Market Update

This looks as good as any place to start a correction to the upside. The downside move is too obvious and the bulls are going to start losing hope if something isn't done soon.

As with the last update, the bigger picture is solidly bearish, we are talking about a correction when we talk about upside, so strategically we have a bearish outlook, tactically there may be some price strength to short in to with underlying market weakness.


I have to admit as a lifelong student of the market, yesterday's signals were strange, the positives and then how they just deteriorated in to the end of day and we gapped down this a.m., yet they still are there. The other strange bit is the lack of confirmation, I think we are going to learn something new about Wall Street here, it almost seems like we have two different camps, 1) wants to bounce the market and most likely sell in to that price strength or more likely short at this point and another that seems to just want to get out no matter what.

 Again, the DIA 1 min with yesterday's strength or positive divergence that turned negative almost as quickly or faster. Right now it's close to in line on the day, but a tad more negative.


 Divergences on longer timeframes do accrue and that appears to be what we see here on the 5 min DIA, this could be a pretty decent bounce with a leading positive out to 5 minutes so be patient before just shorting any price strength. Remember, there's almost always a reason for what they do and that is why we tend to see extreme moves rather than just overbought/oversold tension relievers.

 The 60 min DIA chart has immense damage done to it, not only does it really start showing at the head fake move, but for a 60 min chart to lead almost vertical with no interruptions that deep, that fast is massive damage to the underlying issue.

 IWM still the strongest looking, 2 min chart, this is a leading positive divergence, this should generate a decent move to the upside, but always remember that price is deceiving, as Cramer said in the rare video that I posted (and this is probably as straight as you'll ever hear it about the reality of Wall St.), "Never do anything that even remotely resembles the truth", "Create a new fiction".

 Oddly, like the DIA, the IWM 1 min is almost perfectly in line with price. This is what I mean about "Strange".

 QQQ from yesterday's positive divergence on a 2 min chart has added to that today, we have a leading positive. AAPL now represents 19.8% of the NASDAQ 100, last time I figured out the wighting, it was similar, which meant that AAPL had the same weight as the bottom 50 NASDAQ 100 stocks combined. So if we had a theoretical NASDAQ 51 comprised of the bottom 50 stocks and AAPL and all 50 stocks were down 2% on the day and AAPL was up 3% on the day, the NASDAQ 51 would close up +1% even though 50 of 51 stocks were down 2%. That gives you some idea of how the averages are moved with such horrible Advance / Decline lines.

 QQQ 5 min is NOT seeing any strength from the 2 min chart bleed over so while strong on that timeframe, where it is more important, there's no strength there, in fact it's pretty close to inline, I'd watch this for deterioration in to any move up.

 SPY 1 min showing a positive today, look at that little break below support, it's bigger now, but remember that reversals are preceded by head fake moves at least 80% of the time and on all timeframes, this may very well be such a move.

Bigger picture, the 5 min is seeing no strength migrate through so we are still bearish, just looking like we'll see a short term move to the upside shortly.

I'm going to check around some more and see what else can be found.