher beta with stocks.

 Interestingly, if QE is not coming, then now would be the time to dump GLD for institutions as they need to raise money for redemptions and on a yearly basis, GLD is one of their most profitable positions, note the move above resistance where there would be retail demand that institutions could sell/short in to. I use yellow boxes to denote suspected head fake moves.

 GLD 1 min trend since the breakout, not looking good.

 GLD 1 min this a.m.

 GLD 5 min trend since the breakout. This looks like the distribution I mentioned above.

The hourly chart though is where the weight is.

If I didn't already have GLD puts I would consider them here, if GLD can move above the resistance of the last week or so, I'd consider adding to the position.

Remember, oil acts similar in the same position that the $USD and Euro are in.

The EU Sewing Circle as the Catalyst

The opening action didn't look good for my early hypothesis, but the ECB RUMOR (remember the ECB talked the market higher with no action at their meeting) this morning that there will be no rate caps set in bond buying (which is far from settled, ask anyone in Germany), was just what the market needed to get that short term move under way and with Draghi canceling his speaking engagement at the Jackson Hole symposium this Friday, dashing F_E_D QE hopes, all the market really needs is the counter rumor that ALWAYS comes, look for Germany to speak out soon, but for now, it did what we needed.

 The announcement and the move in the SPY and rest of the market are perfectly timed...

The QE sensitive GLD also moved, but it's not looking very good even on that move, in fact GLD is looking downright bad, Ill bring you charts soon.

Risk Assets-Credit is the last piece

All of our leading indicators in the Risk Asset layout are negative to severely negative from yields to the $AUD, commodities, the Euro, and more. Credit is the last piece of the puzzle, it' the last asset class to complete the puzzle that has called every major turn this year, it's very early, but since yesterday, Credit is not off to a good start.

 High Yield Corporate is starting to miss and fall apart, we'll keep an eye on this today as it could be an excellent timing marker with other indicators.

High Yield Junk credit is also lagging and is not performing like it was...

Again, the longer term indicators are getting very ugly.

The $AUD

As many of you know I keep track of the Australian dollar as it is a leading indicator among currencies due to its carry trade currency status and due to its reflection of the Asian condition. With last night's comments from Japan cutting their assessment of the economy and seeing funding drying up, combined with disappointing Australian Home sales, the $AUD has been hinting at a top for more than a week, now take a look at the currency.

Even with a plunging dollar today (short term positive for the market)...

And a surging Euro today (also good for the market short term)...

The currency that tells us more about the market than any, the $AUD can't manage any gains today.

 $AUD loss overnight despite the drop in the dollar...

And the bigger picture of a divergent $AUD vs the SPX.

I don't expect you to understand all the subtle hints I'm putting out there, but a drop in the dollar today and a rise in the Euro are both short term trade markers, both good for the market to rise short term, but the $AUD is a longer term marker, one that shouldn't be ignored as it has called every reversal this year and every one I can remember since we started tracking it, this is the big picture and fits well with our expectations.

More Evidence

I'll just go straight to the S&P Futures, it really doesn't matter where I look, confirmation is almost always the exact same.

The 3C signals in ES tend to be a bit stronger than in the market averages for the same timeframe.

 ES 1 min overnight and in to the open chart with the European open at the white vertical arrow, note the divergences when looking at the chart below.

 Almost perfect swings between VWAP.

The one thing I keep coming back to is the fact we have very little short term strength on the ES charts and lots of weakness.

 The 5 min ES 3C chart, leading negative, the red arrow is Friday regular hours.

 30 min 3C ES with a deep leading negative divergence and the area I suspect was the actual pivot/top in the box.

 a 60 min ES 3C chart, absolutely horrible, shows clearly the distribution process as large events by large funds are always a process, not an event, there' the process. Again the suspected top is highlighted.

 The 4 hour chart showing the June 4th low and a process of distribution in to a leading negative divergence.

The double top scenario on a daily 3C/ES chart, it's pretty clear not only by the local negative divergence, but the leading negative divergence currently.

What I'm Looking For

Yesterday was flat, the strength needed to crack the 5 min charts never materialized, I'm looking for some early price strength, in to that price strength those 5 min charts should crack across the board, still making shorting in to strength the scenario with the highest probability outcome.

Here are some example charts of why I'm looking for this, remember the longer term the chart, the longer term the trend it effects and the stronger the signal, short term charts are for near term trends and are not very strong.

For instance, if we had a 1 min and 5 min negative, I would expect the near term to be negative, the longer term (days) to be negative, if the 15 min chart and longer were also negative, I'd expect the larger picture to be negative, if the 60 min were positive, I'd basically expect a leg down, building in to strength for the next more powerful leg up.

Here's what we have in different asset classes...

 QQQ 1 min suggests some near term price strength, it doesn't have strong backing, but it should be able to lift.

 The same with the IWM, we didn't get much of anything yesterday.

 TLT confirms with some  near term 1 min price weakness as it trades opposite the market.

 However, the 5 min averages have already started cracking, like the SPY here, they don't ned much more to fall completely apart, but a little price strength will help that along.

 TLT longer term saw an amazing leading positive 60 min move, this is a huge move for a 60 min chart, I suspect any price weakness in TLT will be aggressively accumulated. Remember, TLT trades opposite the market.

 VXX near term 1 min, also trades opposite the market is about in line, it can see some weakness from here very near term, maybe this a.m., maybe the first half of the day, we'll have to watch developments.

 However the 5 min chart saw some VERY strong positive divergences, volatility continues to be accumulated, that means the market is getting ready for a fear phase.

This is really not any different than what we expected as of Friday, just yesterday the market didn't do a whole lot.