Market Update

VERY INTERESTING!!! Pop Quiz! Which average has shown the best 3C relative strength the last several days? If you said the IWM/Russell 2000, then yo have been paying attention to the market updates. Bonus question? Why? The answer, IMHO is because the DOW, SPX and NDX all broke ABOVE near by/obvious resistance (on a head fake move you need demand to sell/short in to) and the IWM hasn't made it there yet until yesterday and even at that it wasn't a strong move so it has been a full 2 days behind all the other major averages.

Today I expected to see a lot of intraday volatility with the more important trade later in the day, that's just been the market's behavior lately. If we looked at the SPY, DIA and QQQ alone, you might get the impression the market is just treading water right here and upside volatility would be hard to come by, but as the R2K should always be the leader of a risk on move, it seems the attention is focussed there today in order to create that volatility, you'll see what I mean, but when looking at the IWM charts, make sure to distinguish between the 1, 2 and 3 min intraday timeframes and the 5 min timeframe which is the first of the short timeframes where we see institutional activity.

First the SPY...

 The reason for the SPY first, remember the last post-USO and remember the accumulation on the short term charts from Thursday of last week? Well, here's Thursday of last week, Aug 2nd. Remember also the FB post and why I thought FB would likely pullback and create a larger base rather than make a large run up? The reason why is no matter how strong the accumulation, if it is only 1 day and it's largely confined to intraday charts, they simply can't accumulate a large position and the size of the accumulation is somewhat proportionate to the size of the move, although we have to allow for mark up and possible short selling that shows up as distribution also, but in other words, "if" it was going to be a BIG move, a nice trend up, they'd need a bigger base. This size is perfect to push the averages through resistance, make a quick buck and set up the next cycle.

In any case, the leading negative divergence on the SPY 1 min is much larger than the positive divergence in white, this would suggest short selling in to price strength which is found at a break out above resistance as traders wait for price confirmation before entering, at least many do.

 SPY 1 min intraday with yesterday's negative divergence, trend confirmation at the green arrows, note there's NO positive divergence on even the shortest charts this morning in the SPY. There is a very slight leading positive intraday that could lead to some intraday volatility, but it may be long gone by the time this is posted.

 2 min intraday-again in yellow, no positive divergence intraday at all.

 3 min leading negative intraday yesterday, in yellow no positive divergence even on an intraday timeframe.

 DIA 2 min trend shows 8/2 accumulation and a much larger leading negative divergence since.

 2 min intraday for DIA, there was a small positive divergence on the open sending the DIA in to the gap, then a negative divergence at the highs.

 3 min trend from Thursday's accumulation, note the leading negative trend.

 3 min intraday is almost perfectly in line with price, or confirmation , again there's a small leading positive developing, it's so small it may just be noise, but given the IWM, maybe not.

 DIA 5 min in leading neg. position

 QQQ 1 min with a small positive on the open, that saw a negative/distribution at the highs today

 QQQ 2 min with yesterday's leading negative divergence, today shows no signs of any positive accumulation.

 QQQ 3 min, again leading negative yesterday near the highs and today.

 Here's the QQQ 5 min trend, this is really ugly, a bad leading negative divergence that looks exactly like the move above resistance on Friday has been an area of short selling by institutional money.


Now the IWM

 1 min relative positive intraday followed by a leading positive divergence, this looks like it wants to create some upside volatility.

 2 min isn't nearly as strong so neither is the divergence, but there's still a leading positive right in this area.

 The same that applies to the 2 min applies to the 3 min

Now, pay attention to the 5 min, this is where the signals move beyond intraday and more toward trend, leading negative.