Market Update-BROAD

This is a bit longer than the normal intraday market update, that's because I want you to see what I see. I want you to understand the tone of the "bounce". I want you to see where we are with the 10 min "Gas in the tank" chart scenario and how quickly that changed once you gave the market higher prices to sell in to (yesterday), which should also tell you the message of the market.

We'll start with the SPY and I included some SPX futures (ES), I didn't do that for all of the averages as there would be 100 charts here.

Once again, like yesterday, the TICK Index is showing weak intraday breadth and this channel that was captured several minutes ago looks like it is getting ready to break to the downside. This was one of the give-aways in yesterday's market, breadth was weak, the averages were all over the place.

 The 1 min SPY has been in line with price movement most of the day which is not anything unusual given the near neutral percentage gain.

However the longer the chart timeframe, the more we reduce noise and the more trend we uncover. I mentioned several times yesterday that migration of yesterday's negative divergence had reached 3 min charts and was getting uglier. 

This is a 3 min SPY chart leading negative and adding to the leading negative downside today (3C distribution area).

 It has been the 10 min charts I have been keeping my eye on as they are the bellwether of change. You can see the SPY's "bounce" divergence or what I refer to as the "Gas in the tank" for a bounce and this was part of the reason why the Week Ahead forecast from Friday the 8th included a bounce for last week or at least starting after early week weakness last week. There's some slight deterioration today and yesterday, but it's not jumping off the chart yet. You will see other averages that are worse.

The market is the strongest influence on any given stock accounting for about 2/3rd of its directionality, thus I want the market in an area in which I feel the timing of a downturn is imminent before I introduce too many Trade ideas, such as Transports which we saw setting up nicely yesterday, but we could also see that they were not there yet (see the transports trade set up from yesterday and the Daily Wrap).

 The larger, much stronger trend is found on the SPY 15 min chart which never went positive. The 10 min chart above did go positive and that's why it suggested a bounce, but a bounce fails and the 15 min chart which is stronger and higher probabilities is the chart that tells us that the 10 min chart's bounce will fail. If the 10 min chart is "paper" in "Rock , Paper, Scissors", then the 15 min chart is "Scissors". 


Because we are reading the charts in terms of multiple timeframe analysis, it doesn't mean one chart is right and one is wrong, quite the opposite, it is exactly as it sounds, "Multiple timeframe analysis", so the faster/shorter term 10min chart tells us the probabilities are high for a bounce which was reflected in the May 8th Week Ahead forecast, the 15 min chart tells us what happens after and tells us what has happened during this bounce as Wall Street doesn't set up any cycle without a reason.

The reason here and "message of the market", can clearly be seen in the divergence on the 15 minute chart through the bounce area. DISTRIBUTION as was expected before the bounce even started.

 This is the ES/SPX futures 3 min chart, this is showing the 3 min damage done yesterday that was evident on the charts of the averages, meaning the newest divergence starting yesterday at the 1 min chart and migrating to the 2 min and then 3 min was telling us that the market was weakening significantly. There's a simple reason for this. What was different about yesterday (especially for the SPX and Dow) compared to the last month?

If you said it was the first time we saw higher prices and thus something to sell in to, you hit the nail on the head.

 ES 5 min trend also telling us essentially the same thing the SPY 15 min chart is telling us about the underlying condition or message of the market during the bounce area.

 This is another excellent example of the concept above under the ES 3 min chart,

"What was different about yesterday (especially for the SPX and Dow) compared to the last month?"

You can literally see the range (yellow trendline) and the reaction in 3C as price crosses above it. This is the kind of confirmation we look for to verify a head fake move or in this case "A False Break-out".

So far so good as that chart is a strong timeframe and shows an exceptionally strong leading negativee divergence just as price crosses above 2015 resistance.

 Again getting back to multiple timeframe analysis and the highest probability big picture resolution, this is an ES / SPX futures 30 min chart, stronger than any above with a much clearer trend as there's less noise with small divergences. The exact same area our "Gas in the tank" bounce divergence formed in the major averages, it formed in Index Futures (around May 6th/7th which led to the May 8th Week Ahead forecast).

