Waiting on AAPL Put

I'll post charts of AAPL and XLK

Going to Add to AAPL Equity Short-Maybe a Put

AAPL we expected to bounce, it has and is seeing distribution, I'll at least add to the equity short, if there's time I may add an AAPL Put.

XLK is also turning very negative very fast-that's the Tech Sector.

Futures seeing Distribution too

Distribution can be selling of longs or selling short, both actions are selling across the tape.

All Index futures have a negative divergence as well.

Here's ES.

SPY having a hard time

This chart of the Yen/SPY shows the SPY is having a hard time as the Yen opened the door and gave the SPY the all-clear.

All 4 averages have started seeing distribution as well, this is the start of the process, not a signal in itself, but it is the next thing we were looking for in the chain of events and its there across the board.

 The Yen in green gave the SPY plenty of breathing room to make its move, it's not making it so far.

I'm wondering if sellers are just overwhelming the attempted breakout-remember the last WSJ article by F_E_D mouthpiece, Hilsenrath that made clear the F_E_D would be backing out of QE wasn't published until after the close Friday.

We also have the Thursday move toward's Friday's op-ex pin that could be an issue, but I suspect some fear of what Hilsenrath may put out after the close may be in play.

The market will ALWAYS front run the F_ED, that means they will have cleared out and we'll be in decline BEFORE the F_E_D starts withdrawing the punchbowl, the thing is no one knows when that is. With QE1 and 2 the market sold off before the end of the program which was known in advance and the market hates not knowing.

SPY struggling...

SPY intraday divergence on the break out attempt already started.

As for the better performing IWM...

Distribution, it may lose its foot hold.

If so, we may see the same HYG effect, selling before its time, that's real FEAR.

CONTEXT Helps Confirm

Sorry about all of the posts, but the market is moving fast and as I make each new discovery I want to share it with you so you know what we are dealing with.

CONTEXT also helps confirm the general atmosphere is correct for a head fake move-all other risk assets are selling off, a move up in equities though? Based on what? All of this morning's fantastic Economic data (sarcasm).

CONTEXT is already showing a differential of negative 27 points, this is getting close to the last very volatile corrective move we saw when CONTEXT hit 40. As the SPX moves higher, even if Risk Assets don't move down anymore, the differential will become greater, but risk assets are trending in a sell-off so that should send CONTEXT even lower.

As of 30 mins. ago, the SPY Arbitrage wasn't helping the market, although I see the SPY is having some difficulty making the breakout right now.

I also noted this about the DIA-the last attempt to move out of the not as mature triangle was sold hard...

 Note the volume on an earlier attempt in the DIA this morning, but what did 3C say?

 1 min chart negative at the same spot and at "A" note there's no accumulation even intraday to push the DIA higher and as far as I know it's not the levers either  according to SPY Arbitrage, as I suggested before, it's the Yen 

DIA 3 min at the same spot-negative and right now in to the attempted move to breakout, there's a negative 3 min divergence.

As for the Yen...

 Yen in green and SPY in red (you'll see this chart more often for a while), note the Yen moving down as I suggested based on the relative negative divergence I just posted in the Yen and at the same time, so far the SPY is having a hard time capitalizing on the move down in the Yen, UNLIKE YESTERDAY. This tells me there's likely more selling-actual supply / demand dynamics- STRENGTH IS BEING SOLD LIKE WITH HYG A COUPLE OF DAYS AGO.

Remember the relative negative divergence of the 1 min Yen chart I posted? it did as expected.

So far we are almost perfectly on track as far as our expectations, even though I've only been able to stay ahead of the market by several minutes, we've still predicted the moves correctly.

It's getting interesting, please forgive the posts.

SPY has the Same

And is even moving to confirm right now...

 Here's the pattern and there's going to be no significant reversal without a head fake move

As I am typing, the SPY is starting to break out of the triangle...

Again the 5 min is negative before-hand as well as the more important...

15 min.

The SPY has no intraday positives for the breakout, the only thing it has is a relative negative (weakest divergence) in the Yen...

Yen futures with a relative negative 1 min, which is good because it's a very weak signal, on the Yen chart alone it will probably only look like a normal corrective pullback, on the SPY chart it sets up a head fake entry.

The thing we have to watch for next is negative divergences growing in any head fake or lets say triangle breakouts for now and positives in the Yen, that's the cue to position.

Another Market Update

I've been looking at this congestion in the market, I found the pattern clearly in the Q's which are getting some help from AAPL, as I suggested AAPL would move higher yesterday.

The pattern is a triangle, retail takes it as bullish, but they won't buy until it breaks out, there is a 1 min positive at least on the Q's so I'm thinking this will be a head fake breakout from the triangle this early, this may in turn set up some trades-just as AAPL might as well.

Note the triangle at the white area and the 1 min positive divergence.

