Market Update

I'm going to start looking for positions, if we follow the AAPL theory, then the market should get 1 last move to the upside, HYG will support that move...

 HYG 1 min-as an oversold move as cover, HYG's move up would support the SPY Arbitrage model/SPY, if we follow the AAPL example laid out as the model for the market as well, HYG's action makes a LOT of sense. As does TLT's price positioning and VXX's, although their underlying trend is much different, but it's price that the arbitrage model follows.

 For instance, although not strong, we do have an HYG positive to 5 mins, at 10 min it stops completely, no hint. What does that tell you about HYG? As a lever, it is being prepped, as a real asset in portfolios...

This 15 min chart tells you everything you need to know, as I mentioned before, they are running, not walking away from risk in Credit.

I would think they'd want this move to start before the close today to make the most of it on the open tomorrow.

The Leading Indicators layout near term doesn't matter anymore, it is so negative and dislocated, we are well within reversal territory and when I say not 20%, that's what the media considers to be a correction, I'm talking about the end of the story started in March of 2009.

Asa for TLT, other than the long term daily chart which you have seen soo many times I dare not put it up again, what's important is the timing of what it going on.

 The 2 min chart shows the detail of where accumulation is/was/still is, but as you get to longer, more important charts, the trend becomes clear. You must understand however the difference between a 1 min and 5 min divergence and a 10 min and 15 min and a 15 min and 60 min. The longer the timeframe, the more significant the flows of money are, so shorter timeframes will always look stronger and have more detail, but longer ones shoe the trend, they show the extent.

For example...

On the pullback for TLT, just today (as I mentioned, I think overnight futures were used to keep TLT low to accumulate on the cheap, which tells us something about timing too), the 60 min chat is in a leading positive position, this means there has been an exceptional amount of accumulation in a very short period here, why the hurry? I have an idea.

VXX...

 VXX 1 min

It doesn't matter what price is doing at this point with the Leading Indicators so dislocated, the SPY Arbitrage and CONTEXT don't even matter because the price action right now is totally irrelevant, it's the 3C action and the timing of the pickup in it,the way even minor strength is sold immediately, the hedge pack has split up.

2 hour, each divergence created a small move, but I believe this is one large divergence, the current leading positive 2 HOUR is yet to go.


I would say one of the most important things to watch for is HYG to make its move, that should (with TLT and VXX lower and under accumulation) allow the market to make that move up I envisioned in AAPL-IF THE MARKET MOVE OR ESPECIALLY HYG ARE SOLD PREMATURELY (NEGATIVE DIVERGENCES-EVEN PRICE FALLING) I THINK WE WILL KNOW THE MARKET IS ACTUALLY MAKING THAT CRACKING SOUND.

THAT WILL BE THE TIME TO MAKE YOUR MOVES ASAP, IN FACT I'M GOING TO LOOK RIGHT NOW, I'D RATHER BE A DAY EARLY THAN SCURRYING AROUND LAST MIONUTE.

As of this moment, I am not closing any positions, if I did, you'd know.

Same in the SPY

 1 min is showing a weak positive intraday, enough to move SPY intraday, but after that...

It has been distribution.

The DIA is similar to the SPY, but the IWM and QQQ barely show anything positive anywhere, it looks like those are simply being sold.


On the last move-and it's getting hard to say which will be the last-the AAPL theory or this move today, HYG will help out, 1-5 min are positive-from 10 min on, where it really counts, HYG is negative.

TLT is accumulating, it's a bit choppier in the fastest timeframes, but clear and smooth on the long timeframes that represent the heaviest trend so in faster timeframes there are adjustments, perhaps to keep TLT in a range, but the net effect is a strong underlying trend.

The exact same is true for VXX (VIX futures), choppy in the earliest / fastest timeframes,, the longer you go out, the clearer and stronger the trend of accumulation is.

Quick ES Update

Remember what I said about AAPL, it seems to me, ES is pulling a little sneaky move of its own...

AAPL/Market Update

I have some more market analysis to do, but generally speaking, AAPL being such a heavily weighted stock and the market in risk on mode, generally are going to move together so I'm thinking when its time to enter AAPL short, the market too will be shot and that far gone. Oh and I don't think the reversal from this to the downside will be a process, the process has been underway for a long time, I think it will be an event and probably a pretty drastic one so I'm guessing we'll have to be in a little early and it will be worth it, I think missing the first move will be like missing most of the first move.

