Message of the Watchlists

In an addendum to Broader Market Picture I often tell you about flipping through the watchlist as this will often give you a tone or trend that is clear enough that it is a high probability, and when it fits with your other market analysis it's just adding to that probability.

The case I've been making is that I think the head fake move that we see so often before a reversal, especially a major reversal, which provides some of the best, lowest risk entries we could ask for as well as exits from any piggy-back (long) trades, is still a likely probability and thus a gift that takes some patience as long as you have reasonable objective evidence that this is the most likely course.

We know from history that it's the most likely course, but each market is different. In the last post this was the case I was making.

I've gathered some charts from my watchlist and there are two things that are trends, our short-sale watchlist components have fallen apart and are looking great for new or add-to positions like SCTY mentioned earlier and the very short term charts don't look ready to give up the ghost without that head fake move and  once again if you don't understand the reasons it's so important to large funds trading large positions, please see my articles linked on the member's site, "Understanding the Head Fake Move".

Here are a few assets that we have been following and their message.

NFLX as recently posted...

 There has been a ton of distribution over a couple of days after a very strong move in NFLX, it's looking very close to ready. In my life pre-3C, I'd probably already be entering NFLX here.

 However the short term 2 min chart that reflects action over the next day or so does not look ready to give up the ghost, it looks like it wants that upside move that we want to sell in to.

 However make no mistake about how close NFLX really is from breaking down so a move to the upside and shorting in to it may seem hard, but it's the highest probability in this situation and the best entry which should be followed by some nasty downside.

 VXX has a beautiful 30 min chart, a beautiful reversal process and looks like a beautiful long shaping up, although I'd want to pick it up on a pullback (market head fake as it moves opposite the market) would do it.

 The 5 min chart showing the very near term expected action shows distribution, but not that heavy in to the 8/1-8/8 market base, the positive divegrence here means this upside move is not far off, it can easily handle a pullback and that's where the entry is.

The same 5 min chart on an intraday basis is not leading or accumulating, it's in wait/stall mode.

AAPL is one I've been watching for some time, the 60 min chart is now leading negative which is something new for AAPL, it's pretty ripe for a downside move, but...

The 3 min intraday chart is not falling apart here as it normally would just before a reversal, I think it's waiting on that final bull trap pop.

Z is one we've been watching as longer term charts are falling apart, this 15 min is sharply leading negative on the market rally this month, distribution in to the price gains.

However very short term (much like yesterday afternoon, the intraday chart is pointing to an upside short term move consistient with a head fake/bull trap or "Failed breakout".

 FB has been interesting, there's a sharp leading negative 15 min divergence in to this month's rally, this looks like a short right here and over the course of a month or two, it probably doesn't matter if you enter here or a couple percent higher on a head fake move, but...

It's 2 min chart looks like it's ready for that last move.

Note that all of these positives are on 1, 2 and 3 min charts, they are small, they are not sustainable, but they are what we'd expect to see for a head fake move which is what my market analysis says to expect. Most all of the watchlist shorts look the same, longer term, intermediate and short (5 min) term charts are destroyed, they look to have that 1 last head fake move left in them which is consistent with the reversal process or the "Igloo with Chimney", the igloo being the rounding top/reversal process, and the chimney being a quick, sharp move up / head fake, that creates a bull trap and many other things institutional traders need like momentum on the downside reversal.