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Wednesday, October 29, 2014

Planning the Trade, Trading the Plan... No Room For Emotional Decisions

From our members' site,


Last Night's Daily Wrap

On a day when the Russell 2000 has its best day in a year and best 10-day run in 3 years, I think sometimes looking back to when things were a bit different and a lot less emotional gives you better insight in to forward looking events, this is why I post certain analysis under the heading, "Anchoring Expectations".

Right now, this is one of the most important concepts that was posted October 15th in the Daily Wrap...

"I suspect we will see a sharp upside move taking out shorts and breaking above obvious resistance like 200-day moving averages and top trendlines as well as the August lows, remember these moves HAVE to be convincing, it doesn't mean there's a real change in character so if and when the time comes to start shorting in to that strength, it's a gift, although you can bookmark this post, I promise you , you will not feel it is safe to short in to strength as the market moves higher on a bounce like you do now, the moves are that convincing, which is all the better for entering new or adding to existing shorts."

This is from September 30th, the last day of Q3 Window Dressing,  the Daily Wrap.

In the excerpt below I'm theorizing about a post Q3 rally and the reasons why, this is very early before we had any real evidence, I'd put this kind of analysis under the heading, "Mass Psychology".



 "I'd say the amount of selling underperforming assets (Window Dressing in to quarter's end) with probably something near 50% of the NASDAQ Composite and 50% of the Russell 2000 stocks in a technical bear market, there certainly wouldn't be much accumulation during window dressing,  this is the reason in the Week Ahead post I suspected if we saw anything it would be post window dressing, Wednesday. I think there's enough room to work with to put in that post Window dressing bounce as a lot of small and mid caps are oversold or viewed as such as they were the worst performers on the quarter and thus sold the heaviest this past week or so. I do think we'll have a clear signal and be able to make a choice of whether to participate or not..."

This is just to remind you of what sentiment was like just a mere 2 weeks ago...

Monday October 13th, 2 days before the lows were in and the rally was off...Daily Wrap

"From a conceptual point of view, the bearish sentiment among retail is exactly the kind of bear trap we expected with a head fake move not only below the previous week's lows, but below the larger support level of the August stage 1 market lows which were surpassed. In effect, the Head Fake move is there for several reasons, one includes creating supply from sellers and short sellers that can be accumulated cheaply and another is the upside reversal catching what is now a majority in a bear trap in which higher prices cause them to cover and eventually buy, instant demand and upside momentum without Wall St. having to spend a penny to drive prices higher as the initial short squeeze does the heavy lifting and the bearish sentiment change to bullish does the rest, assuming the move is powerful enough which is why I suspect this is going to be a very strong upside move, even though there's no real change in the underlying situation, it is a quick and rather effortless trade worth a lot of money to institutional traders."

Wednesday October 15th's Daily Wrap... This was the low before the market rallied...

"On the day today, lots of stats...

The Dow has lost nearly 1200 points in the last 3 weeks... remember I warned a while back that I wouldn't take the risk of being long as fear is stronger than greed and markets fall much faster than they rise.

The NASDAQ Composite is in official correction, down over 10% from recent highs. This Average also has one of the worst Advance /Decline lines I've seen.

The VIX's intraday high of 31.06 is the highest reading since December 2011.

The Dow Industrials are down -4% Year to Date, so much for long and strong. It's also down close to the official -10% correction levels.

The Russell 2000 is down -9.6% year to date and this is the average that should lead the market.. The SPX is now down -1.5% year to date."

And as to what we were seeing Wednesday October 15th...

"The Fear and Greed Index is at zero, the most bearish it can be, Wall Street often flips the script when there are too many people on the same side of the trade, you can't make money like that in a zero sum game."

"The VIX, after last night's "VIX futures were going negative on the 5 and 7 min charts very clearly and a bit further out"  hit a new high at 331.06 intraday, the highest since December 2011, before closing lower at 24.92, creating a bearish Doji star with long legs or bearish "Shooting Star"  (remember the VIX moves opposite the market). As for fear though which was obvious in the VIX intraday, not as much on the close, the Fear and Greed Index closed again at zero, the most fearful reading possible. Remember the VXX, short term VIX futures was also showing 3C distribution today as posted in a market update.