I'll confirm on the market, for now, AAPL.

 AAPL's long term 5 day 3C trend, big accumulation from 1996-1998, right in time for the Tech boom, then big accumulation from 2001-2003, in time for the next bull market, since 2009, mostly distribution of decades of positioning long, it makes sense theoretically and I have evidence of at least the lst 2 years.

 3 min chart showing some intraday distribution, this would "almost" pull me in, but I think something else is going on here and as a short, I would not be scared off yet, but the negative divergence here creates a price pattern that may help scare me off when it breaks out.

 The 10 min chart showing the accumulation for this move, it still hasn't migrated negative so there's still some work I think before AAPL is ready.

The 15 min chart doesn't show the accumulation for this move, it's not that big to show up here which makes sense because it's a shakeout move, why accumulate more than you need to get the job done when your primary interest is in seeing AAPL decline and you want to short strength? You don't need all those extra shares long to sell before you can add to your short position. This also shows the larger AAPL counter trend bear market rally.

60 min shows no accumulation, not even for the bear market rally because again, most shares are positioned short and this just allows them to add to that position, again, why accumulate more than needed to get the job done when you want to add to a short?

 The momentum 15 min chart doesn't show AAPL as having turned negative yet, this is the recent move since Friday's decline ended.

However the 60 min version is in line with AAPL having lost momentum for the entire, larger counter trend bounce, as soon as the 15 min goes negative, the shakeout is done, the larger counter trend bear market rally is done and AAPL is donee, I'm guessing the market is done at the same time.

Here's what's important about that 3 min negative divergence, look close and it halts AAPL and creates a bullish ascending triangle, shorts will see that and when that breaks out, they'll assume it's a bullish reversal, that is (the breakout from the triangle) enough to scare them off, a sharp upside move included should do it and a higher high, that's where I want to add AAPL puts, I also think that is where this market is in big trouble, I will confirm that.

GDX-Gold Miners / MARKET CONCEPT

This is a complicated asset, 1   because of the market behavior we'd expect from it, 2 because its long term correlation with gold has been flipped on its head over the last several years and 3 because its correlated to gold which is in the crosshairs almost more than any asset with the F_E_D ending extraordinary policy accommodation. this is why I have thought gold has performed so badly lately longer term (bear market) as smart money has discounted what the F_E_D is doing long ago, if I can figure it out last year and Hilsenrath is now just telling dumb money it's a possibility, than smart money knew before I did.

Yet many of you have asked, I'll show you, but also give an opinion on the trade that might surprise you.

THIS IS A MULLTI-DAY (4)  of GLD, it shows confirmation of the uptrend and then distribution, to show distribution on a 4-day chart it has to be VERY HEAVY, ironically it starts right at the 2011 top, which ironically is the place I said we have either seen an intermediate or a primary top in gold, thus far I was right as gold has moved in to an intermediate downtrend, it may move to a primary bear market, I suspect it will.

*On a personal note, if I had been accumulating physical gold and silver the last several years, I'd be selling it all right now while you still can at a reasonable level and maybe keep some profits, I think gold will be back down to about half of its value today within the next year.

 The yellow box is where we saw the large triangle top-triangles that large are either tops or bottoms depending on the preceding trend, 2011 is where we were going to buy some GLD, but stopped because I didn't like the change in character, we were 100% right. I told well (I'll withhold his name-many of you know him), he has his own site and a fund and is a major gold bug, back then that I thought gold topped, he dismissed me as some punk kid. Part of me hopes he's still long gold and buying the dips, I'm sorry, but arrogance in the market and thinking you know everything (I learn from our members every week) is a fast track to the bottom.

 This is the 60 min counter trend rally in gold/accumulation-remember counter trend bear market rallies are some of the strongest rallies you'll see in ANY market; think ABOUT WHY?

 GLD's 10 min 3C trend, remember new divergences start on earlier timeframes, I can't say 100% that this is the end of the counter trend rally or just a break in it, I do not consider this a high probability area though to enter any trade in GLD currently, it's too choppy, volatile, there's no good stop nearby, there's no "Let the trade come to you" concept in play here. You don't have to trade everything, wait for the best set ups.

GLD 2 min has an interesting short term positive divergence, because of what we see in the miners.

