Futures Indications

As I showed yesterday ES /S&P futures 10 min chart which is fairly substantial, already had a decent looking positive divergence which looks like some accumulation in the area, however we usually want to see the 3, and 5 min charts go positive as well as a sort of timing mechanism. I posted a chart of the 3 min ES last night showing it was in line which makes it easier to move positive as it doesn't have to work off a negative divergence first.

However, it seems like there has been selling in to higher prices as futures climbed higher overnight. On the other hand, the overall total trend on longer term charts is improving in many areas.

Here ar some examples, what they mean and what I'm looking for to take action.

 This is the ES 3 min chart which was in line yesterday, as you can see, as prices have moved higher, 3C has moved lower indicating some distribution, but not necessarily very heavy. This is one of the reasons I want to see the cash market charts of SPY, DIA, QQQ and IWM improve.

On the other hand as we saw with the intraday charts in this morning's A.M. Update, while ES was showing more of a negative divergence and not confirming price action, the other Index futures were, this is not a positive divergence, but it ids telling us there's not as much or any distribution of note.

This is the NASDAQ futures 3 min chart and as you can see, they are in line with price action.

These charts are really more about timing if we have a larger area of accumulation or distribution, the longer term the timeframe, the stronger the divergence.

 Here we have the TF/Russell Futures 10 min chart which is showing a decent, growing positive divergence, falling more in line with the 10 min ES positive divergence. If the area from the start of the white arrow to the right side of the chart is considered, through that area we have seen improvement of the overall underlying trend in R2K futures, this does have the look of a small inverse H&S type of base from which TF could bounce. The cash market charts are still important for confirmation as are the shorter term timing charts.

The VIX futures 10 min chart (remember we have VXX/UVXY short positions open for a market bounce) are confirming what we saw in the cash market VXX/UVXY yesterday with a leading negative divergence and in the same area as TF's positive divergence. Being the two move opposite each other (VIX and R2K futures), this is confirmation of the signal in the area.

These charts are not meant to be detailed with specifics, they are meant to cut the noise and show the underlying trend.

This is a 15 min ES chart which means the positive divergence from ES's 10 min chart has strengthened and migrated to the next longest timeframe, from 10 mins to this 15 min chart, actually right through the 30 min and starting to show on the 60 min chart.

The point is there's progress and migration of the positive divergence, again suggesting this week has been a volatile basing area from which we can see a bounce.

This is the longer and stronger 30 min Russell 2000 Futures chart. To the left you can see a deep leading negative divergence that sent prices lower shortly after, to the right you can see a building and improving positive divergence, this was not standing out on this timeframe yesterday, not even close so it appears we have some significant improvement in the overall charts with a lot of confirmation.

The cash market charts confirming would go a long way toward a declaration of a strong bounce and taking on additional risk as would the Futures' 3 and 5 min charts going positive.

It looks like we have an area that is suitable to act as a base for a bounce from here, however as I mentioned earlier this morning, Greece is very fluid, China is lord knows what from day to day. I want to be sure to have the best probabilities I can in this area, higher than normal before adding more long risk which has been the theme all week and it has rightfully been so as the market isn't much off this point last Friday. If the signals aren't there, there's a reason and you see that in retrospect and are glad you stayed out of the way. However things look to be improving, I just wouldn't say that we are AT a pivot for an upside move as of yet, although with the amount of improvement in Index futures, it really wouldn't take much.