TLT Position Update

This seems to be another great example of, "Patience Pays".

As you probably know, I'm looking for and expecting a strong counter trend bounce/ra;;y in TLT (20+ year treasuries- 30 year Treasuries). however before I could add a call position in addition to an equity long (short TBT-2x inverse TLT making a 2x long TLT position), TLT took off to the upside the last 2-days, but rather than chase it, I thought it best to just give it some time and it would come back to us, giving us a better long entry, a much better call/options entry and much better timing, the signs of a pullback or correction were there, now there are standing out.

This is why I don't chase trades, so long as there's a reasonable amount of evidence to suggest patience is the best bet, it's often worth it. This is much different than "hoping" it comes back.

As flor the longer term picture of a TLT bounce/counter trend rally...

 TLT daily chart with a channel buster/support break. There are a lot of Treasury shorts which is great initial momentum/fuel for a counter trend bounce/rally back above the long term trend line.

The last couple of days TLT has been up, I'm not one to chase an asset and believed it would come back down and offer us a better entry. Here TLT has met resistance and has a small reversal process in place suggesting there's a good chance of a pullback, giving us that call / options (or long) entry I've been looking for as the baser area matures.

Looking at the charts, it looks like this is a probability, from the shortest term, intraday or near term action first..

 The 2 min negative divgerence suggesting the near term pullback I've been expecting.

The same in the 3 min chart

While the 5 min chart is leading positive suggesting the basing area is nearly complete, there's a small near term relative negative divergence (red arrow) suggesting the pullback I've expected.

And despite a larger positive divergence on the 15 min chart, near term action shows a small negative suggesting a pullback.

The longer term 30 min chart shows the two areas of accumulation I consider to be 1 larger base, so I think the counter trend bounce/rally is still on.

As for 30 year Treasury futures... Starting with the bigger picture longer term charts and working down to short term action...

 60 min 30 year Treasury futures (/ZB) with the 2 positive divergence base areas I believe are 1 larger one, supportive of the counter trend rally theory.

The 30 min showing the positive at the right side or second base area.

And the 15 min showing the same with a weaker, smaller relative negative suggesting a near term pullback for our long entry/calls.

The shorter term 7 min chart suggesting a pullback like USO short term charts.

As well as the 5 min /ZB chart

And the 1 min intraday.

I'll be setting price alerts for reminders to look at TLT on a pullback for an entry area, likely calls in addition to the partial 2x long TLT position already in place.

USO Update

Putting aside the argument of $US dollar (petrodollar) dominance as for right now, it doesn't matter, we do have to consider the $USD in any oil/USO analysis.

Last week I posted 1 $USD small bounce and late last week I believed we'd see another which is really just creating a choppy zone, but here are the most current $USD 3C charts and expectations very near term...

 5 min $USDX  positive divergence near term which is one of the reasons why I expected a $USD bounce early this week and a EUR/USD decline,

 More importantly (the 5 min chart is good for timing telling us it is nearby), the 15 min $USDX positive divergence through last week, again a strong signal for a short term bounce... unless this is a reflection of the market's perception or inside knowledge of F_O_M_C policy tightening this week. For now, I can't prove that so we'll just assume it's a normal $USD bounce within an already locally choppy area.

The longer term daily $USD chart has a clear leading positive divergence as the carry trade was on and a deep leading negative divergence as the $USD hit its high and moved to a primary downtrend, making lower highs and lows on a daily chart.

Above is the "Larger downtrend) at the red arrow that was part of the April 2nd $USD forecast (a small bounce followed by a much larger move to the downside). The yellow arrow represents the $USD's 7-day counter trend bounce. I fully expect the primary down trend to reassert itself, but in the white area right now we've had a lot of chop.

Why is this important? Because the $USD's effect on oil prices is still a real influence, no matter what Russia, China and whoever else would like to see happen, this is what happens...

 The $USDX in purple vs Oil futures (/CL=Brent) in candlesticks, there's an inverse relationship as the less the dollar is worth, the more they charge for oil, the more the dollar is worth, the less oil prices tend to be.

In the big picture of my $USD and USO analysis I expect $USD to continue making primary trend lower lows and I expect USO/Crude to reverse its downtrend from last summer and make higher highs, those two independent bits of analysis fir together well.

Here's a closer look at the inverse relationship between the $USD (Purple)  and Crude futures (candlesticks). This is not a perfect correlation, but roughly it's pretty accurate.

Thus if we are expecting a near term bounce in the $USD as the charts above would suggest, that would also mean it would be reasonable to expect a near term decline in oil/USO. If you recall the complete picture for USO, I have expected it to fall back in to the base area...

That would be below the upper red trend line or the white hash mark which USO is right under today...

And for USO to finish it's basing work which has been in effect most of 2015 before leading to a breakout and an upside reversal of USO's downtrend from last summer.

If you consider the near term $USD analysis (remember they move opposite each other), I have expected the $USD near term to bounce a bit and for that to fail and head to a new daily chart/primary trend lower low, so the two assets' individual analysis matches up t their correlation for closer term trade and longer term trade.

