After Hours Futures

Here's how the initial overnight futures are starting out the night

ES (S&P E-mini Futures)

 ES 1 min was pretty tight between 3C and ES itself all day, it loosened up toward the end of the regular hours session and has since loosened up a lot more as ES is leading negative, but ES is still managing to hold $1412.

 The longer 5 min ES chart shows the first serious divergence that took stocks lower yesterday morning, the end today wasn't positive, but not quite at a new low either.

 The ES 60 min chart shows clearly where accumulation was sharp at the 11/16 lows with the market very strong that day, but since there's been a decently large negative divergence that must be resolved and I don't think that can happen without a pretty serious move down. However I don't see this as a trend change to the downside as you'll see, the longer charts are very bullish from the October-November accumulation cycle which is based on something Wall St. knows, perhaps about the fiscal cliff? I'm really not sure, but this is a big cycle, not the normal garden variety.

NQ (NASDAQ E-Mini Futures)

 Like ES, NQ 1 min was also tight, but negative all day and loosened up toward the close, it's now leading negative and in fact worse than this already.


 The 15 min chart shows confirmation at the green arrow and a negative divergence at the red arrow, again it's pretty significant in size.

 The 60 min chart shows confirmation and the initial strong 3C move off the lows and a leading negative position since.

 If we look at the daily chart (for any of these, it's the same), we can see a large accumulation cycle after the market topped. This cycle ran from about late October through mid-November, the 16th was the start of the move so any pullback, no matter how bad it may look (even new lows) has extremely high probabilities of moving to new and significantly new highs. The basic way I'd want to approach the market is leveraged ETFs, maybe a few options for a pullback move, then once those are sold as 3C starts to show accumulation in to lower prices, start adding to longs/leveraged longs and ride out a bull move through the end of the year and likely beyond. Ultimately and I don't know if it is this cycle or one further down the road, we'll want to back up the truck on shorts and hold on as we see the market put in a new kind of decline on ultra-low liquidity as the HFTs pull all bids and there are few market makers or specialists left, the end result (and you've seen how bad the long term negative divergences are), sellers who want out and use to be able to find it with a market maker or specialist as long as they were willing to take market price, could find a way out. However HFT's have replaced many market makers and specialists as the HFT's can get in front of the traditional liquidity providers with better bid/asks, but they are under NO legal obligation like a market maker or specialist to make a market and to take the other side of a market order no matter how ugly the market, the HFTs can simply shut down and there goes all liquidity,  it's the making of one of the worst, if not worst market declines ever.

One bridge at a time though...