IWM looks like it's going to roll over here...

More charts coming, but for at least an intraday  trade or beyond, the IWM is looking very poor here

Other Indications

So far Credit has no enthusiasm about today's move, HY Corp. is negative on the day, as is Junk Credit and High Yield. Yields are lower on the day and commodities are just starting to turn down.

The easiest way to show all of this is through the ES CONTEXT model, you may recall it went very negative just before the move down this week at -12 to -14, it has hit -15 today.

The bottom line, risk assets are not supporting this move AT ALL, they are in fact headed in the opposite direction.

SPY Update

This is really a market update, but focussed more on the SPY. Remember, "Volatility is going to increase to the upside and downside"? I said it the last 2 days. Suddenly CNBC's "The market is worried about the GDP" from yesterday doesn't seem to fit the market today does it? Are emotions and analysis really that fickle?

Here are the notable SPY/ES charts.

 The same "Rounding " price and volume patterns are becoming apparent, but note the difference in volatility today, much more vertical than Tuesday, we should see that same increased volatility on the downside move and ever increasing until the reversal is solid. For a market that has had extremely low volatility and ATR, this is a definitive change in character.

 The 2 min chart isn't confirming at all, it did show some positive behavior at the same time as the QQQ long call yesterday, but that's gone now.

 The 3 min chart is starting to act like it did at the start of the Tuesday/Wednesday move this week, except it's actually in a weker starting position because of the damage done Tuesday/Wednesday.

 The 5 min chart shows that damage and no recovery from it, there is a small positive relative divergence within the larger leading negative from yesterday, no confirmation today.

 And of course the increased downside 3C leading divergence momentum has been one of the most notable changes recently on very long and important charts.

 ES 1 min is also starting to sour.

The 5 min chart which has worked fantastic for next day or near term moves that predicted the move down this week as well as the move up today, is turning worse and worse to the downside.

QQQ gain

That last burst of momentum was helpful and I think AAPL was part of the reason...

AAPL did improve as I hoped and that may be the reason the Q's gained upward momentum.

The position was closed at a fill of $1.53 making it a +56% gain as the cost basis was $.98, I'm fine with that, even if S-A-? makes 200% as he probably will and I hope he does.

As mentioned, there are some things developing, particularly in the SPX which loo a lot like Wednesday, except we do have the increased volatility.

I hope you remember some of the key indications from yesterday that helped us understand what today would do, not only the market updates, but even the Dominant Price/Volume Relationships, etc. They are all pieces of the puzzle and all helpful.

Closing the QQQ call Position Completely

There are a number of things I don't like and there's good momentum in the Q's right now, time to close them.

Financials Creating an Opportunity...

For the S&P to be up, Financials need to be p, just like the NASDAQ 100 needs tech for support. I have updated Financials several times this week, but haven't moved on them yet. In one of the updates I mentioned that the obvious range in XLF would be hit on the upside, there are just too many reasons not to when you're that close and this all create the rising volatility a well.

In any case, Financials may in fact be creating that window of opportunity, perhaps today.

Here's what I've been looking for, what has happened and what needs to happen to finally take a position in FAZ long or fill one out.

 Here's the 7 day range in Financials and today's break above them finally. The volume is there, which is good, that's the reason for the range and break above. I don't want to pull any trigger yet, but I do want my finger on the trigger.

One of the most common areas to see distribution in a trend like this or accumulation in the opposite trend is during flat areas or trading ranges, it gives a stable VWAP and fill for institutional clients, the break above the range as a head fake move is typically the last event in a series of events before a reversal, it's a head-fake or failed move and there are a lot of reasons as to why if you read my first 2 articles of the 3 part series, "Understanding the Head-Fake Move".

I have little doubt this breakout will be proven to be a false breakout as the chart above suggests the probabilities  were already very high before it even started.

 Here's a 1 min, very short term positive divergence that suggests the move to the upside is being prepared for by smart money, much in the same manner we just made a quick trade in the Q's.

