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Monday, December 31, 2012

Price Action Is Above All, Deceptive

Remember that nasty late day sell-off Friday (Dec. 28,2012) ?

Well we were watching the market at 

Wolf on Wall Street

all day  as we do every day and noticed some strange things. Some of those strange things led to us taking a Call position in the QQQ (Long) which is up pretty big for a 1-day move today.

QQQ gain today

Here's one of our posts from Friday that explained just exactly what it was that we saw that made us feel like, 

"I'd much rather have the NASDAQ call position than a NASDAQ put position going in to Monday."

Friday, December 28, 2012

Early Closing Take

Well I'd much rather have the NASDAQ call position than a NASDAQ put position going in to Monday.

So far some interesting things, HYG-High Yield Corporate Credit doesn't show this as well on a chart, but watching it real time in to the close, it was moving up off the lows on some very heavy volume. High Yield Credit  made its ONLY upside move of the day from 2:30 through the close and that includes moving up from 3:15 to 4 p.m.

FCT which has been more on the bearish side intraday this week closed off its lows and ended relatively well vs the SPX.

The Euro and EUR/USD stayed almost perfectly flat the whole day, including the last 30 minutes, the $USD made no move connected to the last 30 minutes of trade at all. The Aussie ($AUD) held up very well, it's coming off lows from Wednesday and didn't skip a beat vs the SPX. The $AUD is in what I would call a bullish short term pattern, at least on a relative basis, longer term (and not even that much longer) it's in a very obvious negative divergence with the SPX so that still fits well.

I don't know what Yields would have done, they were closed before the closing dump. Commodities also held up well, they seemed to be much more interested in the currency correlation than any Fiscal Cliff concerns.

Here are a few of the charts, I still haven't had time to take a thorough look around, but as it says above, "Early Take".

 Commodities over the last 6.5 days are definitely showing more risk appetite than the SPX, a rare positive divergence in commods, usually they are negative vs the SPX. To the far right you can see how commodities held up as the market went south on the news Obama wasn't bringing anything new to the table.

 The longer term leading negative position in the $AUD, a bounce in the SPX with the $AUD staying put would really highlight the divergence.

 The $AUD intraday today held its ground.

 The EUR/USD seemed like it was holding steady waiting for Fiscal Cliff news, but when Fiscal Cliff news came, it barely budged.

 High Yield Corp. seeing large volume as it bounced back off the lows in the afternoon, it was more impressive to watch live.

 The same HY Credit as above, except on a 60 min chart with 3C shows the longer term negative divergence sending it lower, but...

Look at the intraday chart for the same, it was leading positive and continued so right through the close. This doesn't make sense.

 High Yield Credit saw a move up in to the close, you'd think the move would be down and in to investment grade, so again something isn't sitting right here.

 Even as the TICK finally saw some extreme readings, it stuck me that it wasn't a straight down trend, there were upside readings during the sell-off that were +1000 and not over a 1 second period, there were other positive readings in the +750 range which is odd on a move like that.

Here's the same TICK chart with the SPY in red overlaid. Notice even earlier when there was barely any range, still Tick followed the SPY, but at the EOD, it didn't.

I find it strange that so many risk assets, in fact any risk asset at all, acted so well during this period, it's almost as if stocks alone were selling off while the riskier assets like Credit (because of the leverage) either held up well or even advanced!

As for the averages, these are the same 3 that were the only 3 that held up all day today.

 DIA 1 min , note the negative divergence yesterday worked perfectly with this morning's gap down, yet in to today's close it's nearly the mirror opposite. Yesterday the market is moving up and we see an EOD neg. divergence that tells us it's likely the market gaps down today which it does and today as the market sells off it is in a leading positive divergence, take that with what we see above and something doesn't sit right with this afternoon sell-off.

 The NASDAQ futures that held up all day today and especially in to the close.

 And the QQQ 1 min which held a leading positive position in to the close.

As well as the QQQ 2 min which I show a longer trend, but you can see today's action as well.

More as I dig it up, Enjoy your weekend!

Brandt Uses Worden's TeleChart and StockFinder 5 Exclusively

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