VIX bearish shooting star close after a bearish Harami Monday/Tuesday."

Today SPX Futures volume was the highest in 3 years, this kind of smells like short term capitulation or a mini selling climax which makes room for a bounce.

If we get the same kind of late day positives we saw today, we only need a couple of hours before I'd feel comfortable filling out existing longs and adding to them including Call option positions."

I think you probably get the point I'm trying to make, when you're at sentiment extremes, there's a reason, Wall Street designed the move to trigger those emotions and no matter how far in advance I warn, no matter how accurate the warning is, there's a reason that the majority of our concepts work in any time frame and with any asset, HUMAN EMOTION NEVER CHANGES AND THE MARKET IS MORE ABOUT EMOTION AND PERCEPTION THAN ANYTHING ELSE ON THE WHOLE.

I use to read a lot about the competing theories of "Random Walk" in which the market's moves are essentially random vs. "Efficient Market Theory" in which the market discounts ever bit of information that's out there. After years of watching these crooks set up rallies like this one which we called in concept, weeks in advance and which we called with actual positions right to the very day, I don't believe in either. For the most part, smart money is smart, they may not control everything in the market, but they exert enough control that you can beat the market by following what they are doing. 

This rally wasn't an accident, it was predicted days and weeks before it even started and confirmed with objective data like the VIX distribution highs, the selling climax lows, the emotional warnings that "You aren't going to feel safe shorting anything" while we were in one of the most bearish periods in years.

I think it's probably pretty safe to say that we all get it, these market moves had to be extreme as the preceding bearish move was more extreme than anything we had seen in years in many cases and to shift sentiment, you have to d something bigger or faster.

As for technical levels, this may be what they were working so hard to hit yesterday with HYG accumulation and a VXX slam , both of which were ineffective....

 The Russell 2000 daily above its 50, 100 and 200-day moving averages, those are all technical triggers for Technical traders.

 The SPX-500 above its 50, 100 and 200-day moving averages.

The NDX also above all major moving averages and highs

The Dow 30 which over 2 weeks earlier was down 1200 points in 3 weeks!!!

The Dow also broke the psychological technical level of $17,000

Yet....
The NASDAQ Composite's Advance/Decline Line (green) is way below where it should be vs the NASDAQ Composite (red), there's a major problem here in breadth and this isn't an indicator, it's not something to be interpreted, these are hard numbers, these  are fact.

And while all of the averages are above their 50, 100 and 200-day moving averages....
Less than half of ALL NYSE Stocks are above their 200-day moving average, in layman's technical terms, the market of stocks is in a bear market.

Barely above half of all NYSE stocks are above their 40-day moving average at a mere 55% (vs the SPX in red).

It's not that hard to see, something remains, VERY WRONG with this market.

Again, volume for the SPX was 40% below average, I found the chart I was looking for that shows SPX Futures volume vs price, I think it may be enlightening...
Anyone who's read the first chapter about volume knows that an advancing market that doesn't see rising volume is always suspect, in this case it's not just a couple of suspicious days, but a trend.

I showed how HYG fired off today and helped the market...
 I also mentioned HYG distribution had already started, this is wht it looked like around 3:30, this is what it looked like by the close...

HYG at the close, distribution picked way up.

As already mentioned, the HYG divergence from yesterday wasn't like the one at the bottom in to the intermediate timeframe charts, this divergence only went to the 1 and 2 min charts, above the 3 min is still in leading negative position  so the intent of the accumulation was for a short term move, but a move that needed help and an obvious target in mind, I think we can safely assume it was the technical moving averages.

HYG also responded to the distribution in to the close as it slides lower (blue) vs the SPX in to the close.

And it's still in a deep leading negative position, but note how it was perfectly in line and leading the market early in the move...