How many remember out "Miners Trading System"? The two trading assets were DUSt (3x short GLD) and NUGT (3x long GLD) and the system gave signals to buy or sell both.

You may be surprised to know that the rules I used in the system had nothing to do with gold, instead they had to do with two costs that miners can't control and create either higher or lower costs and that is what the system was based on-the costs miners faced and those were based on Energy they need to run operations and currencies as the value of their gold as mines are across the world, depends on whether their currency is weak or strong against the $USD which is what gold is traded in-almost everything else, labor, equipment, land leases, etc are fixed costs.

 This is the Trading system that gave a short for NUGT/Long DUST and as you can see, that trade would have made significant money on a nice trend, but there's a recent cross to long NUGT, this is not based on anything other than Energy costs and currency values, but it is interesting as it fits with market concepts.


 5 day chart of GDX, I always start from the longest chart because it shows me the history, what I see here is a massive, complex H&S top that has broken down and is in a bear market-before gold and this makes sense. Miners use to trade at a higher multiple than gold itself, that all changed in 2009 and miners traded at a significant discount to gold so the fact miners are down first and harder is no surprise. Longer term I expect miners/GDX to make significant lower lows, as a long term invesment, short GDX makes sense to me.

I checked volume to validate the H&S top, it validates it with my custom cumulative volume indicator.

On a 1-day chart it looks VERY much like GDX will see a counter trend rally, like some other assets recently, volume makes sense, the range makes sense, even the market behavior for H&S top shakeouts make sense, although this is a long way to go to shakeout shorts.

 This is the 2-day GDX 3C chart, makes sense for a H&S top doesn't it?

However the 2 hour chart looks like a counter trend rally is the highest probability right now.

 Strangely though, on the 1 min chart you can see whenever there's strength in GDX, it is sold, much like many market averages and assets, this could be part of maintaining a range to accumulate in as well, it's hard to say for sure.

NUGT which would rally "Countertrend" with GDX also has a 30 min accumulation zone after distribution and confirmation of the downtrend.

The 5 min NUGT chart shows strong accumulation, at this point it is very tempting for a swing type trade-long GDX/NUGT.

 Again though a 1 min chart of NUGT s like GDX, strength is sold, that is natural when trying to accumulate in a range, you want prices low and steady, I only question it because the market is doing the same without the range conditions.

 DUST, the 3x leveraged short GDX ETF shows longer term 2 hour distribution in its uptrend as GDX has moved lower, this confirms GDX and NUGT's charts.

The 60 min shows distribution at recent highs, again confirming GDX and NUGT.

The 2 min chart does the opposite of GDX and NUGT in the same timeframe, which again confirms them.

As for behavior of shaking out a major H&S top as we discussed with AAPL, it makes sense here, although the decline from the H&S is a bit deeper than usual, by the time price moves to shakeout shorts, most shorts will be at about 0% or very small losses and will see GDX as overbought and not likely to cave in easily.

The other problem is it is hard to imagine gold/GDX making a big move like that now, but the 3C signals are there supporting it, the problem is that we have seen those fail since last week the same way they failed in AAPL just before it lost nearly half of its value.

I'm going to say that despite the signals, I'm not playing GDX unless it does bounce on a counter trend move and I will use that as "Letting the trade come to me" and look for a short entry to be on the side of the primary trend-short GDX or long DUST, but that requires patience.

AAPL Update

I just wanted to let you know where I'm at with regard to AAPL and a new put position, I am waiting for now. Remember that moves like this, a counter t rend (Friday was down, today up and you should know why from earlier updates) are only effective if they move sentiment and make the new shorts so scared that they cover, today's move has started the process of exactly what we were looking for Friday and that's why we closed the AAPL put for a profit, but this move is not to, as they say in Technical Analysis, "Work off oversold conditions", the market cares less about overbought/oversold or else this would be the most overbought market in our lifetimes, it cares about its positions and these moves are a means to an end, they are only effective if they can scare new shorts enough that they believe they are facing losses much greater than a bounce which is to be expected.

So although we are seeing the right track in AAPL developments, imagine yourself as a new short entering when AAPL broke below $454, at $457 are you scared?

You have to forget about what Technical analysis tells you about overbought and oversold-they almost got it if they had thought a bit more because they always add the caveat, "The market can stay irrational longer than you can stay solvent", what they missed was the market is not acting irrational, it's pushing emotions to their breaking points, the market is not some benevolent or ambivalent creature, it's an extreme, manipulative, emotional hell on earth and that's the way Wall Street wins so understand that and you are closer to beating Wall Street.

