First lets go back to yesterday because I like to "Keep it realsies". In this post from yesterday at 3:31, "More Data" I said the following...
"This is just more data that backs up my position that we will almost certainly see a correction/bounce to the upside, the thing is, saying that or hearing that right now sound reasonable and most people feel like, "OK, cool, this will be an opportunity like he's been talking about".
However, Wall St. rarely does anything half-tooshied. When they wanted a low volatility melt up to drag dumb money back into the market with no pullbacks to scare them and a bunch of nightly news headlines, "This is the highest the Dow has been since XYZ0!" they did it and did it well.
When they want to scare people out of positions, they do it and do it well, you'll see a downside move like yesterday that sends longs in to a panic, shorts chased it and likely we'll get an upside move that may indeed make that all-time new high in the Dow that CNBC was talking about yesterday morning just before the market crashed.
The point is, be prepared for an emotional assault that is meant to touch on the two things that move the market, FEAR and GREED.
This is all part of my market Pendulum concept, it swings way too far one way and way too far the other, don't fear it, it truly is a gift/opportunity.
To give you some proof to sustain you, although I doubt you'll recall if we get the kind of move I'd expect, here are a few charts...."
Today we definitely saw some of that as we had a negative divergence in the averages today around 12 p.m. that I would take as a trade every time, that's around when the 3X long positions that were bought yesterday in anticipation of a move up today were sold. The reason I chose 3x leverage rather than a weekly call which would have worked great today (even though the longs did their job), was because I knew volatility was increasing, the move was based on market manipulation and nothing concrete and that makes the move more unpredictable, so I chose a less leveraged asset being the environment is becoming more chaotic and unpredictable, which itself tells us something about the state of the market.
So, while we had an idea what to expect and we saw everything today that e expected today conceptually, there's no way to tell how exactly it would play out, but I think we were about as close as you can get.
As far as the averages toward the end of the day when I made that comment...
NASDAQ Futures 5 min.
Even though price moved higher as I expected yesterday, as you can see above, I still wouldn't be surprised to see it move even higher and fulfill what I said their goals were. Today showed they were selling heavily in to higher prices.
Divergences move from short timeframes to the longer ones, although this SPY 15 min is already losing momentum in 3C, I'd say it will take this chart going negative as it did in the red box before this move is done, which could very well happen tomorrow.
The Dominant Price/Volume Relationship was Price Up/Volume Down across the board, this is the most bearish of the 4 possible relationships and usually sees the next day turn down.
The ES CONTEXT model is still at probably the largest differential I've ever seen, meaning risk assets that normally rally with the market, aren't moving, which comes back to what I said yesterday, "This is the market being manipulated".
Today is a perfect example of why we don't chase prices lower, imagine if we had yesterday and why we don't fall for these traps of manipulation that is clearly being sold in to, we use it to our advantage.
ES in Red and CONTEXT model in Green with the Red negative histogram differential.
That's it for the moment. Some of you may recall that my wife has been in Europe since before Christmas for medical treatment and she just returned last week. One of our member's sent us a gift and asked that I take her out to a nice dinner so thank you Arthur, we're headed out for a bit.
I'll be back later and check the futures.
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