Early Market Update

The gist of my thoughts from last night's post is that we are likely to see some lateral movement and loitering around the area which is typical after a Trend Channel break, when the Trend Channel breaks I've found it's time to get out of the trend, but it's usually not the top, there's usually a very volatile area just after where some higher highs (at least higher than the stop out) are made, but they are minimal and extremely volatile and dangerous, hitting a higher high is luck or chance, the meat of the trend is over, but we'll get to that.

I'd expect the SPX to bounce around the 15 min 100-bar moving average or thereabouts. Before it can make even a serious attempt at Dow 16k, SPX 1800 or NASDAQ 4k, there needs to be at least a small reversal process rather than an event, in this process we will see what's what, but nothing changes from Friday's analysis of the second part of yesterday's prediction, the first being a gap up in the a.m., the second being the massive deterioration/weakness closes the market lower creating "Something like a bearish Engulfing Candlestick" which is exactly what we saw in 3 of 4 major averages last night, that larger weakness is still there and not going away.


Yesterday I drew your attention to the NYSE intraday TICK Index which showed something price didn't...

 The TICK trend yesterday during the last 45 minutes went toward a positive trend while price did not reflect this.

 My custom TICK Indicator vs. the SPY shows the cycle that started 10/9 saw TICK rise as it should early then start falling near the top, then a slight bump on the head fake breakout.

Intraday this morning, this is what the same indicator looks like on a 1 min chart.

This tells me some lateral/sloppy/choppy trade is probable before anything of significance can happen, any price strength on this underlying weakness sets up positions in stocks or set ups like I profiled yesterday (PCLN/AAPL).

 SPY intraday is consistent with this line of thought

 As are the Q's

and the IWM

Even HYG HY Credit, used for short term manipulation is consistent with this line of thought, intermediate or longer term it is trashed.

 So is VXX/ UVXY or short term VIX futures.

This is the Trend Channel for the cycle from 10/9 ; it held the trend perfectly until the red box, that's the easy money or meat of the trend, anything after that is dangerous volatility and in years of using the TC and backtesting it, it's the top and bottom 10% of a trend that are the most dangerous and the least worthwhile to try to capture additional gains, it doesn't mean we can't use this volatility, it just means if you are trend following, the saying the "Trend is your friend until the end when it starts to bend" would be appropriate here as the trend has started to bend with the stop out.