My Take

I can't get all the charts out to make the case right now and the difference between option 1 or 2 is subtle.

As far as I've been concerned, the market looks  like a short term downside correction would take place and then it would resume the upside move and that would eventually end, it would be during this stage that we'd be selling long positions (speculative ones) and starting or rather finishing the process of establishing or filling out mostly core short positions, a few longs here and there.

The other possibility is that the signals today that look like a short term pullback are distribution of higher prices and the market instead of making a correction and moving higher, essentially has made a correction through time this afternoon (lateral trade) and it continues higher as the divergences get worse.

Either way, the difference is really a matter of whether there's a short term correction, one I'm not too excited to try to trade.

I'll show you what I see later, after the close.

I'm still leaning toward the initial plan/idea for several reasons, but one is there are several potential or current shorts, GS is a good example that look like they still have a powerful upside move to make before they are ready to rollover and the other is that I have expected the market to make a powerful upside move, one that scares not only the shorts, but makes the longs feel like they missed the boat and were wrong not to buy the dip.

Either way, I do think the market will make a stronger, more emotional upside move.

Where we are right now, retail is not scared, they are shorting the market, they think this is a great place to do that and usually the market will allow them to think that and give them some downside as many won't enter the trade without price confirmation, so again, I still think the original idea is more probable, but I had to lay out the other which also relies on the idea from yesterday about "Slow boiling the frog" and essentially keeping the shorts in as long as possible on smaller upside moves until they can execute a short squeeze at higher price levels rather than lower one.

ERY Long

If you are open to a short term trade along the lines of the market move I talked about last night and talked about in many posts today including the VXX/UVXY post, you might consider  ERY long, a 3x Bear Energy ETF), again I consider it to be a speculative and short term trade (possibly a day, maybe 2, I wouldn't expect much more than that and I'd prefer not to use XLE put options, I'd prefer the leveraged, but less leveraged ERY long).

VXX / UVXY (Short Term VIX Futures)

If there's a bid under VIX futures, then we'll see it first as a positive divergence in VXX or the leveraged version, UVXY, the bid in VIX futures is a move to protection, not quite the same as a "Safe haven trade", but similar concept at the same time, when the market is expected to see some downside which I warned of last night.

First the P/L of UVXY short (because XIV long wouldn't have the leverage)

At the $72.96 fill, the P/L was for a gain of +8.9%

 VXX and UVXY are essentially the same except UVXY is a leveraged ETF. VXX 1 min is showing signs of accumulation, it is even showing signs of what is either a purposeful ahead fake move below the yellow trendline or that may have just been the market reaction to F_E_D speak today, either way both areas saw positive activity.

UVXY 1 min is direct confirmation of the positive activity as price broke under the yellow line, head fake or just a move in the market intraday, the results are the same.

VXX 2 min is seeing migration, I'd think that a little more of a "process" would occur before an upside VXX reversal and a downside market reversal as mentioned last night. I still don't see anything so far that changes last night's analysis of the downside move being anything more than noise and the move to the upside continuing after the correction is complete.

 VXX 3 min shows visually what I just said above,

" I still don't see anything so far that changes last night's analysis of the downside move (*in the broader stock market) being anything more than noise and the move to the upside continuing after the correction is complete."

The negative tone of the VXX 3 min chart is visual confirmation of that statement,

UVXY 5 min relative positive, still I'd think there would be more of a lateral process, but if this is truly just a short downside market correction, then there's really no need for much of a reversal process.

UVXY 10 min gives us a picture perfect representation of a leading negative divergence. Note price is at nearly the same level at "1" and "2", however note 3C's position at "1" and then note its position at #2, it is not just lower (which could be a relative divergence, not as strong), but it is leading below price significantly, this is the strongest divergence (leading). Beyond 1 & 2 3C is even leading the UVXY lows.

This suggests that there's still some more UVXY downside after a correction which would mean there's more market upside as I have expected.

A long UVXY or VXX position could be considered here, I may, I probably won't consider options, it depends on whether I  think I have time, whether it will distract me from the bigger picture, etc. However your position may be different, you may have plenty of time and want to make a few extra points.

 I wanted to show you this, intraday form 1-3 minutes a lot has happened today and continues, so my advice in reading 3C with this situation is to move to a longer term chart until a trend becomes evident, at the 5 min SPY chart a trend is becoming evident, from upside confirmation to the negative divegrence I spoke of last night. ***This also goes to the issue of confirming signals in VXX and UVXY as they trade opposite the SPY

SPY 5 min

I'll be Closing the UVXY Short

That means VXX and UVXY are likely to rise at least in the very near term and as expected last night, the market to pullback in the same period.


I'm considering a UVXY long, I'm not sure if I'll have the time, it would be a short term trade and probably worthwhile.

I'll have charts soon

USO Update and P&L

At the $2.07 fill, the P/L for the USO July $132.50 calls comes to a gain of  + 27%

(I will likely stick with the bulk of positions entered for this move, but I really want to start clearing out these shorter term positions and put more of my attention to the prize, that means spending more time on the core positions for the highest probability trend, which should follow the upside trend we are playing the last week or so (the one I have described as us "hitch-hiking on" and it being a means to an end).

