AAPL may be giving signals now

The 15 min ES and NQ (S&P and NASDAQ Futures) charts look bad, I really don't want to see the negative divergence get any worse on these charts or else it will start lowering probabilities on the up trend that should follow a pullback.

 ES 15 min

NQ 15 min.

Both are also now negatively divergent on the 1 min chart (intraday).

As for currency which is obviously a major driver and we identified that as a major catalyst before the recent bottom was hit several days before as it became obvious the market was waiting on the $USD.

 The Euro in green and the SPY in white, as you can see there's already a divergence with the Euro lower than the SPY, this in large part is because of that bear flag that was run to the upside as the Euro gave an early divergent signal sending the market lower on the open.

 The 5 min Euro (FXE) leading negative here-so we have our longer term charts in place, we just need short term tactical charts as the market makers and specialists adjust for the move.

 The 3 min (which on FXE is about as low as you can go and still have a trend without some blank spots) shows the earlier positive divergence at the lows and now a leading negative.

As for the $USD (UUP), the 3 min chart went from a strong relative positive to a strong leading positive. $USD strength puts pressure on the market, Euro strength helps the market.

As for AAPL it is now negative in multiple timeframes from 1 min to 10 min and everything in between.

The QQQ is also negative intraday 1 , 2, 3, 5, 10, and even 15 min across the board.

The IWM also has some significant divergences as does Tech and Financials.

We're just about there I'd say, still there will be volatility, use it to your advantage.

Tactics

If you have the time to watch the market (not every minute, but to check up on it several times a day or set alerts on your phone) you may want to consider using this area (as we have talked about many times before) to set up short positions that are shorter term in nature, for a pullback in the market. All of the signals are still there for a decent size pullback.

If you'd rather play a larger trend with less babysitting and higher overall probabilities, wait for the pullback to start to end (as we'll update) and start looking at adding some of the longs you like.

A Little Problem developing for the market

Are you watching the TICK? If so, you may have noticed the SPY hit a new intraday high while the TICK was far from it.

SPY in white, the TICK readings at a new high in the SPY were below +500, now they are below 0, that means more stocks are declining right now than advancing even though the SPX is at an intraday high.

Trouble

Leading Indicators

 Yields look like they are in line with the SPX (always green unless otherwise noted) intraday, but back out to include yesterday...

 Nope, Yields are significantly lower within the context of intraday trade and a pullback, Yields act like a magnet and equities are drawn to them.

 While not a huge signal, the $AUD is a good leading currency and it has broken off with the SPX,

 The Euro is a good confirmation currency, note it did not confirm the open and sent the market lower, it's not doing much very interesting right now.

 High Yield Corp. Credit is interesting in that it is hanging in there pretty well, like Junk Credit below.

 JUNK, however just like yesterday, these two are off on their own vs High Yield Credit...

This is the second day HY Credit has been at a negative divergence-like yields.

The closing levels are what are important, but anyone of these can be watched for clues: the $AUD/FXA, the EUR/USD, DHY for HY Credit, etc. Look for divergences that standout, they often lead the market.

Market Update

Earlier today I said to look for volatility, it wasn't going to be a straight line move and we actually have a pretty good example of Wall St. manipulation of Technical Traders. So far AAPL hasn't given the intraday negative divergence, I'm leaning toward it being a bit of a process more than an event, meaning it may take 15 -30 mins, etc rather than a quick "V" reversal, but that's just gut.

Take a look at the technical pattern that was used today against traders to get them back in the game long or just to confuse them (it's way too early in the day for a downtrend to hold through the entire day).

The obvious price pattern for Technical traders here (today) is a bear flag, I drew it with red trend;lines, volume was correct for the flag. Traders see this and understand it to be a bearish consolidation /continuation pattern, they expect it to break the lower channel of the parallelogram or flag, however Technical Analysis teaches that if this pattern sees an upside breakout as it did and on volume, then you switch sides and trade from the long side as the pattern is no longer in effect. This is exactly how technical traders are manipulated everyday and some bought it as volume ticked up.

Don't get caught in these traps, understand them, understand what retail is expecting and look for the manipulation or game Wall St. runs and think about "Why?". This should be fairly clear.

If nothing changes too quickly I'll put up the leading indicators and maybe a few other updates.

AAPL Update

Yesterday I opened some additional Dec. $570 AAPL puts, even though price is higher now then when I posted that additional position, the puts are still in the green.

