Friday, June 1, 2012

ES Update

 First let me say the point of a 3C signal is to contradict price movement, that tells you something is going on that price doesn't reflect. If you look from left to right, the first negative divergence was 3C at the same level although price had moved higher, that move higher was being contradicted by 3C and although it was small, it led to a small downturn, the second divergence was just before the NFP print, again price moved higher, 3C moved lower, you saw what happened next.  During the opening trade, price made an equal high, 3C made a lower high, once again it contradicted price and price fell to the a.m. lows, from there a large leading  positive divergence developed, the underlying action is what creates the strength. We already know that a leading divergence is the strongest type, but when it keeps trending higher and isn't giving intraday signals anymore it is because the underlying action that is creating this leading divergence is so much stronger than any of the intraday signals, they simply don't show up. Many of you may remember when we were accumulating shorts in to bounces and price strength near the top's highs, 3C was doing the same thing except as prices moved higher it was in what I was calling, "A persistent leading negative divergence", the distribution in to higher prices was so strong that intraday signals wouldn't show up. The result of that? All of the shorts opened in to price strength are at a gain from AAPL at a +7.53% gain (no leverage, just an equity short) to BIDU at 21.6% gain.

To put the regular hours divergence in to context...

This shows the overnight trade as far back as I can go.

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