SPY Update

My first post this morning outlined what I expected to see today/tomorrow and thus far, it's right on track.

Earlier in the week, I said that there was a bearflag developing and just like GLD had to make a new hgh/false breakout, I expected a "scary" bounce in the market in general that would throw the validty of the bear flag into question. It's the same principle as what I just outlined in GLD, just a different price pattern. The reasoning for breaking up th bear flag is the same though.

Here's what it looks like on the Q's which had a very clear/clean and attention grabbing bear flag.

 The bear flag is obvious, that's why it needs to be broken by locals, it doesn't negate the negative implication of the bearflag, it just creates the volatility, volume, bid/ask spread, etc, that the HFT firms have come to rely upon as income in a low volume, low participation environment-both of which ironically make these head fakes easier to pull off.

 Here's the possible target in the SPY I put up several days ago, that would create a sufficiently scary bounce to achieve their goals before a reversal. Note however that technically, the SPY is still well within the downtrend. This is why I tell you to keep your eye on the bigger picture and not to be so swayed by these regularly occurring head fake moves.

 The 1 min chart did exactly what I hoped to see, it went negative without pulling price down, this tells me that we are not seeing the trades or distribution of market makers/specialists, but bigger money.

 And the 5 min chart has deteriorated badly today as well.

At the 10 minute chart, 3C hasn't moved above the level it was at when the SPY was trading at $129.50, so at nearly $131, this is a negative divergence on a relative basis. If the pressure keeps up tomorrow on the 1/5 min charts, the 10 min should take a turn down and the 15 min chart will be effected. For newer members, usually by the time there's a negative divergence on the 15 minute chart, we are at or very close to a reversal (not a 1 day reversal, but a swing move).

So what I outlined as my expectations for today are on track. I expect tomorrow we'll see the same and be done with this bounce.