Market Update

If you watched last night's video or late Friday/Sunday's analysis, the trend was, last week saw weak accumulation through the week, but after the Friday op-ex pin was over around 2:00-2:30 positive 3C divergences picked up a lot of strength, the strongest on the week.

I thought this was odd because we were going in to a weekend Congressional session that seemed like there would be no resolution to get around a government shutdown with the Senate not even due to return until the 11th hour so even if the House had put something plausible together, the Senate would have minimal time to consider it and that was purposeful, so why the addition of risk in to the weekend when most traders reduce risk in to a weekend and uncertain events?

It seems the market had already discounted the government shutdown as a done deal, perhaps they think it will extend QE or make the debt ceiling negotiations easier as the American public will be sick to their stomachs with the government shut down, no elected official would dare anger the public again with another impasse with the debt ceiling debate over the next week or so. I really don't know, but we have had increasingly strong signals (remember I added GS calls Friday) the closer we got to this event, last night's video details additional short term strength in Leading Indicators and ESPECIALLY credit.

This is obviously one of those disconnects in the market that doesn't seem to make sense like a company with good earnings selling off. However it very well could be the simple removal of uncertainty, along the lines of, "When the missiles fly, it's time to buy"


War is hardly any more positive for the market than the shutdown, the point is, the uncertainty in the lead up to war is removed once it begins, we may be seeing a similar effect here, the uncertainty (for the moment) is removed and the market can discount, but this seems to have started Friday afternoon .

Some of the accumulation, focussed on last week starting with the 23rd (Monday)

 DIA 15 min with increased 3C positive divegrence in to Friday/Monday

The Q's have been the worst looking in underlying trade, this 5 min chart that is in line, is about as good as it gets.

 Daily SPX chart... We had the channel as we've went over before, the channel buster which is deceiving, a nice rounding bottom last week, a head fake low below support running stops/getting shorts in the market and the candlestick formation we expected (a bullish Hammer reversal yesterday on increasing volume).

The Channel Buster is deceiving as it will generally head back INTO the channel before falling in earnest, VERY similar to our IWM situation (10-15 min charts).
 
 SPY 15 min with growing accumulation in to the head fake/ stop run under support which we see 80% of the time before a reversal, maybe more.

GS that I entered Call/Long Friday

IWM w/ an uptrend and then a bullish consolidation/continuation Ascending Triangle, and as expected a head fake shake-out /stop run below the triangle's support before an upside reversal, again the head fake move seen about 80% of the time before a reversal on any time frame).

I have thought since last week that this Ascending Triangle was NOT coincidental or a natural forming price pattern, 3C shows it was built, it comes after an uptrend as it should, it is doing everything we expected from the shakeout to a move toward a breakout. This is what we have been expecting from this pattern, and this is why I keep saying I can show market expectations for the near term and what comes next with only 2 charts, the IWM 10 min and 15 min. UP & DOWN.

Last week's weaker accumulation, then the head fake move sees increased accumulation as Wall St. is able to find more supply on stops being hit at cheaper prices.

It's now, VERY much about what comes next.

First we need to make sure this will hold and breakout as well as manage positions taken up for this move.

Next a large portion of time will be devoted to core short positions if we get the breakout above the triangle or in to the SPY's channel.