It's pretty clear that there were sellers on the open, there may be some other charts changing character a bit too, like I said yesterday, movement is good, that's where we can really see who is buying weakness or selling strength.
We also had the 10 a.m. release of the US ISM Manufacturing Index, coming in at a miss
Released On 8/1/2012 10:00:00 AM For Jul, 2012
| Prior | Consensus | Consensus Range | Actual |
| ISM Mfg Index - Level | 49.7 | 50.1 | 48.5 to 51.1 | 49.8 |
This is the second month in a row the report has missed, while not far off consensus, below 50 is contraction and this shows last months dip wasn't just a blip in the series (last month at 49.7). The employment index fell from 56.6 to 52, this is why I didn't bother covering this morning's ADP employment report, after years of following it, they are no better, if even, a coin toss.
Now, given yesterday's better than expected data which is bad news for market participants that know pretty much the only thing that will send the market higher is new QE from the F_E_D (I'll play either side of the market), the question is, was this a bad enough miss to be considered "Good news"? From GLD's price action, which is pulling back as we expected, so far the jury is out.
Here are the charts for this morning thus far...
DIA 1 min negative on the gap ip, but seeing some modest positive activity on the 1 min, this is regarded as intraday, meaning swings in the intraday trade.
The 3 min DIA also showed that there appeared to be fairly substantial distribution on the gap up, there is a relative positive divergence from that 1 min leading positive above bleeding through, still in the intraday territory and not as impressive as the negative on the open.
Looking at the trend of the 3 min chart, you may remember this relative positive divergence from this week, one of the reasons I expected a gap up yesterday, we got it today, but not as impressive as I had hoped for. There is now a negative divergence from today , the first one since the positive started.
When in doubt, try to reduce noise and go to the longer term charts-this is true of almost any indicator or price chart, the DIA 15 min in a leading negative divergence, the probabilities according to the charts are still for a decent move down-of course the right words or wrong words from the F_O_M_C today could change everything, either for the better or much worse, but we have to make decisions based on what we know when we know it, it's called, "Living at the right side of the chart"
QQQ 1 min also negative on the gap up open
The same trend of a relative positive divergence on the same 3 min timeframe as the DIA, is also seeing the same negative divergence this morning, again the first since the positive divergence started. I should remind you that short term positive divergences on short term charts, "can" be support to hold the market in place or in a consolidation.
The longer term QQQ 5 min, leading negative still
And a very long term picture of the 15 min QQQ and what it has taken to turn it in the recent past.
Like the others, the SPY was negative on the 1 min right on the open.
The 3 min chart that I have shown you above in the QQ/DIA looks the same here except a worse negative divergence, a leading negative that has formed quickly and is fairly large for the time in which it formed.
The 5 min chart, still leading negative.
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