Market Update

Unfortunately, the market is moving faster then the situations can be updated. Here's what I was seeing in the SPY and most of the market in general...

 First as mentioned in an earlier market update and from last night's charts, the squeeze in the 15 min Bollinger Bands was telegraphing a "highly direction move in price", from everything I saw on Friday and over the weekend, I am glad that I asked you to consider using Friday's strength to go short, whether initiating new positions or adding to older ones, everything seemed to line up just fine, but I know it can be hard to short market strength, however, it is also one of your least risky entry areas as a stop can be put close by. As for the earlier analysis, I said I thought the market would try to reach the median of the 20 bar (15 min) moving average sen above here, which it did and it acted as resistance as I would have expected. In the meantime, a triangle that was pretty visible formed in the 3 major averages.

 This is the SPY and one way of drawing the triangle, volume is roughly correct for the price formation and a symmetrical triangle like this has no inherent bias (bullish or bearish) until the preceding trend is considered, which was down, which made this a bearish consolidation/continuation pattern (meaning expect the market to break lower). However these are manipulated so often I had to consider a second way of drawing the triangle below.

 Here is the second way, which uses the first reaction high and although not as pretty, it is probably the correct trendlines, in which case the market did exactly as it almost always does and manipulated the pattern with an upside breakout (head fake) before the pattern is allowed to continue on its true trajectory. The little volume spike recently would tend to confirm these trendlines as correct.

 3C seemed correct too with an attempt to push prices through the upper trendline and then a failure to a new leading low.

 The short term DIA also seems to have confirmed this (and realize this post was being put together to let you know which way to expect this triangle to break ultimately.)

 The real trouble remains on the 15 min charts, here's the DIA and Friday it was bad, which is why I said I would consider using the strength to short in to, but today as the consolidation (lateral intraday trend) played out, the 15 min chart (which is zoomed in close to see intraday action, in reality it is much lower in a leading negative divergence)  lost a LOT of ground, and movement this severe on a 15 min hart, this early confirms the amount of underlying distribution that I mentioned in the first update as the 5 min chart had moved down much more quickly then would otherwise have been expected.

 The QQQ 1 min chart, remains ugly and was another hint as to direction.

 However, the 15 min chart once again signals the real or the bigger problem for the market, that's a big move for 2.5 hours of trade.

The same is seen in the IWM/Russell 2000

And here's the result of all of this, a break lower, which as usual is now probing or testing the resistance level offered at the lower triangle trendline. All in all, the underlying action thus far looks worse then the real price action, which suggests some catching up perhaps later in the day. If the markets are down too much too early, it's not a good thing from a bearish perspective as they have to generate some movement for the middlemen to make their spreads and volume rebates. The action today in my opinion  from a bearish perspective is neither too cold or too hot, but just about right.