And the news!

I see these divergences everyday as do you, but I'm still blown away that ES was at overnight highs and 3C was calling distribution in ES at least an hour before it moved to the downside, actually several hours before. I'd say during the last hour this news was leaked to smart money.

The EuroGroup Meeting today to decide what to do with Greece ended with no agreement, the headlines...

• *FRIEDEN SAYS NO DECISIONS REACHED TODAY ON GREECE BY EUROGROUP
• *FRIEDEN SAYS EURO FINANCE CHIEFS TO CONTINUE TALKS ON MONDAY
• *SCHAEUBLE SAYS EUROGROUP UNABLE TO REACH CONCLUSIVE AGREEMENT
• *LAGARDE SAYS MORE WORK NEEDED FOR GREEK SOLUTION
• *JUNCKER IDENTIFIED 'CREDIBLE' IDEAS TO BRING DOWN GREEK DEBT 

And ES once again, I'll never tire of looking at a chart like this... 

Not only did we get a positive divergence at the afternoon lows, but a negative divergence(distribution) in after hours at the HIGHS!  I'm guessing this information was leaked, ES was run up and they sold in to that run up. Without 3C you'd never know this was coming.

BEAUTIFUL!!! 

Overnight Session Update

As I mentioned many times today, the 3C charts suggest a pullback and that's what I'd like to see to set up another trade like Friday's AAPL calls, but we need some downside and we need positive divergences in to that downside. We already saw evidence of some very early positive divergences and the TICK chart looked great as well, the intermediate term 3C charts and now even the longer term charts are getting more and more positive so the probabilities of a pullback favor accumulation in to a pullback.

Ironically after having had this opinion most of the day today, I get home late from my board meeting and look at the S&P and NASDAQ futures and see exactly what I'd hope to see. I'll admit it's very early in the overnight session, but I was hoping for early downside and perhaps a chance to get long in to a position in the afternoon, even if it is just a short term intraday trade.

Here are the SPX and NDX futures thus far in overnight trade.

S&P E-mini Futures

 1 min ES futures show a negative divergence in to the overnight highs and a leading negative divergence since then, this should drop ES in the overnight session, although the European open could have some effect, I'm hoping we get a lower open and as we usually see, perhaps a positive divergence after the European close. In any case, however this develops, it's worth reminding ourselves of what the highest probability for the longer term trend is, below is the ES 4 hour chart.

 A huge leading positive divergence in to the ES lows, this long term timeframe represents the longer term trend and the highest probabilities, so any short term pullbacks are highly likely to see positive divergences which give us a number of opportunities on the upside.

NASDAQ E-mini Futures

 Since the positive divergence at the afternoon lows, NQ went on to make an overnight session new high with a negative divergence in to that high, like ES, NQ also has a leading negative divergence on this 1 min chart. I like that we have good confirmation between the two futures.

Again, to remind ourselves of the long term trend and highest probabilities, here's a look at the 4 hour NQ chart.

Not only did NQ see a negative divergence in to the post QE3 announcement highs with downside following, the recent lows saw a huge leading positive divergence (leading divergences are the strongest kind). So once again, we have another chart in a longer timeframe confirming the same thing ES is showing us, the same thing the SPY, DIA, QQQ and IWM are showing us.

This is the move we have been watching develop and now it's starting to unfold. My view is to be patient on the leveraged longs we set up and to look for pullbacks to set up some leveraged trades, perhaps options (Calls).

Like I've said a number of times, "Not every decline is bearish and not every tally is bullish".

As I was finishing this post I captured the EUR/USD charts, this is pretty amazing...

 EUR/USD, now a closer look



Look at that nasty decline in the Euro, that would send Futures lower, amazingly the Futures chart's 3C indication was showing money moving out of the market on an intraday/overnight basis, somehow they knew something in advance and shortly thereafter, this happens to the Euro.

This is what ES looks like now...

We don't call them smart money for nothing, 3C did an amazing job at telegraphing whatever just went down. Imagine you were trading ES contracts right now on those signals, you would have made a very pretty penny!

SPY Update

Despite the correction day and the probability that we see a bit more tomorrow early on, we may indeed be in a positive position later in the day or after noon time.

Take a look at the SPY alone, interesting...

 Here's the bear flag-type correction today

However for what is supposed to be a bearish correction and lead to new lows, the TICK index was pretty darn positive through the period, rarely moving below-500 which is very average and spending a lot of time above +1000 with some highs in excess of that, not what you'd expect for a "Bearish" price pattern.

 The 2 min chart is one of the fastest intraday charts so it makes sense that the divergences show up there first, in this case repairing some of the mid term (5-10 min negatives that called a consolidation/pullback), here the 2 min is in leading positive position, so this should continue and migrate through the longer timeframes until we have a solid signal to enter some trades and/or close some puts or shorts.

 This is what I was really hoping to see and with the TICK so strong, I'm not surprised. Moves on longer term charts indicate larger movement of capital so this leading positive 30 min chart through yesterday and today, has very solidly bullish implications.

Even more striking is the same leading positive today in a 60 min chart.