The Most Shorted Index also helped out today, there was a massive short squeeze, I doubt there's many if any significant shorts left, WHICH WAS THE POINT OF THIS ENTIRE MOVE AS TOO MANY PEOPLE WERE ON THE SAME SIDE OF THE TRADE.

The official MSI (GSCBNSAL) saw it's biggest move since December 2011 today, SHORT SQUEEZE. This move changed sentiment as it was meant to.

HYG wasn't the only thing to slip in to the close, pro sentiment did as well.
Pro sentiment...

Of the 9 S&P sectors, all 9 closed green with Energy leading at +2.28% and Consumer Staples lagging at +0.39%, an exact flip flop of yesterday's leader/laggard. 

Of the 238 Morningstar groups, we had a massively 1-day overbought 115 of 238 green.

We had a strong Dominant Price/Volume Relationship in all 4 averages, Close Up/Volume Up, this is the count of actual stocks within the averages, not the average itself. The Dow had 19, the NDX 67, the R2K 1468 and the SPX 269 which is a strong relationship.

Ironically, although this is the most bullish of the 4 relationships, it's also the one most likely to produce a next day sell off.

I'd say we have a very sharp overbought condition and we have a very sharp breadth problem, all in all, the move has achieved its goals, which is why I had no problem using the move today which forms a chimney on the recent igloo top, for buying puts in to. As I said October 15th,

"bookmark this post, I promise you , you will not feel it is safe to short in to strength as the market moves higher on a bounce like you do now, the moves are that convincing, which is all the better for entering new or adding to existing shorts."

Remember, tomorrow is the F_O_M_C meeting, I'm not even going to guess what they say, do or anything else, but I will watch for signs of a leak as we have found about 3, not many, but they do happen. As always, BEWARE THE KNEE JERK REACTION.  Here's the last F_O_M_C knee jerk reaction from the September17th meeting...
 September 17th 5 min chart, F_O_M_C at 2 p.m., lots of upside volatility, the knee jerk this time ended quickly...

And here's what happened next...

From a "conceptual" point of view, I'd think they'd want to keep price above these averages for a few days to build a bigger bear trap, but today was pretty overbought at an extreme, just like the market was oversold at an extreme when it turned up, I don't have evidence suggesting we stay above the averages for a few more days, it just makes the most sense to me, of course the F_O_M_C is a total wild card.

And... FB soiled the bed in AH tonight with earnings and it seems to be having some effect on Index futures... Congratulations FB shorts!
Russell 2000 negative divergence in to the afternoon and after hours ...

Although it's not like there wasn't already trouble brewing...
 R2K 5 min negative, the minimum timeframe I need to see divergent for a trade, I would not trade this long under any circumstance.

R2K 7 min which has been doing a great job in calling out turns like the bottom that led to this rally.

Just keep your cool, use what you can to your advantage. This market is damaged and this rally didn't changes that as I showed you in the breadth charts, but we already knew it wouldn't change anything before it began.

Have a great night, see ya soon.


Friday, October 24, 2014

Stock Market Forecasting, Anchoring Expectations and Emotions

This is a post from our member's site 


with excerpts from posts around mid-October as the market was in one of the most bearish sentiment ruts it has been and how our advance notice and forward looking market forecasts give our members the confidence to act when emotion tells you to do the exact opposite, I hope in some small way you find value in the post and excerpts from recent posts .

Anchoring Expectations

I received an email from a great member and friend in which the concern that the market feels like it may never drop and I reminded my friend that it was just mid October in which it felt like the market would never rise, the Fear and Greed index that runs from 0-100 had been pegged at 0, the most bearish for nearly a week. The point is not about my friend/member, this is something we all deal with, it's emotions in the heat of the trade and they rarely serve us well.

Sometimes I think it's good to go back to what we were looking at and forecasting before things changed so I want to just touch on a few posts from mid-October which I had said I was trying to "Anchor" expectations so you could use moves like this to your advantage , so you'd know what to expect and hopefully not get bogged down in emotions and miss great opportunities as our emotions are often the best reverse indicator we have.