Overall there's a large relative negative divergence at the longest red arrow, the shorter ones are pointing out local divergence and the overall deterioration is telling us the message of the market.

Once again, note the increased downside ROC in 3C as a leading negative divergence to the far right and ask yourself again, "What was different about yesterday than any other day this year for the SPX?"

 This is a daily chart of the QQQ with several notable things including the fall-off in volume we have been touching on in the Daily Wrap each night. A support area at the white arrow on a bullish reversal candle with increasing volume on that day as well as local resistance and yesterday's/part of today's move above it, once again a derivative of the question above, "What was different about yesterday?"

 The 1 min QQQ shows what was different about yesterday, as I answered the question above, it gave smart money higher prices to sell in to. When I say sell in to, short selling comes across the tape as a sale, so it can be wither or both.

 This is a larger trend view of the same QQQ 1 min chart and it has near perfect 3C correlation or trend confirmation because not much happened until prices moved higher, then you see 3C diverge with the QQQ unlike anytime in the past 2 trading weeks.

 The QQQ 3 min chart as mentioned the divergences migrated out that far yesterday alone. Again while I point out smaller divergences with the least obstructive notation possible, you should see an overall trend of confirmation with some smaller divergences both positive and negative. However there's a definitive change in character recently as our bounce gives the market higher prices to use.

 This is the same exact chart with no drawings to distract.

 And this is the QQQ 10 min "Gas in the tank" positive divergence from May 6th/7th and now we are seeing the first sharp deterioration since yesterday's move. This is the chart I talked about Friday in the Week Ahead. As this is the chart that you could say, "sponsored the bounce", it needs to see deterioration and then we know we are as close as we can be to a downside pivot and want to be much more active about positions.

 IWM 1 min, showing the "Bounce " accumulation on the exact same date as the charts above, whether the averages or Index futures, May 6/7 and the distribution trend with a leading negative divergence as price breaks above a clear range on the chart .

Smart money rarely sells unless it's in to higher prices which is something Technical Analysis Dogma has completely wrong.

 IWM 2 min with a negative and then leading negative divergence yesterday. Again the same question, what was different yesterday?

 IWM 3 min trend again with more confirmation of the accumulation for a bounce May 6 and 7th and the distribution once the IWM breaks above the local range.

The IWM 5 min chart is now seeing migration from the 3 min charts, it is one of the worst looking 5 min charts and the question I'd ask you to explain why the IWM 5 min looks worse than any of the others, "What was different about the IWM yesterday compared to any of the other averages?"

If you said it had the best relative price performance, you are correct. the IWM gave Wall Street something to sell in to in a much bigger way than the other averages.

 Still, the IWM has its "Gas in the tank chart", it's at 10 mins like the QQQ, it has a similar base and accumulation for  a bounce at the same time, although a bit larger. This chart's "gas in the tank" base is stronger than the Q's as you can see a small "W" vs the Q's tighter "V". We want to see this deteriorate.

As for the same concept I showed you above, the IWM 15 min chart which is stronger and a longer , bigger picture timeframe, is the roof on the 10 min chart's bounce. This is the highest probability resolution for the bigger picture and the chart that sponsors the next trend or pivot we are looking for.

Remember the May 8th "The Week Ahead" forecast was as follows,

"I believe  we will see early weakness on Monday. HOWEVER THIS PART OF THE FORECAST IS NEAR MEANINGLESS COMPARED TO THE REST SO I WOULD NOT GET TOO HUNG UP ON THAT.

I'm still expecting a $USDX led bounce in the equity market as well as the bond market, certain stocks are going to be shorts before others, but this gives us a chance to open or add to any positions we may want to tweak a little.

In comparison to what comes next, this bounce is nearly meaningless like Monday morning's forecast.

The main theme is strong market weakness and any chance we get to open or add to positions we like should be taken. There's simply no comparing the "bounce" charts (of the bounce expected) with those of the distribution and broad deterioration through all of 2015, but increasing at an exponential rate since the April 2nd forecast of triangles to be finished and a false breakout above them...the deterioration there is beyond anything I've ever seen."

