Revisiting Targets Again & Market Deterioration Moving Fast

***Don't miss the ES charts at the bottom of this post!!!***

On April 22nd I posted Revisiting Market Targets... which was a look back at the April 11th Market Update in which we not only knew there would be a move to the upside and we were at the very lows before it began, but some targets for the move which are all based on market psychology as well as some charts that helped to confirm the market psychology.

These are two of the charts I posted in the April 11th Market Update that showed a "Guestimate" of the targets and I'll tell you why...

 The QQQ at the April 11th lows as that was the day this was posted with a range in yellow of the upside target. The market psychology of the targets were that the Q's had already broken to stage 4 and nearly retraced the entire February rally, but the first thing that we see happen more often than not is a volatility shakeout which is a shakeout of new shorts entering on the break of resistance, that was already completed for the Q's.

The psychological aspect of the targets were two fold and that's why the range is a bit larger, #1 was the market would have to AT LEAST break above the downtrend channel to turn retail traders bullish as a downtrend was clearly in place in the Q's. The second higher target was to break the lower lows/lower highs by breaking above a significant pivot high which is where the small red trendline is just under $90.

These targets weren't based on anything other than, "What will it take to convince retail that the downtrend is broken?" and these were my two answers.

The IWM chart below was also posted and had the exact same reasoning for the targets...

#1 to break the downtrend channel and #2 to break above a former pivot high, the one around $115 would have broken the trend of lower highs/lower lows, but the market always tends to move in extremes, that's why I placed the upper range at the next higher pivot high.

I didn't post the SPX and DOW because they had JUST broken to stage 4 on April 11th, but this is what I expected and have posted several times for their targets (these are current charts)...

 If you look at the IWM/QQQ charts posted on April 11th above, they had already broken to stage 4, they had already completed their Volatility Shakeouts, I think the move off the April 11th lows had a lot less to do with the QQQ/IWM than it did about the SPX/DIA completing their volatility shakeouts as they were last to break to stage 4.

The SPY broke to stage 4 on April 10th after a head fake move (these are used to create momentum and this is why we often see them just before a reversal) on 4/4 in the form of a failed of false breakout, you can see the SPY went straight to the break of stage 3 support to stage 4. I believe the volatility shakeout waited 1 more day for the April 11th lows because the Dow had not moved to stage 4 on the 10th, but the 11th (see below).

As is the norm (just look at the IWM and QQQ charts above, one of the first things that happens after a break of major support from stage 3 to stage 4 (and I talk about this a lot with regard to the 3 places I'll short a H&S top with the Volatility shakeout being the 3rd and last place I'll short a top pattern), both the SPX (SPY) and DOW (DIA) made that VT shakeout which we saw coming April 11th, that's when the upside targets were posted before the upside move even began.


This is the DIA, it broke the stage 3 support, technically at stage 4 on April 11th. The Volatility shakeout could have just taken out the last pivot high at the white trendline, but again, the market moves in extremes and you have the QQQ and IWM to consider, whether just breaking the downtrend channel would be enough or whether the series of lower lows and lower highs would have to be broken convincingly.

I would say that all of the major averages have moved far enough to hit their target zones and that is probably why we are seeing the deterioration build so quickly now, for instance take the ES/SPX E-mini Futures that quickly built from intraday negative to 5 min negative which is a pretty serious move in the amount of time it took.

 This is the ES 5 min chart, the negative divegrence that formed here from the after hours 1 min negatives last night was very fast.

*SURPRISE*

I didn't even see this until just now and I did look last night when I was putting up the Futures Updates, it wasn't there...

 The ES 15 min chart has gone to a leading negative divegrence, this is very fast and strong migration of this divergence.

Just as I was putting these charts together I thought, "well let me see what the longer timeframes are doing" and more surprises...

 The ES 30 min has started going LEADING NEGATIVE AND...

The 60 min ES chart is doing the same, this wasn't something I expected to see when I started this post.

This looks to be very bad market deterioration in amazingly fast time. I'd guess the targets on the upside are pretty much taken care of.