Market Update

Generally speaking, we usually have 2 to 3 intraday trends. The first is typically a near reversal of pre-market on the cash open, then typically somewhere around the European close there's another trend change (assuming futures were headed down pre-market and then ramped in to the open, that's your first trend change, the change from early strength to afternoon drift is your 2nd and typically we'll have a 3rd one in to the late afternoon depending on where we are in a cycle).

Today we've had 1 trend change, the entire overnight session saw losses in Index futures since the ugly negative charts from yesterday and after the cash close , this didn't change on the cash open, just accelerated down with the SPY taking out a week's worth of gains in 3 hours. The second trend change intraday as posted earlier, IWM / SRTY Update in which the IWM looked best with the additional thought in the post, 

"If you chased the IWM or the other averages which could draft off an IWM move if it can hold together, you'd likely be put at a loss quickly which is why I don't chase, but let the trade come to us."

The point being the other averages missed something the IWM had which was a lateral consolidation intraday, the SPY/QQQ just drafted the IWM thus far on more "V" shaped reversals. The idea of the post linked above is an SRTY set-up or other assets.

Honestly I don't know why we as traders expect the market to move one way all day long, it never happens, even on strong days like yesterday after the CBOE came back on line most of the averages lost ground or moved laterally. Maybe it's because we have hopes or expectations that we expect the market to move in one direction all day, but history has shown, that's rarely the case except in extreme markets just like "V" reversals or parabolic move rarely hold as we have seen since yesterday's close and intraday today.

In any case, the IWM still looks like the leader (on the 3C charts) and everything else is just drafting it. I'm very curious as to whether we get a 2nd or 3rd trend today.

Here's what we have so far...

 This is the IWM 1 min, similar to the earlier update with the defining feature that turned me on to IWM without even having to look at 3C was the "W" base intraday as the other averages are "V" shaped.

I considered earlier taking the +6% gains in the UVXY position from yesterday, but I didn't want to send the wrong message , like I don't believe in the position or that you have to be a day trader.

However I did want to point out something regarding "W" bases, you see the IWM's intraday today above, now for UVXY/VXX...

There are a lot of moving parts in the market and most contain some information. Just as I said in this update and the previous one that IWM caught my attention without even needing to look at 3C because of the "W" base intraday, I'd point out the larger "W" base in UVXY/VXX and it's not intraday.

This is part of multiple timeframe analysis, the concept is exactly the same, however the trend and probabilities between the two charts are very different. The same way the IWM lifted of the "W" intraday, I fully expect VXX/UVXY to lift off this "W" on a longer trend basis. Taking that thought 1 step further, without any other analysis , we know that VIX moves opposite the market. So I can afford to hold UVXY, although you are welcome to trade it on updates like the last one in which you have a 6% gain in 4 hours and know that you can probably take profits of 6% and re-enter at a slightly better position than today's +6% area.

It's amazing how fractal these concepts are on one hand, on the other, it's just human nature.

 The IWM 2 min doesn't look too much better than earlier, still a relative divergence today, still dwarfed by the negatives of not only yesterday, but the past two weeks, especially last week.

And the IWM 3 min probably puts this multiple timeframe analysis in best perspective, the major signal being a large leading negative, the minor signal being a small intraday positive.

As for the SPY...

I meant for the 1 min chart to load fist, but the 3 min did instead, in any case, the in line status on the decline from last week is obvious and the leading negative divergence yesterday is obvious as is a relative positive today.

The intraday NYSE TICk can often give you an early head's up, if you can confirm that with volume, you have a pretty reliable signal for a reversal whether intraday using TICK or daily using a daily chart (hourly, etc.).

This is a simple intraday NYSE TICK Index, if you draw simple trendlines and see any break of them that trendlines on the averages have not broken yet, you have an early head's up and volume just adds to that. 

Looking at the SPY price/volume intraday, Technical Analysis misunderstands or over the years has been misrepresented as far as volume analysis goes. Most traders believe that increased volume on a move down is evidence of institutional selling,  these guys never show their cards, unless they want them seen. We've seen this time and time again in which a cycle is set up days or weeks , even years with home builders in 2000, before the move, the volume is not them selling, they have already been in place before the move started (like yesterday in to the highs). More often than not, that increased volume means exactly the opposite of what most technical traders think it is, it's more often than not, capitulation (in this case intraday and would give you extra confidence in an intraday trend reversal.

There are exceptions to everything, but this is one of the biggest misconceptions I've seen. Of the traditional Technical Indicators, I think you can do more with candlesticks and volume (with a basic understanding) than you can with some of the more complex systems and indicators, this is why I keep pointing out these anomalies, they are market hints.

 This is the SPY intraday 1 min in line thus far.

The Q's

 You can see the VERY negative 3C action in to yesterday's price action with the market picking up today right where yesterday's closing negative divegrence left off, we see this so often, I'd say it's close to 90%.

This is a relative positive divegrence and a "V" bottom, this is one reason the IWM looks much better and I believe the other averages are simple drafting it.

And QQQ 2 min intraday confirming downside earlier and then the upside with a slight negative.

All in all, you can't compare today to yesterday at all, I hope you also get what I'm trying to show with multiple timeframe analysis and probabilities and the market's "Jiggles".

If the IWM gets to an area in which SRTY looks good as well, I'll put that post =out as that was the idea of the original post preceding this one.

I'll also have some other updates coming out, some possible pyramiding positions that many of you are in already that have been working great as well as anything else I dig up. We'll see if we get trend change #2 today, the fact we have only had one thus far and the fact the SPX took out a week of longs in 3 hours should tell you something about how bad those negative signals yesterday actually were.