Consolidation

Consolidation is a tricky word because most people take it to mean a lateral consolidation which is through time with patterns like triangles, rectangles, even flags to some extent and pennants, but consolidating gains can also mean pulling back and consolidating through price.

We've had the signals for a market consolidation for the last 2 days now, but it had remained in a lateral or sideways consolidation through time. I personally didn't trust it and have mentioned it in many recent updates like this one from yesterday.

However when you have 10 min charts like this QQQ and SPY with negative divergences, it's hard to imagine they will just remain lateral and I was hoping they wouldn't as we closed leveraged longs like TQQQ and FAS right near the top of this initial break higher (actually Financials are still hanging in there this morning-ROTATION!) looking to re-establish them at lower prices for another run again, so just for some perspective...

 QQQ 10 min negative divergence screams for a pullback and that's what we have starting this morning.

 SPY 10 min chart looks the same.

However for perspective, the move up we are trying to play and nimbly, is based on a 30 min positive divergence that is quite large and the pullback in red thus far is very much in scale with expectations of the move to continue after we have a chance to add longs back at better prices.

Some of your favorite longs will be down with the market and there's not much more to it than that, some of your shorts will be up, if you have shorts that are trading positions then this pullback may allow you to exit them at better prices.

I'll be looking for the opportunities to add to the upside, but also listening to the message of the market on what appears to be the pullback we have been expecting more and more with each passing hour over the last day especially.

So far, nothing has happened that is outside of our expectations so the game plan seems to be working out just fine and unless the message changes, should continue to do so.