Extremely Close...

There's actually not too much more to add to today's analysis, it has been covered through the day to a degree I'm comfortable with. Here's a bow tying it all together with several different trade opportunities from extremely short term trade management to new swing positions to new trend positions. If there's anything of importance I feel needs to be added after going through the charts, I'll post an addendum, but this is pretty much where we stand and it's a nice place to be standing.

The scenario I laid out this afternoon in this post, Market Update and Possible Trade set-up is very close, in fact so close I nearly took action, but realized that it was out of fear of missing the trade rather than objective evidence, strong objective evidence. Truth be known, over the long haul I've found it's much better to miss the trade than to enter for reasons like fear of missing the trade or greed. Once in a while you'll be right and that sets a dangerous precedent, one that tells you in futures situations to go with your gut rather than objective evidence. We have all manner of cognitive biases, each should be plucked out of our trading like weeds choking a garden.

Nevertheless, we are very close to the scenario laid out this afternoon in Market Update and Possible Trade set-up.

Ideally this is what I'd like to see happen tomorrow and how different trade set-ups would take shape.

Starting from the longer timeframes in which the SPY (pother averages) saw their positive divergences migrate out to (strengthen)...

 SPY 15 min leading positive, but still not a great base, still very "V" shaped.

10 min SPY leading positive, same trouble with the base.

To give you some perspective, this is the same 10 kin leading positive above, so it's not nearly as strong as it appears in context of the overall flow of underlying trade, nor is the 15 min chart, but still lots of improvement today.

 On the daily SPX chart, this is what I'd like to see happen tomorrow (the yellow candle I drew in). It doesn't really matter where it opens, whether a gap down low below today's intraday low or up higher, so long as there's an intraday low lower than today's, that would run stops and allow for a better looking base, a more stable base before breaking above the 100-day moving average which it's just below.

Looking at VXX/Short term VIX futures from the shortest timeframe...

 The intraday 1 min is positive as of the close. The 3C concept of picking up where the divergence left off at the close would suggest VXX moves higher early in the day (SPY /market lower as I'd like to see),  this allows us to close the UVXY and VXX long positions at a slight gain and enter VXX puts. At the intraday lows SPY, QQQ, etc calls could be entered. Ot course as always I'd like to confirm them first, but I suspect they'll be fine. I'd use leverage personally as I don't see this as a long lasting move. As a short squeeze it could be an impressive move, but I doubt it lasts long so some leverage would make the profit potential look a lot better.

The VXX 5 min chart should lead VXX/UVXY lower while the SPX breaks above the 100-day moving average triggering buying and a short squeeze, thus VXX puts should do well and/or SPY, QQQ, IWM, etc calls, again very short term.

However as I said earlier, the real trade here and the real probabilities is using the price strength after nearly 3 weeks of decline to enter short positions that need to bounce a bit and need the market to do it, take Transports for example which I've been very interested it. They simply haven't been able to accomplish much despite a decent positive / bounce divergence due to the market's overall negative tone.

With market support, assets like Transports (IYT) should finally give us that upside we can sell/short in to. I'm using Transports as an example as they could act as a proxy for ay number of watch list "Short Sale" candidates.

This is how it has gone and how I expect it to go and you'll hopefully understand why this is the highest probability, highest profit trade set up...

 The 60 min Transports chart's leading divergence "should" have pushed Transports up a lot further for a lot longer, but the market has been acting as an anchor on most of these watch list trades. Transports only got a measly +2.6% gain, hardly worth the effort or the trade set up to get a better entry and reduce risk.

 The 5 min chart shows the details of IYT's turn back down and it starting to develop a new positive divergence that has grown out of the start from yesterday like the averages today.

The more detailed 2 min chart shows that improvement today like the rest of the market,  thus we should get another chance here with market support and a real entry worthwhile.

For instance, looking at the daily chart of transports, something higher than the last attempt off a 60 min positive divergence that normally would have sent transports up for a couple of weeks rather than dragging them back down.

However if the market does as expected and a short squeeze kicks in above the SPX 100-day, transports will have the support for a move higher which we can finally short in to (red "S").

The thing I didn't show you and why I fell VERY comfortable shorting transports in to higher prices is the 60 min positive divergence in context of transports trend...

60 min IYT chart, not such an impressive divergence when it's in context.

Even worse...

Daily 3C chart of Transports.

No short squeeze 2-day divergence is ever going to overcome the distribution seen on this chart, thus,  I feel VERY comfortable shorting in to short term price strength. This is what most of the watch list short asset trade set-ups are like.