Take a look at the example chart below since the Week Ahead forecast of May 8th...

You can see the Friday May 8th The Week Ahead forecast, then the expected "early weakness on Monday. HOWEVER THIS PART OF THE FORECAST IS NEAR MEANINGLESS COMPARED TO THE REST"...

Then the bounce to the upside that our May 6/7th divergences sponsored, but here's the point.

Regarding the "early weakness" in the week, it was called, "meaningless" compared to the bounce. And then ...

"In comparison to what comes next, this bounce is nearly meaningless like Monday morning's forecast."

What we are seeing on the 15 min charts that has been there is essentially "part" of the reason that I said that in comparison to the move (downside) that comes after the bounce, the bounce would look nearly as meaningless as the "Early week weakness".

THAT WAS THE MESSAGE OF THE MARKET AT THE TIME OF THE FORECAST, EVERYTHING WE SEE ABOVE SINCE THE FORECAST IS CONFIRMATION OF THAT MESSAGE OF THE MARKET.

GLD Position Management

*This is just a quick update, I will put out another with charts as soon as I post the market update which is almost complete.

Our GLD Puts are in the double digit gains this afternoon.  It's my intention to try to keep this position open as long as possible in a trend-type (really more of a swing trade, but with more trending qualities) as long as possible which is likely directly related to our $USD counter trend bounce which looks alive and well.

However for those who may wish to take gains more quickly, there will likely be consolidations, gap fills and all of the normal stuff we'd expect of any swing trade for the most part. I did say I expect more "trending qualities", this is really based in the concept to "From a failed move comes a fast reversal". There are a lot of different dynamics at play, the $USD being the largest among them in my opinion.

In any case there's a small intraday divergence on 1 min charts which I would think would cause some more lateral consolidation. There's always the chance of a gap fill as the market has been ruthless the last several years about filling gaps, but in my view the other charts are so significantly damaged that I'm not really concerned with any intraday divergence that may cause lateral consolidation intraday or even a bounce. These are most easily seen on the Gold futures charts so I'll show you the 1 min and the next timeframe, 3 min for perspective...

*Neither of these charts represent the larger swing trend I'd like to capture if the charts cooperate, this is very short term only*

 Gold futures went from the high of the week to the low of the week on this 1 min chart (yesterday at 2:00 a.m. to currently. The 1 min 3C chart has been in line and confirming most of the downtrend at the green arrow, the red arrow just showing the price trend and the white arrow showing an intraday positive divergence that has built some lateral consolidation. This could build out further and even bounce, but it has not migrated to longer charts and as strong as the divergence may look, you have to keep in mind it is on the weakest timeframe possible (1 min).

For some perspective...

This is the recent, much stronger distribution in gold on a 3 min chart which is clearly leading negative.

I'm not concerned about any large moves at present that run counter to the gold short/put position. I do have to warn that there's a chance of some loss of momentum and perhaps of some gains near term if this continues moving laterally intraday or bounces.

From a longer term perspective, I welcome a consolidation, I don't want gold becoming too oversold too quickly as that will produce a larger bounce that would be more damaging when trying to capture as much of the anticipated trend down as I'd like to catch.

If I do see something that looks like a bounce or consolidation of a more than a day, I'd likely exit the position, book the gains and re-enter at the appropriate time rather than let the gains slip away even though longer term I think they'll more than return. It just makes sense to take the gains and do it again if it looks like a trade with good probabilities.

Quick Market Update

I wanted to let the a.m. session burn off a bit, there's a lot of game playing early in the day.

So far there's continuation of deterioration from yesterday. The one interesting development that "started" yesterday is the 10 min "gas in the tank" charts that I said I wanted to see fall apart before putting out any larger number of trade ideas as this would be a pre-requisite for the kind of decline I have been expecting since the May 8th "Week Ahead " forecast (for last week which included early week weakness followed by a bounce and then a much larger decline).

There's a bit more damage on the 10 min chart this morning than I would have expected considering where it left off at yesterday's close (which also had shown damage). The chart is not at the area I am looking for as per last Friday's (May 15th's) "Week Ahead", but I didn't expect it to be immediately, it's part of the reversal process that I mentioned last Friday (which I posted a chart of VIX futures and estimated it was about half-way there).

