Question and Answer

This is a reply I just sent out to one ( a couple) of our very long term members. They are a husband / wife duo that I have a lot of respect for in how they work together as a married couple (which is hard in any business, much less the stock market) in such a high stress, difficult environment and they live out their dreams or perhaps mine as they do their trading from various locations across the world like the Canary Islands or somewhere in Europe, which I simply love the idea of and I would probably do it as well if the travel time didn't make it difficult for me to be there for every moment of the market.

The general question had to do with a couple of assets or specific stocks/Industry groups (like biotechs as you'll see by my answer), how the assets look, how they looked today in to the gains that we anticipated last week for this week as a "Week Ahead" forecast and generally where we are in the process more or less. This is really what I would have wanted to write for the "Week Ahead" post had I more time to get it out.

"Hey (Nice married couple),

I just put out the Week Ahead post, it's essentially what I tried to convey in the last email. Is there strong distribution in to Biotechs and NFLX or the market at large? Yes, but I laid out 3 specific sets of conditions that need to be fulfilled. When the market is giving us a strong edge, you don't have to guess at it, whether it is "close" or close enough, it is a clear signal just as last week's Thursday post for a breakout above the trainagle like price patterns or pinched volatility like Bollinger bands, you know what happens with them.

As for EW guys, I really don't know what they expect, I have a member who sends me updates from supposedly one of the best guys out there and they have been all over the place this week, changing almost every day. Our forecast has not changed once since last Thursday when it was issued. The conditions that need to be met have not changed once since they were put out as well.

There are very good signs that are exactly as I expected and I believe I made those clear last week for this week's price and 3C action. I feel, very good and justified in not having wavered, not having changed the forecast mid-way through it, although if the market changed, I would change my forecast to fit it, but it hasn't changed, it has done as expected, although a little weaker and taking a little longer than I first thought, but the process is playing out exactly as expected despite a couple of days of no real price movement this week that stretched out the process by 2-days, otherwise I suspect we'd have wrapped it up this week as it looks like we have about 2 days to go based on where we are, but I'll know more in the Daily Wrap tonight after I look at the data I can only collect after the close.

Generally speaking, I think if you were a trend trader and did not have an expectation to nail the exact top as most people consider that a fool's game, for us the signals are what call the top just like the February 26th short in NFLX at the exact top, considering the trade set-up was made on January 21st as to what I'd be looking for, so it took some patience, but we hit the exact top, not because I believe we can and should always expect to hit the exact top or bottom, but based on what the charts were telling us and they just happened to be exactly right.

In this week's case, if I had called a NFLX short before today, based on anything other than the charts, I would have been wrong which I'm okay with, everyone is going to be wrong, but I would have been wrong for the wrong reason, I would have been wrong because I made a judgement call rather than waited patiently as we did last time with NFLX for the charts to tell us when (to act); that would bother me a great deal, to be wrong because I was impatient or made an arbitrary call without objective evidence.

In conclusion, the charts for NFLX or Biotechs or even VIX-based assets are moving in the right direction, they are moving in the anticipated direction, when I call out trade set ups/ideas for those assets (I suspect within the next couple of days), it will be for the right reason, it will be because the evidence points to that direction overwhelmingly just like last Thursday's bounce call for this week or Feb. 26th's NFLX short call at the exact top after waiting 26 days since I had posted exactly what we'd be looking for in shorting NFLX and good thing too as it gave us an excellent short entry and a low risk entry not to mention a well timed entry and as such, the position is still at a +6% gain despite a +9.82% gain in NFLX since our call for a move up this week in the market  (made last Thursday April 2nd)."

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Now as to the triangle-based forecast, as I said the last two night's in the Daily Wrap, "We need to see some more upside". The fact is the market moves on emotion, especially with these kinds of shorter term moves. Without a move that is strong enough to make people act out of emotion, whether fear or greed-based emotion such as  being afraid they'll miss the trade so they chase an asset rather than waiting for it to come to them, they react rather than plan pro-actively, then there's not much reason to run the move. Very little that happens in the market happens out of coincidence or just spur of the moment reaction. Most of what happens in the market like a move like this week's was planned days in advance, sometimes weeks or months. As we have seen with Home Builders and their accumulation during the Tech Bubble popping in 2000, they (Home-Builders) were being accumulated for a year and a half at minimum and a good 2-3 years before the bubble in Housing prices began.

