Quick Market Update

I think I'll have time to show you the Leading Indicators, at least what I captured earlier, first let me shows you the QQQ and why the scenario laid out last night could be viable, I'm not rooting for it, whatever the market gives us to work with, that's what we work with, it just makes sense.

Las night in the Week Ahead post I showed you a chart of HYG, but said, this could very well be the sort of thing we see in the major market averages, it still could, although not in the SPX today, but there are alternative candles that would work just as well.

Here's last night's HYG as of Friday and the candle I envisioned as being possible early this week as a possibility.

Basically to pull in shorts for a near term short squeeze to create the buy-side volume needed by Wall St (buying to cover is buying), first they'd need to see something to get their confidence up, this was a bearish engulfing candle I drew in last Friday as a possibility.

When looking at the SPY today and what we have, here's another possibility (or perhaps it comes tomorrow-we'll be able to tell more from the intraday charts and leading indicators as the afternoon after 2 pm or so often sees trends reverse once or twice).

From what we have now on the left of the red candle (note again volume is not there, there's not much buy-side excitement here), we could see a longer upper wick (resistance) with a lower close that creates a bearish reversal candle. This is still just theory, but it makes sense.

Looking at the Q's as an example...

 The longer term 1 min trend shows the accumulation needed to send the Q's and the rest of the market gapping higher, but don't confuse 1 min accumulation with what we'd normally consider accumulation, on this timeframe this is more the work of market makers and specialist trying to move the market intraday, not positioning from smart money.

The same chart intraday is starting to lead negative, this is why earlier I'd prefer to take some of the upside momentum to open a put and leave room to add to it in case we get some more.

The next timeframe-2 mins suggests the probability of at least a move in to the gap if not lower is high probability.

 The 3 min chart shows the same, this is about all we really need for a short term move to set up shorts, there's good migration of the negative divergence as well so at least on these short timeframes, the divergence looks healthy and fits with last night's scenario.

At 15 min, this is where institutional money flows are much stronger, note we are negative here, but not really leading negative (at least not near term), this is what suggests that a move to the downside to trap bears has enough gas in the tank to move back up and make a higher move squeezing shorts, forcing the buy to cover and thereby creating the buy-side volume that the bulls don't seem to be interested in. perhaps the bears bite.

So I think I have time to get Leading Indicators up, they are about an hour old, but in most cases that doesn't matter.