Wednesday, August 22, 2012

ES and TLT-The Flight to safety

This is one of the reasons I don't mind if I don't catch the EXACT top, I'd never try to pick tops or bottoms if I didn't have the guidance of 3C, but you know every once in a while I'll say, "Close enough". I'd rather have a wide stop and sit through some drawdown than miss a big move, they don't come that often.

First lets look at ES, although 3C was showing positive divergence on an intraday timeframe for many of the averages, it also showed many of them collapse and I can't find much in the way of confirmation.

 ES is just a fraction from making another deeper leading negative divergence and this is already on top of two days of leading negative behavior in ES, this is very ugly and has the look as if it could collapse at any minute, I'm glad all of my re-positioning is done, but we'll always keep looking for opportunities.

 As I said many times about this move in TLT / Treasuries (30 min chart), I believe the move below support is the same head fake move before an upside reversal that we are seeing in stocks making upside breakouts that are likely head fake moves as well. It didn't take TLT long to challenge resistance, it's basically there today. The yellow box represents the suspected head fake move, think about it, major support broken, stops hit everywhere, plenty of supply at cheap prices, it's perfect for accumulation and no one would ever know because someone has to take the other side of the trade.


 The 30 min chart shows several negative divergences and the break below support, but that break is in to a positive divergence suggesting the stops triggered and massive volume were accumulated, as the saying goes, "ALL OF YOUR SHARES ARE BELONG TO US NOW". Look at that leading positive divergence of the last several days, nearly perfectly vertical, that doesn't happen often on a 30 min chart that fast, but we have been seeing a lot of extreme divergences this week.


 The 15 min chart has been lending support as well with a beautiful leading positive divergence in a base-like area until today when TLT gapped up and then ran in the afternoon despite what the market was doing, it seems the flight to safety may have already begun.

 The 5 min chart has also been leading positive, even with today's gap up.


Here's the real impressive move though, the 1 min chart nearly vertical at the lows, it really looks like there's major repositioning going on and they don't seem to care that they are doing it out in the open , although I doubt too many traders notice.

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