GDX update is next since so many have asked about it.

Quick Update

The market is very scattered and fragmented, each average is different, almost all show distribution in one form or another, but the flocking of the herd is gone, they are in panic mode, EUR/JPY and AUD/JPY have distribution, the TICK looks horrible, it looks like from the TICK that again, any strength is being sold, TLT is the one to really watch.

We are at a very complicated time, these extreme markets and the breaking up of the herd only happens maybe once every 5 years or so, when the primary trend changes and this is the most extreme I have seen, there's the most to lose as the entire rally from 2009 was built on a sand foundation as a house of cards with liquidity that the entire market is now catching on as Hilsenrath got the OK from the F_E_D to go ahead and say what they have been clearly hinting since September last year.

Panic is setting in although it doesn't look like it, watch how long gains can be held before someone who use to move with the herd says, "Sell here and now, don't wait".

I'll do my best to answer emails, but the most important thing  is trying to tell you where we are and what assets make for good positions right now.

TLT

Here are the charts, as mentioned, I didn't understand why Treasuries gapped down with the market, they normally would go the opposite direction, but the low volume of overnight futures allows price to be manipulated with little cost, they want to buy TLT as cheap as possible.

First though TLT is used to send SPX and Dow to record highs, Wall St. can sell in to strength and short it, while buying TLT on the cheap. You recall we saw the shorter term (meaning not heavy distribution, but enough to turn TLT down) negative divergences and I even said specifically, TLT, although it has a VERY strong underlying trend will move lower, maybe a gap fill?" 

Well we can see what Wall Street is doing many times, but if you wait to find out why, then you've missed the move, the reason why in retrospect is quite clear.

 TLT (long term 20+ year Treasury Fund) makes a base, but before heading higher? A HEAD FAKE TO SHAKE OUT LONGS (Yellow trendline), TLT moves up against the SPX correlation and against what EVERY pundit on CNBC said, they said there would be a "Great rotation out of bonds/treasuries and in to stocks", does that look like that is what happened? Turn off CNBC.

Note the white areas where I suspected and 3C short term told us TLT was headed lower, I assumed to fill gaps-on 4/10 TLT gapped lower and 5/3.

Now, look at the SPX on the same days, remember TLT is one of the 3 levers.

SPX breaks out to a new high on 4/10 and again on 5/3, that would not have happened without TLT

TLT recently, "A" showing signs it will pullback, "B" starts accumulating and those who accumulated at "B" (even with price lower now, I guarantee will see profits), "C" is where TLT moved up with the SPX, the SPX topped right there on distribution, TLT was set to head higher and send the market to deep lows fast, this was last Thursday. Only the PPT would step in at that point and I believe as one of our members  wrote in and as John Hilsenrath, the unofficial mouthpiece for the WSJ wrote conveniently after the close Friday that the F_E_D is going to be tapering out of QE as I have maintained ever since (ironically) they launched QE3 on Sept. 13 2012! He also said they were worried about more or less managing the downside moves, but this is nothing new for the PPT, they don't ever want another 1929 so they let markets go bear, but manage them so they don't crash. Perhaps this is why there are typically more up days in a bear market than down days, the down days are just bigger. 

At "C" I almost guarantee it was the PPT stepping in sending TLT down on a large divergence for intraday and immediate, meaning they flashed a big order out in the open for all to see, not something smart money usually does. Why do you think there's all of this hubba-bub about Bloomberg terminals over the weekend and them being able to see whop placed what order? It wouldn't be good for the public to know that big TLT sell order flashed on Thursday at 2 p.m. came from the NY F_E_D's trading desk!!!

"D" could be a head fake move, I was surprised there was none, but it would be a natural reaction to seeing such a large,  apparently desperate looking sell order in TLT on Thursday as well. No doubt part of the PPT's way of sending TLT down without having to spend a lot, mostly psychological warfare.

As already stated, after the Hilsenrath article after the close Friday, of course smart money is over the print in TLT on Thursday and wants to buy TLT as cheap as possible, the easiest way is to send the open lower by manipulating LOW VOLUME overnight futures trade, which was accumulated as we already saw this morning.

