Currency Update

This will have to be verbal, but the risk supporting EUR/USD is breaking down and the risk supporting Carry pairs of AUD/JPY and EUR/JPY are heading lower cutting some support from under the market on the currency side.

The $USD is significantly stronger over the last 30 mins at new highs on the week, market negative, although I am surprised judging by the single currency futures that they didn't hold up better.

When you get to these extremes in the market, the F_E_D becomes part of the equation in a negative way and Hedge Fund herding breaks apart, there are a lot of surprises, for anyone long anything with strong market correlation, one of the nastier surprises tends to be intraday or gap down moves that take out several months of longs in a flash, I'd be careful if you are in that category.

GS-Went W/ June $155 Puts

I'm getting too use to the weeklies, June monthly.

GS Trade

I hate to do it, which is breaking my own rules sort of, with Financial PUT exposure I opted for the longer term position in GS, but I can't resist the Put set up, I'm only taking a VERY spec size position, I'd say just large enough to make the transaction costs worthwhile, maybe half of a normal spec position. The expiration will be tighter and slightly in the money, if I were taking a larger GS PUT position the expiration would be in to June.

Futures, Market and HYG Update

For those who missed the posts on HYG or didn't understand, I wish I had time to link to them or repost them now, but I don't. Actually, it's important...the original from yesterday.

Here's today's recap of yesterday's...


The idea was HG was under short term accumulation, not the kind that tells us institutional money is moving in, the kind that tells us HYG will be used as a lever to lift the market-which were nearly my exact words yesterday. What we have been seeing since Wednesday night are positive divergences that are of a certain size and the asset moves up as the divergence suggests, but then gets sold on initial strength long before it should be.

What I expected was for this to happen to HYG as well, thus far it has, this tells us the Hedge Fund herd has broken up and are selling wherever they can, I use AAPL as an example because the same thing happened there.

First HYG (High Yield Corp. Credit), a very liquid risk asset/Credit

 HYG which has been under accumulation for a couple of days, this was the spark for the market as expected, as posted yesterday, you can see it is falling off, but has similar relative performance to the market.

If the market were to lose a gain like today's either today or tomorrow, it would not bode well in the minds of longs, this is why what happens to HYG is important.

HYG this morning intraday 1 min

HYG this a.m. 2 min intraday

This is a larger accumulation period for HYG, it should have held a significantly higher move, my thought was HYG would be cut short and sold early as we have been seeing in FX, equity, credit and elsewhere since Wednesday night. Thus far, although still early, that seems to be what it happening.

Index Futures Intraday

 ES

NQ and note the leading negative in the flat range in NASDAQ 100 futures

TF

Averages...

 DIA intraday

IWM intraday

QQQ intraday

SPY intraday...

I'm trying to divide my time between watching for the signals expected and watching for opportunities or anything unusual.

Index Futures Looking Horrible

I want to get this out quick, I'll follow up with some charts, they are leading in most cases at new lows.

GS Charts

I've had a lot of emails about GS, I've urged patience and today we have a nice set up, thus the filling out of the equity short position.

 Longer term GS was already in trouble, that's why the short equity position was started, but there was room left to add if we got better prices, this is only done when the big picture looks bad.

In the yellow box is one of the greatest examples of, "Price is deceptive", it's very hard to see day to day and certainly intraday, but this is a "Channel Buster", it looks VERY bullish, but in fact is a change of character that is quite effective and reliable as a bearish set up. It sucks in the bulls by appealing to greed and then typically dumps to the bottom of the channel, sometimes even below before a corrective shakeout to shake off new shorts under the channel, then typically heads down.

In this case we needed a head fake move to add to GS, the best one in this case is a higher high, that's the only thing in Technical Analysis that will allow the bulls the confidence that the downtrend is broken, today GS did that.

However the 60 min chart shows this move toward that higher high culminating today had no strong 3C support, this was not institutional money moving back in to GS, it was them trying to get out of it.

Note there's no accumulation period before the upside reversal, it wouldn't be strong enough to make it here because it's not that kind of move.

The 15 min chart's trend from negative at the Channel Buster, mostly in line with the downtrend.

 A closer look reveals enough accumulation to move GS this far, but distribution in to the move.

Intraday the 1 min so far is confirming the move as a head fake, I feel good that Financials generally look the same.

3 min GS

and migration to the 5 min.

Filling Out GS Equity Short Posiiton

I considered GS puts, but I already have significant exposure to Financials in options, the equity position is meant as a longer term position, it's much more manageable with corrections, etc and the Put position is a 1-time blast, I'm more looking at GS as a longer term trending position, the current GS position (short) in place is at a 3.48% loss or about 4 tenths of a percent of portfolio for risk management purposes.

I'll have charts up, I prefer my puts be more generic in the sector rather than stock specific in most cases, but GS had me on the fence.

TLT

We already saw VXX come around, now TLT after a gap up and a gap fill is coming around.

 TLT 1  min this morning... Which should let TLT resume (as long as migration of the divergence continues as it should) the trend below...

5 min TLT positive divergence.

HYG moving up is risk positive for the market, that's why I've been paying so much attention to its positive divergence and the fact that it hasn't been a large position divergence, but a manipulation-move divergence, this is what was discussed yesterday as I already posted about HYG driving the market, but watch for HYG to be cut off prematurely.

TLT and VXX moving up are both risk negative and create market headwinds, while its still very early, first HYG started to go negative so now it is sideways and no longer up, then VXX came in strong, now TLT is following.

This all comes back to what I've said a few times the last week, 

"Wall Street isn't going to make it easy, they don't want shorts with them, they want to shake them loose. Wall St. makes their money by retail chasing, not by retail moving with them"

VXX-HYG-SPY Update

This is the set up that I have suspected as you can see from this week's posts, the true test is whether the trap door is slammed shut, I got an email from one of our members about VXX which I expected to see accumulation, but it happened so fat, so hard I didn't get to it until seeing that.

 This is part of what we are looking for, a massive flight to safety or actually protection in bidding the VIX futures

However the true and real test I wanted to see most was whether HYG would be cut short, so far it has been , although I'd want more confirmation, that the trap door that this entire HYG accumulation to break higher, talking the market with it and then being cut off seems to be playing out.

The SPY, this is the ultimate trap door and it has played its part with HYG right on time as well, it's too early to say, but for a theory hatched late last week it seems to be going pretty much as expected.

All Index futures are negative/leading negative intraday.

GOOG, XLF and AAPL Update

All 3 of these were recent trade ideas from yesterday and today, here's the GOOG idea yesterday looking for a breakout move to open puts in to momentum, here's yesterday's XLF advising to wait for XLF to make an upside move before opening Puts, but not as worrying with less leveraged positions...And the updated AAPL trade-what we are looking for from here....

It looks like GOOG and XLF are going as planned/hoped and it looks like we may even get a shot at AAPL.

 GOOG looks to be confirming the head fake move we were looking for yesterday, the puts are in the green already.

XLF 1 min is confirming... The puts here are also green already

The 2 min XLF chart is more damning as a head fake confirmation signal.

Even FAZ is confirming what appears to be the head fake expected yesterday-

Remember all of this came from the HYG set up expected...

AAPL has found support at the area I mentioned earlier with a small positive building so AAPL may offer the next opportunity.