After looking around at the watch list assets, there are charts that I have been waiting to see movement on, entering the trades before now would have just been dead money in most cases. Transports are one that I'd like to get another crack at, we've had two entries in core shorts for transports, if we can get some price strength, a final one would be nice considering how ugly they are.
Taken with last night's Futures update in the Daily Wrap and what I'm looking for in different assets including the $USD, I think this is the most probable outcome for early and later next week. I think we are finally at the cliff's edge.
Last night's futures update had a lot of multiple timeframe analysis charts, but in Index futures, the short to intermediate term charts were sloppy and scattered, it was the trend charts that were very clear, making it hard to know what to expect in the very short term, perhaps continued chop, perhaps a pop higher with the $USD setting up nice watch list short entries in to better prices and lower risk.
What does seem clear is that massive trend damage is done (Breadth reflects the same) as was posted in last night's futures update linked above, the 30 and 60 min Index futures via ES, but there's one even worse that was not posted, the 1-day which is the strongest underlying trend timeframes.
Looking at the price pattern for this week, I was expecting (from last Friday) a rounding /Igloo top, then the head fake Chimney. It seemed with Wednesday's decline that the Igloo portion or rounding portion was cut short, but the Chimney never materialized.
Standing back with a couple of days more perspective, I suspect this entire week has been the rounding top/Igloo price pattern...
It's not the charts that bolster this view, in fact it's the lack of strong charts in the 1-15 min timeframe of futures that bolster this view with a very strong set of resolution signals on the 30, 60min and 1 day charts.
The normal logic would be, "go long" for early in the week until the transition where we enter core/trend shorts, however while I think this is a probability, I'd preface that by saying I think the probability is the attempt, not necessarily success in the head fake/Chimney portion.
If I see strong intraday charts develop that support this view and make a trade worthwhile, then I'll post that, but I don't make trades based on gut feelings , I make them based on objective evidence and so far there's little to support strong, successful short term upside trades.
I see the probabilities and the strength in shorting in to any attempted price strength next week or individual trade signals. Just because a market will likely try something, doesn't mean it will succeed. I'd feel much better about short term longs if there were strong short term signals to back up those trades and as I showed last night and am telling you now, there aren't many at all that I'd even consider speculative.
We do have some time left in the day and perhaps they develop early next week, but the SPX chart above is what I believe will be the highest probability with the attempted chimney head fake move being the last event before a drop to the downside which lines up well with the $USD analysis from last night too.
More to come as I uncover it...
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