7 years ago
Monday, April 1, 2013
NEW Option Positions- QQQ/IWM Weekly Call April 12th
This is a split position, basically for risk purposes it's 1 position, but split between 2 different assets.
Long QQQ April 12 $68 Calls
Long IWM April 12 $92 Calls
This is a short term trade, I think the expiration could have easily been this week, but I prefer to go with a little more quality.
Long QQQ April 12 $68 Calls
Long IWM April 12 $92 Calls
This is a short term trade, I think the expiration could have easily been this week, but I prefer to go with a little more quality.
SPY Short term Long Trade
I think a short term position long the SPX or any of the other major averages using Weekly calls (whether this week or next week) makes sense right here based on what we are seeing.
This is a short term trade, thus it is speculative and should be considered as such when figuring out position size and risk management.
This is a short term trade, thus it is speculative and should be considered as such when figuring out position size and risk management.
Leading Indicators / SPY arbitrage
*This post took a little longer than expected to get out so there has been some movement since.*
SPY arbitrage shows some clear manipulation of one or several of the levers used to manipulate the SPY higher intraday.
A SPY Arbitrage capture around 11:15 shows the levers being pulled with a positive $.30 differential.
A more recent capture as of about 11:45 shown an increasing SPY model as the arbitrage model has now moved to a positive $.50 differential.
CONTEXT for ES was and still is negative as the CONTEXT model goes, but the differential moved from -$8 points to -$4 points as the model improves.
As for the levers, HYG, even though it took a pretty good whack today is seeing better intraday relative performance recently.
HYG 5 min chart shows the actual performance vs the SPX with obvious manipulation as HYG forms a positive divergence in mid-March and sends the SPX (green) higher, today's clear negative divergence sends the SPX lower, but intraday there seems to be an application of the brakes on the downside move.
HYG longer term fell out of sync with the SPX back in February, there was some obvious manipulation of HYG once real money in credit took off, but the fast drop put HYG is a short squeeze situation in which it was easy to use HYG to push the SPX higher. As breadth in the market deteriorated so did HYG's price action, a clear negative divergence has formed at the top of the short squeeze (yellow).
However as mentioned, the initial HYG signals along with pre-market futures signals (also negative divergences) have given way to better intraday relative performance in HYG as the SPX (green moves lower) while HYg (light blue) heads higher. The red trendline is HYG's close from Thursday, the green trendline and light blue trendline represent the SPX and HYG 10 a.m. lows respectively as a way to compare intraday relative performance since.
HYG's 1 min 3C chart shows recent positive divergences helping HYG intraday.
3 min positives are apparent as well
So are 5 min HYG positive divergences
The 10 min HYG chart shows the 3C negative divergence sending HYG lower as well as a positive divergence that formed support today in HYG.
The same can be seen al the way out to 15 min charts.
Junk credit (JNK) moves much like High Yield Corp. (HYG) as you can see it also started today with a much more negative divergence vs. the SPV and an intraday relative positive divergence.
HIO is not used as a lever so it's a good indication of real organic sentiment which, despite some indications that would seem contrary short term, has clearly been in a risk OFF mode.
FCT is confirmation of the risk off mode in sentiment as the SPX made new highs last week, the signals in both HIO and FCT would seem to clearly suggest there has been a bout of selling in to new SPX highs.
FXE (Euro) as mentioned earlier today holding up better than expected.
The $USD on a longer term 15 min chart moving up with the SPX which is an unnatural correlation, in fact 180 degrees opposite of the normal correlation, I think the growth in the $USD is real, the movement in the SPX , manipulated which eventually fails.
The $USD on a very short term 1 min chart turning negative which is supportive of risk assets including stocks, It turned supportive just in time to help out on last Thursday's new SPX record closing high interestingly.
$USD is moving with the SPX today, an unnatural relationship, the $USD's movement today is supportive of the market so I think we will see upside as 3C indicated in the prior post (Futures update).
