The Week Ahead.

So far I don't see anything exceptional about the futures, I think Friday's "Wrap" post is about as accurate as we get going in to the new week based on everything I've seen and documented in that among many other posts during the day, I encourage you to skim through it, it's not very long.

HYG (High Yield Corporate Credit) was basically the poster child for what I see as early week (Monday- likely first half of the day) action. 

I hope you'll go back and read the post and take a look at the charts. 

Referencing HYG,  One and 2 min charts (very near term intraday typically) are positive, at 3 mins. there is no more positive and at 5 mins.. the chart goes negative, I'll at least show that.

HYG 5 min chart as of Friday's close, this is the risk asset that is commonly used to influence the market intraday to the upside on short term manipulation.

The gist of the HYG section of the post was this...

"The point being, HYG is helping, but its commitment is skin deep unlike action in previous weeks, they could close and be out of HYG in minutes if need be."

It was also pointed out that the more skittish High Yield Credit (because of lower liquidity) had a very different take on the "after-pin" Friday action in the market in which there was a closing ramp (again, the charts are there in Friday's post linked above)...

"And almost as if right on cue from last night's post, High Yield Credit dislocates with the SPX today as soon as the SPX shows any upside ambition, like I said, this will fall first "

Sentiment (not typical Stock-twits retail, but Leading Indicator sentiment) had soured Friday. I don't think I posted charts of these, but what is interesting about these is they follow a whole range of other leading indicators and signals in to the afternoon (post op-ex pin) action, like High Yield Credit, they were of a different opinion of any strength, even if it was minor.

 FCT follows along with the SPX the last several days, but decides it's time to cut Friday.

HIO makes it even more clear as to where and when its time to cut, specifically right after the op-ex pin is over and the market is free to move, HIO didn't have any interest in following.


Referencing the market, specifically QQQ (SQQQ as a proxy)...

"I think we'll see the gap filled before we move on to the waterfall, which gives us some amazing opportunities, if you can just get past the emotional difficulty of shorting an apparently string asset, Price is above all, DECEIVING."

Referencing JPM....

"However, like almost every other asset today, the intraday charts are positive suggesting early Monday at least we see some ranges that are yet to be broken, broken, take XLF/Financials for instance.

The 2 min chart is the largest positive in JPM, 3 min has nothing, 5 min is negative, so again, like HYG, it's bare minimum support to move JPM. Obviously the only thing keeping JPM from a short position is Financials as JPM's sector and the head fake move needed there. For the 1 and 2 min chart to go negative, that can happen in an hour."

On XLF...

" And on the 1 min XLF intraday chart, look what 3C is showing, XLF is obviously getting ready for something. With that small, but consistent positive divergence on a short timeframe, what do you think the probabilities are?.... XLF 5 min. When we see flat ranges like this, these are some of the best indications that smart money is at work in the asset...3C tells us very clearly what that something is above, distribution, but if 80% of all reversals on any timeframe see a head fake move above or below a VERY obvious support/resistance area, then where do you think out highest probability, lowest risk entry is in XLF?

If you said a "Head fake /false breakout ABOVE the range", you are 100% correct."

In fact, if I had to summarize expectations for tomorrow morning or the first part of the day, (although every chart and asset in that post leads to the same expectation), HYG of XLF would both be very simple, very representative example. Because HYG is more an asset used as an arbitrage (manipulation) asset intraday, it's a means to an end, XLF I think better represents the end (but I'd still like you to review Friday's post).

XLF EXAMPLE...

 The very flat range to the right is the most important right now, it's not only a tight range and a very obvious head fake target, it's also were institutional activity would typically take place on  a larger scale.

 The 1 min intraday chart is negative and keeps XLF from making any headway at all, but late Friday afternoon after the op-ex pin is typically ending and the market has a free hand to do as it pleases, note the improvement in 3C, although this is only a 1 min time frame, similar to what I said about the HYG charts in the same timeframes and area...

"The point being, HYG is helping, but its commitment is skin deep "

 at 2 min's in XLF, there's no support at all and the negative signal you'd expect from a range like that, however the 1 min positive above is also so new, only 2 hours or so old, it probably wouldn't reach the 2 min chart yet anyway, but it (and other indications) still suggest the same these, very skin deep intraday support, not followed by much else positive.

