Market Exchanges on the Fritz

This is a little bit scary at a time like now, especially if you are a buy the dipper with no short coverage, but earlier there was a BATS / NYSE problem, now NASDAQ is down...

Triangle Shakeout

I'm basically getting this out without supporting charts, but I think this is what is happening/going to happen.

You remember our tweet about triangles yesterday, well this is a bullish ascending triangle except it's in the wrong spot to be a real one and thus serves as a great head fake which I think it will be, you'll see when I post market 3C charts.

Not only does a move below the support line break the bullish triangle telling technical traders to stop out and go short, it also breaks the 50-bar/5 min chart that so many intraday traders use for entering and exiting positions.

I think we will see a break below, we have a lot of time and this is the fastest way to quietly accumulate shares without anyone asking any questions.

QQQ Update

I've shown you the SPY charts, last night I posted quite a few in the daily wrap, I've also told you that Tech looks bad vs Financials and I've been saying that since last week and more specifically, the Q's don't look good to me at all, in fact if I was just looking at the Q's, I'd think we are heading to new lows with no chance of a bounce so let me show you what I meant and what has changed since yesterday.

 The 60 min chart is trashed, but it should be, all of the other averages are like this or worse so no surprises there.

The 30 min is unremarkable.

At the 15 min you can see a clear difference between the SPY 15 min and the QQQ (as well as IWM to a lesser extent). Now you see why I would not dare call for a bounce based on this chart, however Index futures for the NASDAQ 100 do look much better.

The 5 min chart is the new dividing line, it is in line with price.

This next chart is new data really most of it since yesterday.

Q's were negative coming down from the 14th as they are on every other chart and then in line, but they have gone positive here and especially in to the post-minutes knee-jerk low, ir seems there was a lot of accumulation of those lows.

At this point I would not consider a long in the Q's, but I'm VERY interested to see if they catch up on the positive side, that would start with a positive 5 min chart, if that happens, then the Q's may make for a decent short term trade using leverage, either calls of TQQQ long, for now though, it's "Be patient, collect the data and see where the probabilities are".

Emails

Everyone is awake and trading today, I have about 3x the normal volume of emails and the normal volume is a lot. I'll try to fit your requests in to updates and/or specific posts if they benefit the whole group, otherwise I'll try to get to them as I find quiet spots, but right now after yesterday's accumulation of intraday , post minutes lows, it's important to figure out if the new data since 2 pm yesterday is supportive of a bounce which it seems to be and more importantly, we are in a more dangerous area as we are in the big picture and just like with AAPL when it collapsed very quickly, there's usually little warning and I need to be on top of that for the entire group, but I will make every effort to answer your individual emails once I feel comfortable I have a handle on the situation.

AAPL Update

AAPL has been pretty strong lately, however some recent weakness has taken hold and a range formed, whenever there's a range, there's usually something going on so this is what's going on.

 The 60 min chart has been strong and still is, I suspect it may see some weakness, perhaps not immediately, but if the 30 min chart keeps deteriorating it will move to the 60 min chart and then AAPL will have some trouble.

This is the 30 min chart, not as strong as the 60 min, but shows more detail and more recent action. You can see it too was confirming the uptrend and recently went negative at this small top.

This is why I say AAPL may have trouble ahead of it, but it would take some time for the 60 min chart to go negative enough that it's worth consideration as a short play.

 We have had a price range since the negative divergence at the recent highs, this 1 min chart shows an intraday positive leading divergence forming, it's impressive for a 1 min chart, but still a 1 min chart. All new divergences (we were coming off a negative divergence at the recent top) will start on the fastest charts (1-3 min). If the divergence is strong enough, it will migrate to a longer timeframe like 5 or 10 mins and then it becomes a higher probability trade.

The yellow line shows the range where stops will be congregated so don't be surprised if you see a break below that support line to hit stops and take their shares if the accumulation continues, that's a type of head fake move.

 The 2 min chart isn't as sharp, but it has a longer positive divergence.

I personally would not go long AAPL even for a quick trade with just the 1 and 2 min charts positiver, as you see below the 3 min is still in line. If the 3 min goes positive then I may reconsider.

The NASDAQ 100/QQQ definitely needs some help, perhaps AAPL is being sent in to do that.

3 min is still in line.

AAPL may make for a decent bounce trade if it can keep it together and the Q's can provide support.

USO Update

I have been patiently waiting for a decent short set-up in USO for at least a few week now as USO has been in a large range (looks like strong distribution) since July.

There's a possible short set up working its way through now, I'll show you the basics and then it's "take it as it comes".

 This is the most important chart, a 60 min leading negative divergence within the range, this suggests a nice trending move to the downside which is what I'd like. I've found WTI crude has amazing resiliency against events in the MENA region (almost completely ignoring them).

From where USO is right now, I'd like to short in to some strength and enter near the top of the range, that's where the risk is smallest and on the way down if it looks like there's accumulation as we approach the bottom of the range, implying USO is still rangebound, then profits on a swing trade can be taken and wait for the next set up.

