Market Update

***NOTE-since putting this update together we are getting some stronger deterioration in the shorter term intraday charts. I will post another update of that deterioration next, but this update is still valid.

Keep in mind the shortened market hours today. Other than that, volume has been light as was expected on the mid-week holiday.

This is definitely a "unique" market. As you know, since mid-may, perhaps even before, we expected a STRONG short squeeze in the market above the SPX's major resistance level and above the EURO's major resistance level. Las Thursday afternoon we saw something that we haven't seen this year any way, probably quite a bit longer; late in the day on Thursday as the market was at the afternoon lows I put out a post that there had been a positive divergence and to expect a move higher in to the close. Later that day after looking at more charts, I realized that we saw a large divergence that skipped right over a lot of the intraday timeframes and went straight to the longer term charts, this only happens when there is sudden, strong accumulation. I described it this way, Accumulation and distribution are typically a process, what we saw late Thursday the 28th was an event" and apparently a well timed one at that as someone seems to have known something in advance as Friday's open gapped us right over major resistance and in to short squeeze territory, I also talked about this Sunday night in the " Week Ahead" post.

We have dismal volume, it doesn't seem we have a lot of strong institutional activity, but we are in an area in which a short squeeze can feed off itself.

 Here's the area we are in that is above major resistance and where we expected a short squeeze to take place, however with an early close today and July 4th tomorrow, I'm a bit hesitant about chasing this, luckily we or at least most of us were already prepared for this as we entered long (mostly leveraged long ETFs) as a hedge at the June lows in anticipation of such a move.

The other thing that bothers me is the Euro is very close and recently was in short squeeze territory, our expectation were for both to get squeezed together which would also provide the market some support, here we see the Euro has not followed the SPY/SPX/market higher which would make any short squeeze right now, unstable without $USD weakness and Euro support.

As for the opening indications,

The DIA

 We have a slight intraday a.m. negative divergence on the 1 min chart. The 2 and 3 min charts are in line with price.

 The 5 min above and 15 min below continue to suggest a pullback, however as I mentioned Sunday night, we are in short squeeze territory, we saw a little of the action late yesterday particularly in the IWM.

DIA 15 min suggesting a pullback in the DIA.

 The IWM 2 min in line as I mentioned above with a slight negative intraday this a.m., the short squeeze of yesterday's close is visible.

 The IWM has seen the most improvement of all of the averages and it happened quick, there's still a 15 min relative negative that is in the realm of a pullback signal.

 QQQ 1 min opening with a slight negative

 QQQ 2 min trend has moved together with the market, but is still in a negative divergence.

 And the 15 min showing the strong accumulation event of the 28th and the current negative divergence pullback signal.

 SPY 1 min on the open...

 SPY 2 min with a little short squeeze actibvity at the green arrow and a slight negative intraday divergence.

The SPY 15 min with the accumulation event of the 28th and a current negative divergence still suggesting a pullback .