In any case, I'll have the charts up shortly, I just wanted you to know where we stand thus far.

I really want to see some strong signals, especially with the minutes out tomorrow. Granted there's new data since the last F_O_M_C, but anything F_E_D has a very high probability of creating a knee jerk reaction (up our down) so I want to have the strongest objective analysis and position we can have. As I said, charts are on the way.

TLT/Treasury Update

With this morning's 8:30 (the same time Index futures/treasuries gave up ECB-based gains) Housing Starts print, the reaction in the market is "Rate Hikes sooner than later" as good news is bad news. Many are starting to come around to a June hike. I myself think June is a very strong contender, but for much different reasons than most, but that's really not at issue right now.

I should remind you that tomorrow afternoon at 2 p.m. the April F_O_M_C meeting minutes will be released (the normal 3 week lag between the meeting and release of the minutes) . Obviously there's quite a bit of room for interpretation and volatility. I also should point out that the TLT trade idea was/is a counter trend bounce/rally trade, meaning the trend down is expected to resume which is in line with a F_E_D rate hike- even in June.

As for TLT, the last trade set-up entry for the second half of the position filled yesterday was last Thursday in Quick TLT Update. 

Below is an excerpt as to what I was hoping to see for a trade entry using June (or longer) calls on a head fake/stop run below the recent "W" base in TLT (20+ year treasuries).

"I'd like to use the June 19 calls so I'm looking for one last thing that we see about 80% of the time before a reversal, a head fake move and in this case it would be a stop run. I may miss filling out the position, but for options, this gives you a nice discount, lower risk and the best timing we can get from price based signals. I'm setting price alerts for any such move. I always confirm head fake moves to be sure any stops that are run, are accumulated.

How deep a head fake move goes depends on how many stops are in play and at what levels as they are easy to accumulate without raising any eyebrows.

I'm looking for something along the lines of...

TLT has put in a nice reversal process (yellow arrow) as reversals are more often a process than a "V" shaped event. The green arrow to the far right represents a break of support hitting stops just below. Since we are close, I'd consider psychological magnetic levels like $118.50 or more likely, $118. I see there's a pretty fair amount of traders looking for a contrarian trade in TLT, thus the typical head fake that we normally see 80% of the time anyway makes even more sense here. You can probably work out why these head fake moves are seen so often just before a reversal."

On this morning's decline, TLT prices were thrust in to the area I was looking for above with at least some initial hints of a run on stops/or new shorts (either way, both are supply)... This morning's low took out the $118.50 level and nearly the $118 level with an intraday low of $118.13 so far.

It also appears that the initial run of stops is being accumulated. There should not be and I would not expect a tight, sudden "V" reversal to the upside intraday, rather a lateral or slight rounding bottom reversal process that is proportional to the move down this morning. Thus TLT could put in a strong buy signal within a few hours at the initial entry level we were looking for before Friday's +2% surge that pulled back for a gap fill yesterday. There's also a decent chance with $118 so close by acting as a strong psychological magnet (whole numbers attract stops) that stops at $118 are hit.

Here's what we have on the charts so far...

 TLT daily chart and the level (/head fake/stop run) I was hoping to see Thursday as per the post above. So far it's a decent daily candle; surging volume would make it much more effective as a reversal candle and if the move this morning hols and is confirmed as a head fake/stop run (via 3C accumulation with strong intraday signals), then it would also act as a great timing indication.

 The initial stops hit can be seen at the yellow arrow, the large green arrow was from yesterday's close on this 1 min chart. Although very early, the initial signal is positive.

 This 3 min chart shows the pullback last week, the initial head fake/stop run area I was hoping to see followed by Friday's +2% gain and 3C negative divergence suggesting a pullback/gap fill which we saw yesterday.

 The longer and much stronger 30 min chart which is the strongest argument for a counter trend bounce is still positive and holding together well.

As for additional early indication, 30 year Treasury futures also put in the start of a 1 min leading positive divergence.