I'll be back in a bit, I have a board meeting tonight, but I'll definitely be posting my findings and any interesting trade , signals and opportunities.

So far today is a simple consolidation day, it's typical and it held up very well in underlying trade. I'd like to get a bit of a price pullback to make some new long positions worthwhile and from the charts, I think that's a possibility, but we'll see what the market brings us.

GLD Update

Although I still think there's a decent chance for GLD to drop more, I'm happy with the initial position in GLD started today. GLD could have gone either way on the F_E_D and with the typical knee-jerk reaction, it still very much can.

While the longer term charts aren't quite there and are telegraphing probabilities are for a deeper correction/pullback before an upside move resumes, we are seeing positive signals in to this afternoon's trade which is what I hoped to see and this leaves me plenty of room to add to GLD or even switch to a leveraged product.

 GLD 2 min is showing a positive divergence between the 11:30 reaction high and where 3C was at that point and the 3 p.m. reaction high and where 3C is now.

 The 5 min chart shows a more clear cut positive divergence as it is about the same level as the negative divergence at the top for GLD, although prices are lower now.

 Most importantly is the 10 min chart that is leading positive at the flag-like correction, that's all today and that's what I want and need to see.

Finally the even more important 15 min chart is leading positive and is on its way to hitting a new leading high for this timeframe.

Thus I am very happy with starting a position in GLD and the tool I chose for the initial position, at least until more data comes in.

Keep an Eye on UNG

All we really need there is a volume spike to grab traders' attention and move UG from a stage 1 base to stage 2 mark up and UNG is in the right area again today on a +2.6% gain.

 UNG's longer term base -1 day chart

 A closer look at the move above what has been general resistance as well as a look at the exact area we called UNG a buy/add to as it hit a channel I had posted fro you as well as the pattern's support.

 The daily chart is in line and looking good.

 The 30 min chart is leading here.

And here's the positive divergence at the reversal mentioned above on a 5 min chart as 3C went positive at support.

This is one of our favorite long term long positions.

AAPL Update

Yesterday we closed call positions in AAPL that were opened on Friday for triple digit 1-day gains, although I like the idea of some AAPL equity shares long for the next trend (ultimately I think long term AAPL is done and when it provides a good entry and the right signals, I'd be al over it on the short side, but for now we take what the market gives), I also would like to open another call position in AAPL when the signals are right.

I'm seeing recent improvement in AAPL and several of the market averages today so I have to wonder whether we are just taking a little breather and resume moving up this week or whether we have some more to go on a pullback before I would consider a long Call position. The speed in which AAPL has changed tone today is quite impressive, there are still signs that it has more to go, but at the pace I've seen character change today, I'm not so sure today won't be the day to open those calls.

 This flag suggests APL makes a move to the downside and that's what most technical traders will be looking for, I'm interested to see if we do get a move to the downside and volume rises as shorts jump in, whether we get some strong positive divergences. If so and they are strong enough and this happens before the close, I may very well consider that call position today.

 The bigger picture re: a pullback is here on the 10 min chart, it hasn't gone positive yet and suggests there is still more downside in AAPL.

 The intraday 1 min chart, like I showed you earlier is showing initial signs of accumulation.

 The 3 min chart is about in line.

One of the other positive things is this last little corrective move in the market since about 1:30 has seen excellent TICK performance hitting the +1000-+1250 which is pretty big for what is otherwise a corrective move within today's trade.

GOOG UPDATE

I have several requests for a GOOG update, this is an interesting one that I'm trying to decide what to do with as there's an equity short at a small profit and 2 Call positions meant to hedge that short (with the intention of adding to the GOOG short at higher prices) that are also at a very nice profit, I'll probably close the call positions and look for a high probability place to re-open them.

Here are the call positions at nearly a 80% and 12% gain.

 GOOG daily with a bear flag that "Should have", according to Technical Analysis, started the next trend leg lower.

 Here's the Trend Channel set to daily and on a closing basis you can see where the long position would have been closed, a short position is very close to a stop out on a closing basis at $673.95 at least for a swing (longer) move.

 The daily chart is negative, it's ugly and I'd be looking at any big move on the upside to short GOOG and I expect that the shorter term charts would confirm that in the future, but first it needs to make that big move higher as we don't chase, we let the trade come to us.

 The 60 min chart already shows signs of a positive divergence suggesting GOOG makes that upside move I'd like to short in to at some point, but because the positive divergence is so far out to a 60 min chart, the first trend I want to play is the long GOOG like you see above with the calls. I prefer calls with GOOG than long equity, but for that the standards are VERY high for the set up.

 On a 2 min chart we see GOOG preparing for this week's move higher and today's negative divergence, but we also already see a positive divergence on the short 1 min chart as GOOG moves a bit lower today, this is what we want to see, accumulation in to a pullback.

 The 5 min chart suggests that GOOG still has some downside before it's ready as a long Call position, the positive divergences should reach the 5 min chart by the time I'd want to consider opening a new Call position or long GOOG stock if you prefer.

 Again the longer term charts, like all the others you have seen are positive in GOOG on this 30 min with more detail than the 60 min chart as should be the case.

