Come Monday

There were so many charts flying around so fast in the last 2 hours, it was nearly impossible to keep up with everything that was happening and seeing where each of those pieces fit in the puzzle especially as the puzzle itself was changing nearly every 15 minutes.

I was spending a lot of time focussing on the Yen and $USD as that has been leading the market and has been giving us correct directional calls every signal day this week in addition to the correct directional call for the week (lateral range).

In the end I had to go with what I know to be the highest probability concepts and those were all confirming. There were a lot of minor elements (which may be major elements by now or by the time futures close) such as the way High Yield Credit was acting or Treasury Yields, Gold's signals were a big one, the outperformance in VIX short term futures, the 5 min charts of the Index futures (usually these are very clear with a move about to take place-they were lagging more toward a downside move, but not very strongly which would indicate a head fake move as it's not real distribution), the hum-drum sentiment indications, the currency futures were not making a lot of sense, but those were 1 min charts and they rarely will make it through a weekend, but the longer 5 min charts which will last through a weekend, did make sense.

Ultimately though it came down to the 3C concept of "3C signals picking up where they left off on the next trading day" whether that be the very next day or over a 3-day weekend. 

The other concept that has very high probabilities is that of a head fake move before a reversal  or in this case, before a breakout from the week's lateral range which is normally at 80% of the time. The longer the defined range is,  the more probable a head fake move is to occur and we had a week long defined range.

The Bellwether stocks were in agreement, which makes long entries in them very enticing on a head fake move, that's actually the best entry we can get as far as price and profit , risk and timing since a head fake move occurs just before a move.

Since the major concept and most probable concept that will likely define the start of trade next week and the move that comes after is almost solely the head fake move, I think it is of utmost importance that you understand what this move is, why it occurs, what the signs of it are, what the effects of it are and how you can use it as one of the best trade set ups available, I'd like to give you the links to the two articles I wrote specifically on the subject and even if you've already read them, it wouldn't hurt to skim through them again. If you have not read them, I think they'll provide you with information that you can use immediately to enhance your trading results.

Here are the articles which are always linked at the top right sidebar of the members' site.

* Understanding the Head-Fake Move Part 1

* Understanding the Head-Fake Move Part 2

Now, to show you some of the charts that tipped my call toward the most probable market behavior...

 Since there's a defined range, stops and limit orders are going to congregate below the range, smart money or any decent trader knows this by instinct, but even easier, they can see it in the order book (not level 2). A run of those stops below support of the range sets off the numerous effects of a head fake move, lets just say, "From a failed move comes a fast reversal" (see green arrow).


 As far as the concept that 3C signals pick up where they left off, note Thursday's negative signals and that resulted in a gap down today. Today we ended with negative signals, that should result in lower prices Monday.

This SPY 5 min chart shows the exact same concept, Thursday the negative divergences picked up where they left off and Friday we opened lower.

Don't forget the Price/Volume relationships on Wednesday that predicted a higher close Thursday and Thursday's (last night) that predicted a lower close today.

This 15 min chart of the SPY shows the range, I suspected the range would develop in to a base with accumulation, the 3C divergence confirms this. The "X" is where accumulation would have occurred low in the range.

 Even the 30 min chart is positive

Remember though that our big picture trade is to sell short in to market strength, this 4 hour (highest probability of all the above charts by far) has enormous distribution, this is why we want to sell short in to strength when we have the opportunity as the probabilities are extremely bearish, far beyond former bear market tops I've studied going back to the early 20th century.

 The SPY daily chart just reinforces this and shows how much worse things have gotten through the second half of 2013 and through 2014.

The other averages show the same two concepts of a likely head fake and a likely rally from that head fake.

The Q's 5 min left off negative so Monday we should see price weakness.

However the larger chart of the entire range (10 min) is leading positive showing us this range has been accumulated all week.

The head fake move is the pinnacle of the concept, "Price is deceptive."

The IWM 5 min chart (and other intraday charts) left off negative at the close for the near term trade Monday.

However once again the range this week shows clear signs of heavy accumulation and there's only one reason for that.

I have a number of stocks that I really like as short term trading longs in to a head fake move, some are set up and look like they are confirming that there will be a head fake move. Others I really like as assets to short in to. Actually all of them should work out to be assets to short in to, some just look like good longs on the way up and those would include: AAPL, FSLR, BIDU,  MCP looks exceptionally good.

A few shorts: PCLN, NFLX, AMZN, and GOOG.

I might get some examples up , but I'll probably spend a lot of time resolving different market assets as futures and FX wrap up for the week.

Have a great weekend.