CONTEXT

I was asked about this earlier today, I didn't take a look at it until someone else brought it to my attention, but if you look at all of the professional risk assets and their performance vs. the market today as posted earlier in, Pre-F_O_M_C Market Update , it makes perfect sense since CONTEXT for ES futures' model is built using institutional risk assets.

Here's today's model vs. ES, which is not surprising and exactly what was being posted yesterday in reference to when sentiment means too far to one side,

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."

The comments above from yesterday taken with the 1-day oversold condition and today's Leading Indicators linked above all fit together perfectly to explain the difference between ES futures and the CONTEXT model. A definition of the CONTEXT model:

The CONTEXT framework attempts to distill the world’s ‘risk’ asset-classes (interest-rates and curves, credit risk, FX carry, commodities, and precious metals) into a single-measure that can be judged against the US equity market in order to comprehend potential mis-pricings (or technical flows and liquidity impacts). Institutional and algorithmic clients tend to use CONTEXT as a confirmation tool for positioning against (or with) a trend. CONTEXT provides a 24-hour-a-day real-time indicator of the world’s risk appetite and whether US equities are over- or under-pricing that risk.

And today's model vs ES...

The CAPITALContext Model vs ES. with a -40 point differential, meaning ES is 0 points rich to professional risk assets' behavior today as already seen earlier in the Pre-F_O_M_C Market Update post. This is also right in line with a 1-day oversold bounce as illustrated in the Daily Wrap Internals last night.

VXX Trade Positioning

I couldn't be more thrilled with the way VIX/VIX futures (short term) held up vs the SPX today. If I had the opportunity to close out the VXX July 17th $18 calls this morning on a SPX pullback to yesterday's intraday lows early today (this did happen in SPX futures last night around 4 a.m. EDT), this is around the area I'd start rebuilding the position, likely in two parts. The first part as the reversal process gains a little more maturity which can be hours and the second and the additional intraday charts lead sharply. I suspect by the relative performance in VXX/VIX today, this will be ready sometime tomorrow, most likely before 2 pm.

 VXX 1 min-Even on a 1 min chart, the m,pst sensitive, therefore the most extreme looking the divergence, there's a very limited, very small relative negative divergence which is the weakest form.


The leading positive at the end of day is far superior to the top/negative.

Often the leveraged versions of the underlying will have stronger /earlier signals. Still on this 2 min chart of the 2x long VXX, UVXY, again, the negative divergence is very minor, almost nothing more than an intraday steering divergence.

 UVXY 3 min showing the same as well as a larger positive under construction.

 XIV is the inverse of VXX, it moved WITH the market, it is leading negative intraday and not a small 1 min divergence like VXX above.

XIV 5 min leading negative shows the problems were there well before today.

 VXX 15 min leading positive and what I suspect will be revealed as a head fake/stop-run below the yellow trendily where 3C is REALLY leading.

 VXX 60 min needs no commentary.

As for the reversal process, it is typically proportional to the preceding reversal and trend. To the far left the reversal process for a downside move and a larger downside move than today is a certain size. The bottom reversal process also is guided by this proportionality, although bottoms are often tighter than tops, but it is proportional to the preceding trend. Today's top reversal process is quite tight, it would be proportional to today's move.  Even though bottom reversal process' are tighter than tops, I still drew it a bit larger, although not much.

I'd be looking for the process to complete and for the appropriate intraday divergences to accompany the reversal process. I'll update these as they build tomorrow.

Sentiment Changed, Mission Being Accomplished

Our Sentiment updates from the stream via one of our members just came in about an hour ago before the last post was published with the Sentiment trap, again I got this update AFTER the last post...

"FYI twitts are super bullish with today's price action"

(with some examples)

""So nice of ES futs to give us all another chance to buy the lows overnight"

"$SPX above $2098, clear skies for a few days or weeks."

"2 days of $SPY. The overnight session with new lows never happened."

"Janet is coming to town."

"the target would be in the 2115 "

"looks to me like market is saying to all these people that say let it go down 5%, then buy ...We gonna screw you"

Like I said, it doesn't take much, now where do you think all of the stops are lined up?

Sentiment Flip-Flop

I mentioned the overwhelming bearish sentiment of the "Fear and Greed" index, this as the market was just some 3% off the recent all time highs and actually, yesterday (June 15th).

