SPY/SPX Update

While we have  little intraday bounce going, by the way, you don't need a lot of fancy indicators to get some really good information from the market intraday and if you string enough intrday clues together, you'll even get some longer term pictures. You just need to type in the intraday NYSE TICK symbol ($TICK) which is the number of NYSE advancers minus decliners.

For example...

The TICK is green on a 1 min chart, the SPY is red. Draw trendlines around the TICK's range, or just eye-ball it, note the nice downtrend, the pops in the SPY at 10 am and 11 am had no support from more advancing stocks, therefore they weren't likely to hold or advance  to a new trend, if you wanted to, you could have played some weekly options (buy puts right there) and sold them at the first sign of the TICK changing course. THE TICK almost always breaks its trend/channel before prices reverse.

Now for the SPY...

 1 min SPY positive divergence suggests some more upside.

 The 5 min is more important, it has a pretty nasty negative divergence in the area, this is part of the change of recent intraday character I mentioned earlier.

 Take a look at the trend of this 3 min chart, there's been almost or no price advance through all of that negative divergence/distribution, yo can probably see why it might be hard.

 Here's where things are interesting, we always knew that the 2 trends we could see coming, #1 to the upside and #2 following that to the downside, were going to be intense, I just figured #1 was going to be more volatile and shorter lived, the advance is about right as we were throwing around the words "New highs" before it started, it's the length and low volatility that were off. However when volatility did pick up briefly around the yellow area, look at the change from confirmation of trend #1 to a deep leading negative divergence, remember that's a 3 min chart.

 The white area is the start of trend #1, green arrow=confirmation of the trend, red is negative divergence and yellow is where volatility picked up, see a pattern here?

 On a cleaner, less detailed 30 min chart, it's the same thing.

Now loo at the Percentage of stocks (all) that are trading 2 standard deviations above their 40 day moving average, with new highs in the area, that would not be surprising, but when volatility picks up, note how they fall from 44% of all stocks to 14%.

Coincidence?

Don't let this low volatility drift fool you, stay on your toes, it' easy to let this grind you down and let your guard down, that's what they're counting on.