Thursday, May 09, 2013
Yesterday there was so much data, so many things happening so fast and so many important things, I had no idea where to start, today was even more so.
If you are not absorbing these posts from the last 2 days, or really this entire week, you are missing out on a chance to learn a lot about the mechanics of the market because there are few times like right now where these specialized tools and techniques are used, if you miss it now, you may have to wait a decade before you see it again.
So lets just look at the SPY for a minute because it was not only in trouble on its own, but from external sources as well. I'll remind you that when David DT (who many of you know) and I were trading together, we were witnessing the PPT at work and had become so adept at predicting their moves, we could call intervention within 10 minutes. The trading desk at the NY F_E_D isn't on lunch break, these guys know what they are doing, they have the capital, they know where to deploy it if need be and when the need to act, today is a prime example.
SPY (And I'm not even looking at or considering any other index).
This is a 15 min chart of the SPY zoomed to intraday, a divergence on this timeframe, even though it's zoomed to intraday, is serious business, it is large flows of money moving in or out of an asset. The first divergence was near yesterday's close, traders were using the strength to set positions or close out longs.
Today as the SPY crossed the unchanged mark for the day (light blue line below the white arrows), the SPY put in a bearish reversal candle set- a "Doji Star" with bearish confirmation and that was in to heavy 3C distribution as you can see and about 2 p.m.
What other proof do we have?
The Yen, I saw something so important in the market, specifically currencies and specifically the Yen and $USD, I spent 10 hours on my weekend to write a two-part article, "Currency Crisis" which I will put in the links section. Not only did I predict that the Yen was going to have more and more influence over the market (it already has more than the Euro, $AUD, even the $USD) and more importantly, how the big picture for the Yen and the $USD were shaping up and what that meant for the market, which is not good at all. Ever since, either everything I wrote about has happened or at least nothing I wrote has been contradicted or proven wrong.
Here we see the SPY (green) vs. the Yen (red) and the Yen has support at the red trendline, the SPY resistance at the green trend line and although I've seen this many time the last few weeks and have pointed out and even predicted that major intraday tops and bottoms would line up exactly with the Yen, the only question I had was who was driving who-it's obvious to me now as I suspected, the Yen is driving the SPX. They both breakout/breakdown art the exact same time above (green arrow).
Remember I mentioned the Yen was starting a positive divergence after the fall? Lets look...
There's the start of the divergence on the Single Currency Yen futures, a closer look...
The Yen's positive divergence starts right at 2 p.m.
That also happens to be the time the SPY Arbitrage model shows something is changing that will support the market.
That's 2 p.m. when Arbitrage starts moving up.
The SPY's "BIG MOVE" (sarc.) couldn't even break +500 on the NYSE TICK, this is all NYSE listed stocks-thousands with all gainers counted minus all decliners per bar. Almost the entire SPY rally it barely ever broke +500 which is typically what we see when the market is absolutely flat and it's a half day-holiday with few traders. A rally or bounce intraday hits +1000, +1250, +1500, but +500 at the maximum and as it makes it's high in to the 2 p.m. hour the TICK starts to decline to the +250 area at the highs of the day of all NYSE stocks, only 250 were outperforming at intraday highs?
If that doesn't convince you of the weakness in the SPY, I'll have to write some custom indicators breaking it down by the hour.
Remember, pros can see the entire depth of the book, if there are lots of large sell/short orders lining up, they know and so does the PPT.
The SPY with help lost .75% and went from intraday highs to lows in one move and that was WITH MANIPULATION TO HELP THE SPY, IMAGINE WHAT WOULD HAVE HAPPENED WITHOUT IT!
As we already know and many of you commented on and as I mentioned last night, TLT was purposefully pushed lower to allow the market breathing room where it was already at resistance, after that happened is when the new highs came in, but TLT was being accumulated to head higher again, just look at today's action before manipulation.
There was already strong accumulation of the lows ready to send TLT higher...
On a 15 min. chart of TLT, look at that p[rice candle's strength and the volume that's 3-4x average volume on the move THROUGH resistance, it sliced through like a hot knife through butter. Can you guess what time? TLT was already pounding the SPY Arbitrage, this move as the SPY was petering out and whatever they knew about the depth of the order book was enough to scare someone large in to taking action to prevent who knows what could have happened? With few shorts to provide any buying (taking profits by covering), there's no telling how deep the market could have fallen, shorts provide natural support as they cover which keeps declines in check, but with so few, it could have really got out of control.
Leading Indicators, TLT vs SPX (green), remember earlier I mentioned that even the normal correlation in the first red box of SPX up, TLT down wasn't normal as TLT didn't move down much, it had buyers keeping the correlation biased, then as some of you emailed me today, you were surprised to see TLT moving up with the SPX, I've been pointing this out all week, in many cases it's relative performance, but many others, pure demand overwhelming the correlation. Traders DON'T trust the market, they're moving to safe haven assets like Treasuries.
This is the EOD for the pair, TLT is knocked below the intraday correlation to give the SPY as much help as possible.
And how was this accomplished? We already saw, but I mentioned the VXX 3C chart rather than TLT.
TLT with huge accumulation to the left and it's breakout through the red trendline resistance-all of this with the yen starting to go positive, plus whatever they knew about the book, was too much, they had to take action quickly and few hedge funds or institutions are going to do this, this was PPT in my view, they spent enough (a relative 10 min negative divergence ) on a negative divergence somewhere between 5 and 10 mins-both institutional timeframes and did it all at once, as mentioned earlier, any trader seeing that kind of block come through at once in that size would assume something big is going on, it was just the lever being pulled hard enough to overcome the current demand.
As I already showed you, it wasn't even close to enough to effect the long term underlying trend, it was more shock than size, shock that an order that big would come across the tape in one piece, it must have looked like panic.
I'd say between last night's currency events and today's currency events already addressed in which divergences were in place and they were killed suddenly, you recall I said both times that , "Something doesn't look right", I think is clear evidence we've hit the unpredictability part, which is every fund for themselves like what happened with AAPL, there's no coordination, just selling at every and any chance they get. This was the unpredictability I said we'd see, it was bound to come sooner or later as one fund decides, "We will sell/dump first", then the party is up, AAPL is a good example of what happens when the institutional herd scatters in an "Everyman for himself" environment.
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