Sometimes what the market isn't telling us (I mean near term intraday) is just as important as what it is, we've seen this in a recent example, 3C charts for GLD recently not giving signals and for good reason lest you be stuck in this...
GLD tightening triangle, it's going to give a strong signal, but it's good we weren't getting much from it otherwise as that's a month of opportunity cost.
Also what the market isn't telling us is a baseline for future moves, but not everything is devoid, just a bit "BLAH" today.
When we consider a head fake move, specifically I'm talking about the March SPX down trend line that has acted as resistance numerous times making all the more attractive for a false/failed breakout (head fake) and all the more visible for retail Technical traders, you have to consider the very near term indications of Leading Indicators and the larger trend indications, simple multiple timeframe analysis.
Our SPX:RUT Ratio Indicator shows this better than many right now as it both called the early April forecast (4/2) for a move higher) and is calling the underlying weakness we have seen through the entire move. The head fake as I have mentioned numerous times is simply one of the best price-based concepts we have for timing a (in this case) downside reversal and it's a fantastic place for tactical entries in to strategic positions or options as timing and the discount are paramount to head fake moves which is why I use options more often at head fakes than any other time.
As for some of the intraday leading indications with some longer term reminders thrown in there...
Intraday the SPX:RUT Ratio (red) vs SPY above on a 1 min chart shows a lack of confirmation intraday, it's still early enough that this can easily flip to support, but it's important to remember the larger implications in using these price moves to our advantage.
The SPX:RUT Ratio vs SPY on a 15 min chart since the positive divergence in to early April, our April 2nd market forecast and a lack of confirmation of the trend in the indicator (red) which is exactly what we expected to see which was also posted in the 4/2 forecast. Last week's market forecast for a reversal process (lateral trade) worked out well.
Remember though the most common topping price pattern and most useful, "Igloo with a chimney on the right), the igloo typically being the rounding of the reversal process, the Chimney being a head fake move above the reversal process highs and turn to the downside after creating a bull trap in this case (the same applies for bottom reversals to the upside, just inversely which we recently saw a small example of in USO's base area before the last run, a stop run head fake).
Pro Sentiment Indicators have been positive since Friday's 1-day oversold condition leading to Monday's pop higher, they have remained in line since then, but were quite positive on Friday for near term trade.
Longer term, they don't look so great.
The last forecasted cycle from the start of April with initial confirmation, now divergence.
High Yield Corp. Credit is maybe not so surprisingly giving up intraday strength, you may recall yesterday I mentioned the 3C charts here look horrible, I'm surprised we haven't seen a larger near term turn/divergence, although the primary trend is very negatively dislocated.
HY Corp. Credit intraday not looking so supportive, but within the recent trend...
Since the 4/2 forecast it has confirmed, put in several small negative divergences and a positive on Friday's deeply 1-day oversold breadth condition.
As I mentioned yesterday, the 3C charts for HY credit look a LOT worse than does the Leading Indication, which "should" go negative before we get a sustainable and true turn to the downside. I suspect that would happen DURING a head fake move.
On a longer term trend basis...
HY Corp. credit was in line at the green arrow and then went negative vs thee SPX (green), it's also in a primary downtrend, sooner or later, equities will catch down to credit's reality.
Yesterday intraday support was found in Treasury yields, today you can see it again (30 year yields), as usual, the market (SPX in green) are drawn to yields like a magnet. However consider multiple timeframe analysis as well.
Longer term 5 year yields, the only aberration to the divergence was that one NFP print sending treasuries lower/yields higher (vs SPX green).
The spot VIX and short term VIX futures are in line so far today, they aren't offering much in the was of intraday information, however don't forget the charts of VIX futures posted yesterday, an usual large positive divergence and remember the coiling in VIX under the 50-day with ANOTHER triangle.
Today for the most part, so far the Leading Indications and the market action is as "BLAH" as the internals were last night (Dominant Price/Volume Relationship, Sector performance, etc.), you may recall that from last night's Daily Wrap, so in some sense, it's almost not surprising that today has been blah, but these are the most dangerous markets as I often say, "It's like the kids in the room next door just a little too quiet", you know they are up to something.
I'll have a Market Update as well as a USO/Oil Update out soon.