The Yen as a Carry pair, which is part of the CONTEX model, shows the natural relationship of the Yen moving down and the SPX moving up, but where the Yen has had some trouble, most likely due to carry trades being closed as the Yen needs to be purchased to close out the carry, sends the Yen higher or stronger than typical which you can see in the red areas as the SPX has also been effected in the same areas (moving sideways).
The Yen on a 1 min chart jumps up overnight and sends the SPX lower on the open as the negative divergences in pre-market futures suggested and now the Yen is finding a little resistance (support for the market) as futures charts see positive 3C divergences.
Commodities vs the SPX are moving as would be expected intraday, but...
When compared to the $USD (green) we see an unnatural relationship suggesting commodities as well as other risk assets like stocks, the SPX, HYG and Junk credit all see movement to the upside.
Yields have been in line with the flight to safety trade that has been observed in Europe (whether negative yields in 2 year swiss rates or German bunds) as well as the US 10-year yields hitting new recent lows. Here yields diverge from the SPX negatively, this is a red flag for the market longer term as the intraday signals in the market are seeing positive movement. Yields act like a magnet for equities, they eventually revert to yields.
Yields intraday from Thursday to Monday with a positive divergence, supportive of the SPX.
TLT (20+ year treasuries) seeing a 5 min negative divergence recently after solid confirmation in the price trend, this fits well with action in yields today short term.
TLT 5 min with a positive divergence or flight to safety, confirmation and a recent negative divergence again fitting with Yields.
TLT 15 min chart also showing a negative divergence recently.
Relative performance among the main SPX sectors shows a flight to safety in to Healthcare, Staples and Utilities as the SPX is lower early today and almost all risk asset groups are lower except tech, I fully expect this to change with the safe haven sectors underperforming and risk sectors outperforming shortly.
SPY arbitrage shows some clear manipulation of one or several of the levers used to manipulate the SPY higher intraday.
As for the levers, HYG, even though it took a pretty good whack today is seeing better intraday relative performance recently.
However as mentioned, the initial HYG signals along with pre-market futures signals (also negative divergences) have given way to better intraday relative performance in HYG as the SPX (green moves lower) while HYg (light blue) heads higher. The red trendline is HYG's close from Thursday, the green trendline and light blue trendline represent the SPX and HYG 10 a.m. lows respectively as a way to compare intraday relative performance since.
The 10 min HYG chart shows the 3C negative divergence sending HYG lower as well as a positive divergence that formed support today in HYG.
Futures Update
Both ES and NQ intraday futures are positive, there's some manipulation of some of the levers like TLT and HYG, I'll show you that next, but expect some upside intraday from the market, specifically the SPY and QQQ
AAPL may finally be building in some support
AAPL has taken a plunge that looks a bit like some very short term capitulation from sellers.
AAPL 1 min chart with some heavier than usual volume this morning.
1 min 3C chart with a small positive divergence
2 min chart with a larger positive divergence
The 5 min chart in line and a relative positive divergence
10 min relative positive divergence
15 min with a negative divergence at the $470 area and building in a relative positive divergence
Manufacturing ISM Misses
Strangely you'd think a miss in the Manufacturing ISM would support the market via the "Bad news is good news" mechanism that QE junkies feed on, however at least for the moment, that's not the case.
The miss was substantial, biggest miss vs. consensus in 13 months, perhaps it was a little worse than the "Bad news is good news" regime could stomach.
The miss was substantial, biggest miss vs. consensus in 13 months, perhaps it was a little worse than the "Bad news is good news" regime could stomach.
| Released On 4/1/2013 10:00:00 AM For Mar, 2013 | ||||||||||
Internals were bad, New Orders imploded from 57.8 to 51.4 (Q1 GDP in trouble?). Perhaps the reason the market didn't take this as good news is because the employment index (as employment seems to be the F_E_D's newest yardstick) actually rose from 52.6 to 54.2, that's a 14 month high. The IWM which was seeing the best intraday support earlier collapsed. 
