Daily Wrap

I have 84 charts captured, and looked at another 5 for every 1 captured. Don't worry, I'm not going to post them all, although it will be difficult deciding which to post.

In my view there are 2 likely scenarios, 1) despite the Asian markets being strong tonight, a pullback is my first choice. 2) A continuation of the trend up.

Considering the Dominant Price/Volume Relationship, Close Up/Volume Down, this would suggest a pullback. Secondly, unlike a few days ago when there were only 2 of 230 Morningstar groups in the green, tonight there are 221/239 green, arguing for a slightly overbought market. Pullbacks are good and healthy for a trend, don't get aught up in 1 day's action or intraday action or even worse futures and pre-market or early market trading, it's a myopic view that misses the bigger picture and caters to emotionalism.

Why Pullback as the most likely option? We gather information and make the best decision we can with the information we have. Much of the day I had expected a pullback anyway.

First breadth is falling off as you can see above on the NASDAQ 100 Advance/Decline ratio.

Intraday momentum is also falling off.

The hourly momentum chart is very strong, hitting new highs, the daily is even more impressive.

 FXE/Euro 1 min is losing some traction and looks as if it could pullback

And the $USD is gaining on a 1 min divergence suggesting dollar strength, these are short term indications.

The Euro's longer term trend on the 15 min hart is still very strong.

What grabbed my attention were the following...

 Treasuries-TLT 5 min , the safe haven trade is positive, suggesting a short term move to the upside, which means the market would see a pullback, again why only a pullback?

TLT's longer term 15 min chart is very negative. This represents the bigger picture.



As we saw most of the day the market was short term negative...

 The 5 min SPY chart looks like a pullback is coming

The 15 min chart is the most impressive we have seen in two months and the 30/60 minute charts are also very strong.

 Financials are a late bloomer, but very important. The 5 min chart tried hard to get in line, but remains negative.

However again the 15 min chart is very strong and the 30/60 min hart are now reaching positions of strength and impressively so.

 Both the IWM above and the QQQ 30 min chart below are also showing some unusual strength as is the DIA. Leading positive divergences on a 30 min timeframe are rare, but strong signals.

DIA 30 min.

As a leading indicator, the Australian dollar is useful.

 It too is showing a 1 min negative divergence arguing for a pullback

However the 15 min chart is stronger then we have seen in some time. It's worth reminding you that short term charts represent short term trends and longer term charts represent longer term trends.

 Sticking with that theme, the other two important industry groups are telling us something as well-XLE/Energy is negative on the 1 min

 However hitting new highs over the last two months on the 30 min chart-relative to price levels.

 XLK-Technology is showing the same- 1 min negative

30 min extreme strength.

Finally, as I have already posted more hart then intended, my DM proprietary timing indicator.

 Is calling for a pullback on the 15 min chart, you can see signals on this timeframe don't lead to extraordinarily large moves, most are intraday.

However, the 60 min chart has called the start of every major move and that signal started right at the bottom, there is no corresponding sell signal so again this suggests a pullback.

Many of the charts not posted included breadth harts showing the same theme, short term weakness with longer term positive harts that are stronger then anything we have seen in months.

Remember that pullbacks can come in two forms, through price relief and through time (meaning a flat range). As  had mentioned the last few days, a pullback would be helpful in showing the underlying trend in 3C as a lower low in price or  a pullback with a higher low in 3C would be very strong.

A pullback here also makes sense as we are in an area of resistance from 9/6 and 9/12 lows as well as stronger gap resistance at the 9/21-9/22 gap area.

Of course I'll be keeping an eye on developments, but a pullback with strengthening 3C signals would likely result in more then just opinions about the market moving higher which we have seen, but also offer a lower risk, higher probability entry point for those looking for an entry point still.

RIP