Quick 3C Example

Here's the QQQ, often we look at many different timeframes and I talk about the 1, 2 and 3 min. being intraday timeframes, giving signals that effect intraday trade, but I also tell you about the long term timeframes and how they represent the larger trend, the larger money flows and the highest probabilities for price to move toward, which in many cases means a different trend will develop to take price to these longer term divergences.

We got to see al of this in fast-foward because of last night's Futures market. Yesterday I said it is rare, but the signals were muddy and that usually happens when the market is unsure, when it doesn't know what is going to happen and when it can't properly discount the event it is worried over, it's one of the few times the market is reactive instead of proactive-when new fundamental (events) come in to the picture (as Boehner introduced "Plan B" the other day) and how those events will play out (the vote last night). As you can see, the market didn't know how to deal with this, thus the muddy signals and when the fundamental event occurred, it reacted very emotionally with an initial limit down 50 point drop in ES. These are the things flash crashes are made of or Black Swans, but the long term 3C chart's probabilities will almost always be the direction the market will take.

 Yesterday's QQQ 1 min 3C chart shows a patch of accumulation intraday, it sends price higher and pretty much stalls on a negative divergence.

 The same chart today, it can't react fast enough to a drop like that, it will sort itself out.

However the longer term 5 min chart has been leading negative, that's exactly where price gravitated to. The even longer term charts have even higher probabilities and most are still much lower.