From an October 13th Market Update, 2 days before the market lows were put in...

"The 5 min chart which is usually the timeframe I use for trades is obviously not enough, this tells me this is likely to be more than just an oversold bounce, but a sentiment changer and this is why,  once again I try to anchor expectations before anything happens. Right now it's difficult to believe we'll see a sharp upside move and that move we can use to short select assets in to, but once a move starts, sentiment changes fast so I want you to see all of this before hand so when you see it in reality, you knew what to expect, you aren't caught up in the emotions that these type of moves are designed to stir and you can make the trades that are otherwise, emotionally very difficult." 

From October 14th's post, the day before the market lows were put in, XLF & Market Update

"this as a broadening top would have pulled in the retail shorts and just like the H&S shakeout, this would be a perfect place to shake them out with a move above the trendline that shakes them out and then fails to a lower low, whether it makes a right shoulder or not almost seems like a moot point being the neckline is already broken.

The larger point is this looks to be shaping up as a rather larger or strong counter trend move/correction, so once again I mention that to anchor expectations as it's one thing now when sentiment is bearish to say, "I'll use any price strength to short in to", but when sentiment changes on a strong move, emotions take over, this is why I try to anchor expectations before we get to an emotional stage with objective data.

The name of the game for now however is still patience unless you are doing some day trading which I'm putting out the market signals fi like the last pullback signal intraday."

And finally from October 15th, the day of the market lows that led to this move higher at 1:04 p.m., Important Update...

"I'm not worried about the size of the move, I'm worried about how fast it can flip and that's why I'm spending most of my day flipping back and forth between about 20 assets looking for those signals as I suspect this is a move we don't want to miss.

Also I want to post this to anchor expectations as this gives us another chance to sell short in to strength, but it will be emotionally difficult which is why I bring it up now before there's any upside or emotions that come in the way of your emotions and making the trade, the market will make a lower low, but look at the 1929 breakdown and the first counter trend rally of about 50% shortly after, they are strong, impressive and their job is to be convincing, you just have to know it's not going to last."


This isn't about a victory lap in predicting a strong move which this has been one of the strongest moves we have seen in years in many assets, nor about the sharp reversal which is not normally what we look for, nor the upside target which we hit, it's not about the trade idea on Oct 14th that would have gained 14% or about the opportunities right now to get in new positions for a new leg lower or a trade inflection point. This is about emotions. I'll always try to anchor expectations ahead of time, but like they say, "Every boxer has a fight plan until the first punch is thrown."

Emotions and sentiment are funny things, they often paralyze us when we need to be the most proactive and they are often the best reverse indicator we have. Just remember, the best that you'll ever get from the market are probabilities and you make the best choice you can with the data you have and you are well served by sticking to the probabilities and the data and doing everything you can to put the emotions where they belong , outside of your decisions.
 

AAPL Head Fake Move-It's not as strong as it appears...


Just to be clear, I think AAPL will hold out longer than most just as many large cap/blue chips did in 2007/2008, although they eventually lost ground, but not as much and this is because long only funds only have so many choices so they are engaged in a flight to quality / dividend trade. If you have nothing but bad choices, you try to make the least bad choice,

However since we have talked about this concept 3 times in the last 2-days, I figured AAPL, which I've been asked about by several members recently,, would make a good example to carry on the concept of the head fake move.

The more of these I see recently on the lift from Oct. 15th, the more I'm convinced this wasn't just about the broad damage in breadth, but also some areas set up for head fake moves that Wall St. could take advantage of, I mentioned a few yesterday including XLF/Financials.

