Week Ahead Market Update

This is pretty early in the day for the "week Ahead" post, usually the data after 2 p.m. tells us a lot so I "may" have to revise it, but I doubt it.

Last week as the market was moving down and things were getting oversold (breadth), the Week Ahead post expected a wider base to form early this week and a bounce off that base. It seems we have a wider than anticipated base and I say that because there's improvement on the intermediate charts that represent a bounce of the scale that can move the market from deeply oversold (breadth) levels which it has been sitting at all week, to a sentiment changing move. This would be the first major pivot/trade set up since the short from late July. I typically want to enter my trades at these major pivots and then let them work until the next one sets up. 

You've already seen the SPY charts, in this update I think the IWM best represents probabilities, but I'll show you the Q's and SPY as well.

First intraday charts of the Index Futures...

 ES looks weak intraday, but you may recall yesterday the 60 min charts I posted that all looked like this week's consolidation had been accumulated and likely a bounce still, just with a bigger base which means it can support a larger move.

Intraday though I don't expect much strength, although these charts can change quickly, they are pretty ugly right now.

NASDAQ Futures intraday also not looking great.

And Russell 2000 futures intraday.

Based on these charts, "if" I had IWM calls that were expiring next week rather than today, I'd still likely close them when I did and look for a new entry , still calls , but at a better price.

This is the IWM 15 min chart, it has improved since yesterday with a new leading positive high added (white vertical arrow). As you can see, since the last large divegrence (negative) sending the market lower, this is the first decent set up for a swing+ trade.

 While the 1 min chart "can" move quickly and change intraday character and thus where a new potential entry is added or if it is added, the 2 min charts look like we'll see some weakness moving forward today, maybe in to early next week,  it is this weakness that I want to use to re-enter a call position, likely in the IWM, but it will depend on what looks like the best set-up at the time.

The QQQ 10 min also shows the last good entry (short) for a swing + trade and this being the first chance for a new entry on a basis that is probably worth trading. Note the improvement in the Q's as well, this typically happens close to the start of the move which is why this week's (or at least the last 2 days) readings have been so frustrating.

QQQ 1 and 2 min are just about in line intraday and also looked to be in the best shape of the Index futures.

SPY 10 min positive, obviously the negative divegrence was larger and tells us something about the longer term market probabilities, but this is the first decent set-up. I want to trade divergences like the negative at the left and let it work until I see the next set up, trades in between are difficult as the market is responsible for about 2/3rds of any given stock's movement.

2 min intraday the SPY also looks to see some near term weakness.

I'll keep an eye on intraday charts in case anything changes,  but ideally from here we get an ugly intraday pullback that can be used to enter a leveraged long ETF or call options. I still consider this speculative as the larger trade and best use of any bounce is to short in to price strength for long term core positions.

That's what I see as of right now so I suspect that we will be seeing a stronger bounce next week so I want to look for the right entry for something like the IWM calls closed earlier.