Market Update-Tech and Financials

*I see the NASDAQ/QQQ dropped since the last update, I hope the information was helpful.*

In last night's Market Wrap, I ended the presentation with the following,

"My Take...
I think there will probably be some opportunities based on rotation (for instance perhaps Tech and Financials flip at some point in the day), but broadly speaking I would expect a little more upside, whether it comes in the form of this insane volatility or a smooth cruise, I think there's enough accumulation to make at least one more move, which I'd like to continue adding to select short positions as some were opened in partial positions today."

This is EXACTLY what we are seeing today so I want to start with the SPY which is more Financial heavy and the QQQ which is more Tech heavy as these are 2 of the 3 most important industry groups (Energy being the 3rd); we'll also take a quick look at the 2 groups.

QQQ

 This is more analysis than a market update (intraday) so the timeframes I chose were to illustrate a point. Above is the QQQ 2 min, pretty fast timeframe, not huge on importance, but this is where new moves start so if there's a transition, it will start on these faster charts first. While the QQQ makes higher highs today, the 2 min is not keeping pace, suggesting there's some distribution as we move higher,if that continues to build and show up on longer timeframes then we have some good signals.

 On the 15 min timeframe this is where we do see heavier accumulation/distribution signals, for the most part there's VERY little here showing QQQ accumulation, I have no doubt there was accumulation to s end the Q's higher, but it wasn't so strong that it showed up on the 15 min chart which by the way is still in a leading negative divergence overall, that's where highest probabilities are right now moving forward.

 SPY (5 min)-I believe the S&P showed more initial accumulation a I mentioned Tuesday to close Financial shorts and I only wanted short exposure yesterday in Tech, the QQQ, etc and that turned out to be the right call. Today's rotation turned out to be the right call so far. The point here is the initial accumulation on the 5 min chart is pretty big, but now we are seeing that start to fade away a bit in to higher prices. This isn't all the evidence we need or that i'd like, but it's a good start and good confirmation so far.

 The SPY 10 min chart shows less accumulation than the 5 min, that probably is because it was not as strong and didn't show up on the stronger chart the same way, that is what we expect to see. In the orange box on today's intraday action we see 3C is failing to confirm the most recent high, so again it looks like the initial accumulation is being distributed in to higher prices.

Financials

 XLF 5 min shows accumulation Tuesday and yesterday we see some signs of distribution.

 On the longer 15 min chart, the accumulation didn't make it that far, it wasn't strong enough, this is why I initially thought this may be about a 2 day move, we do however see this chart showing stronger negative divergences to the far right at the recent new high as 3C is lower.

So thus far, the original theory seems to be holding water.

Tech

 The Tech 30 min chart shows an overall ugly chart with distribution on it, bit recently a very small signal of accumulation at the white arrow, it pales next to the negative divergence across most of the chart, but that is enough to move Tech for a day or so.

 Longer term on the 60 min chart there's very little sign of anything other than a large negative divergence or distribution suggesting the ultimate direction from this signal is down.

Futures-ES (S&P futures)

 Starting with a 15 in chart we can see yesterday's negative divergence or distribution in to the ES/S&P highs, this morning in to the lows there was a smaller positive divergence to hold the futures in place, but it isn't large like the initial divergence or like the NADAQ futures today.

 Now shifting to a 1 min ES chart (remember any new trends will start on the fastest charts and migrate to the longer term charts) we do see a negative divergence in to this morning's move up, call it distribution.

Did it migrate though?

 Here's the 5 min chart with the original accumulation on Tuesday, the selling in to yesterday's highs and the positive divergence this morning, we also see a negative divergence to the far right (red arrow) at a higher high in price, so yes, there's migration.

NASDAQ Futures (NQ)

 I didn't have the benefit of this strong leading positive divergence in the NASDAQ Futures last night when I suggested that they rotate in to strength today, but it did develop and they did rotate in to strength today vs Financials or the S&P (almost the same thing).

 Now to the 1 min NQ chart, we do see some distribution in to the highs today.

Also on the 5 min chart we see the same as 3C failed to make a new high with price. The 15 min chart still needs to go negative before we are ready to expect a serious move down, but with the 1 min and 5 min going negative, at least on this platform, the 15 min is the next timeframe for migration to occur so I'll be watching for the 15 min chart to show signs of weakness.

So far my theory and best guess from Tuesday still holds, this looks to be a volatility move to shake out shorts, longs, different sectors and do what Wall St. does best, make the most people wrong at any one time .

Next up are leading indicators as we try to put the highest probabilities on our side in what has otherwie been one of the strangest weeks I've seen in a while.