 From left to right on the Daily chart of AAPL, we have an uptrend at #1 in to a consolidation/continuation price pattern, a symmetrical triangle which has no continuation bias other than the preceding trend which was up so technical traders are looking for a break out to the upside as the triangle's apex forms. At #3 we see the opposite of what they expect to see with a break below the triangle/support, remember what the TA rules are, "If a trade goes against you, reverse positions ) and in this case go short which would have been a big mistake as they'd be chasing price and easily stopped out on a reversal to the upside probably with a fair amount of risk with stops inside the triangle. Once again, another failed move which would suggest going long and AAPL finally breaks out as the price pattern suggests,  however the first head fake break lower created the upside momentum for the upside breakout via short sellers being squeezed and forced to cover, in the process soaking up supply and creating demand which moves prices higher and thus you have a sling shot momentum, head fake move.

 The longer/intermediate term 30 min 3C chart shows the distribution/accumulation that forms the triangle whether purposefully or not and then clear distribution sending prices below the triangle.

Note there's not any accumulation on the break below, they don't need it as the short covering will lift prices for them without having to invest much in soaking up supply.


The shorter term , more detailed 15 min chart shows some accumulation after the break below the triangle, these are the piggy back longs we often take even if the bigger trade is to short AAPL in to price strength.

 And as AAPL makes the upside breakout, distribution or selling short in to price strength has already begun.

 The more detailed 3 min chart shows it more clearly.

As does the 2 min. I think there are better trades out there, but if AAPL stays in the area and I can't say it will and continues to distribute until we have 15 min negatives, then it's probably worth considering as a put/short trade.

However, the head fake concept should be very clear as we have seen 3 in as many days that are exactly alike.

Thursday, October 23, 2014

Stock Market Afternoon Decline, It's Not About Ebola

From our members' site,



Today was interesting from a conceptual point of view alone, specifically I'm talking about yesterday's Put Option Contingency post in which the rounding top of price action yesterday made it seem highly probable, enough so that I'd put out a post and warn that this is a great potential opportunity to pick up put options art a significant discount, usually the only way I enter them... the chart as posted earlier today and the original from the post above yesterday...

The initial move which had not happened at the time of this chart being posted yesterday was a break under the uptrend line since the 10/15 lows (recall we had a long position call on 10/14, the day before the lows...Trade Ideas: (Swing+) UPRO / FAS Long , these are 3x long SPX and 3x long Financials) , later in the day we broke the trendline as the red arrow forecasts and the "Chimney" or head fake above yesterday's highs is represented in yellow to take place today, thus allowing us to enter put positions at a significant discount, then a move lower represented by the second red arrow, which we saw a little of by the closing hour, but it's intended to represent the next day or so moving forward (remember tomorrow is an op-ex pin day which means not a lot gets done until the last hour or two of the day as the max-pain op-ex pin is in effect).

Today...
We saw the break of the trendline that has held uninterrupted since 10/16, but it's not so much the trendline or the rounding top as it is all of the above with the deep negative divergences yesterday. Today the pop higher, which initially didn't seem like much of a sentiment moving event, which I commented on early today, 


"That means for a head fake move to be effective and worth running, it has to achieve a goal which is usually sentiment related. A higher high is what forms the chimney above the rounding top (Igloo), so when price moves enough to be convincing to traders to abandon short positions and go long, it has done its job, that's what I'm looking for....

Again, these moves have a purpose and function, there's no point in running them if they aren't effective, so when it feels a bit scary to be thinking about entering a put/short, that's when they're doing their job."

Today we got what we were looking for yesterday, all based on the experience of seeing it so many times it has become a concept.

 I was going to post these charts yesterday, I had mentioned them , but I didn't want them to be part of an intraday update as they were bigger concepts. Take the 2013 SPX trendline which was recently broken along with the SPX-200 day moving average. Technical Analysis use to teach us that these were short selling events or for the very cautious, wait for a test of the trendline and moving average, both of which should act as resistance and then be sold short on the failed attempt to break above them.