 TLT 10-min, accumulation and at "A" the move on Thursday that could have crashed the market, even after TLT was sent lower the SPY still moved down. TLT broke out at 2 p.m., just as the SPY saw distribution and moved down and it broke out on 400% volume, Tell me one other risk asset like SPX or DOW new highs that even posted 25% higher volume on all new highs-NONE.

If TLT kept going without the PPT stopping it, SPX would be a lot lower, perhaps 1929 style, the PPT stepped in for a reason, not to manipulate, but to halt unreasonable declines.

Note accumulation even today in TLT as I already showed in futures.

TLT 5 min accumulation today, the green arrow is TLT's breakout and the PPT's halt of that, which is fine with smart money, buying TLT on the cheap is even better.

 TLT intraday 1 min

2 min with migration

3 min migration. Any questions as to what is happening in the Flight to Safety Trade?

TLT looks like it wants to head higher intraday, I'm sure they'd rather accumulate more down here, we'll see what they do, plus TLT moving up with VXX which is accumulating wouldn't be good if HYG  can't hold gains as it hasn't been able to yet.

SPY is Green-WATCH HYG

Remember HYG strength is transitory, it's just a lever being pulled on an oversold basis, it may help HYG longs to exit on strength, this is why we want to see if they exit as fast as possible, the "Every man for himself" rather than try to get the best fill, that tells us they just want out at any cost, the same as AAPL when it fell.

TLT-Lever's Update

First the SPY Arbitrage...

Arbitrage went from positive to negative.

A few things are happening, right now even as the SPY is trying to fill the gap essentially and get green, it is seeing distribution, this is what I have been telling you since last week when I said Thursday night on some risk on assets (currencies) with positive divergences, "Something doesn't look right".

Those divergences sent the currencies higher, but were cut almost immediately short with distribution in to any slight gain, knocking them down, it happened again Friday, any bit of strength is being sold, the hedge fund herd (they herd, I'll ex[plain why later) is breaking up and that's why the signals didn't look right, the same thing happened in AAPL as soon as it was disclosed that Dan Loeb no longer held AAPL as a top 5 holding, every bit of strength in AAPL was sold until the sellers (hedge funds) panicked and all trried to sqeuzze out the door at the same time, not caring about a horrible fill, just wanting out. That sent the GOLDEN STOCK, AAPL down 45% in 7 months.

When AAPL was crossing $700 to the upside and I said it had the worst negative divergences I had seen in AAPL ever, did you believe me?

Now AAPL has lost 315 points and moved down almost IN HALF in 7 months, do you believe those divergences were accurate now? 

The same is happening in the market now, I showed this morning, strength in any risk asset (currencies, etc, is being sold as soon as it appears.

TLT is down, I knew and told you when TLT was near its highs it was going down, for some reason I didn't understand at the time (and you never understand what smart money is doing, you just see it, at least until after when it's too late to make any money), the reason was two fold, to allow the SPX and Dow to make new highs and smart money to get out and sell short the market and secondly to accumulate TLT at better prices. If you think TLT being down is bearish, it's because you follow price only. If you are smart money and have seen the exodus almost all year in to TLT, you know TLT is going higher as the market crumbles so if you know that, do you want to buy TLT near its highs or do you want to buy TLT as cheap as possible?

Before we get to TLT charts, I'll just tell you about the 3 SPY arbitrage assets this a.m., VXX is almost unchanged, but under accumulation. HYG is down pretty significantly BUt, is seeing short term accumulation, HYG is oversold and they will use that as cover to use HYG as a lever to support the market right now because VXX is being accumulated and other than short term HYG intraday accumulation, HYG is being distributed HARD, they are as I said, running, not walking to the exits.

What will be interesting is to see whether HYG is sold early on any bounce/strength?

TLT is down, it gapped lower with the market last night which seemed strange as they move opposite each other, but I'm convinced the low volume of overnight futures was used to gap TLT down so it could be accumulated on the cheap, that is what is happening in TLT.

I'm posting this so you know what is going on and what to watch for-HYG as an upside lever, and whether HYG is sold in to any strength earlier than it should be, I'll tell you that. if so, then this market, as extreme as the divergences are like AAPL, is doing the same thing right before AAPL crashed and that may be the only way we can pinpoint a market acting this extreme, hedge funds are every man for himself and selling any strength.

TLT charts next.