At 5 mins XLF goes from confirmation to a leading negative divergence and the 8th of July area comes up again, right now this is deeply leading negative.

This is why I said the following several time, but in relation to Financials...

"The 2 min chart is the largest positive in JPM, 3 min has nothing, 5 min is negative, so again, like HYG, it's bare minimum support to move JPM. Obviously the only thing keeping JPM from a short position is Financials as JPM's sector and the head fake move needed there. For the 1 and 2 min chart to go negative, that can happen in an hour."

 and...

"These are very simple trades to figure out if you understand the headfake concept, they are also very good entries very soon if you can get through the emotional stress of placing an order against what appears to be strong price action."

NFLX has the exact same theme I was conveying in Friday's post, the HYG and XLF posts specifically...

 Just like XLF has a perfect, VERY obvious range (really resistance is what technical traders are watching for) which sets up an easy head fake move and the 1, 2 and some 3 min charts support that (intraday positives), the 5 min and beyond charts also support that because they are indeed very negative, a head-fake move is just a breakout unless there's distribution in to it and it is clear it will fail, most of the time we know this before the head fake even occurs based on the charts in place, this would be one of those examples. The triangle that is in place is considered a consolidation/continuation triangle, technical (retail) traders expect a breakout to the upside, that's why they make such good head fake moves because Wall St. knows , as do we and anyone paying attention, just what retail TA traders will do, which makes it very easy to use it to your advantage.

 NFLX 1 min, not a strong chart, but again, look where it improves...Right at the "post op-ex pin" area around 2:00 Friday.

There's no strength too far beyond that, nothing at 5 mins.

And looking at it from a "Reversal Process", it is nearly a perfect set up. The symmetry we see in the "reversal process" rather than an event, is already there. One of the last things we see in this process (in a downside reversal) is an upside head fake move; for that to happen, a technical pattern retail will chase has to be in place, it just so happens it is and look at the 3C chart,(the four stages) 1) Accumulation, 2) Mark-up, 3) Distribution and it's only missing stage 4, Decline.

It goes without saying, NFLX is a nice looking trade, we want the trade to come to us with high probabilities (head fake), a better entry and lower risk (again both provided by the head fake) and timing (again a head fake moves is one of the ;last things to happen before a reversal.

DDD... We haven't had a decent "Channel Buster" Set-up in a while as far as I can recall, I think IOC had a decent move, but this is one of them.

 Don Worden pointed these out years ago in his book (more like a pamphlet), "Street Smart Charting", but because so many of his concepts (and this is a guy who designed the charting systems for the big Wall Street firms back in the 1950's and forward for decades) contradicted Technical Analysis Dogma, the books never caught on. Reading these books 10 or 15 years later is like reading "The New Technical Analysis Realities", he was that far ahead and noticed these things way before anyone else, telling me that Wall St. had pretty much started using T.A. against traders as soon as it became mainstream with the internet on discount online brokers.

One of his concepts that I have used many times is "The Channel Buster", they work so well in so many different situations. Here we have a downtrend channel and an upside breakout, this "looks" very bullish for DDD, but these are head fake moves, just using a channel rather than price patterns or ranges.

What typically happens is as soon as the breakout of the channel fails, price shoots straight through the bottom of the channel, this pattern gives new meaning o the phrase, FROM FAILED MOVES COME FAST MOVES".

These can be bullish too, it depends on the channel and the break, but the concept and target are always the same, back to the opposite side of the channel and beyond and VERY fast.

 The 60 min 3C chart has the (4) stages all stocks go through in all timeframes, there's accumulation to the left, mark up , distribution and the channel buster breakout to the upside is the head fake move that sets up stage 4 decline.

The 15 min chart shows the channel, an accumulation area used to buy some shares and send DDD through the top of the channel where they are sold and short selling occurs, you can see that to the far right. This is a VERY clear look at how smart money operates, accumulation at the lows of the channel and sold in to price strength on the breakout where retail will chase the breakout, they have demand and better prices.

If you look at the channel at the top, the target in my view is a psychological magnet, I think it's $50, I'll watch, but I'd set alarms for $50, I think that is where the highest probability end of the break.

AAPL I'm not going to go in to the longer term possibility of AAPL continuing an upside , counter trend bear market rally (AAPL's bear market), we'll have to see what AAPL looks like after the smoke clears, but I'm glad I closed the long equity position meant for that bear market rally.

