Leading Indicators

Yesterday Context was positive, meaning ES was supported by risk assets, today it is back to negative as it has been nearly every day for a couple of weeks now, almost the same period where we have a very clear negative divergence since 3/5.


Although most of the Leading indicators are clearly negative (these are mostly risk assets that should move with the SPX, when they dislocate negatively, they are leading negative), there are a few on short timeframes/intraday that show the "overdone" status of the market I mentioned in the last post.

I had some questions as to why not go long the SPX if a new high is expected. A new high in the SPX is half of a percent away from yesterday's close, that can turn on you real quick, if there were support for a position long the SPX, I'd take it, but the probabilities and support are just too ow. I'll show you next post.

Quick Market Update

The market looks a little overdone on the downside intraday when comparing to currencies, some 3C signals, etc.

When the market looks overdone as I will show you in probably the next post and it just keeps going, that's the extremes in the market and a signal that things have really changed. My gut feeling is the market will get a little relief from the downside intraday

Future Update

Amazingly, the futures are still similar to the earlier readings with a few changes: ES/SPX futures are still just about perfectly in line with 3C, TF/Russell 2000 Futures actually look worse, they look the worst. NQ/NASDAQ futures still are a bit more positive than price.

 ES futures had a pre-market positive divergence, it wasn't as big as it looks now because the scale of the chart is much wider due to price having moved down, but after the open, that went negative and ES has been almost perfectly in line since.

 TF/Russell 2000 (IWM) futures look the worst, they are actually leading negative.

NQ/NASDAQ 100 futures are not screaming positive, but more positive than anything else. AAPL's 1 min chart has gone negative a bit, but there are still AAPL positives to the 5 min chart so I wouldn't say it's done with yet.

GOOG Charts-Weekly Calls/ April Puts

Here are the charts and the set up for adding to or starting a new Put position in GOOG (The April $810 Puts are still an open position).

 The idea here is that we have two head fake areas that should turn out to be failed breakout levels, the major one is at the $775 area, the minor one is at the $800 area, although $800 is definitely a psychological level.

When a breakout fails, they typically reverse fast and hard, "From failed moves come fast moves" so the first thing we want to do is try to confirm the breakout is seeing distribution and not supported...

 The long term 2 hour chart shows a clean trend and it's a clear leading negative divergence above the $800 area.

 The closer 15 min chart shows the preparation to break above $775 with a positive divergence (accumulated at the white trendline) and negative divergences after the break out, suggesting the breakout/higher prices and demand, were used to sell in to, at the $800 area the divergence is clearly leading negative.

 The 10 min chart is zoomed out as far as it will go, but it really needs to be zoomed out a bit more and then you'd see 3C moving up in sync with GOOG from November where there was a small positive divergence and then going negative in to the new year-you can still see that, but if I could zoom out a bit more 3C would be moving a lot closer to price. *For those using 3C or really any cumulative indicator, this is completely normal as these are not oscillators and are not anchored to the price scale, the way cumulative indicators are used (Worden's Money Stream or Time Segmented Volume are the same as far as the scaling factor) is by comparing the price highs/lows/trend to the indicator highs/lows/trend at the same point in time, usually by using at least two relative points, they are typically highs, lows or the general trend. Oscillators differ as they are fixed and the value is important, although many people don't use oscillators with divergence analysis, they are actually more effective when used in that manner.

Here we have the intraday GOOG chart (1 min) with a positive divergence, the 2 and 3 min charts are positive as well, so I want to use the short term divergences to sell (or buy puts) in to price strength and use short term calls to ride that price strength. The idea would be to enter calls somewhere in the following area...

GOOG Weekly Call-Expiration 3/16 / Strike $825

This is a speculative position as it may be closed intraday

Starting a Small Weekly Call In GOOG ***Read

I'm really looking at GOOG to set up an add to or a new position for those interested in April Puts, but I figure since there's already an April put position in place, why not try to rise the bounce that I'm expecting to set up the entry for April Puts with some weekly calls? The position will be smaller and it's already hedged with the April Puts. I'll let you know what expiration and put out the charts for the April Put trade.