AFTER THE TECH REVOLUTION, THE ADVENT OF THE INTERNET IN THE 1990's AND DIGITAL CONVERGENCE IN WHICH EVERYTHING YOU NEED LIKE A WATCH, CAMERA, PHONE, COMPUTER OR INTERNET CONNECTION, DAY-TIMER PLANNER, AND EVERYTHING ELSE ON YOUR CELLPHONE OR TABLET, WHO IN THEIR RIGHT MIND WOULD HAVE EVER GUESSED THAT BORING HOUSING WOULD LEAD THE NEXT BULL MARKET ANDD SUPPORT CONSUMER SPENDING VIA THE NET WORTH OF PEOPLE'S HOMES INCREASING AT AN EXPONENTIAL GROWTH RATE, ALLOWING THEM TO BORROW LARGE SUMS AND SPEND IT IN THE ECONOMY?

I don't know who would have predicted we'd go from a tech revolution to a boring housing based bull market, but the leaders of one bull market are never the leaders of the next. I have showed you what the home builder charts looked like during the year 2000 as the 
Tech/Dot.Com Bubble burst. AS MOST OF YOU HAVE SEEN ON THE CHARTS I'VE POSTED OF HOME BUILDERS DURING THE YEAR 2000, SOMEONE KNEW HOUSING AND HOME BUILDERS WOULD BE NEXT AND THEY KNEW THIS YEARS IN ADVANCE.


My point simply being, that almost nothing you see in the market, whether short term over a week or long term over a full bull market cycle of approximately 5 years happens and wasn't already planned in advance. There's VERY little actual real time discounting in the market unless it is based on a surprise event that no one could predict like some of the tragic events of the last 20 years. This is how we can make a "Week ahead" forecast or a "NFLX trade set-up" and enter at the exact high in price.

NFLX daily chart and at #1) our "earning's based" short-set-up plan. at #2 the minimum upside target we were expecting as middle men like NASDAQ market makers were caught holding inventory at higher prices when it gapped down in October and price was set up in advance on crappy earnings to at least fill that gap and let the middle men get out without taking a major loss. At #3 the "Short Entry" on February 26th posted here on not only the highest close of all of 2015, but the highest intraday move of all of 2015.

Currently even with the forecasted bounce higher this week in the market and thus at least 2/3rd of stocks bouncing with it, we are still at a profit in NFLX as we entered at the exact top. Since our initial trade-set-up (what we were looking for in advance before entering NFLX short), 26 days had passed until we entered. What are the probabilities that we entered at the exact high just by chance over that period of more than 5 trading week?

So once again, very little happens in the market that wasn't already planned in advance, we know what we are looking for before we set up the next major wave of trades and so far, everything has progressed as I not only expected, but had to see happen for our forecast and plan to work.

The Daily Wrap is on the way...

The Week Ahead

If you go back to last Thursday's forecast for the market this week, you'll see that everything we expected has come to pass thus far, last Thursday's week ahead forecast IMPORTANT: AAPL Set-up & Market Movement.

There are 3 things I've been very specific in looking for to tell me when we are at the end of this move and set up in the best possible position we can be for the next pivot move to the downside, but I suspect this is not going to be continued chop and tight ranges.

Volatility overall is one thing I have been looking for to increase, but specifically as I have laid out:

1)  the 15 min charts which are the line in the sand for this move among the averages to fail and do so clearly, not so you have to inspect the chart, but so it jumps off the chart without doubt.

2) The Index futures' 7-15 min charts (7, 10  and 15 min) to go negative as these are the timing aspect, I have kept you up to date on where they stand.

3) Leading Indicators to unambiguously tell us that we are at the turning point.

All of these have moved in the right direction, some so much so that if they were the only criteria, I probably would have called the turn and probably would have done so early.

I'll update you after the close on where we stand, however in the mean time, I believe we are not done with last week's forecasted move which has been slow to make the moves expected and fast to fill in the expectations without completely fulfilling them. I have no doubt of the move's purpose as expected last week as the charts have been exceptionally clear.

In the week ahead, I'll be looking for the final phases of these 3 conditions to be met, but to give you some idea of how things are going beyond the Index futures update you've already seen and largely the divergences in the averages...