 USO 15 min is a PERFECT example of a head fake move, there's clear resistance, USO is run above that resistance forcing weak shorts to cover, pulling in some longs and this was the last thing to happen before USO reversed to the downside from an otherwise rangebound lateral trend, this is a great example of a head fake move.

The 15 min chart doesn't look great so if I were to consider opening a new call, I'd have to have something just unbelievable considering the chart and my focus.

 USO 5 min moving from up trend confirmation (green arrow to the left) to a perfect example of a leading negative divergence in the red box, even price is a good example of a flat area where the divergence developed. Next in white a leading positive divergence, it's about two days so it's not going to support a large upside move, all of these indications are hints of what to expect, the size of the divergence, the longer 15 min chart, the length of the divergence or reversal process, etc.

Finally we have an in line/confirmation move up right now, but as you know, any new divergence like distribution of this trend, will start at the earliest / fastest charts and if strong enough, migrate across longer timeframes.

 This is the 1 min, the earliest, fastest 3C chart, clearly leading negative intraday with a flat range that helps confirm the divergence.

 That 1 min chart has some strength as it has migrated to the next timeframe at 2 mins, again before this we had confirmation with 3C and price, then a flat range and a distribution signal. I see no reason to hold an asset with as much leverage as an options with time decay as well at this point.

Finally the 3 min shows the positive divergence, note it isn't that big, it isn't leading, the uptrend is about what you'd expect for the size of the accumulation. We have confirmation at the green arrow and now migration of the negative divergence to the 3 min chart. AS or if this gets stronger, it will move to the 5 min chart next.

SLV Update

SLV is still the more advanced of it and GLD, but I suspect GLD had some more to overcome and appears to have a later start. SLV is now back above the support area broken (yesterday's close)

The green arrow is the stop run, it's yesterday's close for SLV. The 3C chart continues to improve, it's still not what I'd like to have brought out as the first chart, but it is what it is, not what I'd have it be.

USO update is coming and the market update is coming as well.

I'd consider positions in SLV, GLD or GDX/NUGT long, whether partial, whether ETFs or options, but because of the shorter term nature expectations of the move, I'd of course consider it speculative, but at this point in the market with this volatility, I think anything other than core positions are speculative and risk management should reflect that.

Have to Take USO July $32,50 Calls off the table

I'm certain I'll be back looking at USO calls, if I had a less leveraged position I may let it ride, but not with these calls with the short term USO signals. I'll try to post those as well.

GLD and Especially SLV are starting

They are starting to give that confirmation I was waiting to see, SLV is more advanced than GLD, but it does take 3C about 20 bars to catch up (figure a 1 min chart, that's about 20 mins).

NUGT / GDX are also looking good here.

I was hoping that I'd have more developed signals before putting this post up and I'll keep watching.

I'm also interested in the market, I thing it comes down as expected, the TICK is AGAIN trendless.

I think it's time to look at some other assets, support/bellwether assets

 GLD 1 min

SLV  1 min

GDX-Gold miners 1 min

HUGT 3x leveraged long GDX/Gold miners.

Both GG and SLW just lifted vertically....

GLD & SLV & Fractals

I'll try to make this quick, most of you have heard me refer to the market as "Fractal" meaning the same concepts that apply to a intraday chart will apply to a daily chart, the same concepts that apply to a 1 hour long price pattern will apply to a 8 month long similar price pattern. The reason we see this and if you look around you will see it, I believe is 100% because human nature doesn't change. The fear or greed in an investment length position are the same as a swing trade or a day trade, emotions and  sentiment (which are often indistinguishable) move the market, that's the one honest thing I think Cramer said in his Wall St. Confidential video with Aaron Task in which he admitted the many ways he manipulated the market as a hedge fund manager and how rampant it is to the point that he says, "If you aren't willing to do it, you shouldn't be in the game". The video is harder and harder to find,m but it's out there and that's the most useful and honest Cramer has ever been.

In any case as it relates to head fake moves being some of the last events we see before a reversal (the reasons why are spelled out in the two articles I already mentioned earlier today) and thus make for a good timing marker (this of course is subjective to the timeframe you are trading), both GLD and SLV look to be high probability head fake moves, I've wanted a little more confirmation, before possibly bringing them up for consideration, but so far one of the first things that is noticeable is SLW -Silver Wheaton vs SLV and ion gold's side, GG (Gold Corp) vs GLD.

Of course there are other indications that are more direct and important to me. If we get the confirmation as I suspect, it will be a hard position to enter, but at a great price point, actually lower risk as your stop can be just below intraday lows and if I confirm and I bring it up, the probabilities will be high as well.

 GLD, the reasons for a head fake move are there, evident in volume, again the concept is scalable or fractal in nature for the same reasons in any timeframe.


The same in SLV

 Here's Gold Corp in green vs. GLD in red, there's obvious better relative performance in GC and thus a divergence between the two.

And SLW in green vs SLV in red, again better relative performance in SLW and thus a divergence between those two (relative performance).

I need to watch because if it does as I expect, it will happen quickly.