Shorts Fried

Our long bias was spot on as the shorts covered like babies. (Does that really make any sense?)

Some nice day trades to be had today, while framing the daily structure with the underlying knowledge that a lot of fed day panic shorts were caught short at bad prices.  The VWAP really is the king of all references so many time intraday. Momentum and consolidation patterns were clear as well today.

And the daily now is looking like it wants to bust a move above the 1869 zone.
But the market is firmly range bound, so I'm on watch for more washing machine action.

My bias is for a look above and fail back into the range tomorrow.

Laggard Trap

Smell the effervescent stench of barbecued laggard meat?  Yummy stuff!

Our analysis yesterday was spot on and the Fed Dump was on.

But selling did stop at a visual, mechanical reference and pulled off a mongo excess tail on the 5 minute.  Plus today featured the 1st sub -1600 TICK hit in quite awhile and, quite FRANKLY, for such an extreme reading to NOT punch through a visual level... just makes us wonder... So with that bit of information in our quiver, we are on watch for some shorts to cover tomorrow -- in some fashion.

But was the bit TICK breakout exhaustion or a breakout that will bring in more selling?  There is the gap below.  And the crew here always respects a visual gap to get the programs interested in some downside fill-it fun.

Good By Vampire Desk

Typing on a treadmill now.  Sounds almost like a song.  This thing is great and as long and I don't trip and kill myself, ending up kitty lunch.

We were a bit too pessimistic in last night's analysis, as good news flow came in and the zombie buyers were on the loose.

Trades of the day, if missing getting long near the open, were to pounce on VWAP pullbacks, and also the mid-session continuation coil -- and run for the hills after a few points.  Not massive points, but good solid edge and structure.

It's going to take some negative news to come in, or else the target for this market is the daily all time highs.

But volume totally imploded again today.  This just does not feel like a young auction off of swing lows.  And with the Fed tomorrow, I don't trust this market.

I am frankly biased that this rally is going to fail.

I'll ride it up, but will be ready to pounce if Big Red wants to come knocking.

Onto our analysis:

Low Volume Reversal

So they pulled off a short in the hole.  Not surprising.  Right?

But first, my very cool young stud.  He loves my new stand up treadmill desk.  We can't let Brett post the only cat pictures!  Can we?

He really is a beautiful animal with a great personality.  And he's going to be one regal dude when he grows up.  He enjoyed playing on my daughter's bed this morning.  

He was a Juvenile stray in San Jose, a city of millions.  And somehow he ended up here.  

Market: Surprising just how low the volume was today.  Monday's have been extremely low volume sessions for awhile now, so we expect the Monday hangover effect to silence the desks.  

But today was a just a utter, block-buster, fart-out with FIRM multi-month lows in volume for the NYSE on a gap up, swing higher day.

How can we trust a short squeeze with no volume?

Right, we cannot.

Odds are for sellers to come in tomorrow.

Friday Balance

But you can use liars, naysayers, and mediocrities to make you stronger.
--The good Doc never ceases to keep them coming, does he?

Yet another wonderful example of high-odds post trend day balance.

And the poke below yesterday's trend day's lows, a true wheelhouse trade -- time and time again. TRADE OF THE WEEK!

So now we wait until Sunday to find out if fresh bad news brings in more sellers, or if it's short in the hole time.

Today's slight downwards bias probably shifts odds for short in the hole.

Responsive Sellers Beatdown

Our bias was correct buyers would take it higher.  And our suspicions about the quality of yesterday's auction were also correct.

We did previously mention the all-mighty-cosmic-powers of the gap?  Right?

Geez!

Today was nothing short of a subsequent beat down, taking out and shooting all of yesterday's long inventory -- and then some.  

The downwards action was tricky early going.  Frankly, I saw little signs of a vicious trend move lower unfolding.  IB balance volume was lower than yesterday's, a multi-month low in fact. (We note this on the slides)  Only a viciously trending TLT had me wary.

The collapse broke a few patterns that have been tried and true as responsive buying was nowhere to be found.

So, it's very clear now that the market has indeed changed as 3 of the last 4 sessions have opened higher and sold off. It sure feels "different" this time, like longer time frame sellers are at work.

This market has a lot of support zones close at hand.  Tomorrow is high odds for balance after today's trend day.

A lot of inventory is very short now, but if they want to take it down more fine.

They could print many more days like this in a row.  And a buyer responsive bid would not surprise at all either.

 

Downside Failure

No hat eating tonight as the gap was at least tested.

But as I discussed with colleagues today, the simple fact that the pattern was so obvious really negated it's power.  Every Kirk, Dick, and Harry retail technician was "all over it".

All that they could pull off was halfway into the gap, where the 1850 zone kicked in.

Take that you laggard innovators!

Today's  structure most likely points to continuation higher and we expect some buying tomorrow.

But we say this within the context of today's volume being lower than yesterday's and a P formation on the profile.  Today was no young auction day to say the least. Range was 15.25 points, down from yesterday's 19.25.

But strength was strong underneath the hood and the TICK MA was firmly above zero for almost the entire session.

If negatives hit, fine.  We all know this market could print Big Red anytime as the world is a messy place.

Two nice trades of the day to highlight tonight on the 5 minute.