THE WEEK AHEAD

I find usually whatever our initial suspicion is, it's usually the correct one, too much second guessing tends to cause you to miss the obvious pattern right in front of you.

Our initial scenario that started Tuesday of this week was the market was putting together a base to bounce as Right Shoulders of H&S tops have already started breaking which is a timing signal telling us we are very close to the end of the F_E_D spiked punch-bowl.

For example, take the Russell 2000 Futures as the Russell 2000 is the Index that should lead the market, that's why Bernanke always referred to the R2K in Congressional testimony although the Dow or S&P are much more familiar household names, Bernanke knows what we know, the Russell 2000 has the largest cross section of US business and should always lead a bull market and often a bear market.

My contention is,  the market already topped, too many people have been so caught up in "New SPX and Dow highs" on moves of 0.15% as we are now nearly at 60 consecutive days in which the SPX hasn't made a 1% move up or down, a record not seen since the early 1990's. 

While most have been following the head lines, they've missed the tiny volume, pitiful quarter percent advances, the S&P sectors with 8 of 9 closing red and the only one closing green being the Flight to Safety trade in to Utilities.

Back to my original statement, for all intents and purposes, the market already topped as this is the underlying theme through out mu watchlists, they all look very similar to this...

 Tf / Russell 2000 Futures 4 hour chart, the 3 arrows represent the two shoulders and 1 head of a broad, near;y year long H&S top. I purposefully did not draw in the 3C divergences so you can see them for yourself, however it is easy to see 3C is at a new leading negative low to the far right, no matter how you look at the price pattern, a lateral top of nearly a year with 3C slicing diagonally down from left to right is distribution as clear as you can ask for.

The IWM with the same/similar pattern. It was just a little over a week ago I was saying "We are sitting on the top of the right shoulder of a H&S pattern and not just in the IWM, but it's a dominant theme among many stocks on my watchlists, especially momentum stocks.

Now the right shoulder has broken, but nothing moves in a straight line, there are actually as many ad some times more up days in a bear market than down days even though it's a bear market.

I looked at Leading Indicators today, they are all just about perfectly in line with the SPX so they tell us nothing, however yesterday's post using leading indicators, Big Picture Charts / Market Map, tells us everything worth knowing if you really want to be ahead of the market.

Looking at leveraged ETF which give signals earlier than the averages many times because of the leverage shows me a high probability we bounce next week, however I don't know if I'd piggy back the bounce, but I would sell short in to it and sell longs.

Here's an idea using the IWM's 3x long and short ETFs, I'm already in the short, SRTY, but would consider a URTY long if there were stronger bounce signals, the way they are now, we could have a bounce and a collapse the next morning with almost no warning, that's where we are.

SRTY 3x short the IWM

 2 min chart with a small negative divegrence suggesting a pullback/market bounce.

SRTY 10 min leading positive suggesting only a small/short duration market bounce as there's no negative divegrence here, only leading positive as this is getting ready to rocket higher.

 SRTY 15 min with a large, strong leading positive divegrence/base, this is getting ready for a substantial move to the upside which means market to the downside.

60 min SRTY with the strongest positive divegrence/accumulation. The orange areas are where I think a pullback might reach next week.

URTY, 3x long IWM

 There are short term positives like this 3 min suggesting a near term market bounce

However on a 10 min chart it's almost invisible, so it can't do too much on the upside, although it can and likely will seem impressive, it's more like a gingerbread house.

The 60 min URTY with a huge leading negative divegrence, meaning this and the market should see bear market downside after a bounce next week.

I can't say early as there may be more base to build, I can't say it won't seem very convincing, that's their job, I can say I have ZERO problem selling longs in to it and selling short in to it.

I have more after the close.