Market Update

Earlier I talked about where the market is in the current cycle and the proximity to a breakout (when it comes to ending cycles and reversals of them, we see that false breakout more often then not-way more often).

Here are the SPY and Q's charts, the DIA is not showing the same signals yet.

 Earlier we had a positive divergence that moved the market off the lows, now a negative divergence is taking hold on the 1 min charts as seen here on the QQQ

 The same can be seen on the SPY

The acc/dist cycle is very much like the 4 market stages in a cycle, whether it be intraday, a swing pattern or a Primary trend. Those stages are 1) accumulation, 2) mark-up, 3) distribution, 4) decline. When watching 3C, as I showed in an earlier post on the SPY, we saw the accumulation, the mark up period when prices rise and 3C confirms the uptrend, distribution when we see the negtive divergences, typically starts when the market is still rising and then a reversal. Distribution and accumulation occur most often in a laterally trending market as we can see the least two days. The recent trend before a reversal of a cycle has been a false breakout, whether it be a false breakout to the downside kicking off a move up as seen in the SPY chart I featured earlier, or a false breakout to the upside before a reversal. As I mentioned, the SPY is close enough to pull off a false breakout, whether it does or not, I can't say other then to watch the 1/5 min 3C charts. If the negative divergence worsens, but price fails to fall, then it's more likely we'll see that false breakout, what is happening is distribution which can also be interpreted as short selling. If the market prices fall in response to the negative divergences, the false upside breakout becomes less likely.