Intraday the IWM looks like it has a good chance of finding some support here (1 min chart).
 So far the EUR/USD continues to hold up. |
GOOG Update
GOOG has been able to follow the initial intraday timeframe (out to 15 min ) positive divergences higher this morning and is near a 1% gain on the day so far.
GOOG price action this morning.
The 1 min chart is starting to see some congestion so I wouldn't be surprised to see at least a consolidation intraday in GOOG.
The 1 min chart is starting to see some congestion so I wouldn't be surprised to see at least a consolidation intraday in GOOG.
Opening Action
Thus far, the open has been volatile with the Index futures hitting a high on the week in early action, but following their pre-mmarket negative divergences lower in more recent action.
The EUR/USD as well as the single currency futures of the Euro and Dollar Index seem to confirm intraday distribution in the EUR/USD which seems to be pressuring the market early on.
EUR/USD initial spike higher around 10 a.m., but still carrying a negative divergence.
As confirmation the single future Euro currency also has the same negative divergence
And the US Dollar Index has a positive divergence, all suggesting the EUR/USD move lower.
After an initial move to the upside, ES followed its pre-market negative divergence lower, however the EUR/USD still sitting near the highs has provided some support to ES
A closer look at the opening brief move higher in ES followed by a plunge.
NQ/NASDAQ 100 futures also following their pre-market intraday negative divergence lower.
Although both ES and NQ have moved lower as per their divergences, EUR/USD's position , which has not seen a move lower yet is providing some measure of support.
In the market averages opening action, the SPY has not seen any positive intraday confirmation and has moved lower thus far.
Most timeframes out to at least 15 min are weighing on the SPY with negative positioning.
The Q's have a little more near term 1 - 2 min chart support, at 3 min they are clearly negative, as well as 5 and 15 min.
The IWM looks the best thus far with intraday support or at least confirmation from 1-5 min with 10 and 15 min seeing progressively worse negative divergences.
The DIA has a bit less intraday support, it's more choppy, but 10 and 15 min charts are clearly negative.
It seems for the moment any way, EUR/USD's ability to hold on to initial gains are the key to early intraday support, keeping the markets from tumbling lower, I do doubt the ability of the pair to hold on too much longer.
I'll need to check the typical SPY levers/Arbitrage to see if there's anything else going on.
The EUR/USD as well as the single currency futures of the Euro and Dollar Index seem to confirm intraday distribution in the EUR/USD which seems to be pressuring the market early on.
Although both ES and NQ have moved lower as per their divergences, EUR/USD's position , which has not seen a move lower yet is providing some measure of support.
In the market averages opening action, the SPY has not seen any positive intraday confirmation and has moved lower thus far.
Most timeframes out to at least 15 min are weighing on the SPY with negative positioning.
The Q's have a little more near term 1 - 2 min chart support, at 3 min they are clearly negative, as well as 5 and 15 min.
The IWM looks the best thus far with intraday support or at least confirmation from 1-5 min with 10 and 15 min seeing progressively worse negative divergences.
The DIA has a bit less intraday support, it's more choppy, but 10 and 15 min charts are clearly negative.
It seems for the moment any way, EUR/USD's ability to hold on to initial gains are the key to early intraday support, keeping the markets from tumbling lower, I do doubt the ability of the pair to hold on too much longer.
I'll need to check the typical SPY levers/Arbitrage to see if there's anything else going on.
GOOG Update
We have short term GOOG weekly calls and longer term April monthly puts open.
It looks like GOOG will move both directions, hopefully in time.
GOOG 2 min positive divergence
3 min positive building
GOOG 15 min positive already in place. The short term intraday charts need to see migration from the 2 min which has fairly firm footing across the 3, 5 and 10 min timeframes to meet up with the 15 min for a nice move.
The 60 min seems to put a lid on any upside as a bounce and no more as it is leading negative, it seems the larger trend in GOOG, despite any shorter term bounces, will be down.
It looks like GOOG will move both directions, hopefully in time.