Of course even the 5 min chart looks horrible and had very little chance of coming back. Now we just need to wait for the 1, 2 and 3 minute charts to turn very negative while price is above the range and we have an ideal entry for a Financial short, I prefer long FAZ.

QQQ Options Remaining

Honestly I'd probably have taken all of the QQQ position off the table if I wasn't getting my rear end soundly handed to me by other members in the same trades with more patience or perhaps grater tolerance for option related risk, there's one Canadian in particular, "S-M", who is quite good at extracting solid gains from the exact same options trades at the same time.

In any case, whether I decide to hold the rest much longer or close them out will largely depend on what happens with this AAPL chart in the next 30-60 minutes.

 There's a 2 min positive, this could save the Q's for a bit longer today, they need something to keep them going, so if this divergence really takes off, I'd be more inclined to hold the Q's a bit longer.

Here's a good lesson for you about how many options traders see their contracts expire worthless. I think we've only had a couple of options trades this week, no triple digit gains, but the options model portfolio is currently ranked # 18 of nearly 1100 portfolios for the week. Considering we've had some decent trades there, but nothing like  triple-begger or 3 digit gain, that should tell you something, not about my skill as an options trader, but as to the skill of the majority of traders. If we had a 100% return on the week that would be different, but at just over 20% on the week, that should tell you something about the derivative product known as options and how dangerous they can be.

QQQ Calls and Market Update

Well yesterday's weekly QQQ call trade was speculative, but I felt it had a good chance of making some money and while not the 3 digit gains you hear about often with weekly options (no one likes to talk about how many times they lost on the same options), the gain was respectable, for some people it's a month's salary in 1 day.

 As mentioned, I left about half the position open, but a nearly 37% gain for an otherwise dull market in less than a day, is opportunity and that's the point I try to get across. while I thin you do very well when finding the trading style and risk tolerance that fits you best, I have traded so many different markets that I don't like to consider myself any particular type of trader, I like to consider myself an opportunist. The move in the Q's looked high probability and obvious, but not particularly profitable without leverage, so the weekly options were used and you know leverage is my least favorite vehicle, but it was the right one for the trade.

I think you are most successful when you can identify opportunities and not put yourself in a box, know what tool to use for what job and take what the market gives, not what you think it should.
 
 The very short term 2 min QQQ chart was leading positive yesterday, the reason for the trade and the short nature of it (using options that expire the next day).

 At 5 mins there isn't the same opportunity which tells me this is a shorter trade, which fits with my picture of near term volatility and chop.

 So far on the 1 min chart there's still a chance for more upside, but the momentum is not very strong.

 ES (S&P futures) so far are trading along the upper band of the VWAP, which is fine.


 However there were only a series of very small positive divergences pre-market on the 1 min chart, I'm not inspired that this is a lasting move/trade.

The 5 min chart which is what I'm really using for short term directionality was positive yesterday, that is quickly fading to look more negative like Wednesday.

Thus it's time to take at least partial profits, as the day goes on, if the momentum doesn't keep up, the options lose value.

Closing Out Half of the QQQ Calls from yesterday

They expire today so momentum is important, they are at a decent profit, I'm not taking any chances with them.

Pre-Market

There was more trouble out of Europe last night, as if indices over there didn't already give you a hint, the ECB's second LTRO repayment was far below consensus of $200 bn Eur., coming in at $3.5 bn Eur. hinting the banking sector is not as well capitalized as some hoped after the first LTRO early re-payment.

Secondly the Netherlands saw their first banking failure since 2008, which will lead to its nationalization at substantial cost to the taxpayers and this in the country that is considered to have the healthiest banking sector in Europe.

ES futures behaved very early last night, spending most of the night in a tight 3-4 point range, that is until Non-Farm Payrolls hit this morning and added 157k jobs which was a small miss of consensus of 165k, but above the previous which was 155k and revised to 196k.

The bottom line, the market will open the way we expected yesterday and the way all evidence pointed.

A neat 3 point range that persisted most of the night.

However don't get too comfy up here, the 5 min ES chart that has served us so well in predicting the next day's movement is losing it's positive tilt and going negative like the bigger picture 15/30 min charts.