Conceptual Update

If you had a chance to watch the video in the last post and understood not only expectations, but how they are all common concepts from F_E_D-related Knee Jerk reactions to head fake moves, to the reversal "process".

The concepts I try to give you are universal in trading whether you are trading a 5 min chart as an intraday trader, a 15 min chart as a swing trader, maybe a 60 min chart or a daily as a trend trader, or long term investor, all of the concepts are fractal like the market and scaleable and they work for bullish areas as well as bearish, you just reverse the concept.

Here's a VIX Futures and SPY Update that should be helpful in understanding both short term positions and longer term ones and if you think this amount of time for a market top seems unreasonable, I'd just remind you of the size of the reversal we are talking about and remind you of the concept of a reversal process vs an event. Take a look at this 9-DAY chart of the SPY and former tops.

From left to right, the Tech Top (2000), the Housing Top 2007, the anticipated end of QE top (yellow) and where we are currently. There's a lot of noise in tops as you can see, this is why a lot of people don't like to trade them, but there are ways to trade them obviously with the right tools. The point is, none of these former tops in which (on this chart) each bar represents 9-days  reversed in an immediate or "V" shape, what I'd call an "Event", they were all a process and if you look at them as daily charts rather than 9-day, you see the process, it's just like the same process we are undergoing now on a 2-day basis, like I said, it's all fractal and scaleable.

 The 30 min VIX Futures shows a positive divergence, this fits with a larger trend than the anticipated move to the upside off the small "W" base I showed you this morning, this is more in line with "What comes next".

 The 5 min chart of the same VIX futures however is in line, giving the market enough breathing room to bounce if it wants to, but in no way does this mean the VIX futures look weak, which ultimately is not good for the market.

VXX on a large 60 min chart, see the dates below. I wanted to see the second half of the "W" gain 3C momentum on a 15 min chart, it did, this is a 60 min chart so the larger market trend probabilities are definitely still skewed to the very bearish side.

However like the futures, the 3 min VXX chart is simply in line, giving the market room short term.

The same chart backed out (zoom) shows the trend is actually leading positive so it gives you even more information about charts that seem to be neutral, they are still bearish for the market.

 SPY 2 min F_O_M_C distribution and the "W" base I did the video on.

This is interesting because it's a long term 30 min SPY chart (look at the timeframe/scale axis), note the very same concept as the small "W" base we are looking at this morning, this is a large "W" (upside down) or double top with all of the exact same concepts including the head fake. If you were to take the 2 min "W" of the last 2 days, stretch it out, remove the time scale axis and flip it like a mirror, you'd have the exact same concepts in play, just in reverse.

Flipping the intraday chart (as long as you removed the timeframe and scaled it to this chart)
would fold over almost perfectly to match this chart because the concepts are the same. 

This should be useful in understanding and planning your trades.

This is a 60 min SPY chart, again the same processes are in play, the current 60 min divergence is leading negative at a new low for the chart. You can see the cycle that started with the accumulation range (stage 1) and is in to the distribution/top (stage 3) stage.

Again if we removed the time axis and just looked at the drawing of the last two days' bottom, it's no different than this much larger top pattern, the head fake move and all.



The SPY just completed the F_O_M_C head fake below support. Take a look, imagine scaling the current 2-day chart out to this size and folding it up, it would be almost exactly the same because the concepts are exactly the same.