DIA market update

 It's not often we get a 1 day correction, but sometimes when momentum is very strong and a trend has initially reversed, we will see such corrections. Dealing with the entry is a swing entry set up as I described earlier, you look for the candle that has made both the highest high and highest low and that is your signal candle, that would also, at this point be today's candle. The entry would be on a price move below the white line with a stop just above the red line. Note that the market did exactly what we expected with the bearish ascending wedge and broke out to the upside. Technical analysis books for a century have taught traders that the ascending wedge should break down without any upside movement like we saw. They also taught if there was an upside breakout it was a failed pattern and you go long the pattern. Wall Street knows that this is how technicians think as they have failed to adapt, Wall Street has adapted and by causing that upside false breakout they trapped longs in a bull trap, when prices fell, margin calls rolled in and the longs now at a loss closed their positions which creates more supply and pushes prices down lower. I'd say this now happens 85% of the time and technicians still fail to adapt. So we expected to see as much and did. However, the larger wedge pattern is still relevant.

 DIA 1 min chart has not confirmed price at all today which leads me to believe that it is being distributed to retail while institutions may be going short on the other side of the trade.

 Now we have a significant 5 min negative divergence. This doesn't mean the bounce is over, but it does mean it is highly likely that distribution has begun in full swing by institutional money.

And now we even see it on the 10 min chart which is significant. Be careful on any long market average ETF positions as they seems to be in a distribution mode. I'd guess the chances of seeing a resumption of the downtrend are at least 50/50 which says a lot in this market. Furthermore should that downside resume, we will likely break the S&P and other support trendlines which will cause more technical selling and margin calls/forced margin sell outs.

Be cautious.