As for the charts for crude futures/USO...

 USO's 3 min intraday charts (and below) have mostly looked like gap fills, but although not a strong divergence (positive) on this 3 min chart, I do want to keep an eye on it and make sure current expectations are confirmed by charts.

 The crude futures charts look good. This is the 1 min intraday CL chart with an intraday negative divergence , more or less allowing the gap fill and then going negative intraday.

 The 3 min chart is in line nearly perfectly.

 As is the 5 min chart

 And the 7 min /CL (Crude futures) chart.

 And we've had a few divergences as can be sienna the 10-min chart, but currently in line with the downside price action as we are right at the area of the base's upper trendily.

 And the Crude 15 min chart in line since going negative at a "Flag-like" price pattern.

It has really been the 10 and this 15 min USO chart with a leading negative divergence through the flag-like consolidation that have really suggested a break back into the base to finish up some additional work before USO becomes a long term primary trend long position.

So far I don't see too much reason to close either the USO equity short or the USO July 17 puts, but as I said above, I do want to watch the charts and make sure the expectations laid out above see price and 3C chart action confirming and if there's something new or different, to make adjustments as need be.

GLD Update

We've had an interestng 60 min 3C chart for GLD, which is one of the reasons I've held on to the June GLD calls, but near term signals have been sloppy and all over the place, I was hoping this 60 min chart would trigger soon.

I believe the European close and fear over Greece is likely the driving motivation here.

 The move about 30 mins ago came on heavy volume on this 1 min GLD chart... The fact that this is the same time Europe closes is what makes me believe this is some kind of flight to safety/Greek trade.

 There have been positive divergences in GLD in the area, just not screaming,

 Here's a larger view of the GLD 15 min chart, but it's this 60 min that has been interesting...

Look at the leading divergence there, I only include as much history as I do so you have something to compare it to on a relative basis.

With a bit of luck, the move starting now is directly related to this divergence.

The one thing I don't like is the increased market perception and fear, that tilts the ship too far one way and it's very lucrative for Wall Street to rock the boat in the other direction quickly, stopping out or triggering trades, it''s short term maneuvering that has little to do with the bigger picture, but it makes them money. This Gold move, so sharp on the EU close with Greece's deadline quickly approaching and nothing getting done, smells of fear.

Intraday Update

Unless you want to take some gains off the table such as last week's VXX calls, which could have been done anytime today at a double digit gain, I still think patience here is the best option for the moment.

 ES 1 min in line for the most part, some minor intraday divergences however the bounce off intraday lows doesn't look all that interesting right now.

 The 5 min+ VXXX charts do look quite interesting, although I believe to take advantage of the signals on a chart like this, it calls for patience.

 The intraday 1 min VX which was not confirming the gap up earlier, which is similar confirmation to the SPY, QQ, IWM small positiver intraday bounce divergences, is starting to look like it wants to move toward confirmation now that we've had a bit of a bounce with some interesting internals...

The intraday NYSE TICK chart hit an upside extreme of > +1500, then promptly broke down, very quickly in fact.

The daily SPX did piece the 150-day (pink) moving average earlier, but here's where the day should get more interesting...

As the SPY intraday chart and the TICK above and perhaps VXX intraday above as well appear to be suggesting, a move back toward the intraday lows in the major averages would be very interesting and tell us quite a bit. If there were to be a stronger positive (intraday) divergence, then perhaps I'd take some VXX gains and look for the next entry, however if we don't see anything like that, the market may just be getting ready to slice through local support (100 / 150-day ma's).

Thus, patience is still the best course of action for intraday/short term decisions, let the market get to an area where we should have some excellent information.

As to the longer term or bigger picture beyond what is being dealt with above, I don't think I'd have too much trouble sitting on a July 17th VXX call, I think it would be fine.

I believe we'll find out soon enough as to whether the 150-day will provide the same short term corrective support as the 100-day last week, if not that means those open gaps above will hold, the market's character will have another significant change and the probabilities of the market holding together in the area for much longer diminish rapidly.

MARKET UPDATE

In days past, the kind of gaps down we are seeing in the averages were very valuable tools for gauging the market. I would have said that they were nasty gaps that will hold, but since the rise of an HF dominated market, gaps are less and less common, constantly being filled, not to say that there's much more to the market than that, a short term gap fill doesn't change the bigger picture.

Right now the SPX is right at the area I expected it to meet with some support, but the previous 3-days' candlestick pattern, also was a confirmed reversal to the downside.

 Daily SPX chart with a 100-day (yellow) and 150-day (pink) moving average. In the yellow box is the head fake move above the triangle's range which we called out in the April 2nd forecast as a move coming and a move that would fail, but the market would not see any meaningful downside until that move made its appearance and failed which it did.

The 100-day (yellow) was expected to act as short term support as the market put in a normal correction which it did. The last 3-days of candlesticks formed a bearish downside reversal with the confirmation candle on Friday, the last 2-days were each drawn a day in advance (best guess as to what they'd look like) and we were right on.

