Market Update

There's lots of bad news out there today from the ECB admitting a mistake in the collateral ratings of Spanish loans to the Trokia delaying the Greek bailout package they voted on yesterday for what could be, "weeks". With Draghi saying today in his press conference that the ECB is hesitant to activate the OMT bond buying program, Spanish Yields are seen moving much wider on the day with a 450 bp spread or the highest in 6 weeks. The OMT is useless as even a backstop if the ECB is going to come right out and virtually take its use off the table!

Nothing but bad news across Europe, yet the Euro hasn't made a new low since the 9:30 open so it's hanging in there somehow as the $AUD heads higher.

 Euro hasn't made a new low since the 9:30 a.m. US open.

 The $AUD has been heading higher.

Some leading indicators are also looking decent today:

 Commodities vs the SPX today are showing decent relative performance.

 High Yield Credit is surprisingly even moving higher.

 FCT is also moving higher intraday


 As is the $AUD

 Even the Euro is showing a little better recent relative performance recently.

 DIA 3 min is doing what I illustrated yesterday.

 As is the 15 min DIA chart, which is important (these are just some examples).

 The IWM is showing a very extreme leading positive 1 min after a positive divergence all morning, this is very interesting.

 The IWM 15 min leading positive positive is adding to a higher high.

 NASDAQ intraday futures in a leading positive divergence (Tech looks interesting as well.)

 QQQ 1 min

SPY 3 min also doing what I explained was likely to happen yesterday.

More updates coming as well as some ideas.

GOOG Follow Up

GOOG is already starting to move.

Here are the charts I promised.

 GOOG daily looks a lot like a head fake move with a shakeout below support.

 The daily chart tells you why I'm bearish GOOG long term and why I would use any price strength to short in to.

 However this 30 min chart didn't confirm the downside move, in fact it's about the right size for the range put in before the break below support.

 This 15 min chart is also leading positive at the break below support, further increasing the probabilities that the move below support was a head fake move and making it a low risk, high probability long at least for a little while.

 Near term the 1 min chart went positive with the market.


 The 2 and 3 min charts have been working on a positive divergence since yesterday

 The 5 min chart is at its first 3C higher high with a lower low in price for this trend.

This is my guestimate for a target, I now it's pretty large, but the point of the move is to shakeout shorts and the move itself determines how scared they are and how much needs to be done

Keep an eye on GOOG

I still have GOOG as a core short position and would love to add to it a bit more, but it's looking an awful lot like it's very close to popping higher. I even considered covering part of the existing short to add at higher levels, but that would tip the balance too far toward the long side and that's not where I see the larger probabilities.

If you are a nimble trader you might take a look at GOOG and what options you have available to you including options.

I'll get the charts up in a moment, but I really think it's that close that I put this out without charts to save time.

Market Update

If you recall how I described the most probable outcome yesterday in yesterday and today's consolidation sideways, that's basically what's .

I think we are very close to the market turning up here shortly as the timeframes on most of the averages from 1-5 mins are now positive, which is what we were looking for, positive 3C divergences in to lower prices.

Here's an example with ES, but most averages have most timeframes positive.

WFM Trade Idea

I was asked to take a look at Whole Foods Market, this seems like an obvious target with the economy the way it is and food inflation being a problem.

I took a look at WFM and wasn't surprised, in fact I think if you have the ability to set price alerts you may be able to set up a decent low risk trade on the short side.

Here are the charts.

 On a 7-day chart you can see where WFM's very small bodied candles rolled over, there was a final burst and now WFM looks to be starting to roll-over.

 This is that same area on a 1-day chart, notice how the 7-day chart gives you a different perspective about momentum that you wouldn't catch on a 1-day chart.

 This is the daily 3C chart, there looks to be a very obvious problem here and around the same area. Whenever I see confirmation like this just turn drastically, I give it a lot more weight.

 On a 10 min chart every move higher has been sold in to and if you look at what should be positive divergences between each of the moves at price lows they are either very small or aren't there at all.

We do have an open gap today and I suspect WFM will make an attempt to break higher, I'd set price alerts (and I will as well) between $95 and about $100, as they trigger we'll see how the short term charts are holding in WFM, if we can get a high enough move we should be able to get a low risk short sale entry.

Early Indications

Other than the sector rotation I think we'll see today from Tech toward Financials, there are some other very early, but encouraging signs.