AAPL Factor-Market Update

I'll show you the intraday futures and averages, they'll all be in line on an intraday basis except for NQ (NASDAQ 100 futures) and QQQ, the reason I believe is AAPL, I think the locals are reading the AAPL tape and that's the reason they are using NQ and QQQ as well a they may have been offering better entries, especially with options.

 ES/SPX futures on a 1 min intraday chart are nearly perfectly in line with price-that's price/trend confirmation, there are no divergences suggesting the current trend (whether it be up, down or sideways) has any strong underlying trade that should move it, although the averages will often draft each other (if 1 moves strongly the others follow), but we didn't see much of that yesterday with the SPY/QQQ

 TF/Russell 2000 Futures are also in line

 Only NQ/NASDAQ futures have a positive divergence.

Looking at the averages...

 SPY 1 min is in line currently (green arrows) just like ES.

 The SPY 2 min looks worse

 However if you zoom the 2 min chart to intraday status, it too is in line.

 IWM 1 min intraday is in line as 3C is moving with price, just like the R2K futures above.

 The QQQ 1 min however has a leading positive divergence.

 When viewed within the trend it's obvious this is intraday only and one of the reasons the AAPL trade may have to be closed quickly as there doesn't seem to be much support beyond an intraday move.

 QQQ 2 min chart is in line, so the divergence is only on the intraday 1 min chart-the weakest divergence possible, but still a higher probability of an intraday move to the upside and the reason...

 AAPL's 2 min chart, after seeing distribution on the open has a positive divergence right now.

 The 3 min chart does as well, this is still an intraday timeframe, but suggests more support for an intraday move higher.

At 5 mins, AAPL is almost perfectly in line, meaning the positive divergence hasn't migrated to that timeframe, which in my view, caps the potential return and this is why I think you need leverage to make the trade worthwhile. At 10 mins above, AAPL is negative, so again it looks like an intraday move in AAPL with the Q's following, but not much more than intraday.

I'm going to see what else we may have that may be more profitable and higher probabilities.

AAPL May be worth a shot long-Day Trade

You'd probably need some leverage and I'd be prepared to close it today if need be, I'll show yo why, but there should be some upside that may be worth trading intraday

AAPL set to run again

And it looks to take the Q's with it intraday, I'll post some charts, everything else is trading in line except the QQQ, NQ and AAPL

Volatility

Yesterday I posted this, "Keeping UVXY Trading Position Open" as I was seeing something going on with the short term VIX futures.

Later in the closing wrap I posted these charts of volatility in the short term VIX futures with confirmation between VXX, the leveraged UVXY and the inverse XIV, since each of these are independent ETFs/ETNs and trade unique volume (it doesn't matter that their price percentage moves are tied to VIX futures-demand for them doesn't have to be the same at all) the fact that they all confirmed each other was notable, especially after the VIX had been obviously manipulated yesterday for reasons I went in to yesterday and really monkey-hammeder on the close.

 VXX positive divergence which was seen in all of the volatility futures at the same time yesterday, around 1-2 p.m.

 VXX 5 min the same leading positive.

 UVXY 2 min leading positive yesterday

 The inverse XIV 2 min leading negative at the same time yesterday

5 min XIV leading negative yesterday.

I also mentioned that there was a Crazy Ivan Shakeout in the VIX, whether intentional or not...

Both sides of the triangle have now been run

Today the short term volatility futures look like this as they continue yesterday's positive divergence that started in the afternoon...

 VXX 5 min continuing a larger leading positive divergence, what I want to see is whether these migrate to longer timeframes.


 VXX 15 min leading positive

 UVXY 5 min leading positive with a large relative positive divergence as well. This is part of the reason the position wasn't closed yesterday on the downside move.

 UVXY 10 min also leading positive

 The inverse XIV is actually looking worse, this is the 5 min chart

 Here at 60 mins though, this is the worst or strongest of the volatility related divergences,

Intraday the VXX looks like it will see some normal intraday movement, but it is maintaining an overall positive disposition, the difference between this chart and the market average 3C and price charts is that they look very manipulated where this looks more natural with a positive bias.