This is part of what I was talking about in setting support at the 150-day sma for the SPX and how stops would line up there. Yesterday was pretty clear we'd get a 1-day oversold bounce and interestingly just as the Fear and Greed Index was registering overwhelming bearish sentiment. As I said just yesterday in seeing the market ready to shake-out the newly bearish traders,

"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 is the Fear/Greed Index form YESTERDAY, the 15th...

EXTREME FEAR just yesterday triggering the comments above also from yesterday, And What does Wall Street do when the boat is leaning too far in one direction? They take advantage of it.

The daily SPX chart with the failed head fake move in May and the recent support created at the SPX 150-ma which was already getting attention.  As I said yesterday, "Now all of the stops will be at the 150-sma".

Today's 1-day oversold bounce has created a short squeeze of all the newly bearish traders, on the squeeze and resulting sentiment shift as it only takes hours on a decent move, where do you think all the stops are lined up?

What is interesting today or rather this afternoon are the following charts...

 Last night in the Daily Wrap in talking about Index futures, I said,

"As for futures, it's a bit early, but the ES intraday chart doesn't look good here...This is an even narrower, sharper "V" bottom than we saw last week, however ES 1 min has gone deeper leading negative since the close, maybe it comes down overnight..."

That's EXACTLY what it did, see the ES 1 min chart overnight with yesterday's cash close (4 pm EDT) at the red arrow and the 3C negative divergence after the close which led to the statement above as well as price coming down overnight around 4 a.m. (just after the European open) to the intraday lows from yesterday. I was ho;ping the cash market would do the same today for trade management of VXX, but beyond very short term management of VXX, it's actually not a bad thing we didn't get the intraday lows in the cash market.

If you recall last week's price action, it was forecasted to be short lived because of such a narrow "V" shaped bottom, the bounce lasted 2 days before failing and that was a larger "V-shaped" base than this week (a little more like a small inverse H&S and a better 3C divergence).

Last week's "V" which was wider with a better divergence that lasted 2-days before failing and yesterday's "V" which I hoped would widen out this morning before heading higher to take VXX gains off the table, but it may have been better that it didn't make a wider base as this is weaker than last week's.

And intraday the ES/SPX futures chart going negative

The NQ / NASDAQ 100 intraday Futures going negative.

As well as the Russell 2000 intraday Futures going negative.

Price action is VERY reminiscent of a short squeeze with few if any pullbacks intraday, which makes perfect sense with yesterday's sentiment extreme (bearish).

However what is most interesting as the NYSE TICK Index starts to fail intraday...

NYSE TICK Index falling out of the channel

...Might just be the VIX futures, the real VIX futures...

These are the intraday VIX futures. You already saw how much better VIX/VIX futures are holding up vs the SPX and now they are turning from the pullback expected which is why I wanted to see an early SPX pullback to intraday lows to close the VXX calls, but that may have been short sighted as it should have created  stronger base area, as it is now  the VIX intraday futures are turning from the expected pullback to positive .

Taken with the Leading indicators, the predictability of sentiment going to a fearful extreme with a clear  and defined support/stop area at the SPX 150 ma, this looks like the boat was rocked the other way, as I said yesterday, it's short term extra cash, it has little to do with anything and the market was already in a short term oversold condition as of the close.

Suddenly the close is getting very interesting pre-F_O_M_C.

Pre-F_O_M_C Market Update

There's a lot going on right now that makes it difficult to judge which assets are reacting to which events.

As I said yesterday, the $USD has a positive divergence and the Euro a negative divergence suggesting the EUR/USD moves lower. In the absence of any Greek trouble, I'd assume there's a pretty decent leak pointing to a rate hike tomorrow, a June Rate Hike would be most surprising for the majority as consensus is around September. However Greece is a factor and now this weekend is being called the Lehman moment for Greece. As I mentioned before, Lehman alone was bad enough, it was everything that was unexpected like the complete lock up of the financial system and interbank lending because no one knew who had what exposure to subprime, thus the entire interbank overnight lending structure froze and before you knew it companies like GE were less than a week away from not being able tomato payroll, I doubt most would expect GE to be one of the immediate possible casualties of a financial crisis that mostly effected banks. In the Greek case, this not only effects banks, hedge funds, the ECB, IMF, European governments and independent central banks, it's the default of a nation.

