Early Market Update

For newer members, early indications are useful to see if a gap move is confirmed or not, but early trade s also misleading because of the games Wall Street plays in triggering limit and stop orders that are put in by retail traders who have to head off to work. After 10:30-11 a.m. the market settles in.

 DIA 1 min 3C the red arrow denotes a 3C negative divergence or distribution, yesterday I warned about the end of day parabolic move higher and said, "They usually don't end well and usually a parabolic move lower follows", that's what we have seen this morning as you can see by the white arrows following price up late yesterday and down early today.

 DIA 2 min 3C chart (for newer members, the longer the 3C timeframe, the more important the divergences). Here we see the negative divergence in underlying trade (institutional money selling in to price strength yesterday). Whenever you see a box on 3C, it denotes a leading negative divergence which is more powerful then a relative negative divergence that the arrows represent.

 As pointed out yesterday, the 5 min chart NEVER confirmed the bounce higher yesterday, meaning it was likely being used to sell in to strength by smart money, it was in a leading negative divergence yesterday in the red box. Today it is moving lower.

 The QQQ 1 min 3C chart showing confirmation of this morning's move down (for newer members, a green arrow represents trend confirmation, white represents accumulation and red is distribution).

 QQQ 2 min showed a late day negative divergence in to the market's parabolic move, this morning we have downside confirmation at the green arrow.

 The QQQ 5 min chart was very negative yesterday as price went higher, meaning smart money was selling all day in to higher prices, which is exactly what we expected to see late last week when we first saw accumulation in the Euro, meaning a bounce was coming.

 The SPY 1 min 3C chart shows the negative divergence I warned of and this far we are worse then downside confirmation today, we are a bit more negative then that.

 The 2 min chart shows accumulation at Monday's lows, and distribution at Tuesday's highs, currently the 2 min chart is leading negative, a leading divergence is the worst kind or most powerful kind as we can see leading positive divergences as well.

 The 5 min chart, which is more important shows yesterday's distribution in to price strength in the underlying trade and a nasty leading negative divergence today.

 Here's the charts for FXE/Euro, remember yesterday the 1 min chart never confirmed the gap higher and remained leading negative, meaning selling in the Euro started right from the gap up, right now we have downside confirmation.

 The FXE 2 min chart was even worse, leading negative and still leading negative, no confirmation at all of yesterday's price strength.

 The 5 min chart is in line/confirmation.

 The 15 min chart shows a leading positive divergence last week, this is why we expected a bounce as that represents accumulation which will or was sold in to strength yesterday. The 15 min started to go very negative yesterday and this chart doesn't often make move that fast in a day, so distribution was heavy.

A close up of the 15 min FXE chart shows the leading negative divergence in place right now, so watch out at $1.30 on the Euro, there are a lot of long contracts providing support there, but I suspect yesterday's pop was used to sell them and in some cases get short.