Longer Term Charts,

As most of you know, the longer lasting a divergence, the stronger the implications are for the reversal move. The longer 3C chart divergences appear on, also the stronger the implications for the reversal (meaning the stronger the reversals trend will be, and the further it will travel). Generally anything at about a 15 min chart shows fairly heavy distribution for swing type trends, if the divergence moves to the longer 30 and 60 min charts, the stronger the distribution. 3C can't differentiate between institutional selling and short selling as they are both registered on the tape as selling, but generally we see an uptrend,  and then distribution/selling followed by institutional short selling.

So here are the longer term charts-

 DIA 10 min, this isn't a hugely important timeframe for a reversal, but I included it because of how bad it looked and because of the SPY, which I will explain. This is clearly leading negative, the most powerful type of divergence.

 DIA 15 min, which is an important timeframe is in a leading negative divergence, I also marked some former divergences just to compare.

 The 30 min is negative both locally in this trend and over a long term relative period, which is important as I will explain at the SPY charts.

The hourly is leading negative as well, this is about as negative as we get without hitting daily charts, which are associated with much longer trends.

 QQQ 15 min leading negative

 Long term 30 min relative negative divergence and a local leading negative divergence, this is pretty strong on a 30 min chart.

 QQQ 60 min has a VERY long relative negative divergence as well as a local leading negative, the importance of these long term negative divergences are important and will be explained. Also note the depth of the crest in the 3C depth chart below, it's making new lows that haven't been seen since the late July/Early August major market sell-off.

 SPY 10 min, this is important to show because for a time the 15 min has not gone negative, but the 10 min and 30 min on either side of it both were negative.

 Here's the SPY 15 min chart-ironically going negative on a relative divergence today.

 As mentioned the 30 min chart was already in a relative negative divergence.

The 60 min chart is in a leading negative divergence.

And now to explain the importance of the long term relative divergences I showed.

 This is a SPY 60 min chart, to the far left is the end of that nasty fall from late July to early August and the choppy market that followed. If you've been here for a few months, you know we successfully navigated the chop and traded each of the moves up and down going long and short very effectively. You'll probably also remember that because of observations on the 3C chart, I said many times that I believed in October we would see a new low in the market which occurred on October 4th and that the low would be a head fake move, meaning it wouldn't move lower, but instead higher forcing a short squeeze on shorts who entered on the new low. I also said that I felt this would be the biggest rally we have see since the market became choppy, this has also occurred.

The chop which is normally the most difficult market to trade, we did very well in because the signal were very clean and clear and if we had 2 days of accumulation we would get 2 days of rally, etc. However, as this choppy flag went on, the same charts that showed the high probability of this rally playing out as it did, also hinted at something else and that was that each of the moves up and down in the chart above this one, I suspected were seeing more accumulation then distribution on the declines, in essence the flag and the chop was used to accrue or accumulate at each of the lows, which meant that this rally now, would not come with the same warning that the past bounces came with. Since we had come out of a nasty downrtrend there was no accruement of accumulated shares then, but as the chop went on, I suspected this is what would be happening.  This is important because typically a longer rally needs more time to accumulate and we see "U" shaped bottoms where that accumulation takes place, but in this case, since there was an accruement of accumulation over several months by way of accumulating more then what was being distributed in each wave of the chop, this rally could start and look just like each of those choppy bounces, meaning it could start with a "V" reversal rather then a longer "U" shaped bottom.

The evidence of this accruement of accumulation can be seen in the 15 min SPY chart above. No other bounce in the prior 2 months showed this kind of 3C positive divergence and none showed a positive divergence stretching so far-I count at least 9 days in that positive divergence, thus it is important to note the 30-60 min charts above that are showing long term negative relative divergences, just as this long term positive relative divergence was key to sending this market on it's biggest rally in a long time on a "V" shaped bottom, this is something that could really only occur within the context of the choppy flag-like pattern that has been in place since August 9th.

In the next post we'll take a look at the intra day signals, but for those who want to establish new short positions or add to existing ones, this may very well be the place to do it. First, lets take a look at all of the other indications and charts.

I know the concept above is a little difficult to follow, if you have questions, feel free to email me, I'll respond ASAP.