Market Update / Base Area

This is a bit too early to draw any solid conclusions about short term confirmation of the gap up, in last night's post I made it pretty clear there were some shorter term charts falling behind and that could lead to some consolidation to the downside, but this would effectively be noise as the charts that count, the charts with the highest probabilities of the tradable trend have been very solid and remain very solid.

We'll take a brief look at both, at least to some degree (I don't have to repost the 30, 60 min and even 2 hour positive Index futures, we've seen them, they are very strong and haven't changed).

 This chart of the SPX (2 min intraday) is very interesting to me because last week I said according to the size of the move down, my expected basing area or what I would call the reversal "process" would be about 4 days to be proportional which they usually are, I also thought this one might go by faster as a short squeeze would benefit from a quicker turn-around, but if this post from yesterday   , the one about "slow boiling the frog", in essence keeping steady, but limited pressure on the upside, not enough to scare shorts out, but enough to lift the launching point of a squeeze; if that concept is correct then it really wouldn't matter if the reversal had a faster than normal process (rather than an event-reversal- the difference between a "U" or "W" shaped base and a "V" which is much more rare).

So what I find interesting is that my initial assessment of 4-days is just about dead on as the SPX is just testing what would essentially be the neckline. There is resistance there any way, but we also have gap resistance which until the take over of the market by everything HFT, gaps use to be some of my favorite and most effective support and resistance.

 These 1 and 2 min intraday charts are the fast timeframes we use to see early confirmation of a gap up like today or not. Right now for good confirmation, 3C would need to be about where the orange arrow is.

However as you know these are intraday charts, they are mostly for intraday moves and they don't carry the weight or importance of longer charts, even at 3 minutes, but especially at 5 minutes where there's a big difference between the 1-3 min timeframes and the 5 min.

So although this is almost exactly along the lines of last night's post with regard to shorter intraday timeframes and the medium term (I hate using words like that because they are so subjective, of course I mean medium term within the expected 30-60 min positive Index Futures move we are expecting and the one I believe started earlier this week).

 Above the 2 min chart (and 1 min) are not yet in line with price, suggesting an intraday pullback, but at 3 mins we not only have good confirmation, but a leading positive divergence.

The 5 min chart shows all of the underlying action from distribution to accumulation and it too is leading positive.

As I said last night, the short term charts like 1 and 2 min in this case and any subsequent pullbacks/corrections coming from those timeframes are like noise as far as I'm concerned, the real importance of our analysis of this trend lies with the 30, 60 min and now even 2 hour positive Index futures, that still suggests quite a strong move up, probably stronger than I have even imagined at this point.

So we are still very much on track, if there were a pullback/correction, this would be the right area for that to occur for several reasons, but I think psychological (especially if the "slow boiling the frog" theory is correct) would be the most important.

In any case, we'll stay on top of it, but the main point of all of this is to keep your eye on the ball or the prize at least for this trend's move, we have positions in place for this move, I don't intend on making any significant changes until this move has served it's purpose and we move to the process of setting up or finalizing preparations for the real prize (as I have been saying, even though we are hitch-hikers on this move, it's just a means to a larger end- allowing us excellent, high probability, low risk entry in to new short positions or to fill out existing core short positions).