Many Parabolic Moves Look to Fail As VIX Comes Back to Life

These are the hard positions, SRTY long and PCLN short here when the IWM is parabolic, but right now the VIX futures which were not quite shut down, but more frozen in time today are now back alive.

The signals are just coming in and they are following the same pattern of extreme signals.

Charts coming...

"Hold your nose and jump"

Also Liking SPY short /SPXU long (3x leveraged short SPY) and PCLN Short

I'm pretty well fixed for positions and in place so there's not much I have to add.

I am going to start a strict stock (model)  trading portfolio, no options and see if I have the time to do it, it's really my last priority, but if I think it can be helpful to members, I'll find the time.

The thing I don't want is members  following every position of this portfolio as there are a lot of good ones, I may be entering one because of correlation or because of timing, it's not to be viewed as "Superior picks". That's one of the issues I've had with doing something like this as I never wanted this to be a "Follow" service, but more of a teach a person to fish (as we all learn together as eternal students of the market) rather than give a person a fish).

I will start the first position though with PCLN short and SRTY long. There will likely be no more than 6 positions at any one time.

QQQ Update/ Trades

"If" I were looking for a QQQ Put , this would be the area, the CPMPQX is at $4020, it should hold the $4k through the close so after 6 trading weeks of being in striking distance, it looks like it's finally done on a short squeeze.

I want to buy puts in to upside momentum, as it starts to fade, the premium increases.

I looked at QQQ/NASDAQ 100 breadth intraday and the Advance / Decline line is fading out, going negative.

 QQQ intraday

Migration of the intraday divergence at 3 min, leading negative now.

The entire Oct. 9th trend/cycle with a clear divergence after good confirmation way out at 60 mins.

This is the NASDAQ Futures intraday

And this is the Q's little helper, AAPL today, so AAPL may be one I'm interested in looking at.

If I'm more specifically I'm looking at an equity short like QQQ short (which I think can work, I don't think you need all the leverage of options for a stage 4 decline) or QID or SQQQ long (2 and x 3 leveraged QQQ short respectively), then entering in to momentum is not as important like it is with options for me.

I'd be looking at good signals, which both have, I actually like SQQQ a bit more and I'd be looking for the 50-bar 5 min moving average to be broken around $84.50, that's about where the Trend Channel is as well, there's stronger probabilities at a break of $85.25.

I wouldn't want to let the Q's go much below that before entering other wise I risk losing the momentum of a head fake move with a cross below the $84 level which is no coincidence that it's a whole number.

Leading Indicators

Here's yesterday's if you want to compare.

 FCT (Pro) sentiment continues to fade

As does HIO

Yields are hitting a lower low, rremember they lead the market and act as a magnet for equity prices.

This is the larger view I posted yesterday, I also posted where Yields were giving leading signals and how the market followed, you can see that chart in yesterday's Leading Indicators post linked at the top.

 HYG as mentioned is an Arbitrage asset used to manipulate the market up, that doesn't mean the stable prices here aren't seeing selling.

The Arbitrage is based on HYG's price only, not underlying activity or order flow.

And to REALLY confirm the fact that one of smart money's favorite risk on assets (High Yield Credit) is showing what smart money thinks of this market, just look at HY Credit that is not linked to any correlation or used as a lever to move the market, High Yield Credit below.
 

 HY makes another low

The trend coming out of the stage 2 part of the 10/9 cycle with confirmation and then selling at the stage 3 area, now credit is in decline, "Credit leads, stocks follow".

IWM

I really like the timing on the addition of IWM Jan puts here. SRTY long is also another I like as either a new or add to position.

The Index futures are all going negative intraday. I'm waiting on the MSI to show a crack which may be starting here.

I'm going to take a closer look at assets already in place (and reiterate and I like a lot here whether I'd add to them or not).

The Yen is looking pretty strong, no evidence of a slam down. As a result, EUR/JPY is not able to do anything to help the market here, I believe this is pure VIX containment, not even correction, trying to hold HYG up and most of all, pure short squeeze on this low volume.

ES in purple vs EUR/JPY, that push on the upside, looks to be full-short squeeze, even the TICK agrees.

Leading Indicators coming up, because from everything I see, this is as suggested before, trying to get COMP $4k, but more so trying to prevent a market meltdown in front of Black Friday.

Adding to Jan. IWM $112 PUT

I may add to SRTY as a trading position also, I like either one here, excellent entry with lower risk, an excellent and reliable head fake pattern, a short squeeze in desperation and underlying trade falling apart.

IWM Tempting Short ob Short Squeeze

While there's upside momentum as the IWM and Russell 3000 (lots of COMPQX components in there), I may just add to the Jan IWM $112 Put or SRTY (3x short IWM) which is only seeing -6% drawdown even with this move , I'll likely have to decide very quickly, but this is very tempting.

 Once I saw the IWM intraday chart with a diaganol line with no corrections on diminishing volume, I knew exactly what I was looking at, the hallmarks of a short squeeze, but I just have to wonder how many are left as you saw the recent Investors Intelligence Survey chart showing bears down to historic lows, the lowest since they've kept data back to 1990.

The real threat here is what I mentioned before, the lack of checks and balances, shorts are a part of a healthy market as they represent future buyers that are already committed, when a market falls hard, shorts take profits and to do that they cover or buy, but with so few, there's no natural demand built in and things can get out of hand very quickly, especially as we are at all time highs, we have record (for the year) retail moving in to domestic mutual funds and there are no shorts to act as a natural buffer.

I knew exactly where to look, my Most Shorted Index (R3K components)

 The MSI in red vs the R3K, you can see longer term it was falling apart, but intraday...

 This is the short squeeze.