Technical Analysis just doesn't work like this anymore and I have copies of books like "Technical Analysis of Stock Trends" by Edwards and McGee that are nearly 50 years old, teaching the same things that TA teaches today, Wall Street caught on a long time ago.
 Take this SPY BEARISH Ascending Wedge which we have been taught should come to an apex between the two converging trendlines and then break below and retrace the base, well below the April lows, yet that's not what these price patterns have done for years. Sure, the initial break lures traders in as they see what they expect to see and perhaps enter short as TA teaches only to see their stops which are placed at the top of the apex, overrun by a volatility shakeout. TA also teaches that if you have a failed trade in one direction, you should reverse course so in this instance after being stopped out on a short you "should" according to Technical Dogma, go long and as you can see,  this was the August cycle which eventually made a stage 3 Igloo/Chimney head fake top and a new lower low so technical traders would have been stopped out a second time.

Wall St. knows how Technical Traders think which will bring me to another point about news in a moment.

I mentioned IBB/NASDAQ Biotechs and the range which saw a head fake move below it to create upside momentum above the range which smart money sells in to, I said it was just like what happened in the above chart XLF in today's Trade Idea: (Swing+) IBB NASDAQ Biotech Short / BIS Long post.

I captured this chart yesterday as well, meant to be part of the post I never got to. I was in FAZ (3x short XLF) when we were in the middle of the range, I had a half size position and wanted to fill it out above the range at better prices and lower risk, but that move never came,  instead a break below the range came at #3 and I exited FAZ long on the first day we broke below the range even though that was putting my position at a gain. Why did I do that? Because between the concepts and 3C I knew it was a head fake move that would not move lower, it was meant to suk in shorts and then use a short squeeze to move XLF above the range, something they couldn't do inside the range without buying a lot of XLF which they were trying to sell so they used momentum and technical concepts against traders to get it done.

I did add the FAZ position back, but only once it was above the range at #4 and #5. #6 was stage 4 decline, #7 was a break of a technical level that would bring in retail shorts so it was time to exit again at #7 and shortly after we posted the FAS (3x long financials) on Oct. 14thTrade Ideas: (Swing+) UPRO / FAS Long because it was clear they'd again, use technical traders' predictability against them and run XLF up which they did at #8. 

THAT'S HOW PREDICTABLE RETAIL TRADERS CAN BE AND THUS HOW PREDICTABLE WALL STREET'S REACTION CAN BE.

The event that sent futures higher overnight and in to today's open was the MARKIT European Flash PMI/Composite PMI headline beat which almost seemed to be a goal sought number to get the move we were looking for today. No one who has seen the entire PMI report can understand how the Flash PMI came in at a beat, not even Markit's own Chris Williamson who said,


“The Eurozone PMI rose in October but anyone just watching the headline number misses the darker picture painted by the survey’s other indices, which show  the region teetering on the verge of another downturn. 

Growth of new orders slowed closer to stagnation and backlogs of work fell at a faster rate, causing employment to be cut for the first time in nearly a year.

Business confidence in the service sector also slid to the lowest for over a year and prices charged fell at the fastest rate since the height of the global financial crisis, adding to an increasingly downbeat assessment of business conditions. 

While the survey suggests the euro area has so far avoided a slide back into recession this year, a renewed downturn cannot be ruled out. Growth is so anaemic that increasing numbers of companies are being forced into laying off staff and slashing prices in an attempt to cut costs and boost sales through discounting"

Yet... Markit's PMI for Europe and China beat, sending futures higher at 3:30 a.m. today (EDT).

Today I was asked if I thought the New York Ebola story contributed to the decline in the afternoon. All I can say is the market was weak as of yesterday, add more gains on to such an unstable base and nearly anything "could" topple it.

However, I've seen so many events I'd think should move assets that didn't like the Arab Spring which I thought should move oil, but it didn't or the Syrian conflict which put us at odds with Russia, but it didn't move the market or the recent Ukraine situation, but it didn't appreciably move the market, then... I saw this chart specifically on Ebola and the market correlation yesterday.

While it was correctly pointed out that correlation is not necessarily causation, the chart above is a bit strange, but if we take this with a grain of slat, then the market should have rallied on the Ebola story out of NY as the above chart shows, the more stories, the higher the market.


I THINK THRE ARE MUCH REATER, UNSEEN FORCES AT WORK THAT USE NEWS WHEN ITS CONVENIENT TO COVER UP WHAT THEY ARE DOING.

