TONIGHT YOU ARE SEEING THE SAME THING AS WOW SUBSCRIBERS FOR THE MOST PART.

Last night I mentioned a few key words, “Patience” and “confirmation”, this is why we don't need to be active in the market everyday. If you are a professional poker player, do you raise every hand? No, you wait until the probabilities are highly in your favor before you push. While we do have a negative bias to the market and it could have very well continued down today to make an extremely bearish close, we can't know that until it happens. Just like you can't decide to bet until you see your cards. This is also why we phase into positions. You could have taken a partial short position on the afternoon strength today, but you shouldn't go swinging for the fences on a day like today, not until we get confirmation.

While the market is decideldy bearish, it runs on its own schedule; there are thousands of reasons a market can do something other then what you thought it would do, and you can still be correct with regard to the final verdict, but the market will get there in its time, not yours.

A bunch of news was out today, from BP to Goldman Sachs and the market didn't take a strong stand one way or the other. Sure, you can see some intraday bullish activity, but this could be institutions setting shorts, so that bullish activity that you see, could actually be bearish activity. Things are never as they appear in the market.  Or it could be the market simply doesn't know how to digest the news. I believe it's bigger then news (unless the news is totally unpredictable, meaning an event that no one saw coming). I believe what we are seeing probably has some reason behind it. The price/volume relationship today showed a market that reflected the price moves which were in effect nothing. The P/V relationships had a slight bearish bias but were largely spread out evenly, very apprpriate for the price action today.

If we look at today's candle what we see is reminicient of a hanging man, which is a negative, reversal candle as the name suggests-the opposite of a hammer. Taken with yesterdays Harami pattern, it wasn't bullish at all. The recent candles actually look a lot like the SPY's top we saw in June; the volume is roughly the same, even the price level is similar.

(*Note that the Harami is much more apparent yesterday in the S&P-00 index then it is in the SPY shown here). Both had Harami reversals, both were followed by an approximation of a Hanging Man candle, the volume was the same in both and price levels were similar. (Harami in the red box, hanging man marked by the red arrow).

Here's some more in depth review of the intraday charts,

Here's the Bear Flag I mentioned in the intraday update-this flag failed as we saw a breakout of the pattern, however, as usual, we have to be on guard for the false breakouts that accompany so many of these obvious patterns. As you can see, the last candle was pretty bearish as was the volume.

15 min 3C SPY chart-Note 3 negative divergences, all led to downside reversals of some degree (in red), then we saw price confirmation of the trend (white) and confirmation of the move up-there was no positive divergence preceding the move up. While the close can not yet be considered a negative divergence, it did not confirm strongly either and as we saw the last candle of the previous chart, here we see a bearish Shooting Star at the close right around resistance where we saw the earlier negative divergences and reversals.

3C v.3 5 minute QQQQ. This is not bullish action. Note the price levels and the dip in 3C correspondingly. 

SPY 5 min 4C chart. Again, we see the same type of negative action as in the Q's with 4c.

DIA 5 min 3C v.2. And to round it out-the same in the DIA.

Here's some good news, AMPL made a nice gain for our members, but as I mentioned last night, a pullback is coming and here it is. I think it's probably a buy around the 10-day moving average in yellow.

We've been talking a lot about how Wall Street operates and the amount of leaks. I have to wonder if the SEC's action taken-which amounts to a dog and pony show-was well known in advance as we see a very positive divergence in GS on this very influential 1 hour 3C chart? I wouldn't be surprised one bit.

Speaking of Gold..

GLD, purely from a price action/volume point of view is not looking too good. We have a break of the uptrend and now a bear flag present. The 3C charts suggest there's still upside room left. I would not be surprised to see this very obvious pattern shaken out so I have an initial upside target where the blue box is, which corresponds to the "Kiss Goodbye" of resistance, but even that is obvious so the target could be a bit higher. If you want to take action on a short play of GLD, wait until it breaks below the flag. It is okay to phase into the position at higher levels, but not more then 50% until we see that break below the flag. Note the volume, it must diminish like it is doing now to confirm a flag.

We have several financial institutions reporting tomorrow wich should be interesting.BAC earnings are reported tomorrow, I'm not sure when though.

BAC will be interesting because it formed a weak Harami reversal yesterday as did the market, however today it put in a bearish engulfing candle that I would normally take as confirmation, but with earnings tomorrow, I'd wait on this one. However, remember it's not the news, but the way the market reacts to the news so earnings may blow away consensus, the stock could still sell-off. Keep an eye on this one as an opportunity is at hand if all goes well. The red trendline, if broken, would represent the area where you'd want to be "all in" the position, however you can and should phase into the short above support if the reaction is bearish.

Charles Swab will report as well as Citi below,

Here's Citi's daily chart with 3C in the top window and MoneyStream in the middle window. Both indicators refuse to confirm the price breakout-not bullish.

Here's C's 4C 60 min chart, again we see a failure to confirm the breakout-negative divergence.

C's 4C 30 min chart, shows the same failure.

The 15 min chart did not confirm the breakout, but there is some confirmation in this afternoon's move. If the market did not react this way, I'd think maybe C will come out with something it could rally off of, but since this is what we saw in the market, it's difficult to say.

Here's C'c 5 min 4C chart, again we see the same confirmation, even a positive divergence like the market put in, so I'm leaning toward the idea it's just following the market. The 1 min chart shows the same thing. My guess would be, whatever C's earnings are-good or bad (remember it's not the news, but the reaction), it won't respond well over the next week, although it may in the short term.

Finally, the $USD

I warned about the reversal of the dollar to the upside in October last year, I even gave a target of $88, it hit that. I'm using UUP as a proxy, but it looks really bad on this daily chart. Not to say we won't see some rallies because that is evident in some intraday 3C charts, but I think the move is officially over marked by this ugly leading negative divergence in 3c.

For tomorrow, it's "second verse, same as the first". Patience-Confirmation. We'll be there soon enough, there's no need to take risks right now when we don't have the probabilities HIGHLY in our favor yet. As a rule, when I traded full time for a living, I always tried to stay away from trading during earnings, there's too much Tom Foolery going on.

Enjoy your weekend.