We'll keep an eye on TLT and give it a bit of time to confirm, see if it hits the $118 stops /order and make sure the 3C signals are definitively positive before any additional position updates are put out.

A.M. Update

Overnight the ECB's (European Central Bank) executive board member, Coueure said that the ECB would be "front-loading" their Q/E bond buying in May and June ahead of a low liquidity period over the summer. Net issuance of Eurobonds is actually highest in May. While not specifically citing the Eurobond's increased liquidity during the month, the message was simply that the summer buying would be moved to May/June because of poor liquidity conditions through the summer.

For some reason it took 6 hours for this news to break! The speech in which the details were delivered was given on the night of May 18th (yesterday).

In any case as you might expect, this sent the EUR/USD sharply lower...

EUR/USD down sharply at the European open which has sent the pair below 1.12 to 1.113.

This of course sends the already bouncing $USD even higher...

$USD 1 min. (the red arrow is yesterday's 4 p.m. cash market close)

This of course, after yesterday's $USDX breakout above its "W" base now has there $USD firmly in the counter-trend bounce we have been expecting...

This is the 60 min chart of the $USDX I've been using to show previous counter trend bounces, but this one was expected to be larger than the previous ones (yellow) and looks as if it already is. (I removed 3C so the bounce could be seen more clearly, but it is perfectly in line with price throughout the entire chart including the bounce).

This has had most of the effects expected so far with gold and oil lower on the stronger $USD...

 Gold futures 1 min with good 3C confirmation...

Brent Oil futures (1 min) with both Brent and WTI lower with good confirmation.

The Treasury complex did take a hit and pulled back, near the original area I was looking for a head fake/stop run last Thursday, but seemingly unrelated to the ECB decision...

30 year treasury futures up initially at 3 a.m. (European open) and down around 8 a.m.-ish.

The Index futures also jumped, but have since moderated...

 I'm using Russell 2000 Futures as an example as it's easier to scale with a longer history than ES and NQ for me. The red arrow is yesterday's 4 pm EDT cash close, the green arrow is the 3 a.m. EDT European open and then a negative divergence and almost all of the gains since the European open now having been retraced.

 This is the 1 min ES 3C chart with yesterday's cash close at 4 pm at the red arrow, this morning's European open at 3 a.m. EDT at the green arrow and another negative divergence sending ES lower this morning in pre-market.

A closer look at ES with the European open at the green arrow to the far left and the yellow row denoting 8:30 a.m. in which SPX futures have retraced nearly all of their ECB-led gains.

And the 1 min NQ futures (NDX-100) with the US close and European open at the red and green arrows, also retracing the ECB-based gains.

We'll get a much better look in the cash market, but these gains normally "should: have held at least until the cash open.

We'll be watching position management on USO equity short and June 19th Gold puts as well as TLT longs.


More shortly...

Daily Wrap

Friday the entire day in all of the major averages, it looked like 1 big options expiration pin. Typically this tends to end around 2 p.m., but Friday lasted all day and it may have been because it was a monthly expiration.

Other than Transports in salmon which have massively under-performed the major market averages, everything stuck together close to unchanged on Friday (seen on this 2-day intraday chart). It looks to be pretty clear that the entirety of Friday was an op-ex max-pain pin with the market only available to move today once options expirations was over. However there's more to this than just a move.

The question Friday was whether the best looking head fake scenario I've seen in some time would be hit or not, today it was hit and there was an accompanying short squeeze with it, but in my opinion, this was weak since before the event even occurred today. Normally we'd have fairly clear signals that a head fake move was coming, even if it was only to last the briefest of moments, but this time nothing. The only thing we had to guide us toward that probability was the concept itself and the high probabilities of the concept which were insanely high given the assets' popularity, the size of the trigger (resistance) area and the familiarity of the price pattern (triangles-both ascending and symmetrical.

From Friday's The Week Ahead

"I don't think the bounce is quite complete or its reversal process is not quite complete which means that my first assumption would be that the market would be rangebound and choppy in the area finishing the reversal process, but we also have some very easily recognizable resistance areas that are a hot bed for a head fake move, I have not doubt any head fake move or false breakout would be exactly that.

