Bounces Are Scary

And that's what they are meant to be. There's little reason to move the market higher right now fundamentally and globally. These cycles of accumulation and distribution have become increasingly new-resistant.

So that brings us to afternoon trade and a trend I've been watching unfold wondering if it was going to spark an intraday move-it hasn't thus far, so I'm assuming that it's being coiled up under pressure for another move up tomorrow and why not? It's not at all out of character with the market's behavior, in fact it's  so increasingly common, you can just about assume and trad off the notion that it will happen. I'm talking about these volatility moves up and down that tend to be right before a reversal.

In fact, the 4 C&D trades released earlier this a.m. have all shown to some degree that they are seemingly pulling a downside shakeout into some accumulation (AEZS, MVIS, TRID and EEE) which would fit well with a pop higher in the market tomorrow.

Here's what I'm seeing and while I'm just showing the SPY, it's evident in all of the averages.

 Lateral trade in the SPY throughout the afternoon with rising 3C indications; accumulation typically happens in this type of price environment.

 The 5 min chart is showing the negativity that I expect to see, basically selling into higher prices and demand is what distribution actually is.

 However, our typical turning point, the 15 min chart hasn't given that signal of a clean ad clear reversal. Positive divergences are mounting, but not moving the market. I have to assume it's for tomorrow unless we get a real big move at the end of the day today. That would increase the reversal chances of being today as we'd probably be very close to a dominant price volume relationship that creates a 1-day overbought event, which typically is also a reversal signal with some credibility.

 Here are the zones of resistance in general, red being the most likely target and yellow of course being a more difficult achievement, but not impossible and with these volatility moves, the market almost always moves further then what you expect.

On a daily chart, this zone would certainly accomplish a lot as far as shaking out shorts, that's the goal before a downside reversal. I don't know if anyone remembers the mistranslation of that Japanese game "All of your bases are belong to us", in this situation it's "all of your shares are belong to us"

So unless 3C changes dramatically before the close and/or the market puts in one heck of a vertical move up, I'm guessing we aren't done with this particular bounce. The more you start to doubt whether this is a bounce or something real to the upside, the more successful they have been. THAT IS THE INTENTION.