 The reason why the puts are slightly in the green with the underlying higher is because volatility has increased and made options more expensive, this is another reason we want to enter trades before they make their move, as close as possible of course, but chasing them doesn't make sense. If AAPL can gain a bit more ground (or really even hear) I think it's in a decent place to add a speculative put position. I personally wouldn't go short AAPL stock, but it may be worthwhile if this pullback tests the recent lows, that's about an 80 point move in AAPL, it's certainly less risk, but remember you may have to close it quickly when the time comes.

Believe it or not, the intraday bounce I said AAPL was showing signs of is pretty much only showing up in AAPL, most of the market averages are not showing a decent intraday positive divergence so AAPL again is a bellwether for the market.

When the reversal comes it should come pretty quick as the market averages aren't showing much, if you're not using 3C, but still want a decently fast pre-emptive warning of an impending reversal, you may want to watch the intraday NYSE TICK chart.

Note the trend lines I have drawn around the TICK, when the trend or channel is broken to the downside, your reversal is likely very close.

ZNGA

Many of us are already long ZNGA and it has some nice charts that give us good reason to be. ZNGA is so far holding up pretty well today at +1.25%, I know it's closely related to FB and FB trades against the tide of the market (few stocks do), maybe that's true for ZNGA too, but just in case it does pullback with the market I'd maybe set some price alerts and put this one on the radar if you would like some long exposure in a stock that appears to be constructing a decent base that it should be able to rally nicely off.

Here's one of the key charts at the moment...

This is te daily X-Over Screen unlike INTC which was set to hourly as it is no where near a crossover on the daily. ZNGA has 2 of 3 signals positive and the 3rd in the middle window is headed that way.

Typically pullbacks on this screen go to the 10 day yellow or 22 day blue moving average, I'd set some price alerts in those areas.

INTC Update

This is exactly why we don't chase, but rather look for interesting trades and let them come to us. That sounds good in theory, you get a better price, you have less risk, etc. However in practice, it's difficult emotionally because you are entering a trade (in this case) that is moving down or has just moved down pretty significantly, emotionally that's a hard position to buy, but from a risk perspective it's where your lowest risk is IF there are good reasons on the chart to buy the stock, INTC has those reasons so now it's just about patience.

 INTC's 1 min chart has turned to a leading negative position very quickly, it's a new divergence, but it's starting to migrate which gives it some credibility.

The 2 min chart is doing the same; this isn't enough for a decent pullback, but it appears the process may be under way.

Quick AAPL Update

AAPL may see an upside counter trend move shortly, if it does, I'd be drooling over that to enter a short or put. As it stands now, I won't be adding any more to AAPL just from a position size perspective after yesterday's add.

 AAPL 1 min may give us a little bounce...

 2 min chart shows it wouldn't be more than that.

Here's where the real trouble with AAPL is in the near term on a pullback, lots of damage on a 10 min chart, this could be an ugly pullback that casts a lot of doubt as to the market's longer term ability to rally in most trader's minds.

Opening Indications-2 Charts

Here are the charts which aren't a surprise given the Greek joke of a fix, they decided how all of the money for Greece would be disbursed, they came up with pie in the sky projections, they just didn't come up with the money and what most people forget is even if a deal is 100% agreed on at the meeting, the Finance Ministers still have to go back to their respective countries and pass the deal through parliament and there are few governments with much patience left for Greece.

Just to answer a bunch of emails before I get them, YES, AAPL does look to be in trouble here.

The 3C distribution through the Euro i showed you yesterday. Also the set up that uses Technical Analysis against traders, we had a bullish sym. Triangle in white which is a trend consolidation/continuation pattern that should run at least as high as the trend preceding it, we have the head fake above $1.30 in yellow and as prices break below $1.30 and the apex of the triangle all those longs are now at a loss and selling. Remember the Euro is positively correlated with the market, meaning they almost always trade together whereas the $USD is inversely correlated, meaning they trade opposite each other.

 DIA 1 min with NO confirmation on the open, but that's not the real problem...

 The real problem is this leading negative 5 min chart that saw a lot of damage done yesterday that wasn't there last week when we expected a pullback early this week. In a way, the market owes us a pullback, smart money set up for it in the near term, however don't forget this should ONLY be a pullback, not a trend change as we have much larger, longer timeframe charts that are very positive so we can use this to look for longs at a discount and lower risk as well as the shorts on the way down.

 IWM 1 min NO confirmation

 The 10 min chart from accumulation to ugly distribution, a lot of damage was done yesterday.

 QQQ 1 min, NO confirmation

 Damage done on the 5 min QQQ chart

 SPY 1 min looks like it is inline, but...

 zoom out to the trend and it is leading negative.

Also significant short term damage on the 10 min chart.

We have a long day ahead of us still so i wouldn't expect any straight line moves, expect volatility, but near term probabilities are very high for a pullback.