Market Update

Do you remember why yesterday before the positive divergences for a bounce even started, why I expected to see them?

Our experience has shown major breaks of important support almost always see a volatility shakeout and volatility has grown even stronger which would imply a stronger bounce. Divergences for a bounce formed shortly after I explained why I would expect to see such a move. For this to be worthwhile for the market, the shakeout MUST be strong enough to scare new shorts out of their positions and encourage longs to buy, this is why I said yesterday, "Don't let your emotions throw you off the scent".

The dollar remains fairly strong thus far, this is not helpful for a bounce...

 Here's the Euro (red/SPY green), still down, meaning the $USD is up.


 In red, here's the $USD still fairly strong, this means smart money is going to have to give the market a boost.

 On a 1 min 3C chart of DIA, there's the intraday accumulation they'll need to push the market up, being the dollar is acting as a drag.

 ES has recovered above VWAP and as I hoped to see, 3C is still in a persistent leading negative divergence, the same as the last two failed bounces. This should keep up throughout a move higher and is good for our plans.

 The IWM intraday chart showing a positive divergence, again, they need to push the market through the dollar strength to keep the bounce moving.

 Here's the same in the Q's

 And the SPY

So they need to make a midstream adjustment due to the dollar, but this should get the market moving up again. Remember, this bounce is here for 1 reason, to scare shorts out and to bring longs back in.