Change in Character Index Futures...

Last Friday (see last night's post, Daily Wrap which quoted much of Friday's The Market Into Next Week) there weren't strong (positive/bounce) divergences, in fact from last Friday's post,

The key is the second paragraph...

"There are scattered positives, mostly in the 2 min area, a few out to 3 min and the IWM has been able to maintain a 5 min positive looking signal, but not quite a clean, clear divergence....

The bounce I had envisioned considering I used a partial IWM call position with expiration next Friday, would be along the lines of pre-F_O_M_C and looking at the market as a whole, right now I can't say that I would expect much. In fact I am starting to wonder if it is even possible given it seems any kind of underlying strength that builds is so quickly torn down."

Essentially that's what we saw again this morning, the TICK Index really made that clear. Although there weren't the kind of divergences that I'd normally take even a short term speculative bounce trade on, the IWM at least had a clear 15 min positive in the Futures (TF).

What I'm seeing intraday isn't of great interest thus far, this isn't too much of a surprise given tomorrow's F_O_M_C, however the only real strength for a bounce as of Friday was the IWM (relatively speaking vs. the other averages and we saw that in relative performance as of the close yesterday  and thus far today) and that 15 min positive in Index futures, I don't think I would have taken the Trade Idea: Short Term IWM Calls trade idea without that 15 min chart.

The concept of migration is that any "new" divergence starts on the earliest charts (1, 2, 3 min ) first, if it is strong enough, it moves to longer charts like 5, 10, 15 min.

Take a look at TF/Russell 2000 (IWM) Futures...

 1 min intraday TF is really the only 1 min Index future of any interest , I suspect because it's the only thing moving, and it's not that interesting. The second move to intraday resistance/highs saw a negative divegrence as you see above, but that's not really where my interest is...

The 5 min chart is really the first chart timeframe (fastest) worth following beyond intraday activity and it's clearly deteriorating, the concept of "Migration of a divergence", would suggest that any deterioration on the next timeframe, 15 min would show a strengthening negative divegrence.

Remember, the 15 min TF chart had a very clean positive divegrence, in fact from the 12th's Futures Update post, the 5 min chart was building the divergence which was the same day the IWM closed at the lows from last week's downdraft or the start of the deterioration of the move above the 3-month range/SPX 1900. By Friday it reached the 15 min chart (migration), here's what it looked like Thursday...

Last week's (Thursday) building positive divegrence for the bounce expected this week pre-F_O_M_C.

Now the same timeframe right now...

There's a VERY clear change in character, but is it migrating...?

 This is the TF 15 min chart and the positive from last week around Friday which gave me enough confidence to enter the IWM call trade Friday. You can see the positive from last week at the lows of the R2k / TF /IWM and today, you see a clear negative divegrence in to today's relative strength vs the other averages.

At this point I'll remind you that last week we saw at least 2, maybe 3 positive divergences get run over which is not common, I think the last time I saw it was when AAPL lost nearly half of its value coming off all-time highs.