Market Update

 While I haven't yet taken the necessary time to look at our own more detailed version of CONTEXT (Risk Layout Indicators), CONTEXT is supportive of further risk gains in ES (S&P E-mini Futures) as the model is higher than ES.

 ES itself since the NY open (dark blue background) saw an early positive divergence off the lows of the day, as it has moved higher the divergence is starting to give way to a negative, still small, this could simply be a consolidation.

 The DIA is showing very similar behavior, a positive divergence, confirmation and then a negative divergence starting, this appears to be related to resistance from a head fake breakout move from an intraday triangle on 4/27 that quickly failed and rolled in to the April 30 lows.

 DIA 2 min is pretty much in line with price, so it's hard to read too much in to the 1 min negative divergence except for the immediate intraday movements.

 The 3 min chart of DIA is in line with price, this is relatively positive in the near term as this could be showing distribution.

 Here's a theory on the market using the DIA as an example, in last night's post at the end when discussing the bullish possibility that the bounce is not over, I mentioned a scenario as follows,

"Given the look of the SPY and DIA on the close (3C) I would say that the market would either have to pullback and/or consolidate to allow them to get a positive divergence under them before moving higher" 


So far that theory cannot be ruled out based on today's price/3C action. I drew on this chart to show what such a threory would look like, the DIA's/market's price would have to pullback (green arrow) allowing a consolidation-whether a "W", a rectangle, etc is not important. What would be important is that 3C charts on the whole continue to add to the positive divergence (yellow arrow).

 IWM 1 min showing the same thing ES and DIA have shown, a recent negative move in 3C.

 The 2 min chart shows relatively the same, although the positive divergence early today is stronger than ES's.

 The 3 min chart has a good amount of positive momentum, leading positive, but it too has seen a recent negative move in 3C.

 IWM 5 min is leading positive. Thus far the charts are in line with the theory laid out last night and mentioned in the DIA updated charts above.

 QQQ 1 min has been the biggest laggard today.

 QQQ 2 min shows the same failure to confirm prices moving higher intraday.

 Interestingly though the 3 min chart is leading positive and quite strong.

 Considering the longer timeframe, the 5 min is pretty positive.

 Remember yesterday at the close the DIA and SPY had no signs of positive divergences, this is one of the strongest 1 min positive 3C divergences today.

 The 2 min just fell out of line with price.

 Like the Q's above, the 3 min chart shows some unusual strength.

As does the 5 min.

Since capturing these charts, there has been a slight pullback in the averages that fits with the 1-2 min negative divergences seen in some averages.

As mentioned, the theory laid out last night (in a near term bullish scenario, meaning the bounce is not quite over) cannot be ruled out as thus far the market has done what would be expected for the early stages of such a scenario. I'm also not reading to much in to it until I see how 3C reacts on a price pullback of some consequence.

I would continue looking for shorts on price strength and underlying weakness.