 The DIA 1 min intraday chart with April 2nd (last Thursday's "Week Ahead" post, IMPORTANT: AAPL Set-up & Market Movement which was looking for a breakout move to the upside from many triangle-based price patterns or volatility squeezes, but distribution in to those moves.

The DIA 1 min above shows that clear distribution since the moves higher expected for this week starting on the 6th of April, especially today.


 The 2 min IWM with the same April 6th date and the forecasted move to the upside markeed as linked from the actual post above, and distribution this whole week in to the anticipated/forecasted price move.

Watchlist (Short trade set-up) assets like IBB/NASDAQ Biotech Index are doing EXACTLY what was expected for the week thus far...

IBB's accumulation late last week, the overall forecast for a move to the upside on April 2nd (last Thursday) and the distribution signals (5 min) chart expected to be seen.

NFLX is another watchlist asset/candidate for a short set up...

 Since April 2nd's call, NFLX and the broad market have moved according to forecast, they have also showed strong distribution in to the move. However if I changed the rules I set out last week and this week at a whim because of the distribution in to the move, I WOULD HAVE CALLED AN EARLY ENTRY IN NFLX, NOT AT ALL IN LINE WITH THE TRADE SET UP AND THE REASONS FOR BEING PATIENT AND YOU'D HAVE SUB-PAR POSITIONING.

EVEN WITH TODAY'S DISTRIBUTION, UNTIL THE 15 MIN. CHARTS ARE SCREAMING LIKE THIS 5 MIN... WE ARE NOT THERE YET...

NFLX 15 min since the upside call from last week for this week, even though there is a negative divegrence on the 15 min chart, it is not SCREAMING as the 5 min chart above is and this WAS THE CONDITIONS SET OUT FOR LOOKING FOR THE PIVOT/END TO THE MOVE AND NEW TRADE ENTRIES.

SPY 3 min has seen strong distribution since last week's call...

 Migration of the divegrence (strengthening) is present on the 5 min chart and it is screaming, however the 15 min chart was set out as the goal.

15 min SPY is the strongest and clearly not there yet in which case I'd have made a mistake in calling early based on a lack of patience.

 DIA 15 min chart is much closer to being there, but all of them need to be.

The QQQ chart is almost there (15 min), but almost is not the same as THERE.

And the IWM bear flag is showing strong distribution oin a 15 min chart, but I called for all of the averages, Index futures and leading indicators,

Thus far we have been correct in being patient.

IWM 15  without the drawing.

I think we are exceptionally close, close enough for trend trades I'm sure, but for the actual pivot, not quite there. I suspect maybe a day or two to go.

The 2 P.M. Op-Ex Pin Has Passed

This is when we usually get some of the best data of the week and right now I feel like a 1-legged man in a butt-kicking contest trying to keep up with all of the assets I need to watch.

I see some VERY sharp intraday market negative divergences, the Dow showing one of the worst and in most cases, the 15 minute charts from last Thursday that were positive (except in the IWM) that were the line in the sand or as I often call it, "Gas in the tank" for the move forecasted for this week, have reached a point in which their deterioration is sharpening.

I still don't feel we are quite there, but obviously much, much closer, but I'm going to try to gather as much data as possible until the close as it tends to be the best of the week.

If I run across any trades I think are in a high probability area that have great timing, I will post them as I can.
 Generally speaking though, I do believe we are in about the right area for any new broad market correlated shorts such as short SPY, IWM, etc. This would include correlation for other market assets that have a tight correlation with the market including individual assets from the Financial sector, XLF to stocks like NFLX, although I;'d much prefer update those specifically, I'm just trying to convey that I believe we are in the general area for shorts in these assets as they are led directionally by the broader market to the tune of about 66% of their influence.

I'll get to your emails as quickly as possible, but I must consider the entire Wolf on Wall Street membership first.

Trade Idea: GLD Puts

I still see some support for higher near term prices for GLD, but the overall charts look like the Swing GLD move lower is the highest probability play. I'll be posting a 1/2 size May 15 GLD $116 Put position in the tracking portfolio, I prefer some leverage here as I suspect the downside target is about $110 and I can control my risk (the total premium paid is the total risk).

Closing USO 1/2 Size Long Position

I'll be closing this at break-even, but I'm doing so as to not incur risk as intraday charts are fading fast. There are still decent 2, 3, 5 min charts suggesting we see more upside and I'll wait for that before entertaining the USO short, but for now, I think I'd prefer at least take any downside risk off the table in this case.