It's hard to say which scenario is more likely, but the Index futures have turned definitively and unambiguously negative."

These are two examples of two of the most clearly laid out head fake set ups we have seen in a long time...

 The daily SPX ascending triangle which is not only a popular index/asset, it's a large price pattern and a familiar one making the probabilities of a head fake move that much higher above the approximated 80% "normal" probability. Today's move is above resistance of the triangle so it would qualify as a head fake move or part of one. The qualifying condition is whether or not there's confirmation (in which case the move is confirmed and not a false move) or distribution (signaling the extraordinarily high probability of a false move/bull trap).

The same is true for the Dow, although a symmetrical triangle.

Also from Friday's The Week Ahead:

"As for early trade next week, we don't have any strong signals"

If you caught this morning's first post we didn't have much to go on, a bit later when it looked certain that we'd gap down, the Index futures on intraday 1 min charts firmed up suggesting the gap down wouldn't hold...

There were two positive divergences overnight/in the early hours in ES/SPX Index Futures. The first was right at the lows of the European operand the second came during pre-market trade as the averages were set to gap down. Noether divergence was particularly strong, but did what they should do on an intraday chart. 

The afternoon showed us clear deterioration in to the (I hesitate to call it a head fake move, but technically that's what it is, just without the extreme momentum that accompanies them to sway emotions) suspected move above the clear triangle's resistance.

I also said on Friday as well as today that the gas in the tank for any bounce was from the previous week and reached out to about 10 min charts, therefore,

"The same is true using QQQ as an example-the 10 min bounce chart needs to fall apart more before the next trend/DOWN"

While I can't say that the 10 min charts were taken out today, remember it's a process (also from Friday's "Week Ahead" post...)

"Looking at VXX it looks to be half way through (or more) its reversal process, but not completely there yet."

However, here is some of the deterioration today that needed a lot of help from a VIX smack down to HYG ramping attempts with TLT down...

 DIA's migration of its negative divergence (as all averages were in line for most of the morning with no divergences) reached out as far as 5 min charts clearly and beyond that and that's just on today's trade alone.

The other averages migrated out to about 3 min charts, but put in sharper leading negative divergences by the close like this IWM 3 min.

 Or the very sharp leading negative of this QQQ 3 min.

 Or the SPY 3 min.

The 10 min chart I was talking about on Friday in the post linked above that needed to show deterioration as it represented the bounce chart or "gas in the tank" is this 10 min QQQ chart which did see deterioration today; not as much as I think is necessary...YET.

Remember the VXX chart and my estimation Friday that the reversal process was about "Half over"...

However when dealing with a price pattern as large as the SPX's...

SPX daily chart and triangle...

It's probably much more appropriate to use a VIX chart of similar magnitude. This is XIV, the inverse of VXX which trades with the market...

Notice anything about the price pattern and/or the divergence with that price pattern? That would be the common head fake top/price pattern "Igloo with a chimney", the Igloo being a rounding top and the Chimney being a head fake move at the end of the reversal; process just before a downside move.

A smaler version of the same concept occurred in the SPY/market just before the October lows at the September head fake move which we called in advance as the rounding top was almost finished...

SPY daily just before the downside reversal to the October lows. 

The same concept works as a bottom as well. In the VXX it would look like this...

VXX 15m

These would be much more appropriate as far as scaling vs the SPX's triangle.

The weakness before today was in that there was no additional divergence other than the 10 min chart from the week before last week's, nothing was added to it. Then additionally the intraday deterioration today and 10 min deterioration to the "gas in the tank charts". Again, QQQ 10 min...

QQQ 10 min deterioration, it just needs to go a bit further as posted Friday.

I don''t think there's any coincidence between Friday's op-ex pin price action and today's move above a triangle that has lasted nearly the entire year (2015) on the same day the $USD made the breakout from a "W" base that we had been expecting for a counter trend move to the upside (which should fail and make a new lower low). I'm also a little more than "suspicious" that it occurred just 2 days before the F_O_M_C minutes are released Wednesday.

 $USDX 30 min chart with a "W" bottom and leading positive divergence for a counter trend bounce.

