I mentioned it last night that I didn't trust this move, it's too gravitational, too many people are sucked up in it which makes it the perfect boat to flip as everyone is lined up on one side.
This morning we have data that is starting to confirm my suspicions.
On a VERY important 60 min chart, in the red box, there's a strong leading negative divergence at the price highs, this is the area I showed
in last night's Daily Wrap post , I said this was the area we saw that I believe was specifically targeted to bring TLT down to allow the SPX to bounce as all levers were pulled including HYG positive, what ACTUALLY happened after that is a mystery except to say that there has been steady and strong TLT accumulation almost all of 2013 very different than what you'd expect. Today we made a stop run, potential head fake move below important multi-month support.
The 5 min chart is positive in a number of ways, I'm most concerned about the present trade where it is leading.
This 3 min chart also shows recent accumulation starting today, I also have 1 and 2 min charts positive which means so far, the divergence is healthy as it is migrating through the timeframes and doing so in the perfect place.
However, reversals are a process and not an event 98% of the time, look at what I mean below, you see a lot of "U" shaped reversals and not too many "V" shaped.
A smaller move will sometimes have a "V" shape, but a large move usually builds a base that is in proportion to the preceding trend. I don't think TLT has time and I don''t think an upside/"flip the boat" trade would work if that much warning were given. This could be a rare exception.
I'm not ready to get involved, but I am saying the initial thoughts as posted yesterday are now showing evidence. This can be very helpful with overall market timing and an actual position.
No comments:
Post a Comment