Market Update and Strategic View

I'll be updating AAPL next, it actually plays a part in the strategic movements of the market. When I say "Strategic View", I'm more or less taking what I see on multiple timeframes and adding what we already know about other assets, this is not just a view according to the SPY, but everything from commodities to credit, currencies, mass psychology, market sentiment, most likely path of the Feral Reserve, it just so happens they all pretty much interlock and form this picture so this is a forecast from very short term (today) to the largest (perhaps primary)or longest trend in which I have visibility and data. Of course, just like the random occurrences and changes in weather patterns (If you live in Florida or along the Gulf Coast during Hurricane season, you know how dramatically things can shift in a 12 hour period, from South Florida is the expected strike zone to North Carolina or Louisiana - or is it Le-see-anna?), the further out you try to forecast (especially in volatile Hurricane season), the less accuracy you have moving further out as things simply change, but this looks to be a pretty solid set of expectations thus far. *Of course if anything changes I'll let you know ASAP.

 Starting from the shortest timeframes to the longest or the shortest trends to the longest (the longest are also the highest probability, although all of these seem to be pretty high probability)...

The 1 min intraday 3C SPY chart is in a leading negative position, intraday it is trying to fill the gap, but even if it does, it should see continued downside as was expected Friday and yesterday. I can't say how extreme the downside will be or exactly how long it will last, but in terms of the different trends, this is the minor trend, which doesn't mean it won't be volatile. There are very few random movements in the market, they are pre-planned (as you can see we forecasted and prepared for this move last week) and there are reasons for them. I believe the reason for this move is to lock in more shorts for an eventual bear trap/short squeeze. Yesterday's break above resistance and then failure to hold it was exactly what bears needed to see.

 The SPY 3 min chart also shows the SPY trying to close the gap, but it still is in a leading negative position, this is still the minor trend we prepared fro Friday and yesterday with Puts and short positions.

The 5 min chart is more or less the culmination of the expected downside move for this week, it is leading negative, it is a solid divergence and it gives me the impression of a quite convincing move to the downside, I expect to get some emails from people who may be a little emotionally distressed at the scope of the move, but keep in mind these moves are there for a reason and those reasons can't be fulfilled without touching off emotional responses such as fear or greed (as in, "Let me chase this move on the downside because I don't want to be left behind" - a poor strategy, but one born of emotion/greed).

 At the longer and much stronger 15 min chart, the SPY is still positive over a much larger period, the reason a 15 min chart would look so different from a 5 min chart is not a contradiction in the indicator, in fact the opposite, if a divergence shows up on a 5 min chart like the negative above, but not on a 15 min chart it means the divergence is there, it will likely play out, but it is not so strong as to be able to manifest on the 15 min chart. Going further, the 15 min chart is the longer, stronger trend with higher probabilities, but also the one a little further out in time so we expect the 5 min trend (down) to play out first and then the 15 min chart to send the market higher in a much stronger move. One of the easiest ways to do this is with a bear trap/short squeeze and we just so happen to have the perfect pattern that has done everything we'd expect from such a scenario.

The 2 hour chart is a MUCH larger trend, more in line with a primary trend, just like we don't see the negative of the 5 min on the 15 min chart, we don't see the positive of the 15 min chart on the 2 hour, it is not strong enough to make it there.

The strategic assumption then is the 15 min chart's upside strength will create a bull trap which will help to push the market lower in the larger, longer trend that proceeds it, a large move down.

So we align our trades with the timeframe of the trend we are currently trading, while making preparations for the bigger picture.

This may be a little complicated to understand, if you have questions, please email me and I'll try to address them all in a single post rather than in multiple emails.