Market Close

You probably heard the good news, the Fed is finally being hauled in front of Congress by the man who wrote the book, "End the Fed". It's a nice thought any way.

The dominant price volume relationship today was price down/volume down which doesn't tell us much, it doesn't put the market into overbought or oversold territory. It's unclear right now what effect the Treasuries' SFP program will have as speculation is that as of tomorrow the Primary Dealers will have $25 billion dollars and a total of some $195 billion when all said and done over a period of two months, to invest in risk assets-read as the stock market.  We'll see, there's also another POMO, I'm not sure of the size, the last two days have been rather small.

As for the charts, take a look, they all look pretty similar although there are some differences among the averages. I had to use ETFs for many because for some reason I'm not getting today's daily volume on the index itself except for the Dow.

First I want to start with the DIA's 3C chart, most of the averages look the same as this so I'm not going to be redundant.

 The 1 min chart toward the end of the day showed a positive divergence so there's a good probability (world events excluded) that we'll see at least early strength in the a.m.

 The 5 min chart doesn't look so hot, note the lateral movement in the DIA, if there were accumulation I'd expect to see some price moves to the upside, right now it seems as if positions were offloaded in a somewhat mild manner.

 The 10 min chart which is more significant (the longer the chart, the more significant the implications of a divergence) shows much the same. In a normal market without POMO levitation and other games, this would lead to downside.

 You can see the 15 min chart on 1/27-1/28 had a similar negative divergence that led to downside.

 The 30 min chart is just a bit negative of confirmation so that's about as far as this leg of the divergence has travelled. As stated above, a 15 min chart like that would normally lead to a swing down.

 The actual Dow Jones 30 is .01% higher today on significantly lower volume. The closing candle today (a Doji) is indecision and indecision often means the prevailing sentiment has lost its momentum leaving the door open for a reversal. See the day before the meltdown last Friday-the same Doji candle.

 The IWM representing the Russell 2000 is not confirming the Dow for anyone interested in Dow Theory and it has a couple of different features. First the candlestick formation formed over the last two days is a Japanese Candlestick pattern called a Harami, meaning in Japanese, "Mother with baby" as today's candle in inside yesterday's real body. In the west we'd call this an inside day and this is also a reversal signal. The fact today had a long upper wick makes it look like a bearish shooting star candle, although it does not have the gap needed for the actual title. In any case, it shows higher prices were rejected and carries a bearish bent. Furthermore the Russell broke out to a new high yesterday for this leg up, this normally would have the bulls buying the breakout. The move down below that breakout today puts the bulls at a slight loss, the bigger the move down, the more likely the bulls would sell the positions at a loss. Today's drop was not that significant in this case, however the candlestick patterns are still significant.

 The QQQQ shows two Haramis, a bullish one in the red box which led to an upside reversal and the more recent bearish one in the white box above the white arrow.

The SPY didn't cross below the breakout level yesterday that bulls would have bought, although it did close lower and a bit off yesterday's highs, some bulls can be a a marginal loss. Again we see two Harami patterns consecutively. Whether today's leads to a downside reversal tomorrow is unknown. 3C is showing charts that reflect distribution, bulls were not eager today to chase prices higher, but we do have the SFP wind down tomorrow and that money possibly entering the market so we are dealing with a new unknown. For the time being, it's still about the right trades at the right place.

I'm putting together the February trade list, there's lots of possibilities that have been mentioned and I want to get them in one place. I've also decided to create a separate list for Cats and Dogs trades and their limit triggers that you can look through. I've not wanted to add that number of trades to the list as it may be confusing, although I also want you to have the ability to get into these trades before they pop, rather then me alert you when they do pop and you having to act quickly on a decision so look for the February Trade List and the "Speculative Trades".

I'll likely add another update tonight. If anyone has trouble with all of the updates crowding your email, contact me and if you like, you can provide an alternative email address, I noticed today there were nearly 20 updates-I don't want you turning me in as a spammer :)