UNG

I've had a few emails this morning concerning/concerned about, UNG and the downdraft this morning.

However it seems Energy broadly is down with XLE and IYE down (crude is up slightly) and UNG down, this seems to be all about this morning's weak GDP number, here's UNG pre-market...

Right at the red arrow on this 1 min chart, UNG sees a sharp move down, this is the same time Q1 GDP is released, it seems Energy weakness is all about the G1 GDP coming in softer than expected, thus discounting reduced energy demand.

All in all, UNG's 3C chart is holding up rather well so this looks to be more knee jerk than anything.

In fact the intraday 1 min (where any new short term divergences would start) is seeing a sharp leading positive move starting.

I'm not saying this is where I'd add to UNG, it may be an area, but I'd prefer to see more timeframes suggesting the same and this move is early, but in the right direction and making sense.

Early Update

If I just had to guess, I'd guess that we see somewhat rangebound (op-ex) pin action today with the market free to do what it wants during the last hour as most contracts are closed by then.

This morning (as you know I don't usually pay too much attention, or rather give much weight to a.m. trade), we are seeing some slight early strength, in some cases it seems like a gap fill, but I'd like to show you the averages on an intraday 1 min chart and a longer, more important 3 min chart...

IWM

 1 min chart w/ a  slight relative positive divergence moving toward yesterday's close (gap fill).

The 3 min chart w/ a significantly worse looking leading negative divergence. On another note, many members have written me showing me different indications they saw that suggested to them that the AP Twitter Feed Hi-Hacking event this week in which an AP Tweet said the White House had several explosions and that POTUS was injured, was in fact set up and ready for some fast moving traders/computers to take advantage of the situation, selling before the event and buying at the very bottom. I have noticed a negative divergence before the event (yellow arrow) in every case, maybe there is something to it.

QQQ

 1 min positive this a.m.

3 min leading negative as the Q's also were moving toward a gap fill.

SPY

 1 min positive

3 min leading negative, again all 3 charts show the same AP event.

The NYSE TICK chart was trending earlier, it was very weak though with nothing over +750, that broke and is getting volatile up and down now, but no trend apparent yet.

NFLX

NFLX saw an early surge this morning...

This surge seems to be based on "Insider buying, specifically Director Jay Hoag who purchased 2.3 million shares, however they were obviously an option being exercised as the average cost was just under $86 with the stock at $213, I'd guess in the coming days and weeks Mr. Hoag will be filing Form 4 updates with multiple sales.

Pre-Market

Last night the BOJ had a policy meeting/announcement and the message was, "Course steady"; the more subtle language hoped for was that the BOJ would in some way dial back or slow down their goal of doubling the BOJ's asset / monetary base in the next two years. I already covered this yesterday, the Yen's "wrong" reaction to the policy, the JGB's "wrong" reaction to the policy, Core deflation hitting 3 year highs and it's "wrong reaction to the policy while non core items such as food and fuel surge, again, the "wrong reaction to their policy. Perhaps the BOJ should consider their QE policy may indeed be "WRONG".

The Yen gained ground overnight (a market negative event)...

 This is the Yen's move from about 8 p.m. last night (EDT) to present, not good and not good for the market (stock).

While the more concerning large, classic double bottom base is gaining 3C momentum on a more significant timeframe for underlying flow of funds, 60 min. Note that the Yen is not too far from the neckline that separates a stage 1 base from the primary uptrend of a stage 2 "Mark-up" breakout.

Then this morning Spain cut their growth outlook, predicted higher deficits and scaled back the timing of their deficit reduction program.

Next the US and the first of 3 estimates for Q1 GDP...
The prior was 0.4%, consensus was +3.1% with the actual at 2.5%, disappointing. This is the biggest miss vs. consensus in 6 quarters. However this is a far sight better than the first estimate of Q4 2012 GDP which came in negative to be revised to 0.1 to avoid the possibility of the word,  "Recession" being thrown about, then to 0.4% for good measure. The market did not have a substantial reaction and it looks like last night and the last two days' analysis is more on track for our near term trajectory, at least to the point of an Op-Ex (weekly) pin, although I suspect more than that, but we'll get some clues today.

The Index futures...

 ES doesn't tell us much...

NQ seemed to be working on a positive divergence interrupted by the QI GDP

And TF is working on a positive divergence

Overnight

Not surprisingly, based on the afternoon activity (yesterday's as well), futures are drifting lower; ES is off by -2.5 points, but down 10 points from the intraday regular hours high.

There are some positive intraday/night divergences in the Index futures, but based on regular hours 3C charts, I'd expect some draw-down, thus the afternoon short positions. Currency futures are split, the $USD looks like it will head lower (market supportive), while the $AUD also looks to head lower (market negative), the Euro isn't giving very strong signals, but hasn't been performing well, presumably because of the upcoming ECB policy meeting with rates expected to be cut by 25 basis points. The Yen really looks like it could make a serious move higher, which if you recall in my weekend articles (2 weeks ago), "Currency Crisis" has been looking for a Yen move higher, very negative for the market and carry pairs, this could be what the negative market signals are about.

Take a look at the Yen futures...

Since the BOJ QE policy seen at the far left (negative divergence and crash in the Yen), there has been a strong, building 60 minute positive divergence, this is the base I'm worried about in the Yen, essentially this would be the BOJ policies failing and would have significant effects on the carry trades and the market. What is being termed, "Abenomics" (after Japanese Prime Minister, Abe and his very aggressive moves along with the BOJ to end two decades of deflation in Japan, have just seen an unexpected rise in deflation, the exact opposite of what they are trying to accomplish. The deflationary economic miss is the biggest in nearly 3 years so what they are doing is not only not working, it's making things worse!

Here are some examples of the short term negatives building largely since yesterday...I had expected some more upside on this move before we get a real tradable downswing, a serious downswing.

IWM negative

QQQ negative

SPY negative, but these are largely on timeframes in the 5-15 min ranges.

This 4 hour SPY chart shows a lot stringer accumulation stage at the previous bottom that should support a larger upside move so I expect any near term downside (whether it's a day or several), will be followed by the continuation of this move to the upside which has essentially (at least from the look of the 3C charts), seen a temporary set back. We'll know a lot more if we do get some downside as we can see how 3C reacts, any positive divergences in to downside and we know the move to the upside isn't done, which is actually good because it gives us more trading opportunities and gives us more time to set up our core positions as well as get better positioning and less risk. I can't really complain, I'm just surprised to see it, although no trend id a a straight line. I'm just a bit concerned that the Yen may change things market wide with very little warning as this is a true fundamental event that hasn't been discounted by the market yet as far as I can tell and I do think it will happen, it would just be good if it happens at the time we have all of our core shorts in place, it would actually be like adding a turbo charger to the downside move.

As for CONTEXT, the negative differential is only about 4 points, this has a lot to do with ES actually reverting toward the CONTEXT model (ES moving down, at least since the afternoon highs).

As for Leading Indicators, they are pretty much in line on a shorter timeframe, they are not negative enough in my opinion to be warning of the top I'm looking for after this move up (which seems like it's seeing a short term detour/correction). In other words, Leading Indicators as well as CONTEXT support the view of the 3C charts of the averages above, a downside interruption to our move higher, that move higher continuing (I'd say before the signals yesterday and today, it was probably half way or more completed) and finally a crushing move lower, but following the market signals has served us very well as can be seen by our trades and ranking, so we'll continue to listen to the message of the market and trade with that message.

We'll see what we have in several hours, but I'd expect an op-ex pin, which may be why we are seeing these negative divergences right now (Max pain may be lower for the op-ex pin).

See you soon.

AAPL Calls P/L

Earlier this afternoon I closed the AAPL Calls out of, "An abundance of caution".

I had to take a small loss of -0.004% on this, but I'd rather do that than take a large loss, I celebrate small losses, they are small problems that were crushed early before they became big problems.

GS

Well you can't get everything, but yesterday afternoon the charts deteriorated, it looked like something ugly was coming, today despite a nice head fake move up, those charts still stayed ugly so, TODAY WAS A GIFT, days like today give us an opportunity to enter a position at an excellent price, low risk and very good timing, they are hard to enter as the market is going the opposite way, but you just have to trust the charts over your emotions.

In any case, GS was one I wanted to add to as a core equity short and these two charts are reason why I think we still are likely to have more upside before we get the break I'm looking for, although this one is getting uglier and uglier, I think assets like HY Credit will fall completely apart before the market does and that hasn't happened yet, but what this could be is the very typical, increased unpredictability and volatility.

Back to GS...

 Note the head fake move to a new high above resistance right before GS reversed to the downside, I explain why this is so common in the two articles linked at the top right side of the member's site. In any case, the 15 min negative here is clear and I could have done something with GS as a trade I'm sure, but as a core short...

This 4 hour chart still shows a significant accumulation period suggesting GS has more upside to go before all the shares are distributed.

We'll be able to tell soon if there's accumulation in to the downside move or not.

Going Long FAZ (Financial Bear 3x) ETF

I would have preferred an options position, but the momentum right now in Financials to the downside makes premiums very expensive, however the ETF, FAZ, which still has 3x leverage is up (and I hate to chase),  but still below yesterday's close.

Position size will be just a bit bigger than a spec position

UVXY Follow Up

Earlier today I put out a long position on UVXY, that position is now in the green.

The improvement in the 3C charts is so obvious, the charts need no annotation, if you can't recognize these positive 3C divergences, email me and I'll help you better understand the principal so you can apply it to other indicators and understand just how important charts like these are.

Being that VXX / UVXY trade nearly the mirror opposite of the SPX/SPY, the divergences should be nearly the mirror opposite too.

Here are the UVXY positive divergences, many made extreme moves to the upside today.

1 min

2 min

3 min

10 min

Even 30 min.

AMZN Earnings and Quick Update

I was asked about AMZN earnings and whether there may be a leak, honestly I'd have to do a lot of analysis between AMZN and the market, the Industry group peers and sub-industry group peers.

AMZN in general looks better on the 3C charts than I'd expect given the overall market tone the last few days.

As far as my personal plan, it is as I have posted before, to try to add to an existing partial AMZN short position to bring it to full size, I want the trade to come to me and my definition of that is AMZN trading at least above the flag-like consolidation zone since January (which is way too big to be a true flag) and price above at minimum $278. Ultimately, I'd like to see AMZN above $285 with negative divergences in to that move. I Would consider above $278-$280 "IF" the 3C charts were absolutely stellar in their negative divergences.

As far as a leak, I don't see it off hand, but AMZN does look more positive on 3C than I'd expect to see.