Changes in Character

As you know, I always say, "Changes in character lead to changes in trend". As you also know I have been looking for and we got, a strong breakout move which I have expected to be a head fake move (sucker in the longs and slam the door).

Here are some changes (just some of the many) in the SPX/SPY

 First the daily Trend Channel held the entire move until the red arrow, remember I said with the Trend Channel often there will be more gains, but the stock's back is broken and the volatility and opportunity cost are usually not worth hanging around for. In this case we were expecting a strong move, in fact my exact words were the stronger the move up, the stronger the move down will be on a head fake move. Note the ATR during the rally, it was cut in half as the rally was persistent, but the daily gains got smaller and smaller, volatility was reduced and the only place it was found was from the close to the open.

 On an hourly chart this is the second big, volatile move this week.

The hourly Trend Channel has held the move up since the break on the daily until the red arrow. Note how the ATR is starting to increase, if I put a Rate of Change indicator on it you would see how big the change really is. Also look at the "Close within the range" indicator at the bottom.

It's the small things that all add up to the big picture.