Market Update 1 of 2

I'd like to give you the update with the averages here and the futures in the next (part 2).

 DIA 3 min is a pretty good example of two things, 1) being the intraday negative divergence that is slowing the DIA down here, causing consolidation, etc and 2) the overall near term trend's general direction which is up, despite intraday jiggles and what not. This is what we saw forming last week, the IWM is a perfect example of why.

It is a bit confusing because there are 3 different trends that are all developing at once, just in different timeframes.  Before Tuesday of last week it was more simple, we expected a move down in the market and the longer term charts suggested that move down would be accumulated and lead to a larger move up which has been under construction since late October as a 30 min divergence. So while the move down certainly could be dramatic and shake things up, the larger trend that has been developing since October is for a move up. Tuesday the market shifted very quickly in the late afternoon and  at first we had a split where the NASDAQ immediately didn't look good for the next day, but the S&P did, the following day that shifted, we called both correctly, but it makes things a bit more confusing trend wise. I would try to think of this along the terms of August-October of 2011 when there was a lateral trend from August and we traded that, but also saw 2 things happening, a short term new low would come and that lateral period from August was under accumulation for a larger trend up. In October we saw the short term new low made and the market put in a bottom right there and rallied higher, this is similar to how we have several different trends at once now.


 The IWM as I have shown you has a VERY obvious range, stops and limit orders are bound to be piled up there so it is VERY likely that these are triggered with a move above that range (I believe that in part is what the changes on Tuesday were about, rather than let the market fall lower, some support was built it to take out this range in the IWM and perhaps some other areas in the other averages, whether resistance or moving averages, etc). As you can see since the changes from last Tuesday, the IWM has been creeping toward a move above the sideways range.

 Intraday on a 2 min chart we have a negative divergence, being what I believe the IWM is trying to accomplish, I think this will likely lead to a pause/consolidation. I believe the IWM is feeling a little pressure from other areas in the market that are causing it to pause a bit here, but I still think the most likely scenario is a break above the range before we finish with the move lower.

 The IWM 5 min chart is more representative of the slightly longer term in which we expect that move lower to commence before a solid move higher can take place, very much like the example I gave above of August-October of 2011, the short term trend suggested we see a new low, but the longer term charts showed the range from August to the October low was under accumulation for a larger move higher and that's how it played out.

 QQQ 2 min is showing a negative intraday divergence, but the accumulation (white arrow) is sufficient enough that I believe the QQQ is not in imminent danger of a plunge, once the IWM's resistance is broken, that plunge may become a reality VERY quickly.

 The 5 min chart showing the QQQ's leading negative divergence suggesting that move to the downside before a larger move up can be sustained. The QQQ 15 and 30 min charts are representative of the picture of what comes after this move is finished as that is the positive divergence I have mentioned that has been under construction since late October. The market just simply doesn't move in straight lines, so we follow these trends and try to use them to our advantage.

 SPY 1 min leading negative divergence, I think this will lead to an intraday downside correction, at this point again, like the QQQ, I don't see the imminent danger of a plunge  down hard, but I do think that will come and will likely show up quickly.-the IWM's positioning still being one of the keys in timing this.

 SPY 2 min migration of the negative divergence, however some longer timeframes such as 3 min and 5 min have not been negatively effected yet, part of the reason I don't see an imminent plunge.

Today the TICK chart has thus far been very positive with most downside limited to -250 and the upside at +1000. I do believe this is part of moving a lot of Russell 2000 stocks / IWM toward that point that is so obvious on the charts it makes for a perfect bull trap and there's a lot of order flow money to be made there by Wall St.

Futures and leading indicators will be coming up so we can continue to put the pieces together and give yo a clearer picture, as well as identify opportunities and specifically when.