Pulling it Together...

I'm going to try to do this quick, I don't know if there's a leaked NFP or not, maybe it's bad for the market and we see that until the open, all I can say is unless they lost total control, which it doesn't look like they have, they intend to take this market higher, good or bad NFP, a bad NFP would be good for the market and that may seem too obvious, but the SEC never does anything.

As far as the move, increased volatility cuts both ways, this is why I compare the market to a pendulum, it swings way too far one way and then way too far the other.


Starting with the expectations we had and I still believe are in play, in essence, this to me is a bear trap worthy of a top after 4 years of manipulation-everything in the market has a scale or rhythm to it. I'm going to Bold highlight the Key parts of our analysis from the start of the week below.

From Monday, June 3rd, "A Little More Color on the Day"

"there's no significant reversal on any timeframe as the market is fractal in nature because humans always act the same; I can't imagine the market dumping without a decent head fake and that means above the triangle that the SPX broke under Friday- the one we are very close to testing or what use to be the "Kiss goodbye" before Wall St. started using Technical Analysis' predictability against its practitioners."

From Tuesday June 4th, We're also Just about at the Triangle Resistance

"As I mentioned yesterday, traders expect this to be a "Kiss the triangle goodbye" test of resistance so quite a few will short any sign of the market pulling back from that area and I believe the market WILL give traders what they expect, at least long enough to pull in some shorts which the market will need to break above the triangle on short covering.

If the market heads right through it without any kind of look of "failure", I'd be surprised so I mentioned this yesterday, if you see it, don't be surprised."

This is what I said above (before it happened) materializing in the market.

All 4 averages have the triangle and the kiss I said the "Market would give them", in the posts linked above I get more in to the psychology of this set up / bear trap, I think they are good to review, but for now the excerpts above should be enough.

 DIA Triangle and the kiss at the yellow arrow, this is very rare now-a-days because it's such a classic pattern it gets manipulated so often, but in this case they needed traders to buy it (buy the set up), rather to sell it short, so a failed triangle that didn't breakout and failed exactly at resistance is TA 101, it's a part of a much larger trap being set.

You can see DIA has been accumulated by someone and it's not retail as price has moved lower.

IWM has the same kiss at the yellow arrow, again smart money on a 15 min chart is accumulating lower prices, why would that be?

 QQQ, same set up, the apex of the triangle is resistance here, it's accumulated too in to the decline, this is exactly why I've been opening long positions, I find wherever the first divergence starts, even if price drops significantly below that, the reversal sees price well above the first divergence.

 The SPY is the best example of the kiss, the accumulation, the entire bear trap. NOTHING has changed since I posted my theory Monday and that was before we saw the kiss, again read the posts linked above to see why I thought that, its an important concept in understanding what is happening here and an important market concept.

 Financials -I didn't draw in the kiss, although I'm sure its there, the accumulation is what is important.

The same with Tech, these are 2 of the 3 pillars of the market, Financials, Tech and Energy.

During this period, the asset we use to judge institutional sentiment is NOT falling as you'd think, it's rising, it's being bought in anticipation, this is a leading indicator.

Even stranger is the illiquid High Yield Credit, this is the first to drop, "Credit leads, stocks follow", it's the first to drop because of the low liquidity, but it is rising throughout.

HYG Credit accumulated, this is the asset they'd put most money in to.

This is the normal SPX (red) vs Yen (green) inverse correlation from yesterday, this started working intraday a few weeks ago.

Note today's Yen move, the SPX should have been hugely lower.

Then the SPX rises in to a flat Yen.

To give you a better perspective of just how low the SPX should have fallen today...

That's the Yen in green today spiking, the SPX should have had a similar size spike down.

This is what I pointed out before it happened, now it has happened and confirmed in 3C, it's definitely volatile, emotional, but that is the point of these moves, get everyone bearish, it will be just as volatile and emotional on the reversal and seem like it will never stop until everyone is bullish. 

This is why I have been adding longs and have no problem holding them.