Earlier I mentioned a "U" shaped reversal to the upside was unlikely, a "W" shaped move would be more in keeping with what we normally see, the SPY has traced out such a pattern, interestingly for the intraday momentum traders it has also thrown up a bearish descending triangle, this is taken by technical traders to be a bearish continuation pattern from the preceding trend and on this timeframe the trend was down, so shorts will pile in to this pattern based on that alone. A head fake move that breaks lower support would draw even more in and can't be ruled out, but what I was expecting to see based on the break of support, the volume surge and the early 3C charts, thus far is playing out. A breakout to the upside on this triangle is what we would be looking for as to that one last blow-off upside move. We have 5 points of contact in the triangle and the apex is almost complete so a directional move should be coming soon.
The 1 min chart continues to be positive in the SPY, now leading positive.
That strength on the 1 min has bled to the 2 min which is also leading positive here, it appears the busted stops were accumulated. Usually after 12 p.m. or the Euro close we see some dollar weakness and that gives the market some upside breathing room.
The 5 min chart is by no means bullish at all, scaled out correctly it is leading negative, but there is a mall intraday relative positive associated with the 1-2 min charts bleed through.
Recently underlying trade in the DIA and IWM has looked the worst, we have a decent enough 2 min positive divergence in the DIA which is very close to moving to a leading position, in fact I just checked and since this capture it is leading positive now (3C has made a high above the white trendline).
The 5 min chart is simply in line with price, that may change if the 2 min keeps growing.
Look at the 30 min DIA-this is the longer term trend and the most important of the above DIA charts, we expected distribution in to higher prices, that is what we have, this is deeply leading negative for a 30 min chart and very quickly. It is VERY IMPORTANT to realize that the cliff holding the market HAS broken, this is the most difficult time to get exact tops as this is already more than negative enough to send the market lower. However the trend in the market has not been one in which the market easily tells you what it will do in the near term and head fake upside move to possibly new high before a reversal is still the highest probability based on market action. Almost no reversal takes place without a head fake move first and that applies to EVERY timeframe from 1 min to daily.
Remember the quiet market in ES last night and what I said about it? Here ES goes negative at the EU open, I suspected that was where we's see some action in ES overnight. Since that negative divergence ES was in line with price (green) and now we have a 1 min positive divergence which looks again like Wall Street has stepped in with some support to counter the Chicago PMI and rotten EU data that is creating a head wind against Wall Street's attempt to set the bull trap with a move higher. This is about the 4th time we have seen this in the last week and it is not something we see often.
As mentioned above the IWM's underlying trade has been some of the worst, however it too has a 1 min positive here as a flat range is carved out.
The 2 min looks horrible on the whole, yet we have a positive divergence intraday today.
The 5 min is in leading negative position overall, but again a positive divergence intraday, there's a difference between the trend of 3C and intraday movement, the intraday movement suggest Wall St. is fighting for the blow off move higher, the trend in 3C has shown they have been selling in to every bit of strength they can and only stepping in with minimal support when absolutely needed.
The IWM 15 min is starting to look like the DIA 15 min as of Friday when it started to lead negative only to see that divergence deepened dramatically in the afternoon.
QQQ 1 min has seen some positive intraday divergence as well, including a brief leading move earlier.
The 5 min also looks horrendous, but the intraday positive is there.
The 15 min is also just starting the same move as the DIA Friday.
We are definitely in the red zone here, I am still trying to be patient and watch the underlying trade in the market, but if I were to take a position and not look at it for a month, I would have no problem shorting the market any where in this area.
No comments:
Post a Comment