How Does the Market Work? You Decide

I was reading a technician's report tonight, I guy I've met, a guy whose father had unprecedented access to Wall Street and wrote several of the best books you'll never hear about regarding the market. This guy had a lot of access to a lot of information and maybe he knows better than what he's writing, but perhaps this is all his audience knows and can digest.

In describing today's move, today's decent housing data helped push the market higher! How many good, awesome, bad or indifferent economic reports have we seen that did nothing to the market? Yet today's move was pushed up by good housing data. Another reason was the market was oversold.

To believe in the concept of an oversold market, you have to believe in a market that is searching for fair value, so AAPL's 200 point decline since September was a little overdone and it rallied from Friday's lows....

 An amazing 11.9%, a move on no news that was bigger than the earnings blast higher of 9.9% back in April. So we should then assume that AAPL has to be fine tuned a bit and barring any major developments, AAPL's fair price should be found and it shouldn't deviate too much from there. Do you believe that? In fact AAPL just got a lot of bad news from losing key people to seeing their parts from Samsung jump in cost 20% virtually overnight, yet AAPL which has been on a tear to the downside gets this news and several days later puts in one of the biggest rallies AAPL has seen in quite a long time!

 The Classic Technical descending triangle that should have sent AAPL plummeting down on the next leg lower instead happened to suck in shorts and then reverse to the upside, the classic technical pattern failed.

However, even bigger than that, a major support level was breached on high volume Friday as short sellers piled in on the new break below important support and then AAPL rallied back up the same day to close near the highs? That's coincidence? That's AAPL searching for fair value? That's AAPL reacting to good housing data today and we are just talking about AAPL, what about all the other stocks that ironically were just lucky enough to see huge rallies the same day coincidentally. Perhaps the housing data? Perhaps they too were seeking out their fair value?

Then we have these charts, charts few people see other than our members. Just a week or two ago I mentioned that AAPL which had been a big disappointment in accumulation was starting to see a change in character, a few days ago last week I said AAPL is getting close to a long position, Friday we entered Calls and we had members today make more than 150% in less than a day (I'm sure some of you did even better than that). That was just a lucky guess or could these charts tell us something about how the market really works?

 AAPL's 15 min chart saw a lot of momentum develop from the 6th, by Friday it's seeing more money flow in to the stock at the lowest lows of this move down than well over a month ago over 150 points higher!

 The shorter term AAPL 5 min chart shows an accumulation area between $505 and $552, the accumulated position is probably an average of that, say half way at $528, today it easily would be in the money at 565.73.

Just about everyone knows that if AAPL moves, it's going to pull the QQQ higher being AAPL accounts for nearly 20% of the NASDAQ 100's weight. So why would the QQQ also be seeing big accumulation too, coincidence again? Luck? Or perhaps smart money knows that AAPL moving higher is going to move the Q's higher so why not spread the money around and accumulate the Q's as well?

 The 15 min positive divergence in the QQQ ranges from about the 64.25 area to 61.50, assume the average is around $62.90, today's move alone puts that position at a profit at $63.79 on the close.

On a near term 5 min chart, the accumulation zone is about the same.

What about all the other averages though? Why do so many of them that trade totally different stocks and are totally different in volume and price look so similar?

Take a look at these 15 min charts of 3 of the majors...

 Note the dates and how the divergences appear, this is the DIA

 The IWM

The QQQ

But what about a totally different ETF, TNA, not only a 3x leveraged ETF unlike all the others above, but a small cap ETF, why does it look so similar in the same timeframe?

TNA sees distribution at the same place in mid-October, then is bland for a bit and then gains upside positive divergence momentum to a new leading positive high, this ETF is not connected to any of the others at all in any way, especially the DIA which are large caps. I don't draw these lines, this is the indicator.

How about just the Tech Industry, but lets look at a 30 min chart instead.

 Basically the same findings in the same places.

Lets really mix it up and look at Financials, but instead of a 15 min or 30 min, lets look at the trend of a 10 min chart...

Distribution at the same place, a positive divergence and a new leading positive high all at the same places.

There's no way all of these assets could possibly look this way by accident, these assets rarely ever look almost exactly the same. Coincidence? Luck? Somehow all of these assets that trade different volume, different prices, all have the same signals in an indicator that has no way of making them look the same unless the underlying action itself is similar, the moves smart money are making are largely the same not in one or two stocks or groups, but across the market. I could show you dozens, maybe hundreds more of these charts that are all similar.

I always tell users of 3C that you'll never know why the signals are there at the time, you can wait to find out why and be sure, but there's no money to be made in certainty; by that time the move is over  you lost your chance to make money.

I just had to vent because I know these people are smarter than to say this is based on an oversold basis, some search for fair value across all these different asset classes and individual assets and most laughably, the decent housing data today. Something big has been building here for a while, we've been expecting it since before it really even started and here it is.

French downgrade or not, something big is going on and in a few weeks or maybe longer we'll be able to look back and see how this all played out and I think we'll all have an even better understanding of just how controlled this market truly is.