Opening Indications

Yesterday afternoon in this Market Update after looking at the charts and specifically the Euro/USD, I said,

"The signals suggesting the market pulls back were obviously on to something. I suspect we have more to go, but it seems like we may be getting  little overdone on an intraday basis"


Thus far today's market action is just about perfectly in line with my expectations based on yesterday's post linked above.

This morning's gap up, breaking yesterday's persistent downtrend.


There were several charts presented to back up my thought that we'd get a break from the downside momentum, but they can be easily summarized in this one chart of the EURO.

It was really the EUR and USD that gave away the hint, more so than the market averages.


As for today's update, first the SPY

 The SPY 1 min is in line with price, nothing unusual is standing out in the 3C/Price trend.

 The 2 min positive divergence looks right for the move in the SPY today, nothing unusual here either.

 The 3 min chart may be slightly more positive than I would expect, but I don't see this as anything more than a curious chart worth keeping an eye on.

 The 5 min chart looks about right for price action.

 The 15 min chart saw some damage yesterday that will have to see some pretty positive divergences before we have a decent signal with high probabilities for a new trade here.

Almost every other chart in the other averages were similar and did not stand out except for the few below.

 DIA 1 min actually is about right for price action, but compare to the 5 min below.

 A series of small shorter term divergences can accrue on a longer term 5 min chart like this, or this could just be an anomaly, but this is significantly more positive than I would expect, however it is only on this 5 min chart in the DIA.

 The 15 min chart, like the SPY shows there's some work to do before I would consider an upside reversal to be high probability.

What is interesting is the IWM charts, the reason why is the Russell 2000/IWM tends to be the average that leads risk on market environments, when the R2K does not lead or keep up with a risk on move, that move is suspect, so I found these charts to be interesting.

 IWM 1 min is leading positive

 As is the 2 min

 And the 3 min

 The 5 min is in line. The progression from the 1 to 5 min charts looks natural, not an anomaly.

There's also not as much damage to the IWM 15 min chart.


This had me considering an IWM or small cap (I already have a position in small caps long as part of the hedge) long position, but I think I'll wait and see how this develops and whether the rest of the market starts to confirm the IWM's underlying performance which is clearly much better than the other averages.