Important Market Update...

OK, we are starting to get somewhere now, take a look and keep what I said in the last post in mind.

Before I forget though, I want to congratulate a lot of you that have been sending emails today. You took the information that the charts provided and entered calls and leveraged ETF long positions and made a very nice profit going in to today's strength. I am VERY happy to hear this because while I provide trade ideas, my greatest hope for this site is to provide information and concepts that help you make money. It's like the parable of giving a person a fish or teaching them to fish and while I don't consider myself a teacher, I do consider myself a student of the market and a lifelong one at that. I merely point out what I am learning or have learned and I could not be happier to hear about all of your successes in trades that you have entered and made great money in a day based on the lessons we are all learning together, it really inspires me to know that our members aren't zombie's following Cramer, but students of the market, making observations, making trades and making money. This really makes me love what I do, but the point is not me, the point is you. So congratulations to all of you, today the number of emails I have received from those of you who made trades based on the market updates alone, is staggering and really inspiring!

OK, first to ES. For newer members, 3C on ES does an excellent job in calling all of the intraday jiggles up and down, there have only been a handful of times that 3C has moved in a persistent negative divergence like you see below, the last two times I saw it where on the last two bounces before this one and it suggests that all strength in ES is being sold and/or shorted in to. Before the first bounce several weeks ago, I couldn't even remember the last time I saw 3C do this on ES, so this is encouraging, it suggests that what we suspected on Monday and later 3C confirmed on Monday, is actually happening just as expected.

 Here's the DIA and here's the trend;line that I think the DIA needs to break above to truly cause a strong emotional reaction, that is the point of running a bounce like this. This is exactly what I said Monday BEFORE 3C had given any indication that the bounce was coming.

 The 1 min chart is showing a negative divergence, this is what we want to see, prices rising in to a negative divergence and that seems to have started in earnest. This doesn't mean a reversal is coming, we need to see price rise in to selling, that is the point.

 We have deterioration on the 2 min DIA chart, divergences flow from the shorter charts to the longer if they are strong enough, so the process of selling in to strength appears to be well under way.


 For the first time, the 5 min chart which has been strong is showing signs of cracks as well as the 2 min weakness flows to the 5 min chart, this is what I expected on Monday before we had any indication of a bounce and it is playing out now.

 The QQQ and the trendline they need to break, remember this is all about emotion.

 The Q's have been the weaker of the averages as far as underlying strength goes, so it's not surprising to see this chart looking the way it does.

 The 2 min chart is showing the weakness developing in the underlying trade, however don't jump the gun, 3C is supposed to contradict price, those are the signals that give us an edge.

 And as you can see the QQQ 5 min chart was never that strong to start with, there' weakness there too.


 The earlier negative divergence in the SPY that I thought would cause a consolidation (obviously was partly due to the NY news), but it is moving higher a I suspected it would.

 The SPY trendline and resistance coming up around that gap

 SPY 1 min positive from yesterday afternoon-this is what got so many of you in to short term long trades that made money today. The 1 min continues to show weakness despite moving out of the consolidation.

The 5 min chart is still in line thus far, but I suspect that will change soon.

For now my game plan is to stay patient, wait until the signals are screaming, but I may look for some trades to start phasing in to, I will post any that I consider.

Since the theory was proposed earlier Monday, everything is playing out as expected back on Monday.