Here's the trend...

$USD 60 min downtrend (red) with counter trend bounces (yellow). I do suspect this one will be larger than the previous ones, but that's nothing new as far as $USD analysis.

The correlations are what interest me the most both short term and after the bounce is done as I explained using Gold, Crude, Treasuries and the market as examples...

 This is a 30 min chart of the $USDX (purple) vs 30 year Treasury futures (think TLT long trade). The correlation isn't perfect and the TLT long position isn't based on the correlation, it's based on the merits of its own signals, but I have little doubt that there's a correlation even though today it was sharp;y off as it seems the counter trend treasury bounce trade is overcrowded as  was mentioned last week so a shakeout seemed appropriate, one of the reasons I waited before adding to the TLT position which was done today, Trade Idea: TLT Long

Here's a tighter view of $USD (purple) vs.  30 year Treasury futures )candlesticks) which are close enough to TLT. I believe the very recent non-correlation is the shakeout from Friday's +2% TLT gain.

Other correlations that should have some meaning to short term positions such as Gold puts, USO short and longer term trade set ups such as Gold long and USO long after a pullback...

 $USD (purple) vs 60 min Crude Futures, note the inverse relationship, thus $USD up, USO down.

Closer, on an intraday basis...

 This is a 1 min chart showing the $USD's strength today vs. Crude futures recent weakness.

In fact, the $USD put in the strongest daily performance in TWO months!

This is the $USD (purple) vs Gold futures on a 30 min chart, again note the inverse correlation, suggesting $USD up, gold down.

However I like both gold and oil for longer term trend trades so when the $USD counter trend move is over and it starts moving back down, USO and Gold should have pulled back and be in decent position for a long trade, although we will confirm accumulation of a pullback before entertaining with position.

As for the SPX futures... You have to remember a lot of correlations are new and I think that has everything to do with Carry unwind...

 The $USD in purple on a 30 min chart vs the SPX futures / ES. Note how they were in tight correlation to the left and Es  over away from the Dollar's decline since.

I suspect (from the underlying weakness in the averages today), that the $USD should bounce up a bit, the averages may or may not continue their bounce/head fake, although it looks like they are swimming against the tide, but this should bring them closer to reversion to the mean. I suspect the market wi=ill have its head fake move in or have tried and failed and by the time the $USD is ready to make a lower low, they'll be back in correlation and the $USD will have some catching down to do. This would fit with the fast and sharp reversals that are born of failed moves.

Intraday this is what the $USD looked like vs ES, however as you see above, they are greatly dislocated at the moment.

I suspect that Treasuries will also put in a counter trend bounce, but then will continue lower to a new low along with the $USD and I suspect the market, the carry unwind. I don't know how much more evidence we need, it seems plainly evident that the $USD carry unwind is well underway.

Intraday, here's the performance of the major averages... For a "breakout" day, the percentage gains ranging from +0.14% to +1.09% are not only all over the place, but there wasn't a solid breakout on volume in any of the averages, again suggesting a false move that will fail and from failed moves come fast reversals.

That's the Russell 2000 leading intraday with transports just behind (see our Trade Set-Up: Transports Follow Up) and then the NASDAQ 100 with the Dow laying at +0.14%

It looks pretty obvious the VXX/VIX futures were slammed hard (short term manipulation to lift the market)...

 VXX short term VIX futures in blue vs the SPX, I'm sure you can see the inverse relationship is skewed toward a steeper VXX decline.

Remember today they were trying to get the 2nd asset of the SPY arbitrage going as well, HYG and TLT was already down, which makes me wonder if the entire TLT 2% Friday gain wasn't a set-up for a SPY Arbitrage melt-up to break above resistance in the Dow/SPX? The $USD waited until today, the move in TLT on Friday was extreme for that asset and VXX was obviously knocked hard today not to mention the attempt to get HYG in the game (the 3 assets of the SPY Arbitrage scheme).

 The SPX (green) vs HYG which as I showed near the end of day in this post, Market is Struggling it looked like they were trying to save the close with HYG, not let the Dow go red.