All of the leading indicators right now are in positive divergences including Yields, FCT, High Yield Corp. Credit, Junk Credit, High Yield Credit, the $AUD, Commodities and probably 1 or 2 more I forgot. The only thing out of line is not really a leading indicator, but a confirmation indication, the Euro is a bit weaker and probably causing some of the recent downdraft this morning.

As far as 3C, it's too early to read too far out, but we have intraday positive divergences in all the averages as well as ES (SPX futures) as well.

This is more or less what that would look like this early.

DIA 1 min with yesterday's intraday negative divergence/s in red and this morning's positive in white; again this is in all of the averages so far this morning.

Sector rotation

As expected yesterday, early indications are that we are seeing rotation from Tech (yesterday) to Financials (today) which is giving an edge to the SPX over the NASDAQ, but the larger picture is the rotation is good, even though it's very short lived.

Yesterday the SPY was the clear laggard behind the NASDAQ, I suspect that will change today, at least on a relative performance basis between the two.

Watching GRPN Today for Earnings AH

GRPN reports earnings after hours today so we'll be keeping an eye on it to see if anything looks out of place.

Thus far I don't see much that raises suspicions, but we did catch GOOG in the last 15 minutes of the day after no hint whatsoever.

What I do see thus far though is a stock that looks like it's transitioning from a stage 4decline to start the cycle from the start at a stage 1 base.

 Longer term (1 day chart) GRPN is seeing the ROC shoot up as the downtrend loses momentum and volume is definitely uncharacteristic. The lateral movement is still very volatile, but base-like.

 In white, capitulation, at the two yellow arrows a low of $4.00 which apparently is where stops were hit the second visit there.

 This 60 min chart would support the idea of a base under construction and a pretty nasty reading just before capitulation.

This 15 min chart is the only one right now I find a bit strange or interesting, just because of the size of the divergence, the length and placement. I'll be keeping an eye on the intraday trade for anything unusual before earnings tonight.

No Real Surprises on the open

I think the only small surprise is that the Futures and market didn't open a bit lower after last night's move in the EUR/USD which again is a headline, "EUR/USD at new low" but again isn't as big of a deal as the headline makes it out to be.

 Here's where EUR/USD was as of yesterday's 4 p.m. NY close and the new overnight low to the right.


 Here's the same pair since the 9:30 open and the market is pretty much in sync with the FX pair.

Yesterday I said I wouldn't be surprised to see a dip down a bit lower as "V" reversals are pretty uncommon, but so far everything looks about right as far as the opening and confirmation of where the market opened.

Overnight

In the overnight session both the BOE and ECB kept rates unchanged, but there were some surprises. The Bank of England essentially announced it is halting its QE program due to perceived ineffectiveness, the ECB is in no hurry to activate the OMT Bond Buying program.

Furthermore, Spain seems to be in no hurry to request a bailout this year, sending Spanish Yields higher and the EUR/USD to 2- month lows.

Greece hit a new high in their unemployment rate at 25.4%.

In the US Initial Claims came in at 355k on consensus of 365k with Hurricane Sandy being blamed, keeping people from reaching the unemployment office.

ES stayed in a fairly narrow range all night and is oscillating around a few points above or below yesterday's 4 p.m. close at $1390.50.

There really doesn't seem to be any real trend in underlying action.

Finally the Draghi Press Conference has been widely anticipated this morning...

• *DRAGHI SAYS EURO AREA GROWTH MOMENTUM WILL STAY WEAK INTO 2013
• *DRAGHI SAYS EURO AREA GROWTH RISKS REMAIN `ON THE DOWNSIDE'
• *DRAGHI SAYS INDICATORS DON'T SIGNAL ECONOMIC IMPROVMENT
• *DRAGHI SAYS INFLATION RISKS `CONTINUE TO BE BROADLY BALANCED'
• *DRAGHI SAYS ECB COMMITTED TO REPAIR TRANSMISSION MECHANISM
• *DRAGHI SAYS FINANCIAL MARKET CONFIDENCE HAS VISIBLY IMPROVED
• *DRAGHI: OBSERVED STRENGTHENING OF DEPOSITS IN SOME COUNTRIES
• *DRAGHI SAYS SEGMENTATION IN SOME MARKETS RESTRICT CREDIT SUPPLY