Early Update Incl. GLD/SLV

Ironically (kind of scary), last night's Daily Wrap talked about the importance of making a bounce believable and how recent signals in transports were catching my interest as well as other sectors like financials, but transports is very specific to technical traders that abide by Dow Theory (in essence, it's outdated, but if the Industrials, Dow-30 rally, so should the transports, Dow 20 as Industrials produce goods, Transports ship them). The US long ago gave up being an industrial economy and became a services economy, but Technicians still want to see transports, I suggested a better (updated) pair which would be the Russell 2000 in place of the Dow-30 and something like FED-EX as the transports because they are doing more services shipping than say rails which went out a long time ago.

Even though a 1 day turn around in transports or even a week is far from indicating the US is back on healthy ground, it's still important to Technical Traders who have Dow Theory memorized. That's why I found it interesting yesterday to see Transports looking like they'd pop (now up +1.5%). This is an excerpt from last night's "Daily Wrap"
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Carrying on... I've noticed several sectors seeing nice 3C divergences, Financials has been one I've talked about, but one of the tricks of getting a bounce to work is making it believable, for any old-timers familiar with Dow theory, they're going to be looking for transports to play along.

This 1 min chart is spotty enough, I didn't think I needed to point out the trends.

This is the 5 min, in line on the way down and leading positive, all about the right time as well.
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The SPY divergence...

 You may recall I wasn't feeling great about the SPY 15 min leading positive divergence on Tuesday, I thought price needed to come down and build a larger footprint or base to hold a divergence that sharp, that happened yesterday and now the SPY 15 min positive looks appropriate for a bounce.

At the same time, Transports get on board.

I wouldn't normally call the initial knee-jerk reaction down after the 2 p.m. release of the minutes yesterday a "head fake move", but the volume says different and if you look at last night's posts and yesterday afternoons, they all show that head fake move was accumulated.


As for Gold and Silver, the typical "Taper-Off" move would see the market rally, the $USD fall and Gold rally as well, well, there's been a switch as you can see below gold now has an inverse relationship with the SPX which suggests this is a bounce, not "Hope for a Taper-Off" outcome.

SPY vs. GLD

The same is true of SLV.

The GLD chart is still in a range often seen in distribution, the danger short term of the range is that resistance attracts stops and limit orders which attracts head fake moves, but so far I don't see a large probability of that and 3C is still leading negative.

The same is true for SLV.

I think if you didn't already get in to long "Hitch-hiking" positions, which I don't blame anyone who didn't, if this is our bounce, it's probably too late in most instances, but the real mission here is to short weak stocks in to price strength.

I'm going to keep looking for evidence to verify as well as manage positions that are green on this move and look for any trades that are of decent quality.