However considering recent correlation between HYG and the SPX, it looks pretty plain for a breakout above the triangles that institutional money wanted nothing to do with a risk on scenario. HYG dislocated disproportionately from the SPX today and closing red. Again, see this post from near the close, Market is Struggling

Yields were obviously up on Treasuries pullback today, but not enough to be helpful if the former Leading indication of yields were still working...

30 year yields (red) vs SPX. Again it's impossible to prove, but the pin Friday and then TLT down today, VXX / VIX futures slammed hard and an effort to get HYG up and green on the same day the $USD breaks out of its base and the SPX/Dow above their triangles all seems a little too coincidental, its as if every condition the market could need or want to post a green close was there ad it still looked as if it was struggling.

In addition to an apparent aversion to risk on in institutional land via HYG, Pro sentiment was lagging again...

 Pro sentiment for the 3rd consecutive day moving down and...

High Yield Credit (not the same as High Yield Corp./HYG) was also down for a 3rd consecutive day. If that doesn't look like risk off among the pros...

As for internals, you saw TICK today, there was definitely a short squeeze again, but internals were very poor on the day.

The early morning gap down which we had seen an intraday positive divergence which would at least fill it earlier, Quick Update was about as good as it got this morning to just above +1000 which is nothing to even mention other than the fact it was so poor on the day. The rest of the day you can see the average was right around he ZERO line and this on light volume AGAIN! Not a good day internally speaking.

There was no Dominant Price / Volume Relationship today. There were 7 of 9 S&P sectors in the green and 176 of 238 Morningstar sectors in the green. I don't see any near term overbought or oversold tensions at the moment.

As for futures, the Index futures are pretty close to in line on 1 min charts as is the $USDX, but I suspect the $USD may see some overnight weakness as the Euro and Yen both look like they have small positive divergences. I don't think it's anything much beyond that as the $USD's base and positives are on such long and strong timeframes.

The gold divergences haven't changed since this morning, TLT/treasuries I think gave the best read on the TLT charts during the cash market.

HERE'S WHAT DOES STANDOUT, DAMAGE FROM TODAY IN ALL OF THE INDEX FUTURES ON TOP OF THE LONGER TERM CHART DAMAGE FROM FRIDAY/THIS MORNING... (and this timeframe with this damage continues to suggest that we are in a reversal process)...

 ES 3 min

 NQ 3 min particularly sharp near the close

 TF 3 min

This is on top of the charts posted earlier like ES 10 min which shows what we saw all last week, damage through the entire week and no positive divergence off Tuesday's lows to give the market an extra boost of gas.

I still think that it's a reversal process, we have a potential head fake move in there as well. As I said in my last sentence on Friday, I think patience and letting the signals develop, letting them jump off the chart and not jumping the gun here are going to lead to the best results with the least amount of risk.

Remember we have the F_O_M_C minutes and now according to the FT,  apparently there's even a chorus of Financial titans/executives from some of the biggest banks and Institutional investment firms petitioning central banks to get themselves in stable condition (hike rates) to be ready for the next financial crisis. I don't think they are saying this suddenly out of the blue as an opinion over a casual conversation. As I have believed for some time, the F_E_D is more afraid of not hiking rates and getting off ZIRP so they have some room to maneuver than they are of the damage rate hikes will do to an already weak economy (macro data at 6 year lows)...

And everything seems to be lining up for one last hurrah (bonds, possibly stocks  the $USD where itthe carry can be closed out at better prices).

I'm not going to pretend like I understand the end game at this moment and how the averages/correlation and potential continued head fake move will play out, but I have very little doubt as to how it ends, that was the third trend forecast of April 2nd after a small pullback (last Mon/Tues) followed by a larger bounce (now) and a decline that will make the bounce look as important as Monday/Tuesday's small decline (actual verbiage from the April 2nd forecast).

If anything pops up in futures I'll let you know, but I suspect the $USD counter trend bounce as well as the Treasury bounce will lay out, equities "should" conceptually, but they seemed to be climbing the proverbial "Wall of worry " in today's action. The IWM's close was impressive, the Dow's close and the fact it was so dislocated from the IWM, WAS NOT IMPRESSIVE.