Chart updates coming, but they are as I said, intraday negative like yesterday, with slightly longer still positive suggesting more upside.

USO/Crude Follow Up

Much like gold, I've been expecting a bounce in USO to set up a swing short at better prices, less risk and better timing.

These two posts are from yesterday, USO Trade-Set-Up which lays out an outline or recap of the idea which originally came Tuesday when USO finally saw a 3C divergence as it had been trading nearly perfectly in line until this week, price weakness followed the very next day after our post that we'd be seeing USO weakness with a strong move of -5.19% on Wednesday, that post from Tuesday dealing with the broader aspect of the USO swing trade short set up can be found here, USO Update. Previous to this post, the last USO Update was 3/31 as the 3C charts had been trading in line with USO ever since or at least until this week's post suggesting we'd see some downside.

Yesterday's final post for USO (not including the Daily Wrap), was a quick update, Quick USO Update in which a similar situation to GLD's was quickly updated with the following...

USO's negative divergence as posted this Tuesday and yesterday's 5+% gap down. Today as suspected yesterday and last night, we have a decent intraday positive divergence suggesting something along the lines of a gap fill, certainly more than what we have seen intraday so far.

As for today's update as USO is +1.55% higher today as expected...(these look to make for some decent little short term leveraged option trades, the key being short term)...

The original bounce idea this week after Wednesday's 5/19% decline was not based on a dead cat bounce due to the sharp drop forecasted Tuesday, it was because of the 3C charts. Our original target in which I was looking for price to hit to close a 1/2 size long position entered a while back at a small gain and likely enter or for some, add to short Swing trade positions entered Tuesday before Wednesday's -5.19% decline was and still is the gap area from Wednesday's decline; this is why no USO position/trade was put out on yesterday's gains, although they were better pricing, they were not the target area and we still had/have signals suggesting we hit that gap target area. This is a great example of how these short term trades (likely needing the leverage of leveraged ETFs or options) can work as anything much longer than a day or two here and there has frustrated traders over the last month or so with increasing frequency as the market's range has pinched even tighter in to the general triangle shape we posted last week and was a big part of this week's forecast for price action. Very short term trades like a quick short on Tuesday closed Wednesday or a long Wednesday closed in to yesterday's intraday highs or today's continued move (I believe) are examples of just how nimble you need to be, but otherwise the signals as you already saw in GLD are very accurate.

This is where knowing what kind of trader you are or what your lifestyle will allow is very important. I may be able to find the 5 extra minutes in my day to enter the trade, in a normal 12 hour day with my busiest part during the 6.5 hours the market is open,I'd be lucky to find the 5 extra minutes to enter the trade, THAT'S NOT WHAT CONCERNS ME, it's the half day or whole day I'd need to spend checking in on the asset to see where I need to exit that I simply don't have time for personally, which is why I choose to wait for the larger trade set-ups that are at least swing trade in nature, that I can find ample time to determine when I need to be looking at getting out of the trade. In my situation with what I do, it's not getting in that I don't have time for, it's managing and getting out. You have to consider what you have time for, what your trading strengths are, what your risk tolerance is. There's always a trade out there, but it doesn't mean it's well suited to your personal situation. Thus, I'd rather trade the larger swings with higher probabilities and easier set-ups and management.

As to today's updated charts, I'll try to give a broad overview and include multiple asset analysis as well as multiple timeframe analysis.

 As a quick review (you can see past USO posts for an even larger picture), this is the 30 min USO chart showing the base area that has developed, originally thought to be a smaller base for a counter trend trade to the upside that would fail and head lower, but counter trend trades are some of the strongest, fastest moving trades out there so they are well worthwhile. The half position I mentioned opened in USO was in case we did get the counter trend bounce which would have been a sharp upside move and then failure and likely a new low in oil. The reason it was half size was because the base was getting a little bit larger than what was needed for a simple counter trend rally, thus I had to consider the possibility this was going to be a larger base for a primary trend reversal to the upside, not as fast or sharp of a rally, but a longer lasting move making much higher highs/gains, if that started to look more likely I wanted the ability to add to the position at better prices in anticipation of a longer term trending trade. I now believe that's what we are seeing built and the pullback/swing move I have suspected this week would be toward the base range lows (white arrow). 

