HYG Follow Up and Yields as a Leading Indicator

Especially being around 2 p.m. with a very parabolic move and trouble confirming, it made sense to take gains in HYG (I'll put the P/L up later. I use options as a tool, not a trading method or a lotto ticket, when there's a tight place that has a decent signal , but the trade doesn't look to have enough profit potential or the beta is too low (like TLT), then I use options, but essentially as a way to trade the asset, not looking for home runs although I wouldn't poke one in the eye either. Ever since I've used options in this manner, I've gone from blowing up options accounts to adding to them steadily, this week the entire book of options ideas has added +9.83% and ranked 25 of 772 and this with just hitting singles and getting out as quickly as possible as I see them much like Vegas, the longer you stay, the more the odds are in favor of the house.

As for HYG...

 I like HYG for the longer term, not the primary trend. This looks like a lot of the market averages we've been tracking since 1/24 - 1/27.

However...

Today is too parabolic and the 5 min chart is having a lot of trouble where it should see 3C at a new high.

Another Indicator that I love as it just has amazing predictive abilities has been our Leading Indicator set up for Yields, this too is signifying trouble ahead near term and ,why let the HYG gains turn against me?

I clearly remember showing this chart with Yields making a positive divegrence at the second portion of the "W" base as you see below. However yesterday they failed to track the market so they went negative, today they've gone leading negative. The market seems to be pulled toward yields like a magnet so this is in line with yesterday's signals, thus no reason to hand around some of these calls and HYG.

Closing HYG March $93 Calls

These were for the larger move up as they lead the market, but they are too parabolic today and they are having trouble confirming so I'm going to take the gains, clean up

MCP Position Update 2

Earlier I said that there was one intraday chart (2 min) that was negative in MCP today, more so than I'd think as it stood out so I decided to keep an eye on it, sure enough several other charts followed it.

For me this isn't a big deal or anything that I'm taking any action over, but I know everyone has different trades and methods so I thought I'd update it.

 There are a lot of good looking charts in longer timeframes as you have seen, this 15 min just happens to have a good divergence on a head fake move below support before lift off and ultimately it's in line so for my purposes and the way I view this as a longer term position, there's nothing for me to do here other than hold.

 However here is that pesky 2 min which actually looks better than it did early, but still clearly negative, there was nothing around it that was even remotely negative so I thought it may just be an anomaly, but apparently it isn't.

 Soon after the 3 min chart went negative as we got a rounding move in price (at minimum a loss of upside momentum, at worst a potential short term top).

That is now just reaching the 5 min chart.

I probably wouldn't even take action as a trading position unless the 5 min chart started to look really ugly, but in any case it appears this initial move is seeing some profit taking at best.

Quick Update

As with all Fridays that now see some sort of o-ex pin with the rise of the weekly options, it looks like today is another pin, they typically seem to wear off around 2 pm.

What happens after 2 p.m. is important, but it's always much more important for 3C than price as 3C time and time again picks up on whatever divergence it closes with the next trading day, even over the weekend.

TICK is going negative as are the intraday charts

SPY Custom TICK Indicator.

There are a couple of averages I might consider positions in although as I said yesterday I don't want to get too involved in a shorter term move, but it would be beautiful to see a short term pullback that allows the 1-5 min charts to go as positive as the 15-60, that's a full house on the move we've been tracking since the 34th of Jan.

IWM

 The Q's and IWM have my interest as potential short term shorts, I'll give them a bit more time and see what they look like after 2 p.m.

IWM 3

 QQQ intraday- yesterday's divergence has grown worse.

Same with the QQQ 5 min which is the chart that makes me take this divergence seriously.

Really as I said yesterday, for the most part I'd prefer to stay out of the mix on this move, but the really sticky area for the market and the reason I'm now re-considering is 5 min charts going negative, that has historically (for futures) been a pretty solid trade.

ES (E-mini SPX Futures)

 NQ 5 min relative and leading negative

And TF/Russell 2000 futures, I've been leaning toward TF/IWM, but I'm going to be patient and see if this is just something I'd rather sit through or participate in (beyond the VXX calls position).

MCP Position Update

MCP which is a long term long position, not a market correlated long, is looking good today with a 6+% day, so far all of the charts except for one intraday look good, it's the 2 min. I'm going to keep an eye on it and see if it's just an anomaly as nothing else around the timeframe seems to confirm or see if it's a strong move just getting started.

As far as the MCP long, for me this wouldn't change anything either way, this is a longer term position for me that I might trade around once in a while if there are exceptionally strong signals, but truth be told, I'd be fine just holding it as well, the only reason I'd trade around any signals is to make additional percentage gains. but that has to be weighed against the back drop of the big picture. There aren't many long positions that look like they'll be entering stage 2 mark-up while the market looks as if it's entering stage 4 decline so I really don't want to miss the forest for the trees, for example (remember this has no market correlation to speak of, it moves against the market all of the time which is rare).

 MCP is all about the big picture, this is the 60 min chart's leading divegrence since GS talked it down.

This is a 3-day chart, insane.

