There is a lot of overhead supply out there. The markets are linked globally for now and price action is loose. That tells us all we need to know about market conditions. Over the last few weeks we've shifted from late stage bull market conditions to bear market conditions. We need time to recover. Particularly with the now down sloping averages on nearly every time frame in the S&P 500.
Dana Lyons points out that the interest in inverse ETF volume is near a record. Some of that can be attributed to the shifting long term tectonics of the market. That said, the last peak this high was last October's low.
The biggest theme of note is the commodity rally. A strong El Nino is coming and it can cause some weather disruptions across the globe. They tend to affect mostly agriculture commodities but it's uncertainty and risk for shorts. At the same time, commodity dependent countries formed key reversal weeks at major support zones. There might be some legs to this move. 
Measuring the Market
The Smoothed S&P 500 ETF shows the strength of the recent downtrend.
The NASDAQ to Bonds ratio continues to megaphone.
I was shocked to see the smoothed Arms Index is still not really breaking out of the recent four year range.
The NYSE stock only McClellan Oscillator is already nearing a toppy level after the massive drop early in the week.
Vol Term structure is still screaming fear. It's absolutely not an 'all clear' signal for a V shaped rally.
Commodities
This week we saw an important changing of the guard. The major laggard commodity group led the rally. It was a major inflection week in the space.
Not only did we see massive rallies, but the news and deal flow has been off the hook. Icahn stepping into more Freeport McMoran shares. Schlumberger buying Cameron International. Goldcorp merging a major project with Teck Resources. Smart managements are stepping up to the plate here.
All of a sudden Oil has recovered the Spring lows.
Commodities relative to the Emerging Markets has broken a year long head and shoulders bottom pattern. This can provide a tailwind to the emerging market space moving forward, particularly the oil producing nations.
Gold continues to chop around in this major pivot zone. The next week or so will tell us a lot. I highlighted some of the most interesting gold miner long plays mid-week.
Silver pushed to fresh multi year lows. This divergence from gold could be considered non-confirmation. I don't know. It just seems to me the gold move is a safe-haven play. In the dogma of QE infinity and infinite inflation, silver led gold in the later stages of the rally. Is it a requirement that Silver participates in any gold rally? No, but logically you'd think it'd find some support soon.
Global Markets
Chris Kimble notes the bounces at key levels taking place all across the globe. The recent lows may be much stronger than most give credit.
Note this key bounce area in the STOXX Europe 50. It could end up being a major bottom.
Hello Russia! Look right where it's bouncing. Is this a larger bottom in play? It's way too soon to tell, but this is a major support zone and the news out of Russia really can't get much worse, can it?
Emerging Markets relative to Emerged Markets broke a sharp downtrend. Make no mistake the trend is still lower, but this ratio can move higher short term.
Emerging Markets bounced sharply off the 2011 low. It's an air pocket up to 35-36.
Brazil with a key reversal week at 2008 lows. Can we bounce more in the coming weeks?
Is this a false breakdown in Greece? I'm looking long into next week.
Germany is still below the broken support line. It'll be interesting to see how this acts in the coming weeks.
Bonds
Emerging Market Bonds are re-testing the major pivot area recently lost.
TLT formed a nasty reversal week as it now loiters in this pivot zone. All is not lost. 120-121 looks like a sturdy support area.
TIP is set for a major move this fall. Horizontal support is still hanging in there, but if that goes look out below.
Market Musings
Some of these market pundits are just.... Oop the Dow dropped 1000 points, it's time for QE 4. Oop GDP came in strong, tightening is on. It's funny to listen to, but a complete waste of time. Yellen has held a strong yet steady hand in laying out the slow path to tightening.
The FED continually has to send mixed signals for those trying to game the bond markets etc. It has worked miraculously creating an tidal wave of noise and confusion for those who won't take a step back and breathe. The noise is absolutely out of hand at this point. Bravo, Ms. Yellen.
THE funny thing about the markets is you can take so much time to prepare for a week. Then, all of a sudden, the dow opens down 1000 and half your research seems worthless. But it's only 'worthless' in the moment. That work gives us a strong framework for what we're dealing with to take advantage of opportunities.
You don't know how quality your brokerage is until you need it the most. It was a disastrous week for numerous brokers. If you find yourself in this position, it's a tough choice to either take the time to transfer your funds to a better service or sticking with the status quo during the market volatility. Opportunity cost is pretty expensive here and now.
Trade 'em well!
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