Note the yellow arrow denotes (as usual) a head fake move/stop run which is one of the best price pattern based signals we have that must be confirmed by 3C. In this case, the run on stops took place at the yellow arrow's head fake move, accumulated the stops at lower prices and then ran to the upside. This is the nature of a head fake move whether creating a bear trap as in this case which gives the upside move more momentum as shorts who entered on the break of support are squeezed and forced to cover (changing the supply/demand dynamic and sending prices higher/faster as well as allowing smart money to pick up some last minute shares on the cheap as short selling is still selling and smart money is accumulating those shares on the cheap) or whether an upside head fake creating a bull trap just before a downside move, forcing new longs who entered on something like the breakout of our current triangles, (again altering supply / demand dynamics, allowing smart money to short in to higher prices as they are selling to retail who's buying the breakout, causing retail to stop out as prices move lower and create more downside momentum THIS IS WHY HEAD FAKE MOVES ARE SO IMPORTANT TO OUR ENTRIES/TRADES/TIMING AND WHY VERIFYING THEM IS SO IMPORTANT) to sell as price moves lower creating a downside snowball effect of supply and lower prices. It's actually ingenious and all based on the predictability of technical retail traders.

The 15 min USO chart showing 3C finally quit confirming and giving us a clear negative divergence as posted this Tuesday with Wednesday's decline.

 60 min Brent Crude futures (you can see the difference between the timing charts of the averages and that of the futures as this is essentially the same signal on a 60 min chart as what we have in USO on a 15 minute chart) shows the confirmation mentioned and the reason I did not update USO since 3/31 as there was no edge and the recent negative divegrence this week posted Tuesday with Wednesday's price decline.

This is multiple asset confirmation as USO represent WTI crude and /CL represents Brent Crude FUTURES , yet they have the exact same signal in two different assets that trade at different premiums to each other.


 The recent USO post this Tuesday linked above as 3C finally broke from confirmation giving us a negative divegrence and the first strong edge for a trade which was a 1-day -5.19% move in USO.

The the positive divergence on short term charts around mid-week which became part of a larger trade set up as we let price come to us for a second chance trade opportunity and the ability to confirm our suspicions.

Yesterday's bounce was a better entry, although not any where near our original expectations of up to a gap fill, creating a much better entry. Thus it should be very clear today why patience is so important as rushing in to the trade yesterday would have just put you at a loss today which is at least dead money and opportunity cost short term, perhaps draw down or even the difference between an options trade that works and one that doesn't if you use near term expirations.

 The 30 min Oil Futures chart shows the in line area in green where 3C was confirming price, rather than showing us an edge/divergence . Tuesday is when I posted the first negative divergence since the last update at 3/31 which was followed the next day by a -5.19% decline in USO and our most recent near term bounce which can be used to enter a swing short in USO at better prices, less risk, better timing and stronger confirmation.

 USO 1 min shows again Tuesday's negative divegrence posted and linked above, the positive divergence that ran in to yesterday's intraday highs, but we still waited as it wasn't the highs expected and I'd rather miss a trade than enter a sub-par trade that creates more risk than reward because of a lack of patience.

Crude futures 10 min also showing Tuesday's negative divegrence (LOTS OF CONFIRMATION IN MULTIPLE ASSETS AND MULTIPLE TIMEFRAMES) . As far as I can tell, this positive divegrence is still in effect and the chances of getting a bounce up to a gap fill fo Wednesday's gap down are still a pretty decent chance as was our initial target on the upside for a new swing short USO entry or add to position.

 5 min Crude/Brent Futures showing the negative divergence at yesterday''s intraday highs. This could have caused me to enter the trade then and there as the negative divegrence suggested price move lower, but this was not the higher probability set up of a gap fill and the charts like the 10 min above were still pointing to additional upside as this chart is currently.

And on a 15 min USO chart Tuesday's post at USO bounce highs and the slide by over 5% the next day as expected Tuesday , in yellow the gap fill area and the area I'd like to see price move to before entering a ?USO swing short. Remember the longer term USO charts are suggesting a primary trend reversal to the upside so any near term entry in USO short would be for a swing move toward the $16-$16.50 target level.

I'll update this as best as I can as we move toward a better set up. Again either VERY nimble, leveraged trading is required or patience and letting the trade come to you which is always my preference for the wold pack, to ambush the trade on our terms, our turf and you can always pass and wait for the next trade rather than accept a sub-par trade.

