Initial Internals

For the last 3 days there hasn't been a dominant Price/Volume relationship, its been evenly split between the 4 relationships, today that changed.

Although the SPY did make a late day attempt to move the market (my guess is to keep the bulls hopeful as we enter the weekend and thus keep them in the market and if possible, buying the dip), it was via some manipulation, the Euro didn't support it and it certainly has been a change in character of the trade we have seen over the last month and a half where gains aren't as important (you can tell by the +.12+.50% daily gains which a year ago would go unnoticed) as keeping the market closing green.

 Where's the late day rally that closes the market green by .20%?

Price Volume Relationships. The dominant relationship is price down/volume down, the hallmark of a bear market, but more interesting is just how many stocks advanced vs. declined in each average.

The Dow had 30 losers and not 1 winner

13% of the NASDAQ 100 closed green, as far as bullish closes, only 3% of the NASDAQ 100 closed on increasing volume, not one of the 3 posted a gain of more then .90%

The Russell 200 saw about 15% of the components close green, of that, about 5% closed bullishly.

The S&P saw about the same proportion close green, an 20 out of 500 stocks close bullishly.

The Market's Go To Hail Mary is Hitting a Brick Wall

It may not be immediately apparent at first glance, but AAPL looks like it's hitting a brick wall.

 Yesterday we got our first glimpse of what may be churning in AAPL, although it was a strong day, Smart Money would have been looking to buy a pullback, not to chase AAPL after it's already moved higher starting with After hours on their earnings. The heavy volume and the upper wick on the candlestick suggested the possibility of churning, strong hands selling to weak hands or smart money selling to dumb money which can also be smart money shorting to fill dumb money's orders. Today as AAPL barely moved and saw the same upper range resistance on heavy volume, the churning argument just got stronger.

 The 5 min chart suggests that's exactly what has been happening.

As does the 15 min chart which moved to a leading negative divergence in a rather flat range over the last day and a half.

It may be that smart money has no more use for juicing the market with AAPL.

Speaking of Financials

That's a huge 1.5 day leading divergence in XLF and on a 60 min chart. Rarely do these develop that deep, that fast

This may be why financials performed poorly yesterday

You'd think with a deal on the robo-signing scandal done, the banks would rally, they didn't. This may be why...

"a fully authorized, legally binding deal has not been inked yet."


Essentially, there's still no signed, legal binding deal.

XOM on a Trend Swing basis

This is a 5 day swing chart...

The short trade is already open, the current stop is at $87.13

JPM on a Swing Trade Basis

$38.50 would be the stop here on today's swing short signal, however that is a very obvious stop, I'd use something like $38.63. You may also want to keep the stop tight, in that case, maybe yesterday's lows. Sometimes it takes a couple of shots to get the position you want. Amateurs take 1 shot at a trade and walk away, pros will keep their losses small and 3 or 4 shots until they get the position they want.

3:30-Big Boys Time

 The Euro still hasn't hit that support zone I mentioned earlier.

 If the gap is not filled, on a nearly 1% down day, it won't be good.

How's this for a change of character as far as intraday trade?

Ironic Timing:LTRO

While I was writing the last post, 2 minutes ago Zero Hedge printed an article that proves conclusively that there is a stigma attached to borrowing from the LTRO as banks that did have underperformed banks that did not. I didn't read the article beyond the teaser, but here it is for anyone interested. 

This means if you have an idea of who participated in the LTRO, as conditions worsen in the EU, those are the short targets.

The S&P Said It Was Coming

After the S&P rating's agency stripped several Euro zone countries of their AAa ratings, most notably and predictably, France, they said they'd be focusing on the financial sector; true to their word, they downgraded 34 of 37 Italian banks today. This is not just information for information's sake, but bond holders in corporate debt as well as some equity investment companies have rules they must follow in what grade investment they hold and if that investment sees its credit rating lowered, it is likely to see its corporate bonds and equity shares sold as well.

Furthermore this does nothing to help their liquidity and access to money in the intrabank lending system, not that the system works; the fact the ECB has to provide LTROs to the banking system is evidence that the financial markets are frozen up, just like in 2008 here in the US.

This is just the first round, the S&P will release downgrade after downgrade as they make their way through each country's financial system. The LTRO (one is coming up and huge demand was expected), may very well produce the same stigma that borrowing from the F_E_D's discount window created, which told the shorts which banks to go after. So the next LTRO this month should be interesting as a half a dozen bank in the EU have already made a point to let everyone know that they  DID NOT participate in the LTRO, more or less saying, "it wasn't us, we're ok"

Depending on how many more banks the S&P downgrades and locks out of the liquidity market, the LTRO take up may change dramatically from earlier estimates of over a trillion dollars.

Market Update

 In the afternoon, intraday, the DIA has a small 1 min positive divergence, maybe it tries to fill some of the gap from today.

 The IWM shows the same small positive divergence.

 The Q's look like they had their best chance early today, there is a positive, but not like the early one.

And a slight positive in the SPY.

It will be interesting if they do move to see whether they move in correlation with the EUR/USD or against it and how far they can get if they do make a move here. Remember a break away gap left unfilled is bad news for the market.

If the Euro can find support at it's intraday lows, it may help the market, if not and slices through to the downside, the market will be trying to swim upstream. One thing is clear, there's no strong underlying support, at best maybe enough to get a gap fill attempt started, maybe.