Process Has Begun...

As I was just saying in some earlier posts and as I always maintain, the market and its bases, bounces, tops, etc are more often than not (much more often) a process as opposed to an event.

Take the 2007 market top or any H&S major top, the building of that top and the H&S price pattern is a process, there are different events we look for in that process to confirm that we are looking at either a valid top or random price movement, but the point is , it's a process. The same would apply for a base or bottom. Some of you may recall the charts I showed of Home Builders in 2000 while the Tech Bubble was imploding on itself, yet Home Builders were quietly and inconspicuously floating along around lows. There was nothing interesting about the price action of Home Builders itself until you looked at a 3C chart and at that point, it became obvious that someone knew something as they were accumulating Home Builders which would lead the next bull market (many with gains of 2500%) and they were doing so a good 2+ years in advance of the housing boom, again,  a process of building a base.

An event would be something like the overnight ramp in Index futures on a bum story from  Shanghai Securities News that the market wanted to believe anyway after a PBoC governor came out over the weekend and hinted that more easing would be necessary because of the faster than anticipated demise in the Chinese economy. This, on a short term basis was more of an event that a process. However what occurs on a 1 min chart will typically occur on any other timeframe  as the market in most ways is fractal, meaning concepts that work on one timeframe in one asset will work on nearly any timeframe and any asset, like the micro and the macro and their concepts working just as well on a 1 min chart as a daily chart. I believe this is because Humans trade all of these assets and traders transverse a wide variety of trading styles from intraday to investors and even the HFT algos were programmed by HUMANS, thus human nature which is one of the most consistent themes throughout history, finds its way in to the market in multiple assets and multiple timeframes making these concepts fractal in nature.

 In any case, once the bounce starts, higher prices are to be sold in to or shorted in to, this has been our tactical plan since first identifying the bounce. For smart money or lets say "BIG Money", the process is important because unlike you and I , they can't just enter or exit a position with a single trade and go unnoticed. The size of their positions attracts unwanted attention and if they aren't careful, they'll get an AAPL 2012 like decline in which positions that were way to big were being sold as every hedge fund rushed out of AAPL and all out of the same small door, after finding out about Dan Loeb's sale of his AAPL position, leaving AAPL from a period of all time new highs to nearly halving its gains with a -45% decline in 8 months.

In any case as you'll see in a few minutes, it looks like the expected process and reaction in to higher prices has already begun, the distribution or selling/shorting price strength (our game plan) .

I'd still remain patient, just like I was trying to demonstrate with the concept of price targets based on where a 3C divergence is first seen, there's still a process, I think one of our greatest mistake (myself included) is not to respect that process and to push things too early rather than to show patience and let the market tell you when it's ready. The market will do that as we saw Friday with daily candlesticks calling a bounce, leading indicators, 3C charts, etc. All converged on Monday/early this week for a bounce. While we see the process unfolding, it doesn't mean it's time to jump in both feet, but it does seem pretty early in the process to already seeing it unfold which speaks to my original assessment that this is not a bounce with a mission like the February cycle that was meant to break the obvious 2015 range with a head fake move or the F_O_M_C related knee jerk move , but rather a more natural counter trend bounce/correction.

Charts on their way as it seems enough time has passed t clear Friday's signals and give us fresh ones from today intraday.