The Week Ahead

Earlier today I posted the Preliminary "Week Ahead" with my opinion of what looked likely to happen, this is largely based on concepts we have seen work over and over in different timeframes and different assets.

The gist was that this week's expected "Rounding/Igloo top" with the typical last move seen before a reversal , the head fake "Chimney", was judged too earlier to have taken place as the natural rounding over pattern was distorted by Tuesday's losses, thus the price pattern originally expected to play out this week, finishing the rounding top, actually likely took place. You can read the entire post here, Preliminary "Week Ahead". However the revised price pattern looks like this...

Note how the price pattern looks much more like a rounding top when Tuesday's decline is taken as part of the pattern rather than the end of the pattern. Furthermore the head fake "Chimney", which is where I want to enter watch list shorts that look more ready now than they have in some time as the market has been in an exceptionally tight range, never took place.

I would normally consider entering some short term trades based on the expected move to the upside and then close that out, enter the trend shorts and some longs and let the market take care of the rest, but as seen in this market update...Market Update, you can see why I'm so loathe to enter anything at the moment as there is no objective evidence or overwhelming objective evidence supporting the theory above,  that's not to say it won't develop early in the week, but until it's there, I don't see the advantage in taking a gamble.

For every chart that suggests a trade, there's another in the same average or a different average that negates it, at least for now.

However a quick look at leading indicators and there are some hints that the theory above for next week's action may see the market give it a shot. I believe if it takes place with a head fake move above the rounding top (the Chimney), it will likely be finished before Friday so it would likely have to happen fast unless somehow Greece achieves what they haven't been able to all year and get a deal with the Troika as the looming IMF payment is Friday, there's no more money and if it is missed, they are in default.

I don't see traders as willing to stick around to see how it plays out.

Granted, these are not charts that are blaring sirens for the scenario above, but they do suggest an attempt, whether successful or not, I believe we'd have to see charts improve rapidly early next week or manipulation on a scale we haven't seen and that's a tall order.

Some of the Leading Indicators...

 The SPX:RUT Ratio custom indicator (red) vs the SPX is not confirming the SPX's price move lower today, this has been a reliable short an medium term indication at divergences with the averages.

We haven't seen Yields act as a leading indicator for months which is a shame because they were so effective, but this week they seem to have acted exactly as that , they gave up their correlation with the market and have led it like the magnet they use to act like.

If I'm correct on TLT coming down, that means yields up and if yields are, at least for now once again acting as a leading indicator, they'd lead the market to the upside as they have led it to the downside this week.

Finally, as I often say, "The first lever they reach for to manipulate a market is High Yield Corp. Credit"

This is HYG which has been in line short term with the SPX in green for the week, but notice the higher highs in HYG vs the SPX.

Again, these aren't smoking guns, but they are some unusual standouts in this week's/today's market and the "Igloo/Chimney Top" concept has been a solid one.

At present I don't see anything that's reliable enough or even close to take any risk over the weekend, but I'll continue to look in to the close and we'll see first thing Monday if it develops.

Just remember, the 30, 60 min and 1-day ES charts in the post linked above from last night and earlier today are the highest probability resolution and they are calling for a drop in the market and not the corrective kind wither.