Market Update

Yesterday we weren't able to get much in the way of new conformation from underlying trade as the market was pretty quiet in front of Bernie's testimony today. What did seem obvious was a dip to the downside, maybe 1 day to several days (as mentioned there could be volatility in between days). The point was we had negative divergences suggesting a pullback from 1-5 min, at 15 min we had some negative divergences, but not quite that large, this means the 15 min chart could still go either way depending on what the 5 min chart does. This is why I closed part of the GLD position, only opened 1/3 size FB long to wait on the rest, and entered the UVXY (which goes up with the market going down). So from what was observable yesterday, it looked like a short term pullback was the most likely scenario, but the 15 min chart kept it from looking too bad or too sharp of a move, this is also why I suspected the gap up on the open this a.m. would be faded and downside would follow. Here's where we stand right now, it strikes me as a bit of a holding pattern as Bernie testifies. We can't discount the fact that the market may have de-leveraged in front of the Bernanke testimony, the same way many of us did yesterday (think GLD), thus some of the negative signals we see may be akin to "sell" or de-leverage before Bernie's testimony and then decide what to do after it is over.

 DIA 1 min negative at the open, but showing some intraday strength right now, not a lot, but intraday.

 2 min chart shows pretty much the same, except it shows how aggressively the gap up was sold off.

 The 5 min chart shows the same, we also have a relative positive divergence, this also (as of now) sort of limits the downside perspective, this is why developments on this 5 min chart will be very important.

 The DIA 15 min chart looks bad here, but it's not as bad as we have seen in past pullbacks. Our original theory was we would see a pretty deep pullback, last week's surprise divergences that led to late week strength threw some questions in to the mix as far as that pullback goes, we still are waiting for good signals to give us a clear heading, this seems pretty typical for the market chop we have been seeing, hopefully it clears up with a very clean signal.

 QQQ 1 min negative on the open, same as the DIA with an intraday current positive divergence.

 The 2 min is nearly exactly the same, heavy distribution on the gap up and some lighter positive divergences recently.

 The 3 min chart looks bad, but this still would be a pullback of a day or two (which could be longer with chop as mentioned yesterday).

 The 5 min looks like we should see at least several days down or in some sort of consolidation.

 QQQ/IWM  have looked the worst, the 15 min here is very much along the lines of several days of pullback. However we can't discount the fact that the market may have de-leveraged in front of the Bernanke testimony, the same way many of us did yesterday (think GLD).

 SPY 1 min negative at the ope and like the others, some recent intraday strength, but intraday only on this chart.

 2 min SPY in line with a pullback of several days as mentioned yesterday.

 5 min chart is roughly the same, but we have a relative positive divergence, the question is. "Does it hold throughout the day", which would likely change the outlook near term.

SPY 15 min just barely negative, close to inline, this doesn't suggest a huge pullback, this is why the 5 min chart's influence is so important right now.