EOD Market Update

In yesterday's afternoon post, "Close the Q's Strong" a few things came together for me, 1) the reason why negative divergences formed quickly only to be held up at the 5 min chart, which suggests there was selling in to yesterday's QQQ breakout that we have been anticipating since last week, but there was a limit to how much damage they'd allow yesterday, in essence it seems they did exactly what I posted,"Close the Q's Strong", 

2) This is why I thought that was likely...

"If they can close the Q's strong and above that resistance range... Then it's likely the same thing will happen as it did with the IWM, traders who work during the day will come home, see the breakout, place their limit orders and go to work, the market gaps up and sells off the next day, more flies in the web."

I used this chart of the IWM as an example as it went through the exact same scenario last week...

Yesterday would represent the first day in the red box on this IWM chart and today would represent the second bar with a gap up and late day sell-off.

Here's how the Q's Closed...

Almost the exact same scenario that I talked about yesterday except today we even got a move below former resistance (support) on the close.

In the 2:30 Market Update today there were some intraday 1 min positive divergences, I said,

"There are several 1 min charts, especially the QQQ that look like they could see some intraday movement to the upside,"

And...

"Because there's not  whole lot of support of intraday timeframes beyond 1 min, there's always the chance the 1 min positives just get rolled right over, they are nowhere near as strong as a 5 min or a 10-15 min."

Here's what happened there...

Around 3 p.m. those short term divergences seemed to kick in as the intraday downtrend was broken to the upside, but as mentioned, the changes the short term positive divergences would be rolled right over were real and that's exactly what happened with volume picking up on the break through support which is also the former resistance level on a daily chart we have had marked as the target area.

Today we broke through that temporary road block that held negative divergences back to the 5 min timeframe only and moved beyond to more important areas, here are the Q's today.

 The 1 min positive intraday divergence mentioned this afternoon, it did break through the intraday downtrend and was subsequently run over.

 2 min. showing the 2-day leading negative divergence with today's addition to the divergence marked. Note the very flat range in the area, whenever I see these ranges, I can almost guarantee there will be some divergence there. Think about it, it's quiet trade, market participants aren't paying much attention, they're bored and off guard, it's a perfect time to conduct quiet activity because no one's paying attention and the other half is best summarized by my little saying, "It's like the kids in the room next door being way too quiet, you know they're up to something".

 The 5 min chart is where we were road-blocked yesterday so you can see the additional downside added today.

We did have a large relative negative on the 15 min QQQ, but as you can see yesterday we didn't have a divergence, today we added that.

The DIA

DIA 1 min positive divergence and that getting crushed

 The 30 min chart with an impressive leading negative divergence today.


And the 15 min chart

The IWM...

 IWM daily with the first obvious range that we predicted would be taken out. We have a Harmai downside reversal Candlestick pair today on higher volume.

 IWM 1 min positive divergence triggered and run over.

 3 min added to the leading negative today

The 30 min is interesting because you may recall that even though on a percentage basis the IWM was the best performer yesterday, I said all day it had the weakest underlying trade and today it was the only average to gap down and the worst performed through the day by far. I mentioned why I thought this was so, because the orders where the money is to be made had already been hit at the yellow arrow and since then you can see the IWM never saw any kind of underlying strength, there was no more incentive as they hit the accumulated orders already.

SPY...

 SPY 10 min didn't have much yesterday, it added a large leading negative divergence today, in fact just about hitting new 3C lows on the chart.

 15 min also added to the leading which was non-exisitient yesterday, much of the leading happened before price fell today.

The overall 60 min since this move started on 11/16 with a large negative divergence, way out of proportion with the positive divergence that started the move. 

I'll have more for you shortly, I have a meeting to go to for a bit and then run my scans and collect any interesting charts that may hold some clues or answers for us.