Closing March IWM $109 Calls

I'm just going to clean up and get some dry powder ready.

Closing IWM Feb $109 Calls

VXX Update

The short term VXX trade is growing on me (calls entered yesterday, but I think even an equity VXX or UVXY would work, just remember it's shorter term).

First take a look at yesterday's VIX futures (1 and 5 min)

 This was yesterday's VIX futures 1 min chart I posted, later a small positive divegrence developed.

 The 5 min chart that had me in VXX puts until they were closed yesterday for a decent gain looked like this.

Now look at the same VIX futures/3C...

This is now the 1 min chart, it has done a LOT of work moving toward an upside move.

This is the 5 min chart, the VIX puts worked perfectly off the negative divergence seen above which is also a bullish triangle that never fired (head fake) , the point is it's almost reverted to confirmation rather than leading negative. I don't expect this to be a big move or long move, but I do expect it to move.

 The 1 min VXX / UVXY charts negative when we entered VXX puts at the top and going positive, but did you notice that as usual for the last 4 years, EVERY GAP IS FILLED?

Here's the 5 min chart with a relative positive divegrence, consider the 3C buying pressure at #1 and where price was and the buying pressure now and where price is.

I'm liking this more and more. Just looking at the chart, it just looks like price needs to finish a reversal process.

I may enter some equity longs in UVXY, not yet, but I'm looking for an interesting area.

More on the Q's

I was looking at the 4 hour chart I just posted, I noticed something that made sense with yesterday's signal and given the hourly chart's candles.

 Looking at the daily chart INCLUDING VOLUME, remember me railing on about the Harami bullish reversal candlestick pattern on the daily chart? Well there it is in yellow, a Harami followed by a hammer and an upside reversal.

I haven't met anyone yet who can tell me how far a candlestick reversal will go because I don't think there's any information with regard to that, they just mean the trend will reverse, they don't give targets, but I have found one way to get a target.

First what I wanted to point out to you is this star like candle that has gapped away today and volume is light, that's a pretty good set up for the kind of reversal set up forming on the charts since yesterday.

Here's a way I've found to judge distance with candlesticks, this is a 5-day chart of the QQQ with a bullish hammer reversal, I know that the reversal is going to put in at least 1 5-day candle so that gives me a rough target, see the hammer to the left, but that was a different market environment.

What first grabbed my attention though was the 4 hour QQQ chart posted, just price and that same gapping star, that's nearly a perfect set up for a 5 min negative divegrence reversal. Of course the weekly hammer still holds our longer uptrend that we have been tracking, but things make a bit more sense looking at these price charts.

Market Update- Connecting the Dots

There are far too many charts to show the big picture and the amount of confirmation, I could probably post 80 charts to make a simple point that I can make using the QQQ as an example, the reason I sometimes include so many charts is it gives you confidence to see the level of confirmation, but it's also a lot of time that can be used watching for changes that are constant in the market, identifying opportunities or dangerous areas.

So once again, here are the Q's as an example, the IWM has great confirmation, the SPY was a little strange this morning as it confirmed the upside gap, but as soon as it did so it started going negative almost immediately.

I think the bottom line would still be on a very short term trading basis and this would be the most dangerous, we should be expecting some downside from here just as we saw yesterday and the pre-market Futures indicated and still do.

The Swing trade (I'll call it for lack of a better term) that represents the market action we have been tracking since we first got whiff off it Jan 24 and it started Jan 27th after the weekend has a large base area, yesterday that size was complimented and confirmed with exceptionally strong positive divergences in the 15, 30, 60 min range, this is a safer trade, but it will have to wait for our first shorter term move above to finish.

The safest, yet perhaps the hardest to sit and wait through is the long term which is out of control negative, this is along Primary trend lines now and I think the actual top or the area that will be identified as the top is already in. This is like anything else, if you are a trend trader, you have to sit through a lot of corrective waves, so while everyone thinks it's the easiest method, it's actually emotionally quite taxing, but probably the safest long term bet. It's up to you to decide what trends you will trade and make sure your trades reflect the trends you have chosen to trade and there's nothing wrong with trading multiple trends as long as you understand multiple trends all exist at once in different stages of their cycle. Honestly, multiple timeframes is the diversification I prefer with the shortest trends using the most leverage like options, mid-level trends using less like 2-3x leveraged ETFs and trend trades using no leverage.

 QQQ 1 min doesn't need any notation, it's clearly negative off the open and in line with yesterday's developments.

The same is true of the 2 min

As well as the 3 min. With these 3 charts in a row we have enough evidence to say the divergence has migrated to longer timeframes and that represents the growth or near term strength of it.

At 5 mins we have a negative and that's why I take it seriously, a 5 min chart is kind of my line in the sand moving past intraday moves.

At 10 mins we have a change in character and a more neutral/positive chart, these were built by shorter term divergences that migrated out to longer timeframes.

The 30 min chart gives this a very strong probability of a very strong move up to come, the base action and divergences through it have given us that evidence but it didn't really exist on one solid long timeframe until now so it is clear.

This would represent my swing type trade. My primary trend remains negative.

4 hour deep leading negative divegrence