EOD Market Update

As I said in the last post, I still think there needs to be more of a reversal process. Last Friday's "The Week Ahead" post's forecast for this week (last week's was for a rally/bounce off the 8/1-8/8 base) was the following...

"Today really skewed a lot of things (*meaning the news of the Russian convoy being shelled inside Ukraine which sent the market lower interrupting the distribution process), but just going from the trend prior to today, it wouldn't surprise me if we were very near the end of this bounce, maybe a day or two more, but I suspect we'll be seeing a lot more lateral (sideways) trade next week, a reversal process. which is where we'll find most of our short entries."

As you can see, the idea of a reversal process isn't a new one, it was forecast for the majority of this week almost a week ago.

Along those lines, it seems to be moving right along track, of course you're never going to pin every detail of the week, especially with F_O_M_C minutes and Janet Yellen speaking the same week, but I think it's pretty clear that as we made some gains Monday and Tuesday of this week, we had already entered in to the reversal process.

Here's what charts looked like in to the close which is interesting because 3C charts often pick up where they left off the next day of regular hours trade, which means these divergences in to the close may lead to early weakness tomorrow.

 SPY's intraday chart (2 min) for today...

Here's the same chart with an increased leading negative divegrence starting on 8/18, Monday or essentially the "Week Ahead".

 IWM, which has been an under performer so a little better performance today wasn't unexpected and it did well considering the intraday lows, however you can see what was done with most of today's higher prices, especially once IWM crossed above yesterday's close.

 The same chart backed out a bit showing a positive divegrence at last Friday's lows

QQQ 2 min today

And the same chart's trend with this week highlighted showing a clear change in character in 3C to the downside/ heavier distribution.

 While these 1 min charts (index futures) don't usually hold up overnight, they do tell us a lot about what the market's trend is . This is ES, remember this chart when you see it's chart with VWAP applied.

NASDAQ futures intraday (1 min) as well

And the Russell 2000 Futures, first they had to cross above yesterday's close, then they saw a strong leading negative intraday divegrence. Quite often some of the strongest divergences are in flat areas of price action like late today (yellow).

And here's VWAP, once again, the distribution signals are strongest at the upper VWAP channel which is the target area for market makers/specialists to fill sell/short sale orders.