The IWM intraday is seeing migration of a negative signal meaning someone is ddoing the same thing I'm considering, selling or shorting in to the squeeze as migration of the divergence continues.

to the 2 min

3 min and the 5 min is already at a leading negative divergence and now

The 10 min is clear, plus it's a channel buster and a big one at that.

I'll likely enter IWM Jan puts (112) and/or add to SRTY long (3x short the IWM) equity position.

Market Update

I'm trying to cover a lot of assets here quickly, the only real shifting variable is intraday charts or chart (1 min), damage is done on anything much longer.

Even though today is about NASDAQ COMP $4k, I'll start with the SPY as it's a good overall proxy

 SPY 1 min although zoomed tight the 1 min is in a weak intraday confirmation (green).

SPY 5m is another of the recent fast moving charts that have characterized the last week, but especially this week so far.

10 min is another, longer term there's more damage, it's the fast moving part that's nearly vertical compared to a normal (strong) negative to the left.

The QQQ intraday is inline, remember I had said this was the best looking of the averages, which is like the best choice of nothing but bad choices. Beyond the 1 min damage from last Friday on is apparent.

I showed AAPL which, make no mistake, has a lot to do with the Q's and COMP today. It seems like the market is struggling to maintain even this as the NYSE TICK range is very mellow at +/- 750, not a whole lot of directionality.

The IWM intraday 1 min was in line, at another look it's starting to deteriorate and as you've probably seen in numerous charts, there's no strength behind the 1 min chart, 3, 5, etc are all deeply leading negative.

The VXX seems to be in consolidation, although I think it may have something to do with either an arbitrage play to try to help the COMP maintain 4k as VXX is one of the 3 Arbitrage assets or perhaps just to not let anything horrific happen to the market in front of what already seems like a troubled Black Friday, something horrible like this...

Soit VIX BB Squeeze, this move would see the market make the opposite move.

Consumer Confidence isn't looking good in front of Black Friday...

Released On 11/26/2013 10:00:00 AM For Nov, 2013

Prior Consensus Consensus Range Actual Consumer Confidence - Level 71.2  72.9  70.7  to 76.0  70.4  The temporary agreement to end the standoff in Washington did nothing to boost consumer confidence which fell further in November, to 70.4 vs October's revised 72.4. Confidence took a big hit in October, falling from September's 80.2 amid the government shutdown and budget standoff. So October was bad on the gov. shutdown, but November? This is the second miss in a row and the biggest miss of expectations in 8 months, a plunging market before Black Friday wouldn't help things much, but that is just what the VIX BB squeeze is forecasting. In looking at VXX and VIX futures, there's no horrible intraday signals, more like a holding pattern, however the very strong positive (near vertical signals ) of the past few days are still there strong as ever. Right now intraday all Index futures are seeing intraday 3C weakness, plus there's the 5/15 min charts already weak as shown since Friday. Gold looks bad on the price chart, but futures show a 5 min negative divegrence around midnight, the 30/60 min charts that saw 3C move vertically up are still there so I believe there's actually still a very strong base under gold, but just as I showed yesterday when you consider Black Friday,

Tere's now an inverse relationship between gold and the market (SPY in green), rising gold would likely mean falling market and with only a couple days before Black Friday, it seems they are trying to tie up whatever they can to maintain at least a level market and stave off a decline until BF passes.

That's CLEARLY what VIX futures look like.


However signs of trouble are already here and growing.

The +.04% gain in HYG is seeing strong distribution in to the move which IS an arbitrage asset to manipulate the market higher.

However when looking at High Yield credit, which is not correlated, it's taking another drastic fall today.

I'll have some other charts up, I want to figure out whether the market will be able to hold, with such low volume I'd think they can pull off enough tricks to get it to hold, but if it looks like it has the last several days in to the afternoon, then I may go ahead and take action, otherwise I don't want to enter new positions if we'll just be in a Black Friday, confidence holding price pattern.

AAPL look s to turn down

The NASDAQ Comp is so far holding 400 at 4008, it's clear AAPL is part of the solution as yesterday if falling was part of the problem of holding $4k.

However AAPL is clearly being used for this purpose only, I've been interested in an AAPL short, I had calls opened last week for a short term move like this out of a triangle, but the position I've always been more interested in is a swing short, not a core/trend short in AAPL yet, but a swing+ position.

 AAPL in green and the COMPQX in red

 This is the descending triangle that I've been watching and was hoping to see breakout last week on the short duration call position.

AAPL intraday seems to be fading again like yesterday, but it's still early.

The damage from yesterday is already in the books, I'll be looking for an entry in AAPL for a swing type short, although I doubt it will be today with the need to get the COMPQX above $4k on a close after nearly 6 trading weeks now of being in striking distance.

Market update next.

A.M. Observations

Futures were quiet last night and stayed quiet, the BOJ tried to talk the Yen down and it didn't work, around 8:20 there was a small downdraft, but it did nothing for E?UR/JPY and nothing for ES which is near unchanged from yesterday's 4 p.m. print.

The Nikkei (as suspected) closed red, down 104 points (similar to the Dow in size).

US Housing Permits came in at a high not seen since June of 2008, but there was no growth in single family units, 620k from 615k, it was all in structures of 5 units or more, rentals.

There's opinions that this is a head fake move on permits so private equity can dump their rental portfolios and others say it's genuine, it's a bubble for sure and the days of the single family home seem to be gone.

China is tightening lending conditions, overnight to keep banks from exceeding their loan to deposit ratios to cut down on excessive credit lending, apparently no one learned anything across the world. My wife's family are thinking of buying rental units in the US as they are advertised everywhere across the internet.

Remember for those of you outside the US, we have a holiday shortened week, Thursday closed and Friday a half day.