Thus the Euro could be reflecting that situation and since the $USD pretty much moves opposite the $EUR, its divergence could be reflecting the Hellenistic drama coming to a head. IF you really want something to twist your mind, imagine a rate hike and Greek default the same week explaining both signals!

In any case, the overnight futures did come down to yesterday's intraday lows as was mentioned in last night's Daily Wrap:

"As for futures, it's a bit early, but the ES intraday chart doesn't look good here.

This is an even narrower, sharper "V" bottom than we saw last week, however ES 1 min has gone deeper leading negative since the close, maybe it comes down overnight..."

That's EXACTLY what happened. Of course the internals were strongly pointing to a 1-day oversold condition in the market yesterday and a green close today, also from last night's, Daily Wrap:

"As for internals...

All but the Dow had a Dominant Price/Volume Relationship, it was Close Down/Volume Up, a 1-day oversold condition with 50 NASDAQ 10 stocks, 972 Russell 2000 stocks, 217 S&P 500 stocks...

In this case, this is a 1-day oversold condition and makes sense given the SPX's support at the 150-moving average and "hammer-like" price closing candle...

Of the S&P sectors, only 1 of 9 closed green,  again a 1-day oversold breadth condition...

Of the Morningstar groups, only 23 of 238 closed green, AGAIN A MASSIVE 1-DAY OVERSOLD condition. I see no reason the market shouldn't correct from here"

And then there was the "roof " on the bounce, again from last night and yesterday, it is the VXX 5, 10 and 15 min leading charts.

Today's price action makes PERFECT sense given the internals yesterday as they were massive 1-day oversold which almost always results in a green close the following day. I was hoping that the overnight tag of yesterday's intraday lows would also occur in the cash market, but so far not to be.

What is interesting about today (which we saw hints of yesterday, Leading Indicators Continue to Fall Off a Cliff and late last week), is the following:

 I have inverted the price of the SPX (green) so you can see the relative performance difference between VIX and the SPX, normally as they move opposite together, when you invert the price of one or the other they move exactly together. Here we see a much stronger relative performance from the VIX intraday for the last 2 days especially.

And we see the same which started late Monday afternoon and has carried through all of today, PROTECTION IS MASSIVELY BID DESPITE THE OVERSOLD BOUNCE OFF LOCAL AND MEANINGFUL SPX (150-day sma) SUPPORT.

In addition, Pro sentiment again refuses to chase risk/the market just as yesterday, just as the trend since May.

I'll admit there are some crazy signals here and there that are tough to make sense of, but this is the easiest to understand, Pros are not willing to chase the market higher here, instead they seem to be selling it.

Interestingly as the first lever the market often turns to for help on the upside, HYG-High Yield Corp. Credit has maintained a deep leading negative divergence vs the SPX.

 60 min High Yield Corp. Credit (blue) vs the SPX (green) with a huge leading indicator negative dislocation.

However to get off today's oversold bounce (this is based on breadth and not indicators and usually a 1-day oversold condition) it seems HYG was used, although to a limited capacity.

HYG leading negative vs. SPX yesterday and while lagging, still helping out today.

As a long time Leading indicator that seems to be working again recently, Yields also are interesting.

30 year Yields led the SPX higher as it was leading at thee white area while the SPX was still making a lower low. HYG led to the downside a good day before the SPX followed to the downside,  which is what a Leading Indicator should do.

There was reversion to the mean at the small green arrow (short term any way) and today, 30 year yields are not participating, not leading the market higher, but rather leading lower.

Commodities which were also a fantastic leading indicator until QE distorted them and inflation in commodities caused the F_E_D to react to stamp out inflation in them several years ago, but recently with no F_E_D intervention other than rates, commodities seem to be working again recently like Yields as a leading indicator, in fact confirming yields nearly perfectly.

Again commodities (brown) vs the SPX (green) lead the market to the upside by at least a day (white), then lead to the downside by almost 2 days, then revert to the short term mean (green) and again today like yields refuse to confirm and are in a leading negative position.

Then High Yield Credit (not the same as HY corp. Credit), which will often move with the market on a very short term basis on a day such as this, has been leading the market to the downside since the May head fake move  or failed breakout above the SPX triangle.

 5 min HY credit leading the market to the downside since the head fake move in May, right where I'd hope to see them leading to the downside. However to the far right you can even see it today and HY credit will often make small bounces with the market just as pro traders will take short term trades like the middle men, Market makers and specialists, but not today.

