The Backing and Filling

This will be interesting, over the past month (you could argue more, but I'm mostly focussed on this cycle) we have seen some big moves at the 9:30 open, in some cases they wiped out a great overnight session on the open, in some cases (fewer) we saw big moves up early on after a not so good overnight session, the point is, early volatility increases dramatically with the US open and often goes in a completely different direction than what the overnight trade suggests.

Then after the European close we see the market make another reversal from what it was doing in morning trade, however as I mentioned before, changes in character lead to changes in trend and changes in trend develop new character so this will be very interesting to see what the new character looks like.

So far there's an ES 1 min negative divergence, a SPY 1 min negative which is not as bad, the QQQ failed to confirm the open and the IWM confirmed and then put in a small 1 min negative divergence so this is some of the typical action we'd expect, the backing and filling.

I don't want to give you any false impressions that these divergences are worse than what I said, they aren't that bad, they are intraday timeframe and the market is reacting to them for the most part, the way we'd expect, but this is a fast moving market already this morning.

ES 1 min negative divergence, along the lines of a consolidation or normal intraday pullback. The NASDAQ futures have a sharper negative divergence, but then again so do the Q's.

So far the TICK is holding up incredibly well, for a while we didn't even break zero and the worst we've seen so far is a very mild -500.

I wouldn't break out the victory lap just yet, the market never makes anything easy, even when an open like this looks like it will be easy. However, I also wouldn't be too quick to judge anything that looks a bit ugly as there were a lot of clinger-ons thins morning apparent by the opening TICK of nearly +1800, in other words, a lot of Jonny-come-latelies and the market may be eager to shake them off.

So far though, all of the macro trends that have been developing in the charts and indicators are taking shape, especially with respect to the extreme momentum of the last 3 days of last week.

And before I can even finish this post, the market is now making another new high on the day, like I said, it's moving quickly. This isn't a time to make rash decisions, take it in, lets see what the character looks like, lets see what different environments look like and see if this is what we have been looking for, I believe it is.