 The 5 min chart looks like USO is building a small base or starting to accumulate for a run toward the upper part of the range, however we have the same issue we had with the SPY's 15 min positive divergence and that is enough real-estate in the way of a base (price) to support a move higher.

 In the very short term (1 min intraday), it looks like USO will come down to what would likely be the base area and post more accumulation there, creating larger positives in the 5 min + charts and also creating that reversal process and enough of a base to support such a move.

I'll be setting alerts below to check on accumulation and above to know when USO is in the right area, but I like this a lot as a longer term trending trade, it may be a nice position with 2x leverage (short).

Quick Update

All of the averages have at least 1 min intraday negatives right now, not surprising, the Q's and IWM though look particularly weak, I'm going to have to look at them closer, you can see XLF has outperformed XLK (Financial vs Tech) easily so far today.

A pullback gives us more data on the health of a bounce, we should see it accumulated.

USO is coming up, there may be a set up there soon.

Early Update Incl. GLD/SLV

Ironically (kind of scary), last night's Daily Wrap talked about the importance of making a bounce believable and how recent signals in transports were catching my interest as well as other sectors like financials, but transports is very specific to technical traders that abide by Dow Theory (in essence, it's outdated, but if the Industrials, Dow-30 rally, so should the transports, Dow 20 as Industrials produce goods, Transports ship them). The US long ago gave up being an industrial economy and became a services economy, but Technicians still want to see transports, I suggested a better (updated) pair which would be the Russell 2000 in place of the Dow-30 and something like FED-EX as the transports because they are doing more services shipping than say rails which went out a long time ago.

Even though a 1 day turn around in transports or even a week is far from indicating the US is back on healthy ground, it's still important to Technical Traders who have Dow Theory memorized. That's why I found it interesting yesterday to see Transports looking like they'd pop (now up +1.5%). This is an excerpt from last night's "Daily Wrap"
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Carrying on... I've noticed several sectors seeing nice 3C divergences, Financials has been one I've talked about, but one of the tricks of getting a bounce to work is making it believable, for any old-timers familiar with Dow theory, they're going to be looking for transports to play along.

This 1 min chart is spotty enough, I didn't think I needed to point out the trends.

This is the 5 min, in line on the way down and leading positive, all about the right time as well.
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The SPY divergence...

 You may recall I wasn't feeling great about the SPY 15 min leading positive divergence on Tuesday, I thought price needed to come down and build a larger footprint or base to hold a divergence that sharp, that happened yesterday and now the SPY 15 min positive looks appropriate for a bounce.

At the same time, Transports get on board.

I wouldn't normally call the initial knee-jerk reaction down after the 2 p.m. release of the minutes yesterday a "head fake move", but the volume says different and if you look at last night's posts and yesterday afternoons, they all show that head fake move was accumulated.


As for Gold and Silver, the typical "Taper-Off" move would see the market rally, the $USD fall and Gold rally as well, well, there's been a switch as you can see below gold now has an inverse relationship with the SPX which suggests this is a bounce, not "Hope for a Taper-Off" outcome.

SPY vs. GLD

The same is true of SLV.

The GLD chart is still in a range often seen in distribution, the danger short term of the range is that resistance attracts stops and limit orders which attracts head fake moves, but so far I don't see a large probability of that and 3C is still leading negative.

The same is true for SLV.

I think if you didn't already get in to long "Hitch-hiking" positions, which I don't blame anyone who didn't, if this is our bounce, it's probably too late in most instances, but the real mission here is to short weak stocks in to price strength.

I'm going to keep looking for evidence to verify as well as manage positions that are green on this move and look for any trades that are of decent quality.

Long Assets Up

Just scrolling through a couple of watchlists today, I can't believe how many of the stocks I put out on a list or posted individually about are up today. Our longs/calls like: GOOG, MCP (which I've been pushing a lot lately), FSLR, URRE, UNG, then a bunch more I thought would bounce and even if you're not interested in the hitch-hike, price strength can be used (eventually) to short in to, most of these were in a list of stocks I put out yesterday that are now up significantly this a.m.: XLF, FAS, AMZN, GS, IOC, XOM and VERY SPECIFICALLY from last night's update, IYT or Transports.

I'm still looking at opening indications, but this looks and feels like the bounce, yesterday added a larger footprint to the base, yet it's still a.m. trade which I don't trust so I'm checking indications and trying to see if this is just a knee jerk or something more along the lines of the bounce expected.

It's Not the Data

We should see a gap up from a steady rise in the overnight session being given credit because of better than expected Chinese and European PMI's, the US markets don't care about that right now, they rallied this morning on an Initial Claims miss and a pretty big one, if you're looking for a reason, look no further than USD/JPY

Russell 2k futures overnight rally at bad Initial Claims print

USD/JPY up steady all night.