Again, almost all of the wisdom and quotes of Jesse Livermore of the early 20th century, trading during the 1929 crash and widely considered the best trader of all time all revolve around one theme and that is PATIENCE.

GLD Update

Wednesday and Yesterday signs started building that we'd see a bounce in gold/GLD near term, this is from yesterday's post, GLD Follow Up...

 Yesterday's chart from the GLD Follow Up post and commentary,

"On an intraday 1 min chart 3C has been confirming price's downside action since the decline from Monday's open. As you know from both yesterday and last night's updates, I suspect we see a n intraday or very short term pop slightly higher, which offers a second chance opportunity for the trade at better prices and lower risk. Note today's intraday positive divergence as well as the price trend moving from a clean diagonal downtrend to a flat lateral trend, often seen at areas of accumulation or distribution although this is a very short term bounce I'm looking for which I believe is best used as a short (swing) entry in GLD and miners."

Today GLD has bounced about +1.2% and GDX at +2.80% so far.

This morning's charts look like this...

 This is a closer view of the exact same divergence from yesterday posted above, but now GLD has bounced up to 3C's leading positive divergence as suspected Wednesday and then expected as of yesterday/last night.

Right now the intraday 1 min chart is still perfectly in line with GLFD prices, I'd like to see a clear negative divergence form before entering a GLD swing short or adding to one being as yesterday was a full day's accumulation, thus I'd prefer to have the best timing signals as I may consider this one for a put position as I only really see about a 5% gain in a straight GLD swing short.

 The 2 min chart was also leading positive yesterday and is perfectly in line with price this morning as price has reverted up to the short term accumulation/3C level from yesterday as it ranged laterally which is where we see the most frequent 3C activity, either accumulation or distribution depending on the preceding trend, in this case short term accumulation for such a bounce.

Even though this bounce is being credited to news out of India, obviously someone was either aware of the news coming out or it's simply coincidence, but I don't think that divegrence and today's move higher can possibly be considered coincidence.

The 5 min chart is still overall negative suggesting the swing short is still the dominant trade and a bounce only gives you better positioning at lower risk. Waiting for the 1-2 min charts to turn negative gives us the best probabilities and timing, especially if you plan to consider options as a trade vehicle.

And the 15 min chart that got the entire GLD swing short notion started after some accumulation sending GLD higher, a negative divergence set in suggesting this may be a range and we see a swing lower back to the $110.00 area.

I'll keep an eye on the intraday charts and post when it looks like it's safe for an options (put) trade.

Index Futures Update

This is 1 of 3 indications I have been watching looking for the 7-15 min charts to go negative on the Index futures. We started the week higher as forecast and with Index futures from 5 min to 60 min all perfectly in line with price, since there has been deterioration on the 30/60 min charts which are negative and since the 5 min charts started going negative in several of the Index futures which has now migrated to some longer timeframes.

 NQ 5 min which is negative, it's a starting place for migration of the divergence (strengthening)  to occur, but not the 7-15 min charts I'm looking for to turn negative which can happen very quickly with Index futures.

ES has finally joined NQ 5 min in turning negative since yesterday.

 NQ 7 min has migrated, while not deeply leading negative, it is well in to the process, especially considering how this timeframe has been in line all week until today.

 This is ES 7 min and is an example of what "in line" has looked like most of the week in Index futures, this is what NQ looked like until just the past few days.

NQ 10 min is also deteriorating.

While ES and TF 10 min are still in line.

We are even seeing the first hints of the 15 min NQ chart go negative, thus I don't expect it will be too much longer before this aspect is fulfilled, at which time Leading Indicators should be in place and I'd already say the 3C divergences in the major averages are already well in place.

A.M. Update

Once again Asia was generally up, the Nikkei being the standout at a loss of -.15%, while the Hang Seng forged ahead with another gain of +1.25%, this time on 130% of the 30-day volume average and the Shanghai Index closed up +1.94%. It would seem the mania-like rush in to Hong Kong is starting to fade a bit considering yesterday's 2.70% gain leaving a long legged Doji Star and Wednesday's 3.80% gain.

