Market Update: Head Fake- From Failed Moves Come Fast Moves: Triangles...

Remember yesterday's triangles and the opinion they were a head fake set up, that a breakout above the triangles is exactly what retail would expect, but the 3C charts suggested it wouldn't hold. This is why I encourage you to read the 2 "Understanding the Head-Fake Move" articles I wrote and linked on the members' site.

The triangles from yesterday as I noted in the Daily Wrap last night didn't see impressive breakouts, but the open this morning took care of that, check out what happened after and the volume with it, for any Technical traders going long the breakout, part of that volume is their stops as they were caught in an intraday bear trap. I suspect shorts piled in as well on the break lower, although this is not what Technical
Analysis would expect from the price formations, it's what we'd expect with negative divergences in place.

 Yesterday's SPY triangle looked a lot bigger, it's the volatility today that changes the scale and makes the triangle appear smaller, there's a lot of volume and a lot of people were sucked in to this move 1 way or the other as you'll see.

In yellow we have the head fake or "False Breakout" which failed and immediately sent prices lower, thus the saying, "From failed moves come fast moves", which is part of our Head-Fake concept.

The IWM with the most bullish "Ascending Triangle after a preceding uptrend suggests a strong upside breakout, that breakout failed in yellow (the head fake move) and a quick move to the downside on considerable volume and volatility.

The move back toward the apex of the triangle right now is called "Kissing the triangle goodbye", it can be "Kissing the channel or resistance, etc.

However I think this has more to do with an options Expiration "Pin" (weekly Friday's now pin the market as well, so every Friday). You probably recall how many times I've said it and even yesterday, "Thursday's close is typically right in the area of Friday's pin", there's generally not much straying from that area until the majority of contracts are cleaned up after 2 p.m. on Friday.

The averages aren't giving a lot away intraday so far, an inline status is what I'd expect to see for a market pin, the longer term divergences are more important now as that's where the highest probabilities are to be found.

IWM

 IWM 1 min intraday went negative in the afternoon as I mentioned yesterday after largely being in line all day. Clearly the open saw distribution, right now we are in line.

IWM 3 min shows a clearer and higher probability short term trend, leading negative

IWM 5 min shows accumulation at the lower end of the range and steering distribution at the higher end of the range, that's a fairly negative leading divergence in effect right now, it's appropriate in size for a move to the lower end of the range, in the mean time this market is a meat grinder for most traders trying to take any directional trade and hold for more than a few hours at best.

 QQQ 1 min finally went from in lone to negative yesterday afternoon, the gap up this morning was distributed and the current move is under some distribution,

 SPY 1 min went negative in it's flat range yesterday , a very tight one too, it's close to in line today, but still has an overall negative tone.

The 5 min SPY cleans up the trend, I think it's pretty clear.

As for TICK data, a lot of people were caught in this morning's move as the TICK is extreme on both sides.

 We have >-1250 on the downside and around +1250 on the upside, that's not mediocre, it's actually quite high even for this volatility.

The custom TICK vs. SPY indicator is in line with price action thus far...

The 10 min chart used to show the TICK trend shows it pretty clearly, more and more stocks failing to participate in upside moves.

What I did find interesting was HYG/Credit, their price action yesterday as noted in the, "Daily Wrap" clearly pointed to negative opening action,

"HYG never got any legs under it today, although it was still largely in the range, but it did weaken in to the late afternoon which I suspect was part of the equity weakness and the break on that 3C in line lock on 1 min charts most of the day. Junk Credit had an even more acute sell-off so it seems clear to me that credit expects the market to head lower in the coming days as do we, in fact it seems to be leading it."

I've not been worried about lower HYG prices the last few days because there's been accumulation, it's the gap up that's interesting, remember HYG is an Arbitrage Asset used to manipulate the market intraday, HYG up helps move the market up. With the failed breakout the market's tendency would be for a strong move to the downside, I'm wondering if HYG is being used to counter that just to keep the market within the region/area of the "Max Pain" options expiration pin?

We'll see as data develops in to the afternoon as the options expiration pin becomes less and less important as more contracts are closed out.

*Right now, the Q's intraday chart looks the worst for a downside 3C leading negative divergence.