Market Update

Here are the charts mentioned earlier and what I suspect i've been looking for that was not readily apparent Friday, perhaps starting to take shape now.

 NYSE intraday TICK hit lows around 10:20 a.m. near the intraday reversal off the faded gap up and then again hit an extreme after 12 pm and has been trending down since.

Looked at another way...

Our custom TICK indicator showing today's intraday activity with a morning intraday flameout, an afternoon capitulation flameout and declining intraday breadth since which fits with very short term intraday 3C signals.

 SPY 1 min intraday today negative currently, but remember these are like intraday steering forced on the market, not major signals.

 Just to show how weak they generally are and why I'm not interested in a trade on them now, the SPY 2 min chart close to inline and not even seeing the migration of the 1 min chart's negative divergence.

 The 5 min SPY is still not giving us much to go on for short term trade as you see, just a couple of small steering divergences on a stronger timeframe, but no major signal.

Here's the 1 min IWM negative right now.

It's 2 min chart is a bit worse than SPY 2 min obviously.

As is its 3 min chart, but which of the averages gave smart money the most upside to sell in to? I have little doubt that's why the signals are stronger on the IWM, but still not real helpful for near term trade like Friday.

 And IWM 5 min chart which is where something interesting starts to come to mind.

The QQQ charts are largely the same, kind of between SPY and IWM as far as intraday signals.

Remember what I suspect we should see conceptually any way , at least an attempt. If you don't recall, again it's posted in Friday's The Week Ahead post/forecast and I had posted the exact same excerpt from the posted linked above earlier this morning...

"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."

This is the "Igloo/Chimney" concept that we have because it is seen so often, not because I have objective chart evidence suggesting it...at least not as of Friday.  The Igloo/Chimney TOP is a rounding top and just as traders think the market is about to fall apart to the downside as price rounds over, that rounding top which I call the "Igloo" sees a head fake move called the "Chimney" and this shakes out any technical traders who just went short on the rounding top's decline. It also pulls in new long traders who see the rounding top's resistance area broken. The Chimney (which you can see I clearly drew on the chart of the SPX as of Friday) is a false move, it's not a move that is suppose to hold, just to create movement, stop out new shorts, engage new longs and this is one of the reasons I like to wait for the "Chimney" / head fake to occur to enter new shorts or add to as we get them at better prices and less risk and as far as timing, head fake moves are the best price-based (price alone) indications we have. These head fake moves occur right before a reversal-just look at Crude from the March lows or look at TLT from Friday's breakout above resistance, those were head fake moves that resulted in an immediate reversal the next day.

Looking at the yellow "Igloo/Chimney" I drew above on the daily SPX chart from Friday's The Week Ahead, even without any evidence, just based on the concept being so common, it looks like a perfect set up and I think I see the trigger...

 This is a Flag-like" price pattern, but even if it is not recognized as that, a bullish "Bull flag" by technical traders, the sloping resistance trend line is obvious. That is what traders respond to, breaks of price patterns like bull flags (buy long) or a breakout above resistance which we are right at.

It seems to me this flag is being specifically and purposefully created as well...

 Looking at the SPY 1 min chart, you can see the specific areas in which divergences were put in place, mind you the weakest, steering divergences, but they form the flag. I know it's difficult to see with so much going on, but without all of the scribbling...

Here's where the divergences on the SPY 1 min chart fall on this SPY 5 min chart of the flag area.

This is not a particularly strong divergence, if it was, I wouldn't be watching so close for some sign or hint, but I don't think smart money has any intention of being long or buying long, they'll leave that up to retail and be on the other side of the trade, THE EXACT SAME THING WE'VE BEEN LOOKING TO DO WHICH YOU CAN SEE ABOVE FROM FRIDAY'S POST.

 Now when we look at the larger SPY 15 min chart with the Igloo price pattern in place, you can see how easy it would be to fulfill the chimney area simply by creating some excitement around a break above that flag or trendily at the minimum. Most technical traders should see it.

However as I said Friday, I suspect this is the intention, however I'm not convinced it can be pulled off. There's just not the kind of gas in the tank one would expect even for a minor move forming the chimney.

For now it's a working theory, we'll see if there are additional charts / objective evidence making it a probability we can trust. For now, again I'd take specific trades that have nice set-ups, but looking at the market near term/short term, I'd be patient and wait for stronger evidence, unless you are simply looking at the highest probability resolution which is probably not a bad time to look at the forest rather than the trees and go with the daily charts leading negative. They'll be fulfilled, until then, I'll keep looking for the best entry/best timing and assets.