The 15 min chart, of which I showed you so many last night, has the same breakdown October 17/18 and a positive divergence in to it since then.

So now you know what I'm looking for before I consider GOOG for a new Call position.

Quick QQQ/Market Update

In the last post I showed you the concept, in this post you'll see the actual process. I don't mean to imply we are looking at an upside reversal and we haven't lost enough ground to make an options trade worthwhile yet, plus the fact we have several timeframes that need to confirm first, but we can see signs that we are headed in the right direction and we can predict the probabilities to be high that this would be the case before we even see our first shred of evidence based on the long term positive divergences that are getting stronger and are all over the place like I showed you last night.

 Here's the NASDAQ Futures 1 min chart and as you can see, even though the price of the futures is falling,  3C is remaining in a leading positive divergence, this is what we want to see and see this continue to happen and move through the other longer timeframes.

 Here's the NDX Futures weekly VWAP, note the positive divergence is right at the VWAP.

 On the daily VWAP prices hit the upper 2nd standard deviation and pulled back from there, however look at where the volume is and isn't, volume is slightly higher at the lower channel and lower at the upper channel, there isn't heavy selling at the upper channel, but it appears there's decent buying at the lower channel. VWAP is used extensively by institutional traders to judge value.

 The QQQ 5 min chart with a negative divergence turning price down, it's nowhere near the size of the positive sending price higher, the idea isn't to get rid of a lot of shares, it's to let go of just enough to cause price to fall where it can be accumulated at lower areas.

 Even though we are VERY early in this process and based on all of the charts I'd expect a larger move down before this is over, here we can see a positive divergence to the right, it's actually leading as price is at the exact same level around 1:15. These are very small examples, but they should build, especially at lower prices.

 We can see the same in the IWM all the way out to a 10 min chart .

And the SPY on a 2 min.

I also looked at leading indicators and at last look, they are all holding up well except the $AUD is a bit weak today but that has to do with Australian monetary policy overnight.

Opportunity Looks Like It Will Be Knocking

I've showed you this type of chart explanation before, this is really no more than the essence of a divergence and why it's signal is a signal for us to enter a high probability/low risk trade.

As mentioned early today, the short term market charts in intraday timeframes are all over the place and ugly, the long term charts are strong, this is interpreted as near term weakness for a shorter period followed by longer term strength for a longer trend, therefore these dips and pullbacks offer amazing opportunities when we have this kind of chart set up in place (meaning the strength of the long term charts and the high probabilities there combined with shorter term movement that create opportunities).

I could use any market average, but I'll use AAPL since it is one of the stocks I'm most interested in as we just hit a 115-150-% 1 day return with calls. Beyond that, I want to think about longer term trending positions which I would prefer not to use leverage so the draw down in corrections doesn't cause any distress.

 AAPL 5 min shows a negative divergence on the open, it's moved to a leading negative divergence since then as trade has been relatively flat. So my expectation, until the short term charts say different, is for a pullback in AAPL, THIS IS WHY WE DON'T CHASE MOVES, imagine if you chased AAPL and bought it yesterday as it was up 6% or more!

 This 30 min chart in AAPL represents the longer tern trend developing, it suggests AAPL is no where near done with it's upside move/reversal, but for the common trader, this probably looks like a great place to short AAPL, which only helps us as they cover and send AAPL up 6 or 7% in a day.

 In the last few days, the 60 min AAPL chart has gone leading positive, this is a huge development and a huge change in character here, we also see this market wide.

So again, here's the opportunity, price pulls back and the short term 3C charts will tell us when the pullback is close to being over as they should go positive in a big way, if they didn't there's no trade, no harm, no foul, but I don't think that will be the case. If there's accumulation of AAPL in to the pullback and that's probably what will happen, then this 15 min chart will move even higher and we'll have an even stronger positive divergence. This is what it's about, without a pullback we can only sit on our longs and let them trend up with the market, with movement though like this we can set up new positions and take quick double or triple digit profits.

More on the changes in trend-QQQ/NASDAQ 100

Here's an example of the changing tone in the market and why I'm trying to show you these changes and try to bring your focus to the trend even though there's no real evidence of a price trend yet other than the last couple of days rather than focussing on intraday or day to day moves as there will be those days that are there to cause you doubt. We have seen a bunch of improving indicators as we expected to through this developing cycle, now they are getting even stronger. My initial expectations were for a volatile, strong shakeout move of the shorts, but this may be something even bigger, this is why I keep monitoring it and keep filling you in as I find new data.

Few traders in the market have this kind of information and evidence this early, this is a huge edge.

 This 5 min chart shows the recent action and a gap, that gap certainly could be filled, it would be an ugly move, but it wouldn't be a move that would concern me, in fact I'd be looking at this for opportunities.

 Here's the QQQ 15 min chart and cycle that really has been the focus up until very recently. This indication is strong enough, but when we add the next two charts... Oh my...

 QQQ 30 min chart is leading at a new high in just a couple of days, but even beyond that... The NASDAQ Futures...

This is a 4 hour chart, look at the negative divergence in 3C at the top, at the HIGHS! Now look at the leading positive divergence that is VERY sharp at the lows, this is huge.