After the narrowest range in SPX closes over a 5-day period in history (or at least since Bloomberg started keeping data in 1928), a mere 7.7 basis points over the 5-day range, today the SPX ramped higher in a textbook head fake move...Coincidence
However the day before the F_O_M_C minutes come out, apparently the SPX needed help achieving its +.51% close
on no catalyst whatsoever (
leaving Transports and the Russell 2000 still red on the week) needed some help...I saw these in TICK, but it was actually VIX slams, 3 of them and a little beyond coincidence...
VIX vs SPX, here I have inverted the VIX'x price (blue) to show the correlation with the SPX and where the Slam downs were (remember the VIX's price is upside down). The first slam lasted nearly 10 minutes and was at the a.m. lows for the market, the second around 2:12 p.m. and the fourth at the close which had no effect.
This is somewhat ironic because protection was massively bid, especially through the afternoon and the recent trend...
Here SPX prices (green) are inverted and VIX are normal, note the aggressive uptrend this afternoon in VIX as protection is aggressively bid up, it's little wonder they were slamming the VIX.
And the recent trend, also with SPX prices inverted...
Shows a normal correlation (SPX and VIX move opposite each other) to the left, but over the last 7 days, the VIX has aggressively trended up while the SPX has been in one of the flattest closing ranges, well actually the flattest closing range over a 5 day period EVER. Even with the SPX's move today, the VIX trend is clearly up meaning deep pocket traders are aggressively bidding up protection as retail is just about as bullish as can be (so I doubt very much dumb money is buying up protection nor would they have the ability to move it like this).
Toward the close, just like VIX, over the last 2 hours VIX FUTURES were also aggressively bid (protection from a downside move or capitalizing on one)
VIX futures vs SPX (inverted) the last 2 hours in to tomorrow's F_O_M_C Minutes release.
Coincidence?
Looking at TICK, intraday breadth (TICK=the number of all NYSE stocks advancing minus the number of ALL NYSE stocks declining).
Note the first VIX slam was not only at the morning lows, but at an area where TICK was starting to aggressively trend down, a trend of more stocks selling off than gaining. The second slam lasted about 2 minutes in the afternoon as the TICK uptrend broke and started a downtrend, despite the VIX slam, the TICK continued to lose ground while the SPX held it's ground,
translation, despite the SPX holding its ground or even gaining, more stocks were selling off than moving up as opposed to just 15-20 minutes earlier at the VIX slam obviously meant to counter that from happening and maintain the market's prices.
The last VIX slam in to the close, one we are more than use to seeing (afternoon ramp) there was no beneficial effect at all. This is what the SPY looked like at each of the VIX slams...
The first slam at the morning lows as TICK continued to slide, obviously an effort meant to and successfully halting the slide in market internals and thus market prices. The second afternoon slam of the VIX held prices intact, although internals suffered and the late day slam of the VIX in to the close had no effect whatsoever.
This is what ES/SPX futures' 3C trend looked like...
ES 1 min 3C chart.
The $USDX was not looking good either which was essential as the USD/JPY was the ramp for the market otherwise, other than the VIX.
USDX 1 min today.
The $USD was weak on a stronger Euro on stronger German data, also a macro trend (stronger Euro)
The USD/JPY (candlesticks) vs ES (purple) during the cash market. The USD/JPY's ONLY saving grace was the Yen was weaker intraday.
If that weren't bad enough, take a look at High Yield Corporate Credit in to the close, HYG...
Talk about an aggressive sell-off, HYG plummets at the close.
I know I said I wouldn't post the macro charts of Leading Indicators, but I think in this case it's worth a reminder.
Last time HYG was divergent was right at the head fake move of the August cycle's top in September, today looked like another TEXTBOOK head fake move and beyond the massive divergence already in place, today's hard selling in HY Credit in to the close, again in front of the F_E_D minutes tomorrow.
High Yield Credit (not HYG as it is used as a ramp for the market every so often), also has a VERY nasty trend.
Understand that HY Credit is an institutional risk asset like we may trade a 2 or 3x levered ETF as a risk asset, the fact no risk assets including commodities (beyond some mild precious metal strength today) are rallying.
HY Credit..
HY Credit and...
Another HY Credit slam at the end of the day like HYG, this is PIMCO's High Yield Credit Fund.
And professional sentiment...
AGAIN, selling off.
And again the trend is probably worthwhile...
The last time there was a negative divegrence in professional sentiment vs the SPX was at the head fake move at the September high (August cycle's top/head fake move). THIS IS A DIVERGENCE OF QUITE ANOTHER ORDER.
I know there are a lot of Wall Street mavens calling for a historic decline, I get the emails from members every day and appreciate them, but I don't need to know Carl Icahn's position on the market with charts like this,
the market is speaking plainly if you listen to the message of the market which few want to do at all time highs, but in 2007 we topped at all time highs, AAPL lost -45% after making all time highs, Oil in 2008 lost -80% after making a bull market high over almost the entire Bush presidency.
This decline in USO of over -80% saw extreme 3C negative divergences, but no matter where you had sold short during those divergences, you still would have made well over +60%. There's a reason I DON'T IGNORE these divergences, experience.
As seen earlier in the day, both 5 and 30 year yields which have seen the market following them nearly tick for tick, diverged massively today. It almost seems like the market started feeling their gravity just as the bond market closed.
5 year yields leading indicator vs SPX
30 year yields leading indicator vs SPX.
As mentioned, other than gold and silver with some moderate strength, the commodity complex didn't benefit at all from the weaker dollar, Dr. Copper was slammed, oil was slammed lower, near 4 year lows.
Transports were up +.33%, still red on the week and a laggard, they also saw selling in to the close and on volume.
Transports selling in to the afternoon.
In fact just about every asset class sold in to the afternoon/close including the averages, thus the VIX slams.
Russell 2000 selling the last 3 hours...
Today for the first time in about a week we had a Dominant Price/Volume Relationship in all of the averages except the Russell 2000, it was Close Up/Volume Up. This is the most bullish P/V relationship, but ironically it is also the most likely to cause a short term overbought condition in which the market closes lower the next day.
In another overbought sign, for the first time in weeks, all 9 S&P sectors closed green, with the more defensive acting Healthcare up +1.61 and energy lagging, but green at +0.08%.
Of the 238 Morningstar Industry/Sub-Industry groups, a whopping 199 of 238 closed green in another 1-day overbought sign. We haven't seen these in quite a while. Interestingly, they often have a negative next day effect and if this is the head fake I'd say it is by about 90%, then all the more.
Yet again, there was no movement in breadth indicators, take the
Percentage of NYSE Stocks Above their 40 or 200-day Moving Averages,...
The indicator in green vs the SPX shows NO movement even today, same with the 40-day moving average version.
The averages not only did not confirm today which they could have done in an hour, they showed distribution through the day.
SPY
QQQ
IWM
Finally, the same indicator that went wildly positive at the October lows and called the September highs, is wildly negative here, not confirming price, the SPX/RUT Ratio.
SPX/RUT Ratio vs SPy.
I'll check on futures later tonight, I'm particularly interested in the Nikkei 225 futures as they were the first crack with a head fake following as well as USD/JPY, right now Nikkei 225 Futures' 3C charts don't look good.
The macro charts negatives have crept to the short term timing- 1 min
NKD 5 min
NKD 7 min
Macro 4 hour NKD...
A gap up in the morning is my thesis on a Key 1-day reversal, if we get one and can confirm, there will be a lot of action very quickly, especially with a high probability (90%) head fake move in place, breadth caved in and all leading indicators at the worst levels we've seen since using them.