The DIA has something similar and this is why (among other reasons) I think this is likely a head fake move, we usually know they will be head fakes in advance due to current divergences before the move happens...All of our best trades and highest probability trades have set up the exact same way as the DIA below.

 DIA 1 min , note the slightly larger triangle. If you zoom the 1 min chart to intraday you get an "in line status, this could be enough to support the break out of the triangle. Because it is a symmetrical triangle following an uptrend, retail technical traders see this as a bullish continuation pattern, it's one of the most basic price patterns out there and often used as bait by Wall St. for head fake moves.


As mentioned, these are our best set ups, good price, low risk, high probability because of the head fake factor.

Why though would we think the breakout would be a head fake?

You already saw the DIA 15 min chart's damage/negative divergence, even at the 5 min chart it's leading negative.

All good head-fakes we are aware ahead of time that they are almost certain head fake set ups before they move based on behavior and the already present negative divergences in stronger timeframes, this is why we use them to short in to or buy in to on a downside head fake like TLT's yesterday-which had the same 3C confirming head fake signals.

The fact it has set up this early, is good, the trend has plenty of time to make a move, distribute and possibly, if it works out as planned, allow us positioning.

I have more charts to look at and some alerts to set.

Early Market Update

Most of the market seems to be in a holding pattern right now, the Yen intraday looks a little weak right here, but the correlation with the SPY has been pretty good. The IWM intraday looks the best and will probably gain ground, across the board though the 10-15 min charts have gone deeply leading negative which is interesting when looking at these Yen charts.

*Last night's Yen positives where in futures, this is in FXY.

 FXY/Yen ETF 15 min leading positive

FXY 30 min leading positive.

Now remember that I said if HYG was sold off on any strength as it was, that was perhaps the "Cracking sound"...

Take a look at the damage done to the 15 min charts of the averages in that same timeframe/period.

DIA

IWM

QQQ

SPY

More to come...

TLT Makes Huge Jump-Yields Fall

Yesterday I showed you a large positive divergence in TLT, there was also a gap fill with a stop-run head fake move (remember head fakes almost always occur right before a big move in the opposite direction-think of this as a mini bear trap for TLT), here's what it looks like on the open, this is a strong move and is right in line with what I said last night about TLT & Safe Haven assets...

"While TLT showed early strength that quickly faded, I believe it was intentional to run stops as it showed remarkable resiliency on the intraday 3C charts..."

"stops were run in a small head fake move with a strong closing leading positive as well, it seems the other form of protection was being more aggressively bid than is revealed by price alone-there's a market message there, you just have to listen for it."

 Here's TLT's gap up this morning to the right on a 5 min chart.

This came as a result of yesterday's action-remember price is deceiving, yesterday's bearish TLT action was to effect a head fake, then it recovered after accumulating stopped out shares.

This is the bigger picture for the positive TLT divergence...

 This is the same chart I showed last night, there's a message from the market here.

The jump in TLT resulted in Yields falling, Yields are like a magnet for stock prices.

SPY vs Yields this morning (red).

VXX is starting to gather strength, HYG is the wildcard.

Pre-Market

Lots going on this morning...

Is Japan seeing a "Good news is bad news" QE market bending warp? It seems like it, after days and days of huge Nikkei surges, Japan posts a better than expected Q1 GDP of 3.5 vs. 2.7% and the Nikkei is down, remind you of the good ole days? 

Europe for all intents and purposes was quiet.

This morning Walmart missed on revenue, but worse, guided lower.

• Q2 EPS expected in the range $1.22-$1.27, on expectations of $1.29
• Q1 comps ex-fuel -1.2% vs Exp. 0.4%
• Sam's Club implements first fee increase since 2006: raises membership fee to $45 nationwide
• During the 13-week period, the Walmart U.S. comp was negatively impacted by a delay in tax refund checks, challenging weather conditions, less grocery inflation than expected and the payroll tax increase. Comp traffic was down 1.8 percent, while average ticket increased 0.4 percent.

US Marine Amphibious Assault Ship and Marines are on their way to Israel...

The S&P downgraded Warren's Berkshire from AA+ to AA / Outlook Negative

The F_E_D could no longer hold the line which no one believed as the NY F_E_D (Empire State) confirmed yesterday and Initial Claims came in at 360K, on expectations of 330K, the worst print and worst miss in six weeks, which is almost exactly the same as 12 months ago showing nothing has changed or gotten better.As usual, last week's print was also revised higher from 323K to 328K.

Housing Starts came in at a downward revised 1021K to just 853K, well below expectations of 970K, the biggest miss since January 2007.

Finally, CPI data, declined from -0.2% to -0.4% in April, the worst MoM drop since December 2008.

Here's how ES responded.

It's going to be a busy day for me, lots of new analysis to be done.