Divergence - contradiction - coincidence?

The correlation between the euro and indices was weakening the last couple of weeks. But early in the morning, we even saw a complete opposite move. The euro was spiking (and so did oil & precious metals), but stocks were going lower. What's next, pigs that fly, hell freezing over?? Or maybe we just got a reversion to the mean. Stocks were getting overbought and maybe the euro is oversold at this point. Let's call it a silly coincidence for now...

Anyway, we started the session with a small gap up. This gap got sold immediately, but when price was about 1% down, it bounced on yesterday's low. And from there on, the market went higher toward the high of the day. Except for the S&P, the major indices all made new highs towards the close => bullish.

5m-chart SPY:

Daily charts DIA, SPY, QQQ and IWM (ignore the horizontal line on SPY (= entry of my trade):

Metals were going higher, while stocks started to reverse lower. Later on, it was the other way around. Stocks bounced and metals started to go lower, making new lows for the day. Except for copper, which traded sideways.

Oil went up with stocks in pre-market, but $103 was resistance. Then oil started to sell off, even losing the $100-level. The EU-embargo on Iranian oil got delayed by six months, causing the sell-off.

The euro spiked hard, and was up 1% intraday.

Trades
With gold moving over $161, I've put my stop-loss just under breakeven and sold half my position @161 (in from 158.75).
I went long SPY 128.79 after price bounced exactly on yesterday's low (SL at low of day).

Articles for this evening:
What's the Deal with Natural Gas?
Would you watch your ex-girlfriend making out with her new boyfriend?
Stop Worrying Yourself Out of Profits

And there's the breakout.

As I expected yesterday, we broke higher in premarket. So there was no real edge if you opened your screen this morning, only to see indices were up +1%...

We traded sideways most of the day or even sligthly lower (with tech pulling back more than other indices). Another very small candle on the daily charts for the indices and a close under the open. We'll probably see a small pullback before going any higher. Volume is too small to go higher straigth away. And that lack of volume is also the reason why I wouldn't chase longs here. Not without a tight stop and a smaller position than usual.

5m-chart SPY:

Daily charts DIA, SPY, QQQ and IWM:

Metals were up big, outperforming indices. Oil went up, close to the high of last week, but then retreated somewhat. Among all this bullish action, the euro was up only little.

Trades
Gold is looking very bullish here after a 3-day consolidation (see chart below for gold-futures).
I went long GLD (gold-ETF) @158.75 with a stop at 156 for a swingtrade.

One article for this evening:
The Counter-Narrative

Metals getting killed

Unbelievable! That's the least you can say about the action in the metals today. While the major indices struggle to stay in the green, metals got hit. Hard! An intraday snapshot, 2 hours before market close and right after what looked like an intraday bottom to me:

Look at silver! Down 16.66% and it was -18% briefly. The other metals losing 'only' 4% to 6%. Now why is there such a selloff in metals while stocks are still mostly in the green? Metals were outperforming stocks since early Summer. But in these volatile markets, where the word crash is used quite often, there are no real safe havens. This is just a reversion to the mean, illustrated by the chart below.
The chart shows the spread between SPY (representing the S&P500) and GLD (= gold). We see a breakout, showing that the spread will probably move back to more 'normal' levels. The SPY-SLV (silver)-spread shows more or less the same picture on the weekly chart; silver outperforming stocks since August last year. So basically, we can expect more downside in metals, or at least narrower spreads in the future (which can also mean: metals up, but stocks move up stronger).

Divergence between indices and overhead resistance, what now?

What a nice market rally half an hour into the session. It brought the S&P right under 1220 were it touched several times. There we stayed rangebound until an hour and a half before the close. That's where the bears took over, taking back all of the gains of the day. This creates several bearish candlepatterns on the major indices; inverted hammers on the Dow and S&P, an engulfing candle on the Russell2000 and a dark cloud cover on the Nasdaq.
Moreover, Dow and S&P are sitting close under resistance of their 50-day moving averages. Nasdaq is sitting above some major moving averages, but at the top it's trading range (see depicted chart of QQQ below).

Charts of DIA and QQQ hereunder, both have quite a bearish look.

Gold and oil were up +1%, silver only up just over breakeven.

The focus tomorrow will be on the FOMC-meeting. Interesting to see what will be said and how the market will react to that.

Trades
I closed my GLD- & GDX-calls for a nice gain ($237 per pair traded).
I also went short ES-futures today, 1207.50 on average. Taking a prudent stance for now by hedging the position with SPY-longs. I'll peel of the SPY's on further market-weakness. Something new I want to try, see if this works out or not.

Going higher on lower volume

Today was almost a exact copy of yesterday. Choppy opening and then lower, followed by a trend higher albeit at a slower pace than the previous day. Today tech and small caps were actually lagging the Dow and S&P and they also printed possible hanging men (hammer-like candle after a couple of updays). That may indicate the end of this rally is near.

The rally came after the news that central banks would bring liquidity-providing operations to the markets (see article here). The economic data coming out before and just after the open, was not to bad. The focus was mainly on the jobs data and the Philly Fed number. Both were not meeting expectations, but stocks shrugged off the bad news.

5m-chart of the last 2 days in SPY, you can see momentum is waning a bit.

The next charts are DIA and QQQ. You can see QQQ (Nasdaq based ETF) clearly leading and breaking out today, but it's still in it's trading range.

Trades
I got stopped out of BAL (just above breakeven) and SGG (small profit). The only trade I have left, is an options play on the divergence between GLD (gold ETF) and GDX (goldminers ETF). I entered the trade on 08/23 on the divergence between gold and the goldminers. The goldminers were lagging gold action, so I wrote GLD-calls and bought GDX-calls (both March '12 calls). It's working great so far, already sold half the position and keeping the other half.