As a full time trade I usually didn't make any moves before 10:30-11 a.m. as this is the time that overnight orders by people who go to work, are being manipulated, but by the looks of the longer term 3C charts, this does appear to be a valid move down. Friday I posted 2x to use strength to short in to, even though that is very hard to do, it would have given you a very low risk entry. If you are playing catch-up now to either initiate or add to positions, I still prefer to do it on intraday strength. There are some gap support areas coming in to play and gap support/resistance in my experience is the best support/resistance you'll find.
DIA 1 min 3C has signaled a positive divergence so as we plunge in to the gap, hopefully it will build and offer some intraday strength, if not, then it's a pretty bad sign for the market.
The DIA 2 min is in line to leading negative so the 1 min divergence is not strong yet, it may not even hold, we'll have to see if it can transfer to the 2 min or 5 min charts, then you would have a better looking chance to see some intraday strength.
QQQ 1 min is showing the same, although slightly stronger (which may be due to the fact that 3C "blue" is a much faster to react version of 3C), however, this divergence may have already played out on a slight bounce, although I don't see the downside 3C signals yet, so it may continue.
The 2 min and 5 min above and below are not registering any positive divergences and the 5 min is leading very negative.
The SPY is not even showing 1 min signals, but the gap area in white is where I would expect some to materialize, we are just entering that area now.
The 1 min ES hart however is showing the start of a possible positive divergence and perhaps intraday strength.
The 5 min is trading in line with price ever since the negative divergence at the overnight highs.
Sector rotation makes sense with the signals seen and not seen in 3C in the major averages. As you can see, so far today Tech is outperforming say Financials at -.73 vs -1.90 respectively. As you might expect, some other groups performing better on a relative basis only, are defensive sectors including Utilities (red). Financials in green are not doing well even though C (Citi) remains green on a farce of earnings, once again showing the headline scanning algos and most people don't dig in to the reports beyond the headline beat. If t weren't for accounting gimmicks, Citi would have come in at a HUGE miss, I expect that will be discounted soon, or as soon as Wall Street is done fleecing those who don't go beyond the headline "BEAT" on earnings. Speaking of which, this is a heavy week for earnings, 1/3 of the S&P market cap reports this week. Remember, earnings aren't about beat or miss, but expectations moving forward, making forward looking guidance the most important part of earnings. The market is not moved by value, it is moved by sentiment and it will be interesting to see what sentiment is on earnings reports this week.
I pointed out distribution in GOOG over the weekend (sell in to strength and demand) and GOOG is down 1.23% vs the tech heavy NASDAQ 100 at -.76% and as one of the few industries with decent relative strength today.
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