Today's Action

I'm going to make this short and sweet. First, there's a bunch of trades that have not triggered. I suggest setting alerts for any you like. There are a lot of great set ups there and you don't want tomiss them. The way many of our members have had a lot of success is by setting alerts. www.Freestockcharts.com is real time, free and allows you to set alerts.

Today I saw something in the market that didn't look good in 3C, I've verified these same findings in several other indicators that are similar to 3C.

The fact is, the "buy the dip" trade is extremely crowded, even today with a high probability of POMO money entering the market, we didn't see it. Statistically it's a very high probability that the money would show-it didn't.

The market structure has changed dramatically, not just because of Fed manipulation through primary dealers like GS, but through the lack of liquidity caused by HFT (High Frequency Trading firms). There simply isn't the traditional market maker/specialists there anymore as HFT's can front run them by micro seconds and scalp a penny here and there. Many liquidity providers are simply not there.

IF-really when, the market breaks, the break will be horrible as the market structure won't permit for the crucial role of liquidity providers that can give the market a break during a massive sell-off. Thus, the same way the QE 2 trade has seen only 1 pullback as I showed yesterday, there will be very few opportunities for longs to get out. They are going to caught in a severe downdraft with no liquidity to provide exits. It's kind of the bigger they are, the harder they fall. This is a failure of the underfunded and ambivalent SEC.

Whether what I saw today emerges into the eventual flash decline I believe we will see, I can't say for sure, but today's 3C negative divergences spread from the 1 min chart only all the way to the 30 minute which is rare and shows a high degree of divergence. Not to mention Dow Theory non-confirmation.

What I'm saying for now, is be extra careful in chasing market averages higher-the greater fool theory is close at hand in my opinion.

Risk management is essential during these times. And eventually, if you want to make profits quick and big, you better be comfortable with being short the market. I have many articles at Trade Guild linked on the left side about short selling-it has a bad rap that is not deserved. Any questions on any of these subjects, please feel free to email me.

Have a great day!