After watching an ultra-low volatility multi-month grind higher, the true trend day print is not easy to wrap one's mind around as it's occurring Recently bias is very strong.
However, the astute trader had plenty of evidence to build his argument for a day like this unfolding:
1) Obviously, a huge daily super grind higher was well due for a big puke. Price is below highs too. But for this situation to take hold, multiple evidence trails must show their hand.
2) Friday's low volume move higher was quite uninspiring and would add failure fuel to the fire if downside movement picked up.
3) As the gap up based and then failed, the ducks started to come into line. By 9:00 we had the table set with:
a) Volume increasing on the downward swings. Although initial balance volume was not up, volume came in strongly thereafter.
b) Steady, non-liquidation, type selling with high-confidence swings moving lower, firmly respecting fast line moving averages.
c) Strongly trending inter-market themes. And NONE of them were messing around. Bonds firmly trending, AUD firmly trending, Euro and dollar firmly trending. VIX screaming higher.
d) Neutral but firmly trending A/D sediment.
e) Financials and semi's leading lower.
f) Did I mention already the EXPLODING VIX?
g) Exploding negative cumulative. It was -120k by 9:00. You don't see that very often.
4) After 9:00 it became of game of monitoring symmetrical swings. Without any signs of liquidation, steady selling will reverse perfectly at prior breakdown zones. That's what happened today as sediment trending lower across the board. TICK picked up with multiple -1000 readings and no upside +800's. Just no sign of impending reversal as this "1st day big down" had continuation written all over it.
