Market Update

This seems to be making a little more sense now, often we see things that are being executed way before we know why, as a matter of act, we may be out of the trade before we know why or we may never know why. Let me just say, I'm very much okay with the fact I exited BIDU PUTS yesterday for a nice gain, they'd be worth a whole lot less today so I follow the signals.

Many of you know I had the useless pleasure of seeing a major Wall Street firms research papers for the trading desk, I thought I had a goldmine, but nothing that was in those papers led to any profitable trades until I looked at the papers 6 months later, then things fit. That should give you some idea of how far in advance Wall Street often plans, or if you've seen my charts of the homebuilders under massive accumulation during the 2000 Tech meltdown, who would have thought after the tech revolution the next bull market would be led by housing? Wall Street knew and about 2-3 years in advance.

So take a look at the near term.

 First the Euro is at about the same levels as it was at 8:30 this morning.

 So this move in ES that had a positive divergence in pre-market has nothing to do with legacy arbitrage correlation. Keep in mind the VWAP charts of ES posted, VWAP is where they'd like to sell, but as the door closes there will be more and more trying to fit through a very small space unless they can keep that door open wide enough, long enough, which looks to be an opportunity for us.

 The DIA 3 min, as mentioned, divergences can accrue and we have now at least a 1-day solid positive divergence on the 3 min chart, not a huge divergence, not an extraordinary timeframe, nothing compared to the negative divergence at the head fake top, but enough to provide us with opportunity? I think so. The trend line is what EVERYONE is watching so it's useless, you have to see what the crowd misses, but a move above the trendline may kick start some natural retail buying, the VIX ix no where near fear yet.

 As for the very short term 1 min, it seems this move is not only not confirmed, but appears to be seeing selling in to it, not extra strong selling, but selling.

 The QQQ 3 min divergence (positive) is a mess, not organized well, but it is still a positive divergence.

 As far as selling in to strength, shorting strength, this is how and why the core short positions have been so successful, we didn't chase, we let the trade come to us on our terms and we did what emotionally no trader likes doing naturally and sold short in to price strength, but we had the signals there to give us a reason and confidence.

YOUR GREATEST ADVANTAGE OVER WALL STREET IS PATIENCE, YOU DON'T HAVE TO BE IN THE MARKET ALL OF THE TIME, YOU CAN PICK AND CHOSE YOUR BATTLES.

 THE SPY 3 min positive divergence

As far as selling in to strength, I want to see the 3 min go negative, but I have no problem with it as this 30 min timeframe is 100 times more important than a 3 min timeframe and it is ugly as can be.

We just have to keep an eye out now on our theory and look for the opportunities. We've only had about 3 really good opportunities to set up larger, longer trades this year, this looks to be a 4th.