Market Update

These have to be some of the toughest intraday market updates I've had to do, as far as longer term positions, core positions, it's now one of the easiest updates to do, the problem for many people is "If" you didn't set up these short positions when we had price strength and I know it's very hard to short a stock when it's trading at intraday highs and the averages are making all time new highs, then the problem right now is it's really not the best idea to try to play catch up, either you were building the positions and are ready or I think showing patience until we get to another high probability low risk area, and right now the only real difference is low risk, probabilities of market downside are high, but as I often try to explain, a high probability market outcome and a high probability trade that features low risk, an excellent entry point, etc. ARE NOT THE SAME THING AT ALL.

After most options positions are settled around 2-2:30 today, the market may make some very fast moves and changes to underlying trade, but the issue I see right now is the same issue we have had Wednesday afternoon, yesterday and now today, either the market averages are not showing great confirmation between them and/or the signals are not far enough along and aren't strong enough and that's especially true when compared to the downside probabilities. There are very few positions that are in decent shorting position here, YOU'D ESSENTIALLY BE CHASING THE MARKET AND THAT'S THE LAST THING WE WANT TO DO.


I can't say for sure if this is the hedge fund herd (as they do tend to move in a herd-like fashion, all buying or selling the same thing-no one cares about underperforming the market, but they'll lose their job if they underperform the herd so they are content averaging whatever the herd is averaging even if it's less than the benchmark SPX.

Or it may be that there will be signals, we just aren't there yet. This is an extreme market and a very unique one.

The DIA is actually one of the  better looking averages speaking on a relative basis.

The 1 min chart is leading here.

The 2 min chart is as well

Even the 5 min chart, but these are either not strong enough, or don't carry far enough in to effecting the 10to 15 min charts to some degree.

The 15 min DIA chart had been leading negative and it didn't take price very long to follow that divergence and the divergence is still calling for more downside.

If we look at this 2 hour, much more serious chart and deeper divergence, imagine if price were to move toward this leading negative, this is the risk if you are considering any market long positions for a bounce and the reason why I compare it to picking up nickels in front of a steam roller. IT May become worth the risk, I DON'T SEE IT NOW.

 The IWM doesn't look good at all, I can't find anything except some intraday positives on 1 min Futures.

You can see how the intraday 3C divergence led the IWM lower

 And the danger can be summed up even in the near term with this 60 min leading negative, price will follow this divergence like you saw above with the DIA and as extreme as the divergence is, it could happen literally any moment, I'm shocked it hasn't already months ago.

 QQQ 10 min has a relative positive divegrence, but...

This is the 1 min intraday that has pulled price right along with it, there may be a positive starting to form and now is the right time, but that's the truth of the situation right now.

And the risk...

I show "A" on this hourly chart because we have often seen negative divergences this size turn the market down, at "B" we have never seen such strong divegrences, this looks like the kind of 10 or 15 min divergence that is extreme that turns the market down so to give you perspective of how dangerous this market is.

 SPY 1 min is positive, it actually seems to be building more as I just checked again as we move out of the options pin, but...

Right now the 3 min chart and price action are perfectly in line.

The longer term 30 min so you can understand that price can fall on this longer chart just as fast as it did on the DSIA 10 min neg. divergence.

Things are moving so I'll be checking them and letting you know, I expect we'll see some very fast moves in underlying trade and price until the close.