A closer look at today reveals HY credit making lower highs and lows since yesterday.

Leading Indicators / Pro assets that retail rarely trades are not buying in to today's 1-day oversold bounce expected from internals last night. That tells us quite a bit, despite a lot of near term charts that could have double meanings or be reflecting one situation or the other.

And one average that I would have hoped would have bounced today, WILL NOT confirm either and remains in the red, Dow Theory's Transports vs Industrials...

Green=Dow-30 Industrials and Blue=Dow-20 Transports, the red histogram shows relative performance between the two.

Until I get clearer intraday signals, these charts are telling us CLEARLY, that smart money is not following the market even for a quick buck in some of the more humble assets that could follow such as HY Credit.

Protection is significantly bid today as seen above (the first few charts of VIX/VXX vs SPX) and if that wasn't enough...

There are interesting 3C charts such as Financials, one of the groups most say should be outperforming and thriving i n this environment...

XLF isn't only not thriving recently, but not today either which is one of the reasons for the very recent, Trade Idea: XLF Trend (short).

But even more telling in my opinion, the rock charts that aren't moving.

I knew VXX was likely to see downside today based on internals alone, but even intraday 3C charts, but it's the strong charts like this 10 min (between the 5 and 15 that are very strong) that not only is positive and leading positive, but looks like it put in its head fake move as well.

Or HYG, anything beyond an intraday oversold bounce should have seen HYG accumulation first.

 Intraday 1 min HYG has the sharp "V" base that the market has (cash), but it also shows the most sensitive chart to intraday underlying trade, the 1 min going negative through the entire day, doubtful it holds long.

Much more likely is the HYG trend which is already in a primary downtrend and headed for a new lower low (There are 3 lower highs and lower lows on a primary trend basis- HYG is in a bear market and moving toward its 4th lower low on a primary trend with 3C confirmation all the way).

THERE ARE SOME SHORT TERM CHARTS I DON'T COMPLETELY UNDERSTAND OR HAVEN'T FINISHED THEIR SIGNALS, BUT THIS IS WHY WE AREN'T LAZY AND WE LOOK AT AS MANY PIECES OF THE PUZZLE AS WE CAN.

I'LL LEAVE YOU TO DRAW YOUR OWN CONCLUSIONS ABOUT WHAT YOU SEE ABOVE.

Crude Futures

First let me remind you that tonight/today after the bell we have the API Oil inventories which has been a bit volatile and the 10:30 EIA inventories tomorrow morning which also has been a bit volatile as they have seen 2 weeks of draws, but that has been offset by increases in production.

As for the $USD legacy arbitrage ($USD Up/Crude Down - USD Down/Crude Up), I'm still expecting a $USD bounce.

In fact the signals for a $USD bounce are so thorough and consistent (although not huge), it makes me wonder if there is an F_O_M_C leak as tightening (rate hike) should send the $USD higher, this is separate from carry trade considerations, it's just a normal reaction to policy tightening which is one of the reasons the F_O_M_C has mentioned the strong $USD so many times this year in reference to hiking interest rates so obviously positive divergences suggesting a move/bounce higher in the $USD are a bit suspicious the day before (or even several days before) the F_O_M_C tomorrow.

At the same time I have also said I believe the Euro will see downside with current negative divergences, thus a lower EUR/USD. To be fair, this could certainly be a reflection of what's going on in Greece.

In any case, here are the charts for Crude Futures with negative divergences suggesting the near term move lower that has been expected in crude (these are Brent futures).

 The 3C charts have done an EXCELLENT job confirming the downside moves in crude as you see above, but not just on a 3 min chart, on all of the timeframes.

Here's a 5 min chart with good downside confirmation and what looks like a gap fill (in USO cash) with a negative divergence in the area.

 The 10 min chart also confirmed lower prices with a negative divergence in the area which I suspect is a USO gap fill.

And the crude futures 15 min chart with a negative divergence and otherwise good downside confirmation.

With USO solidly below $20.25, we can start looking for signs of the next trade set-up/entry which would be a long term trend long position for a trend reversal in oil. Interestingly the base and this trend reversal I've been looking for developed a few months BEFORE inventories started seeing draws.