Remember in Friday's post I talked about the Q's filling the gap? AAPL sure would be helpful in that task and a such, I've recently gone from "Holding the long term AAPL equity position to closing it and now even thinking about a short in AAPL".

First a quick look at the Q's and note the 4 stages, you see these so often and it's a great way of knowing where you are in the process, these are fractal so you can have large stages in primary trends on 2 day charts, intermediate stages on 60 min charts, intraday stages on 1-2 min charts, they are very helpful.

 AAPL 1 min has a large gap from Friday, but again note the flat range, that's not accidental and note the clear positive divergence after the op-ex period expired. The Q's (like XLF wants to break the top of that range) want to fill the gap and this is consistent with what we've seen from Friday , Friday Wrap and an overview tonight.

 The 5 min chart really puts things in to perspective, while there is a slight positive "relative" divergence (the weaker kind), it falls within a large leading(the stronger kind) negative divergence. This is akin to saying the evidence is of a large downtrend, but a quick bounce first, which as we know, the market rarely moves in linear fashion.

QQQ 10 min just shows there's no hint of any positive at all, even the 5 min above can barely be considered positive, but the leading negative is quite clear.

The vertical trendline just shows you how deep the leading negative was before the Q's dropped Friday and now how deep the overall situation is.

 The 30 min shows all of the divergence and all of the 4 trends, after the 4 stages end, they typically start over again. To the left distribution and decline lead to stage 1 accumulation, 2) mark-up. 3 Distribution and 4) just starting decline.

AAPL

There was a large positive for a counter trend rally, but a lot of damage has been done on the 30 min chart, that may be it for AAPL's counter trend rally, but I'm looking at this as a high probability short setting up.

The 15 min chart shows accumulation that kicked off the AAPL upside move, we also see sharp distribution and I wonder if the area in yellow was indeed a head fake move and thus the top for AAPL on this leg.

A 3 min chart shows the area closer, for a head fake move it acts like it should, it draws in limit orders and breakout buyers and quickly fails, the longs are at a loss so any additional losses cause panic selling and it creates a snow-ball effect.

This is the 1 min AAPL chart, the possibility of a head fake and the positive divergence that may help the Q's fill their gap and set up a high probability, low risk AAPL short or put, this is looking good as a great trade that comes to us.

As for futures tonight...

The Index futures gained some as new futures trade opened for the week, but the 5 min ES and TF just went sharply leading negative VERY quickly, I'm guessing they'll come down shortly, but it's a long night and a lot of important markets aren't open yet.

The Nikkei futures had a negative divergence as they opened so the way they look is not surprising.

As currencies go, I'm not seeing anything that is a clear trend or out of place, I wouldn't comment on them as of now.

The 10 and 30 year Treasuries have gained ground, both have pretty sharp negative divergences on 5 min charts, after that they don't. I'm wondering, actually suspecting that the 5 min negative divergence in Treasuries correlates almost perfectly and acts as confirmation of the 1, 2 and 3 min intraday charts I've been talking about above with regard to the market, say the Q's, Financials.

In fact, I think it's very likely as Treasuries normally would come down on any market strength, even if it is 1, 2 or 3 min based. This is the only smoking gun I see as it confirms what I wrote Friday, what we were seeing Friday in the market and individual stocks.

These charts make perfect sense with the market charts, the stocks we are looking at, Financials, Credit, everything, even the timeframes.

The 30 year 5 min chart with a sharp negative, that should effect price of the 30 year in to tomorrow suggesting our market expectations for tomorrow, at least the first half of the day (we'll have to see how it goes after that, but the leading negative divergences and the short positives only out to 2 or 3 minutes cap the upside on the market).

 The 15 min 30 year having no negative here caps the downside on the 30 year and thus the upside on the market.

As you know, I've been wanting a pullback to add to the 30-year TLT long or to add some leverage so this works out well. The reason I like the 30-year long so much and this has been for quite some time...

This is a VERY strong 4 hour leading positive divergence in the 30 year.

As I said last Friday and Thursday, someone knows something and has been quietly accumulating this "Flight to safety" trade en masse. 

I'll see you in a few hours, Please remember I'll be out of twon Thursday and Friday for my first vacation in well over 3 years, thanks for all of you who sent the well wishes for my fishing trip.