Something just feels a little off, although I know bubbles as these tend to last much longer than a few days, something just doesn't feel right in Asia considering the housing bubble that they can't seem to keep inflated, it seems the Shanghai and now Hang Seng have become Casino Macau, except everyone is invited, even the illiterates (that's not a joke).  If it doesn't feel right in Asia, I guess I'd be hypocritical to say the same wouldn't apply to the US, just on a much longer timescale (failed property bubble, everyone rushes in to the stock market as the F_E_D inflates the next bubble).

Speaking of the F_E_D, both Kocherlakota and Lacker are due to speak today.

Option Expiration Friday's are generally pretty dull (next week is monthly op-ex), which generally gives me time to concentrate on more stock specific assets which is what I'll be spending a lot of time on, however once again, some little voice in the back of my head keeps whispering "Asian Financial Crisis". I do remember the crisis although being only about 25 at the time and a neophyte in the market, I really didn't understand the crisis as I would today and I know if had roots in different regions and different assets, but its spread was pretty dramatic, contributing to low oil prices and one of the best stock plays I had ever bought, in an oil Trust with a massive dividend while prices were still in the low teens per barrel of oil. I consider the $40 billion the IMF contributed to try to stabilize the currencies of 3 Asian countries during the crisis and think about that amount relative to European bailouts or of the Greek debt of $320 billion Euros alone.

I think it would be a mistake not to recognize the the lack of couter-party trust in which developed countries wouldn't lend to developing countries, much like the US Financial Crisis in which the credit mechanism froze as there was a complete stoppage of counter-oparty lending between banks as no one knew who had what exposure to subprime after the Lehman collapse and how that spider-webbed out, just like the lack of counter-party trust in the Asian Financial crisis set up events , particularly low oil prices that played a role in the next year's Russian Financial Crisis which spider-webbed across thee Atlantic and nearly took down the ?US financial system with the failure of Long Term Capital Management, THE SMARTEST GUYS IN THE ROOM.

I know these are very different events, but some of the best advice I've received and often give out is, "If you want to know how someone will behave in the future, look at how they've behaved in the past" and what is the stock market or financial markets if not a cornucopia of hundreds of millions of "somebodies"?

In any case, it's just something that's been nagging away at me that I thought I'd mention as the volume and price gains in Hang Seng are starting to see a drop off while the quota's allowing mainland investors to buy in to Hong Kong and vice versa through stock connect are set to rise. Hang Seng has gained +9.5% on the week, however the premium in the exact same stocks trading on the Shanghai vs the Hang Seng which had a premium of about 35% last month, part of the reason we saw such a rush to buy cheaper stocks in the Hang Seng, has fallen off to a still very substantial approx. 24% premium.

Looking at FXI- FTSE/Xinhua China 25, there are some charts that a re more than a bit concerning...

 FXI daily chart which is very parabolic  and has the look of a potential blow-off top...

And the 15 min 3C chart in which apparently smart money was ready for a parabolic climb, one it looks like they are selling in to fairly hard ion this 15 min FXI chart.

As to the Index Futures Update, it's the NASDAQ 100 futures charts that are seeing the 7-15 min migration occur the fastest which started with 5 min charts 3 days ago while higher timeframes remained in kine, moving with price then the next day the 30/60 min charts went clearly negative and since, NQ has been deteriorating the fastest, 1 of 3 events I've been looking for, the other-distribution in the averages is well on its way and the last, Leading Indicators has begun too.

Index futures will be out in just a minute.

TF-Upfate (Russell 2000 Futures)

Most of this week the Russell and its futures have had by far, the worst looking 3C charts, this was actually the case last week when this week's forecast was made, all of the averages had strong 15 min charts which was the gas in the tank for this week's move, all of which have seen serious deterioration since last Thursday, but the exception was the IWM which had a bad looking 15 min chart last Thursday that now looks horrible.

The negative 1 min Index futures from last night didn't play out the same way this morning which I suppose isn't too surprising given the Friday options expiration max pain pin, but I'd be remiss if I didn't at least post this chart as a potential warning for the IWM.

The 1 min negative divergence in futures last night has held up and continued to develop all night in Russell 2000 futures.

I'll have an update of the Index futures in just a few minutes, the punch line is that we don't have the charts we need yet for a pivot and that's fine as we haven't seen the price move expected quite yet, but the NASDAQ futures are the closest to hitting that downside pivot target in Index futures, although not at the 15 min chart yet.