I rarely show my renko chart.  It is a great chart for understanding how the tape prints.  The bars are not time-based.  They instead print only as price fluctuates by a level of your choosing.  When the Nasdaq is moving fast, I usually dial them back to 3 points.  Lately I have been running them at 1.5 points.  When conditions get real bad I dial them down to 0.75 points.

I mainly use the renko for profit expectation and risk management, but I do watch for this picture to emerge—the triple intraday confluence.  One lined up this afternoon, and I worked a long into the close, click and enlarge it if you want:

This situation is the only other ‘working zone’ I have besides the morning market profile levels.

This isn’t good. I held my DXD and BIS—my marquee trades of the week—but I have a reasonable expectation of how tomorrow will transpire.

They want to keep bears engaged. That means no sudden movements or loud noises. If short sellers get spooked, then they won’t stick around overnight. And that is when the campaign will begin. At night and slowly.

There’s no rush you see. This is all about slow motion. Time is valuable. If the market can keep bears in until about 11am, then they’re practically obligated to wait and see the FOMC minutes at 2pm. After all, in our fickle marketplace a few key fed minutes can provide direction.

This is where it becomes a lose-lose situation and where I expect they will really heat the coals cooking below the bear’s arse.

At this point I will want to wait for the minutes. Meanwhile, the market starts to slowly ascend and I have to sit through it. I can cover but risk missing out on a sharp reaction lower.

The likelihood we see any sort of downward price action during this wretched 11am-2pm widow is real low.  So I added some risk.

Finally, remember this—Twitter is my ticket out the ghetto. My position is meaningful and I intend to hold it, sans technical analysis, for years to come. Therefore I insist you tell one person everyday how ‘Moments’ makes Twitter infinitely more accessible. Show the layman what we’ve been going on about for nearly a decade, but reintroduce it via Moments.

So many of the context pieces I monitor are flirting with the high-ends of their established ranges.

Either this is it, and we finally break range and explore higher prices or sellers are about to land a blow from the top ropes. I am watching USD/JPY, Oil, and Nasdaq semiconductors. Here’s the semiconductor chart:

Breadth is strong intra-day, but these context pieces have me trying to dig my heels in and stay bearish on the week.

I also have a lagging Nasdaq, fading copper stocks, and lackluster momentum in the favorites like Facebook, Netflix, and Tesla.

On my wish list is biotech softening up again. They are so strong. And some decaying breadth to motivate sellers to become initiative on the week.

This morning has all the makings of a pain trade. Cash on the sidelines had to wonder if they missed out by waiting for a retest of the lows. Sellers from yesterday had to take some heat. Now that we pushed just high enough to suck in some chasing bulls, sellers are responding.

Several momentum darlings were not participating this morning. Shares of Tesla haven’t been the same since Elon took the stage last week and presented his latest and greatest. GoPro continues to be a heartbreaker to any hopeful knife catcher. Tech overall has been a mixed bag.

The big winner so far this week is basic materials. Therefore it is no surprise that the volatility in oil post the 10:30am inventory stats is knocking the overall market around. The clearest way to monitor this action, however, is to keep an eye on the USD/JPY. This remains the key contextual piece. It is wound tight heading into Wednesday afternoon.

Keep it simple, a strong move above 120.25 is contextually bullish and a strong move below 119.75 bearish for stocks.

One of the contextual pieces I follow is trading in line with my primary expectation heading into the week.  Here’s the excerpt from last Sunday’s Strategy Session:

 Transports could not hold their range last week and instead broke lower. Now we are left to wonder if this index will continue to discover lower prices or if instead it is still balanced but just in a widening range. The bracket low from the prior range still serves as a useful reference point [3431.30]. The expectation now is for any attempt back into this area to be defended by sellers.

Here’s an updated chart of the index, which managed to take out its lows alongside the NASDAQ while on the day, the other indices demonstrated relative strength, see below:

Biotech grabbed the headlines this morning with its standout weakness while the market otherwise entertains a 40 point Dow day aka real calm.

That’s because everyone wonders what the implications of our next under-the-surface correction might be.  Now that the basic material (oil) patch has already been incognito corrected, our methodical market can turn its attention to biotech—correcting their flamboyant valuations.

“The short answer is YES.” – Raul

In the 09/20/15 Issue of the Exodus Strategy Session, we looked closely at the Biotech industry’s market cap.  If you include the all Drug Industries into the equation the market cap equates to just below 9%.  Biotech as a standalone industry equals a mere 0.68% of the equity complex, almost paltry in size.  The rest of the data is presented below:

Data source: Exodus Market Intelligence

 As you were…

While the broad markets shows balance between buyers and sellers, the biotech industry is being dismembered.  Biotech ETF IBB is down over 3% already on the session.

Leading the way lower are the ones tinkering with God’s molecules over at Exact Sciences Corporation.  They caught a downgrade by an analyst from Benchmark and are being roasted on a spit—down over 40% on the session as of this writing.

Here are some other big biotech losers so far today:

Data source: Exodus Market Intelligence

First of all, aside from those bastard APP shares I am having a decent day.  Last week I added some GARP exposure along with a few other positions.  They are faring well.  Plus the Silicon Valley soap opera is over and Twitter has a CEO.

I bought BIS early on for a decent price and the position is down a touch.  I would quite prefer more strength so I can get my real position in place.

Toward the close I added some hedge/short exposure via DXD.  The Dow is leading the bulls higher therefore I’ve shot some arrows in its direction.

I don’t need a ton of risk for this position.  A bit higher tomorrow and I’ll shed DXD.  But for now, I am adhering to my pool of data—despite the market of stocks working well to start the week.

American Apparel sucks in so many ways.  They had everything going for them.  They had the controversial branding, great locations, and unbeatable everyday clothes.

They just can’t figure out how to make money.  Cash flows can really do wonders for fixing sick companies.  And now they’ve filed for Chapter 11 bankruptcy protection.

Most of the best cuts and colors have been out of stock for months.  I doubt they will remedy this anytime soon.  As for the shares I own—they’re now worthless.  The hipster in me died alongside this horrific trade.

Call me short sighted, but I am sticking with the predominant conditions which are of the ping pong variety.

Several key contextual pieces are pushing into the high-end of their near term ranges.

Biotech is on a death march despite strong indices.

Issues have been lagging behind all morning inside the NASDAQ 100.

My robot friends and I like the short side of this tape.  We may be wrong today, even tomorrow morning, but come Wednesday we’ll be drinking motor oil and starting shit.  Ball, prepare to meet paddle.

h/t @clegger_2000 for this song, sung by a nice lady: