The View of the Forest

Backing away from all the micro analysis, lets see the big picture.

The 5 min 3C SPY-shows what has developed into a bear flag (downside continuation pattern) There's a negative divergence in the bear flag

The 15 minute SPY 3C chart, the divergence is even worse.

Here's 10 minute chart of today's bear flag-volume tends to confirm the pattern as not being random

Here's the actual Dow-30, the only index I can get intraday 3C data from directly-look at the trend of price and that of the 15 min 3C chart

Again, the Dow 30-this is the 1 hour chart that showed us the bounce starting in late August-see the white arrow. Note 3C's past effectiveness at the top. The current 1 hour chart is a negative leading divergence.

Finally the same breadth chart we've been watching of the NASDAQ 100- Advance / Decline Ratio, again shows a roughly lateral price trend with fewer and fewer stocks participating in upside gains. We actually are seeing the downside increase.

Because we have a very obvious bear flag on the chart, we have to expect an upside head fake as usual. This is what I tell you almost every day, the market uses conventional technical analysis against those who use TA to make their trading decisions. Anyone going short the bear flag would be confronted with losses on an upside breakout, this is to the market makers advantage and ultimately when we get downside movement, it provides fuel to the downside in the form of longs who would buy the breakout, now at losses (speaking in the future).

Study these charts, see what happens, understand the game and if you use technical analysis, see how they manipulate it for their own purposes.