Market Update

There's really not too much different than what forward looking expectations were for early this week as of Friday and what we saw yesterday, the intraday 1 min divergences still look like steering divergences, keeping the averages in a pretty tight range, while the longer term, heavier underlying flow timeframes continue to deteriorate. We had distribution in to higher prices last week by institutional money, that was like a mini-cycle from May 15th's bear flag which was short squeeze powered, as I think I said before, I think the move is used up, done and in a reversal process which is the same trend among numerous assets on the watchlists. The price action of trying to maintain stable prices in a reversal process is not unusual, think VWAP as mentioned yesterday. I suspect the longer a range persists (as this is just one of our concepts), the more defined support/resistance are, the more stops/orders will pile up, making a head fake move a higher probability, such a move if it were to occur and I don't have any objective data that it will beyond our concepts and the fact we see it so often, would probably occur as some sort of knee jerk reaction to Thursday's ECB policy announcement. The fact there was distribution in to higher prices rather than just confirmation (holding the positions), tells me that there's a high probability that the lofty expectations of the ECB may turn to disappointment.

 The Most Shorted Index (I use the most shorted 100 stocks of the Russell 3000 to create the index) in red, has fallen off substantially more today, this after having fallen off all of this week and then some (Friday was when it first really became noticeable).

 DIA 1 min, as you can see, these look very much like just small corrections in 3C to keep price in a defined range/area. Since the market has the most directional influence over any given stock (about 2/3rds) and most that I have seen are in some sort of Right shoulder top or other reversal process, holding the market rather steady is what we expected to see early this week or until the process is complete. I'll have a few example stocks up/Trade set ups.

 Meanwhile the larger underlying trend both shorter term and longer keeps deteriorating, in other words it looks like price is being held around a certain level like VWAP where positions can be filled at advantageous levels, but those positions seem to be shorts and or selling of longs, although I suspect most of that was done last week in to price momentum/strength.

The longer term DIA as the range that was so difficult to get off any good trades is showing serious damage, and now with a head fake move in place that we know was distributed, the market looks to be right on a ledge.

IWM 1 min more or less in line, but while most averages the last several days have been pretty much near the unchanged area on the close, the IWM has seen weaker relative performance and is slipping from its range, I suspect there will be some IWM outperformance on a relative basis just to get it back up in to the range area.

Here's an example of one of those divergences in the IWM (3 min) positive, this should get the IWM back in to position.

 QQQ 1 min is one of the better examples of steering divergences.

 While longer term (even short term) charts continue to deteriorate just as you'd expect to see with something like VWAP selling or rather selling at VWAP. It's the market maker and specialists job to get the fill for institutional clients that is most advantageous and that is usually judged by where the fill is in relation to VWAP for the asset.

 QQQ 30 min recently showing a lot of weakness, which is interesting as the same chart/timeframe in the SPY looks the same and I recently noted that Tech (QQQ) and Financials (SPY) are two Industry groups that are looking the worst. Remember last week the only net buys, which were still small (institutional money) was in the defensive Utilities sector.

 SPY also with steering divergences

And that 30 min chart I mentioned, the longer term multi-month range that was a portfolio meat grinder is definitely giving very strong signals that it is likely a top.