Follow Up-SPY

In the last market post, "We should see soon" I explained the mechanics of a reversal including a head fake move. These concepts can be put in to practice on any timeframe and in any risk asset that you think there are enough technical traders following (if it's a 30k share a day stock it's a lot less likely to attract their attention and that is what is needed).

Of course if you use these concepts in different timeframes, you obviously need to scale them to that timeframe, but the concept holds true for any risk asset, this is just how Technical Analysis has been turned on its head and used against traders. If you look at a Technical Analysis text book, what just happened shouldn't have happened, but it's so common place now that we actually use it as a timing signal.

The divergences in the Futures as well as the market averages also helped, in fact I wouldn't have been looking for this triangle if I had not known underlying intraday trade was shifting.


The SPY now...

The red arrows are what Technical Traders expected, since we already had a head's up from 3C, we expected some game as most reversals see this kind of head fake. The yellow area is the head fake where traders commit, the white area is where they are at a loss and starting to cover.

I need to keep an eye out, but this also helps explain FAZ which I will post charts for momentarily.