TLT / 30 Year Treasury Futures Update

I suspect tomorrow we'll see quite a bit of knee jerk reactions to the F_O_M_C and possibly to Greece. It's nearly impossible to say what the short term outcome will be as one could be taken by the market dovishly (positive) while the other is taken bearishly leaving a situation in which one cancels out the other. I have long suspected that the F__E_D has known exactly when they were going to (are going to) hike rates. As I have said to some of you in email correspondence, if you are running the largest financial organization in the world, you don't make huge decisions that could have untold effects on the fly. If you have a business you wouldn't make a decision to expand it by 50% in a day or even 2-days, you'd be long prepared for it. If you were going to lay off half your work force, it wouldn't be a decision you made in a single day as if it was like choosing whether you wanted eggs or pancakes for breakfast, it's something you'd prepare your company for to survive the new dynamics. How much more so for an organization as big and powerful as the F_E_D?

I have also long suspected via comments made well over a year ago by F_E_D speakers about when lift-off would be and what they expect the rates to be at toward the end of 2015, that June has just as strong a chance as being the date of lift-off as any date (market consensus seems to be around September). The F_E_D is clearly ignoring or downplaying all of the reasons not to lift rates, although I don't think it's smart to be at zero in case the next recession is right around the corner leaving them boxed in, but at the same time, the economy doesn't look like it's anywhere near overheating or even in possible trouble of overheating any time in the near future which is what rate adjustments are usually about, if anything, it seems the F_E_D has their own reasons and has either doubly seasonally adjusted data to get a more reasonable print for a rate hike or they have minimized and downplayed recent weakness as transitory. When was the last time the F_E_D's projections were correct about anything except the Atlanta F_E_D's Real time GDP program which has been right on the money, but if the F_O_M_C followed that, they'd be far from even considering rate hikes. They have reasons that they are not saying aloud and that's what's really scary.

In any case, as for TLT/longer term treasuries, it's difficult to say what the knee jerk reaction will initially be as the F_E_D inspired knee jerk reaction is almost always wrong and almost always retraced within a couple of days or a bit longer. My suspicion has been that TLT/longer term bonds would pullback just a bit and move higher and at the same time the market would bounce just a bit (as bonds are pulling back) and then drop lower (as bonds are moving higher). There have been all kinds of strange correlations between Treasuries and equities, they have been on and then off, but it's the short end of rates that the F_E_D controls, the long end the market dictates. TLT is 20+ year bond  fund, /ZB below are 30 year Treasury futures.

 I've posted the channel buster concept numerous times specifically dealing with the break below the long term trend line in TLT and how it is used to shakeout what is a trade pretty thick with shorts, a counter trend rally as I do suspect that at the end of such a move, Treasuries do head lower as they have been (see the trend below). As for recent daily candlesticks, Friday put in a bearish reversal Shooting star, Monday put in something close to a star, but added no additional upside as it hit resistance from Friday and thus far today we have another small bodied candle that will not make a higher intraday high, it looks like a small reversal process for that short term pullback I've been looking for.

 30 year Treasury Futures (/ZB) are more sensitive to near term timeframes and have pretty good/consistent signals which also suggest near term pullback. The bigger picture counter trend rally is really addressed in other posts I have put up every time I've updated TLT, like the Bond counter trend set up so I'm not dealing with that here/now.

 3 min ZB/30 year Treasury Futures are in line at the green arrow and then the red smaller negative divergence suggesting a pullback.

 5 min ZB with a positive divergence, then in line/confirmation (green) followed by a negative divergence along the lines of a pullback.

 15 min ZB positive divergence (leading) and the current negatives, but not horribly strong.

 ZB positive and a relative negative (weaker form).

This is the 2 hour ZB chart connecting the first base area (positive) with a pullback from higher prices and a second low/base with a positive signal. This is getting more in to the counter trend bounce area, but near term I still think it comes down a bit and opens up a nice opportunity to add TLT calls or long positions, of course as always I want to confirm that any pullback is constructive and accumulated, that's just me being extra careful.

Early Update

I have to say the opening parabolic move made me a bit nervous as I decided to keep the VXX call position open until A) I have good 3C chart reasons to close it or more likely B) until the market pulls back toward yesterday's intraday lows which I thought probable and we saw happen in SPX futures overnight, but the cash market still needed to.

