Market Update

I'm putting this post out just so you have an idea what to look for if you want to time any positions that I may be throwing out your way, I can't watch every single idea for the best timing, I try, but I'd rather give you some tools and explain what I look for and hopefully you can use it not only today, but all of the concepts can be scaled out to whatever timeframe you want to trade in, day trade, swing trade, position trade/trend, etc. I'll be working on more specific analysis and trying to get to some emails after this.

I'm just looking more at timing now, I think if retail wants to sell the rip (short it), Wall St. will give them enough rope to hang themselves, last night I kind of suspected early action would look like this and mentioned that we might see it and those who didn't make moves Friday may very well get a chance today, but I didn't have anything concrete to base that on other than gut instinct re: retail and a bit of knee-jerk reaction considering the heavy news coverage over the weekend, but the end result is still, Congress has to vote and it doesn't appear there's much of a rush.

So the leader of any risk on move "should" always be the Russell 2000, so we'll start with the IWM.

 This is a 15 min IWM chart, it shows most of what we need to see for a bounce with initial indications which started coming in 8/16, the white blocks are areas 3C shows accumulation.

If we go to a longer chart, the trend becomes more clear, we lose detail, but it's always worth looking at to put things in perspective and smooth out noise.
 
 This 60 min chart of the IWM in a leading negative divergence is the primary underlying trend or VERY bearish, as I keep saying, "The big picture isn't off in the near distance, I believe 98% we are in it now".

This doesn't seem to be sending the message I was trying to communicate above, but this is part of "Multiple-Timeframe Analysis" so I'm giving you context. Lets look at the same chart zoomed in.

The 60 min zoomed in is not in a huge or VERY obvious leading positive divergence here, but it is leading positive, this is within the context of the primary trend of course, but it does show us the change of short term underlying movement to a more short term bullish stance which is what the expectations of a bounce have been based on.

 Now to the other end of the IWM spectrum at 1 min or intraday, this is one of the few averages that is starting to see the 1 min chart go positive, I suspect retail has done their shorting and are running low on more bearish demand at this point. I suspect smart money is picking up supply out there from retail and that is why the IWM 1 min chart went from a negative divergence on the open to bring prices down as smart money stepped back and let retail guide the market and now smart money is coming in and picking up all that extra supply created by retail short selling in to the "Rip".

Obviously we need to see divergences migrate to longer timeframes and I always look for a reversal process, which is just a function of the size of smart money positions and the time it takes to put those together without driving price against them by soaking up too much supply at once. The point being, it appears the initial a.m. trade is now starting to reverse and move back on course for a bounce that will likely squeeze retail and help bounce momentum. As I said, a couple of days of upside momentum and retail will flip, they are fickle, but in addition Technical Analysis DOGMA teaches, "If you enter a trade and it stops you out, enter the trade in the opposite direction". Basically, "If you were wrong, enter the opposite direction" which usually refers more specifically to false breakouts and more specific situations, but a strong squeeze would have the same effect.

The 2 min IWM is NOT showing migration of the 1 min divergence YET, but it is "in line", which is better than leading negative.

As a "Conceptual Feature", I wanted to point out in yellow the stop run or a type of head fake move in yellow, it's under intraday support where stops would be placed, as I often say, we see these on all timeframes and they typically precede a change in trend which is in context with the trend we are looking at (proportionality), the verification of that being a head fake move is the strong positive 3C divergence as it happened, meaning the stops that were hit, were accumulated and this is how we verify head fake moves from real break downs, this type of head fake move makes for an excellent (long in this case) entry as you get a better price with less risk as well as high probabilities as head fakes are run typically just before a reversal.

However the point here still being that this 2 min chart will need to go positive and then the 3 min before we see anything exciting in terms of an upside reversal.

 The other concept is that of reversals being a process, not an event so they are more "U" or "W" shaped vs. "V" shaped and this is not without reason, it's the size and time it takes to fill the size of the orders that will cause the reversal, it's not arbitrary with meaning attached only by habit such as "Support at the 50-day moving average", there's nothing in price whatsoever that places importance on a moving average, that's all human habit that creates that, that's very different than the reversal process.

The SPY is finding some support at the 5 min/50-bar moving average, I use this because it's popular with traders for intraday moves, so that's also interesting.

The NYSE (1 min) TICK is going to be important, thus far today it has trended with price, but a break above the channel can precede a price move (you really have to watch though as it can happen pretty quick. I'd expect we may see that a couple of times before the process is over. Actually as I type right now, TICK is breaking above the channel, that's as price flattens out near the bottom of the "U" I suspect, we are still subject to intraday head fakes and a break to hit stops or drag in shorts on the bottom of the "U" (support) as these occur in ALL timeframes.

 The VXX is also key to watch for a reversal, it went negative Friday afternoon, this is why I opened a UVXY long and VXX Sept $17 Puts.

However the intraday chart here will have to go negative too and it looks like it still has some upside momentum before that happens as well as migrates.

The 5 min chart is more important and shows the higher probabilities which are, the VXX will go intraday negative and continue lower with the market heading higher.

***And HYG is looking better intraday/3C so I'm not concerned about it as the data keeps coming in like I was on the open before any data was available.