I've tried to prepare you with what to expect or at least what the highest probabilities are based on not only market behavior, but the charts (all of them), you probably remember the post about "Anchoring expectations" as the market won't make anything easy whether you're a bear or a bull (for some of us that depends on what trend we are looking at).
The area we are in now is the area I warned about last week at least a day before we even came near it and marked it as an area where you should expect volatility and game playing, it the major resistance area for the SPX and I've tried to explain many times how the market uses the predictability of Technical traders against them.
So far what I see in the sectors suggests that game playing is continuing, I believe the object is to bring price in the area of resistance, have it pullback from resistance which is a classic TA short set up and with those new shorts, the market is primed for a squeeze, so long as Europe doesn't hit us with a black swan. Longer term or Primary trend, as I posted last week and have posted for many months is just about as ugly as anything I've seen.
Some of the charts of sectors from the last post are confirmed by 3C in this post. I also see GLD and to a lesser extent SLV are making some interesting intraday moves despite the $USD.
Looking at our daily bear flag, we saw a Crazy Ivan shakeout, a failed move on an upside breakout which brought about the downside move below the pennant which was also a failed move or a head fake, so far so good, this is what we expected. Then in my post about anchoring expectations, it was this exact area I warned of, I said technical traders expect a failed test of resistance and Wall St. may even throw them that bone, which could be used as a primer in a short squeeze., the red trendline is the important level where a short squeeze makes or breaks, the trade thus far in this area is not surprising to me, it is what I was trying to prepare you for.
Energy, remember in the last update the recent momentum change in Energy, well on the 1 min chart we have the same negative divergence on the open as we see everywhere, but a decent positive divergence in the a.m. leading to a move higher and a current leading positive position.
The 2 min chart has almost the same features, the only difference is the 2 min chart is in a leading positive divergence, but hasn't made taht new high like the 1 min, so it seems the 1 min had or continues to bleed over to the 2 min.
Energy on a 15 min chart shows the backing off from the resistance area the SPX has approached, the current 15 min positive divergence looks much stronger here that at the last test on the opening of the 7th.
Energy on a longer term 15 min chart with several larger positive divergences before and as Energy hit its lows, it is in a leading position right now, but the choppiness is obviously coming from the backing off from the tests of resistance in the market.
Financials interestingly intraday are shaping up on the 1 min with a leading positive divergence at new highs for this time period.
The 2 min chart is seeing that 1 min strength bleed through.
Even the 5 min chart is seeing the same positive divergence today come through, note the 5 min did not see a negative on the open which makes me question the strength of the opening negative divergence, again it would appear that this i not organic market action, but manipulated; if so, the implications here are suggesting the market or specifically financials are getting ready to make a real run at resistance. All 3 sectors would be needed to sustain any type of decent move (Tech, Energy and Financials).
Financials on a 15 min chart positive at the lows, in line on the move up, if not leading positive and the negative divergences are all in areas where the market is backing off from resistance or tests of resistance. The price action at these levels is definitely sending a message to bears as it is quite volatile, but this 15 min chart doesn't look like anything is quite ready to collapse and the shorter timeframes look like Financials may be gearing up for a real run at resistance.
Tech showing the same 1 min intraday negative on the open and a positive leading divergence since late morning.
The 2 min chart looks especially good.
The 5 min isn't in the best place relatively speaking, but seeing a positive divergence bleed through intraday.
Longer term 5 min positive at the price lows and again backing off in the areas where the market tested resistance, but these are relative negative divergences, they aren't the type of strong leading negative divergences wed expect to see on strong distribution in to resistance, thus it appears this has been the game playing I warned of in the area.
Finally the 60 min Tech chart, this is a significant time frame, negative during March when we were building core short positions, negaitve in to one of the last days we were adding core short position on May 1, and a pretty decent change in character with the Tech going from downside confirmation (green arrow) to a positive divergence before the lows (in the bear flag/pennant) and stronger at the lows, currently in line. The shorter 30 min is much better than in line, it' leading positive, but I wanted to show how far out the positive divergence has gone and 60 min is a significant timeframe, only the negative on the daily trumps it and that is the primary trend.
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