Like many of you I started with fundamental Analysis and quickly realized that if your information is garbage, your analysis will be garbage and all we have to do is look at the Financial sectors use of the F_E_D's 1-day Reverse Repo facility as it sets new record usage on the last day of the quarter only, essentially allowing banks to hide huge collateral shortfalls nearish a half a trillion dollars and they facilitator hellping them hide it with a 1-day loan of collateral on the last day of the quarter is the very same entity that acts as the banlks' regulator, the F_E_D so Fundamental Analysis is a no go.

We know Technical Analysis is used against traders, although there's some use, but the concepts that have worked above are all Mass Psychology, a 3rd form of market analysis that few know anything about,  but what is the market if it's not a huge living, emotional organism that is led around by the nose via its own emotions and sentiment?

This is why I said what I said today about the usefulness of a head fake move,
"so when it feels a bit scary to be thinking about entering a put/short, that's when they're doing their job."

While there's obviously no correlation with Ebola stories and lower stock prices, if anything higher, the one correlation we have seen a lot of lately is quote traffic/cancelled orders as NANEX has been pointing out for weeks so these tweets from NANEX seem to be more likely to me than the Ebola story and don't forget, we already had significant distribution yesterday when we entered the first positions short...


This is a correlation we have seen nearly a dozen times, high quote traffic and cancelled orders leading to lower prices, now look at the E-Mini contract during this period this afternoon...


Again from NANEX, the E-mini SPX contract losing ground as the high quote traffic comes through just as we saw last week and the week prior.

In addition to 3C distribution, we know HYG is used to lead the market, which is why this post from earlier in the week showing HYG under heavy distribution was important to events later in the week, HYG Support Giving Out

For instance....
 HYG performance vs the SPX since our post above and...

HYG intraday selling off even harder...

Ebola? Was this story out 3 days ago, because HYG distribution sure was.

Yields also continue to lead the market lower as do commodities, something we have been tracking most of the week and then there's simply this....
SPY distribution well in advance of the Ebola story...

As for the Dominant Price/Volume Relationship,  it was dominant in all of the major averages with 21 of the Dow 30, 71 of the NASDAQ 100, 911 of the Russell 2000 and 298 of the S&P-500 of 4 possible relationships, all 4 were Close Up/Volume Down, the most bearish of the 4 possibilities and a relationship that usually sees a close lower the next day.

Of the 9 S&P sectors, 7 of 9 closed green with Industrials leading at +2.15% and Consumer Staples lagging at -.15%

Of the 238 Morningstar groups we track a whopping 209 closed green,  we have a 1-day overbought scenario which usually leads to a close lower the next day although tomorrow is an op-ex max pain pin day, usually we don't see that pin released until 2 p.m. or so, but everything we see tells us this has been brewing, it's not a last minute Ebola story.

Don't forget that all of the major averages broke their uptrend line for this leg as well as the 2013 uptrend line and all of them stopped out on our trend channel set at 60 min (wide).

Finally, it has been my opinion that we have already topped, the Russell 2000 being the bellwether for the overall market. Looking at market breadth, I don't think you can make a bullish case or any case that doesn't end with significantly lower lows.

For example, the "Percentage of NYSE Stocks Trading Above Their 40-Day Moving Average"
 or...
 the "Percentage of NYSE Stocks Trading Above Their 200-Day Moving Average"

or...
The NASDAQ Composite's Advance/Decline Line...




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The Bottom line, this site is a collection of my opinions with several companies that I may receive a fee or other considerations from, for the use of my site. I have no stake in the company, I have no way of knowing what they are about. YOU ARE SOLELY RESPONSIBLE FOR ANY DECISIONS OR CONSEQUENCES OF SUCH DECISIONS THAT MAY ARISE FROM YOUR USE OF THIS SITE. Disclosed affiliations include Worden, TeleChart, StockFinder, Google Adsense, INO.com and FreeStockCharts.com