As you may recall last week we had fractured (not solid) positive divergences in the market Wednesday and Thursday, also unconfirmed for most of that time, so the expectation was a bounce, the BIDU and other short term Puts and shorts were closed out in anticipation of higher prices and a better entry in a new short term Put/short position.
As of Friday we started seeing selling in to the move up very early that reached the 1, 2 and 3 min charts and in half the major averages, all the way out to the 5 min chart which is where the positive divergence is, so the break down of the 5 min chart is where we want to think about entering those short term shorts again for the next leg down. Remember the VWAP posts and what VWAP means to institutional traders.
These were several target areas on the SPY I posted last week, Wall Street rarely runs a move without a meaning, psychological/Technical-they're both the same, so a closure of the gap was an easy on, but to maintain longs in position, a higher high would give them confidence or a move to the recent highs, which I believe will likely be shown as the top as we move forward.
ES Sunday night since the Friday close at 1409, 3C is very choppy, not much trend, but few major markets were open like Treasuries, etc.
ES going in to the 9:30 open, the white arrow is the European open for the week.
ES daily VWAP, you can see the move to the upper standard deviation, we'll likely see another now that ES has touched VWAP pre-market.
The weekly ES VWAP needs the open to widen out, but there's the area in red I suspect is our actual turning point, look for ES to move just above the weekly VWAP as it did last week, I suspect the downtrend will remain intact, but Wall Street often makes moves that are more extreme than we think rationale, this will be interesting to see where it does land as it may signal a major change in character and those changes often are a part or precede changes in trend.
More coming...
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