Today's price action thus far has broken the 100-day as expected and found some intraday support at the 150-day, where it found support on the last decline, this is also not unexpected.

Whether this holds and leaves the gaps above open or not is the short term question, the bigger picture (taking the F_O_M_C out of the analysis for now as that's a wildcard), is not very bright for the market as it has done everything expected since the April 2nd forecast which includes a move below the October low eventually as we continue to move lower, find some temporary support, correct and move lower again.

 So far intraday since ES has the most continual 3C chart history for the new week, it is still showing the market as being in line with the downside.

There are some hints of intraday support at the 150-day moving average which was to be expected...

 SPY 1 min leading negative at the 3-day candlestick reversal price pattern with a very small intraday positive to the far right, likely indicative of some intraday support at the 150-day m.a.

 The IWM and QQQ's are showing something similar on the 1 min chart as well.

This is not , at least at this point, anything I'd want to trade (Day trade) as an intraday bounce, it's too early, there's too much that can still happen today and the charts are just setting up for the week with ES in line with the downside this morning.

 This is the bigger/head fake picture with the accumulation we saw market wide from May 5th to May 7th and the distribution on a rounding top sending it lower to the 100-day with a small positive there leading to last week's bounce which gave a negative/reversal signal as well as this 10 min chart is leading negative plus the candlestick reversal as well.

This is a more important chart for me right now than the very short term intraday charts, it is strong, it has tracked the entire cycle seen above and it is leading negative. Thus short term/intraday I'll stay patient for a bit and let the positions that are in place remain in place until/unless I see some reason to change them.

 VXX 1 min intraday is not confirming its gap up which is not surprising given the SPY, QQQ, IWM 1 min charts, but again I will stay patient and keep the July 17th VXX call in place  for now, which is up around +22%.

VXX's bigger picture 5 min chart went strongly leading positive last week, the 10 and 15 min charts were already in good shape, but even the shorter term intraday version of these intermediate charts improved as well...

VXX 10 min. leading positive which made last week's break of support in VXX look like a head fake stop run, thus I'll be patient with the position and not overreact on some intraday support that market is finding as was expected.

HYG doesn't look like it will be used for any serious market support, it looks like it will continue to a lower low which is part of the trouble this market is facing, What High Yield credit is Screaming

For now, I think patience is the key word, let the market settle in and keep your eye on the target/big picture until/unless something in the short term charts requires us to take action. Otherwise, I'll continue looking for additional opportunities.

Last Friday's, Trade Idea: XLF Trend (short) is working out well, already nicely green. These are the kinds of set-ups that I'm looking for, timely and in excellent position.

A.M. Update

I hope everyone had a nice weekend. We spent part of ours cruising the intracoastal and taking our dogs swimming in Boca Lake, which is saltwater just before an inlet.

One of our dogs, Emma , our Vizsla.

In any case, markets around the world, especially Europe haven't taken well to the Greek/EU talks over the weekend that collapsed after only 45 minutes. Since, the EU has warned of a possible state of emergency as Greek bonds collapse and yields rocket higher, but also the other PIIGS including Spain, Italy and Portugal as the Greek contagion is very real and I would think would be in the EU's best interest to make sure if it's not going to have the ending they choose, that it has a very bad ending to discourage other anti-EU factions from becoming emboldened by a Greek exit from the EU. It seems the European Central Bank may do exactly that and cause bank runs by yanking emergency lending via one ,mechanism or another, creating chaos and what some think may end with a violent overthrow of the Greek government. I was truly serious when I wondered on Friday whether this could lead to some kind of armed conflict on the continent as it seems Angela Merkel is the only EU politician that understands why it's so important to the EU's survival to keep Greece in the fold, even at the cost of having nearly half of her party abandon her efforts.

Pretty much most of what I suspect about this week so far has been covered in last Friday's, The Week Ahead. Other than the F_O_M_C Wednesday which I think is a wild card, Greek news has't been anywhere near good, it never has and I doubt it ever will, it's just the inevitable conclusion is much closer and the stalling tactics have just about run out. Wednesday will not only be the F_O_M_C, but what the ECB chooses to do with Greece and I don't see it ending well for Greece or the EU.

As for futures, like world markets, down since weekend talks collapsed.

 ES/SPX futures gap down on the open of futures trading for the new week Sunday,

NQ / NASDAQ 100 futures and ES look like it's possible for an early bounce, but we'll have to see what the cash market looks like, IO don't see it being held unless something big changes and I don't see that right now with State of Emergencies being talked about in the EU.

 The $USD has seen a little of that near term upside I was expecting early this week, sending the EUR/USD lower early this week as expected.

Crude is also lower as expected...

And 30-year Treasury futures are at Friday's intraday highs and finding some resistance, but still gapped up.

We'll have a bust morning seeing what may stick as a gap fill and what may simply collapse. Lots of volatility this week with the F_O_M_C also.