Nightly Wrap

Tuesday and Tuesday night I mentioned in several different contexts that the market looked like it could bounce based on holding support for two days, tweezers bottom candlestick patterns n the averages and finally last night's price volume relationship being heavily skewed at Price down volume up, a dominant relationship over 2x greater then then next relationship of 4 indicating an oversold condition. I also mentioned the blackbox pattern recognition programs and the fact we had a near perfect rectangle and in the past we've seen a lot of false or manipulated moves around these patterns. So the conditions were right and Chinese economic data coming in stronger then expected got the European markets bid up as well as some good economic data out of the Euro zone (it was mixed as well, but sentiment clearly was ready for a bounce). All of this raised the US Futures market as we saw wit the gap up in the a.m.

The 3 charts of the averages below all show a fairly common occurrence when a channel is broken, it's akin to a support level broken and retested, it called "kissing the channel goodbye"

 DIA daily

 QQQQ daily

SPY Daily

3C did not confirm the trends higher today as it remained well below where it should have been to confirm the trends.

 DIA 1 min

 DIA 30 min barely lifted

 QQQQ 1 min

 QQQQ 30 min did not lift-for a move of this magnitude, these should have lifted much higher

 SPY 1 min

SPY 30 min initially lifted and headed lower throughout the day

 GLD 1 min lost ground in the afternoon in a leading negative divergence.

 SLV 1 min looked better toward the end of the day

 However, the 10 min chart continued lower. A simple interpretation of what these two charts suggest would be early strength in SLV that fades.

 USO 1 min failed to confirm as well today

The 15 min USO which shows accumulation in white is why we had the bounce trade in USO, as it moved higher, you can see it's now in a leading negative divergence

 While I didn't look at every inverse/bear trade, several I looked at showed some surprising strength- here's EDZ short on emerging markets seeing late day accumulation and the start of a move up.


 FAZ's 3C lifted eve into lower prices EOD

and the short on the China 25 showed an impressive leading divergence in the afternoon.

Today the news was scattered and strange. First the arrest warrant for Jullian Assange from Wikileaks after it has been widely believed the US Bank that was next on the leak list was BAC, due to him giving an interview several months ago in a computer magazine saying so. An Arrest warrant came out, followed by their server dumping them, they jumped on the amazon server to have the US government pressure Amazon to dump them. It seems they are back up now in Sweden. Whatever this BAC thing is, it seems serious.

Then the news the US would help bailout Europe lifted the market followed shortly thereafter by a denial in the Wall Street Journal, saying no such talks are in progress.

All in all from the charts above, it looks like today was a bounce that was sold into.

The Asian markets have opened strong a second day, however the big event for Europe tomorrow and probably the US as well will be what comes out of the European Central Bank which is expected to announce a bond buying program to stabilize Europe. What is said and how it is taken will largely dictate tomorrow's trade I would think. There may be some early hits in the FX markets.