Midnight Update

First lets start with ES, then I want to give you a feel for the bounce potential.

 Since the close Es has remained flat near the highs, 3C is in a 1 min negative divergence so I wouldn't be surprised if ES pulled back overnight, but when you see the next chart, you'll understand how well ES is actually holding up.

 Here's the Euro since the 9:30 open to the 4 pm close, note the Euro has dropped off since then, ES has not, the correlation is fairly strong and ES holding near the highs looks like an exhibit of strength, I believe in part because for those in the know, the Euro pullback probably isn't all that serious. The orange area is where it was a little sticky in 3C and the market today, but the market again held better than the correlation would suggest.

 The multi week trndline has been broken and the base's first level of resistance has been broken and is holding, I believe the Euro will put in more gains and while some claim it is Euro repatriation from the EU banks selling $USD denominated assets, I might be inclined to agree had we not seen this move coming in the Euro last Tuesday before it even started.

 Here's the next level of resistance for the Euro, should it break above $1.30, watch out above, serious upside momentum and a serious market bounce that will have most shorts thinking or rethinking their positioning, I won't be this is exactly the kind of bounce I have been waiting for and expecting and even better, thus far, it's tech /AAPL led as suspected.

Now for the upside potential-it looks pretty amazing. This is exactly what we have been waiting for and expecting, not a correction from oversold, but a true Wall Street initiated cycle.

 The Euro 1 min today was a little touchy mid afternoon, but that resolved to the upside in a strong way.

 The 5 min is moving toward a leading positive position.

 Look at the 30 min leading positive divergence, this suggests the Euro has a lot more upside, again, repatriation, short squeeze, etc... No, this looks to be a typical Wall Street run cycle.

 Just for confirmation, a leading negative 30 min in the $USD!

 The DIA which has been the laggard is finally showing underlying strength with this 15 min leading positive, all of which was put in today alone!

 IWM 15 min leading positive, all today

 AAPL is helping the Q's, look at this 15 min leading positive and all in one day.

 The Q's as most other averages on a longer term timeframe have stayed in a leading positive position, this is why I had not given up on a strong move up, today just added to it with a new leading positive high.

 SPY 15 min leading positive today alone

 And the longer term 15 min trend has stayed leading positive through all the downside.

 As for the flight to safety trade, TLT/Treasuries, that's a massive 5 min leading negative divergence, I'd expect treasuries to fall hard.

 TLT 15 min leading negative-more evidence of distribution in the flight to safety trade.

 Just to confirm, here's TBT, the Treasury Ultrashort in a 5 min leading positive position. This should take off, even though it's not high Beta, it is optionable.

And TBT 15 min leading positive, look for upside in the Ultrashort and downside in Treasuries.

The bottom line, last Tuesday we saw the change in character in 3C in the Euro and $USD, since then they have developed nicely, they now are looking like they'll lead the market to a strong move and as I have said, there's no reason to run a bounce cycle unless it's going to knock a lot of shorts out and maybe even suck in some longs so be prepared to be moved emotionally, but remember the forest, this market is in huge trouble, this is just a great potential set up for us, as I say and believe, LET THE TRADE COME TO YOU!

I'm not concerned about ES overnight or the Euro with these divergences, these are the clearest, strongest divergences of the entire top, which would suggest one of the strongest moves up of the entire top, just remember if you start to doubt the short side or weakness in the market, we have signals that are strong enough now to lead the market much higher, remember we expected this and remember what we want to use it for-SHORT STRENGTH!


This looks like it will be an exciting week, I'll try to get some speculative longs up for you, but I think just about anything Tech will move, but remember, these are speculative, even in a strong bounce, it's a trade that runs counter to our major market perspective.