Futures/ Market Update

These are virtually the EXACT same charts I posted last night for ES in this post, So Far So Good showing the 30 min ES chart with positive characteristics as well as the 15 min and a chart with no 3C showing the chop or volatility in intraday trade or from day to day that goes in to creating a range, it's not the typical very tight range that we associate with a range bound market, at least not while you are in it, looking back you see the range differently than you do while you're in it.

In any case, as was the point late Friday and last night, we need that range bound trade to put together a more solid base and positive divergences to make our move higher, we aren't going to see many positive divergences in to a "V" reversal, but in a flat-ish range (that will have chop), that is where we'll see them develop.

Here are the ES charts.

 As shown earlier today, ES started off with a negative divergence pre-market, I warned about this causing some downside volatility, but in the larger picture this is still just a 1 min chart and intraday moves.

 The 30 min is already starting to show its own positive as we saw last night and may be part of an even larger positive.

This was the example chop range between a decline and an advance, this is where the positive divergence above was put in, if indeed this chart should be read as putting in the second positive of a larger positive divergence area, this will be a much larger base and able to support a much larger move.

As for the averages, the SPY might provide another example that may be another way to understand the importance of the range and how it develops.

 Earlier I showed you the extent to how far the positive divergences went out for each average, for the SPY it was the 5 min chart. This 3 min chart though shows a better representation of where and when the divergence started on Friday, later in the afternoon after most options positions would have been closed and in a flat range around 2-4 p.m., that's where it was leading and this will move to the 5 min chart and from a strong 5 min chart it will move to a 10 min chart and then a 15 and at that point we probably have a pretty good case for a reversal move.

 The 10 min chart which was negative for a good part of last week is just now starting to show the first signs of progress as the first positive divergence is put in at the last move to the downside intraday.

The 1 min chart shows the intraday mechanism of building these divergences and keeping the market in a range, however tight or loose that may be, a negative at 10 a.m., a positive on the decline from the 10 a.m. highs and a leading positive, this should continue putting in the chop and lateral movement I talked about last night. If all goes as it appears it will, the 10 min and then 15 min charts will start to show clear positive divergences just as the SPY 5 min has.

It's not a terribly exciting time, but if you look at last week, we started with a couple of days of upside, then midweek a couple of days of lateral trade with a negative divergence and then a reversal to the downside, almost like a sine wave, we should be in the process of putting in the lateral trade before the next move up. As mentioned above, if indeed that ES 30 min chart should be read as one larger positive divergence rather than 2 independent ones, this would give us a larger divergence and base to move up from.