Tech Set-Up (XLK / TECS)

Let the trade come to you...

Just browsing around and looking at different charts in different stages, I'm mostly looking for charts that already have substantial damage, near term damage since the 6th and the possibility to bounce a bit in to a divergence. After looking at several I really like including SPXU (long)- 3x short SPX, I really like Tech as a short set-up (XLK).

Lets start with the macro or longer term view which is the highest probability over a period that covers a Primary trend.

 Just to establish that Tech has enough damage to hold a longer term primary bear trend, we'll look at these long term charts like this 6 hour, you should be able to see the divergence.

Since the October cycle which has been defining for the market up until now and will be until its lows are surpassed, the 60 min chart shows the entire cycle, but the distribution side of it is much larger than the accumulation side at the stage 1 area at the October lows.

 In what you might call a small H&S type top, the 30 min chart is very clear about the trend in XLK

Now for more tactical timeframes...

 This 10 min chart represents the oversold bounce cycle lows to the right and some others to the left, both sold in to strength with a new leading negative 3C low. Today's action on this chart alone is very interesting.

 We've been waiting since first seeing something wrong on Thursday for some 5 min chart confirmation, Friday was op-ex and not likely to produce anything and yesterday was a down day, not able to produce anything other than to show us that any price gains were sold off aggressively both yesterday and today.

From a tactical perspective, we want the trade to come to us. All of the charts above suggest that any upside move will see distribution in to the move so we are really just looking to confirm that.

 The intraday 1 min found lows like the rest of the market after a parabolic sell off of today's gains. This sets up a short term bounce that we are looking for rather than chasing Tech lower, we let the trade come to us.

The 3 min chart shows no positive strength in to today, so it's another chart suggesting high probabilities of a negative divegrence in to any price strength, confirming what we already see as a high probability and making any move reasonably higher an attractive short entry, either via XLK short (or puts) or perhaps a 3x leveraged inverse ETF like TECS (3x short Tech).