I have to confess, it is so much easier to make decisions based on objective evidence rather than what I think or fell at the time because on the open as the market went in to a parabolic rise, what I felt was the VXX call profits slipping away, what I thought was , "I should close the position and keep what gains are left", but that's not the way I make decisions, I make them based on the best objective evidence I can find and it's not always an easy decision.

 Despite how I may be feeling emotionally at the time, the 1 min SPY 3C chart still has the negative divergence from yesterday suggesting price pullback and while it doesn't tell us exactly to where, I've suspected yesterday's intraday lows or around the daily SPX 150-day sma,

The ES 1 min chart was not confirming the parabolic move up on the cash open and thus was a second bit of objective evidence that told me, "Be patient", this should come back down. Had I closed the VXX position on the opening parabolic ramp out of panic I would have had a +36% gain, rather than the current +45% gain which should get better.

Our custom NYSE TICK chart was telling me the same...

SPY vs TICK with the TICK deteriorating suggesting a pullback or additional downside and not a lasting parabolic opening move.

 The intraday VXX chart was in line as well.

And of course the bigger picture 10-15 min VXX charts are leading positive in a big way, but that's a bit of a different perspective than just intraday.

I'm still looking for a pullback toward yesterday's intraday lows. The idea is if we can get a pullback to the area, we'll have a 3rd tag of the SPX 150-sma and it will be an even stronger stop-level making Technical traders' predictability easier to use against them and making Wall Street's predictability in using Technical trading against technical traders more predictable.

I still think a near term oversold (1-day oversold condition from yesterday's Daily Wrap's internals) bounce is likely, however a pullback toward those lows would show us what's happening in underlying trade, is it being accumulated for such a bounce or is it in line and likely to just break below the 150-day m.a.

For position management, if there's accumulation in to an intraday pullback, then I'll make a decision as to whether to take VXX call gains off the table which I'd probably do. Even if we don't get a move to yesterday's intraday lows, if the 3C charts start showing better looking intraday charts suggesting a bounce as right now (above) they are still suggesting a pullback, then I'd also consider taking the VXX calls/gains off the table.

The 5, 10 & 15 min leading VXX charts tell me something about the bigger picture and the pathway of least resistance beyond short term intraday trade and it's not looking good for the market, but we've known this for some time. This is really more about opportunities and the movement that creates them.

We still need to get to the area or get intraday signals above and beyond what we have,  I think the main point I'm trying to get across is trading and the market is made so  much easier when you are not making emotional or arbitrary decisions, but decisions based on probabilities of a system or indicator you trust. You won't always be right, but you'll be wrong a whole lot less often.

A.M. Update

Volatility has picked up worldwide with the Shanghai Composite down -3.47%, most of the rest of Asia was red, Europe is res and while a lot has to do with Greece, each region seems to have a little something different baking in the oven. However there can be no doubt from all the talk that everyone is starting to think of this weekend as the Greek's "Lehman moment", with EU emergency meetings scheduled, apparent deals agreed to which would put capital controls in effect as early as this weekend in Greece and what seems like a public (Greeks) that aren't too happy with the current government's job. As I said before and as it was with the Lehman era, it wasn't the horrible stuff you knew was coming, it was the stuff no one imagined it would lead to in areas no one imagines would be effected...How much more so with a country going in to default?

In any case for our purposes, I wanted to see price action come down to yesterday's intraday lows, that happened overnight as I suspected it might in last night's Daily Wrap,

ES 3 min with price coming down to yesterday's intraday lows overnight.

Now I'm hoping price will move there during the normal cash market hours and we can get the data needed from that area.

I suspect the 150-day wasn't tested twice out of coincidence, I think Wall St. knows traders are watching that level as a last stand before the 200-day and I think a bounce off that level ala-last week and a slice down through it would likely catch a lot of stops.

Just to be clear, I do think we get a bounce, internals agreed with a 1-day oversold condition yesterday as well. The bounce may evaporate by tomorrow's F_O_M_C policy announcement or it may be helped by the knee jerk effect (we'll get to that later), but I think that's the game and I'm looking to likely exit VXX calls at yesterday's intraday lows.

SPX-500 daily with 150-day sma is as good an area as any for a bounce, stops should be lined up below making it a profitable area to slice right through on the downside of the bounce.

I'm just hoping we get a move back down to the area in the cash market, which I suspect we will, we may not be there long though.

As for the big picture, absolutely nothing has change, we are talking about regular, corrective bounces above, something you'd see in any market.