Daily Wrap

Another uneventful day in the market except a good call in AAPL yesterday with the right asset for the job and interestingly as I was waiting to see, right on schedule with DeMark's call although our call was about 7 hours before I even heard of DeMark's AAPL bottom call.

It also probably stinks to be a long term BA investor, an officer or a design engineer as the FAA was grounded the Dreamliner; that should put some pressure on the Dow, but as you saw today and many other days recently and as you know, the market isn't moving based on value, FX correlations or anything like that, it's part of a Wall St. fed cycle.

Tonight futures have lost a little ground, but nothing that seems noteworthy.

I think the tight ranges of the last week (or even longer) looks exactly like what 3C has been telling us since before the move higher that we were expecting , started on 12/31/12-these flat ranges are most often associated with distribution or accumulation if it was after a downtrend. The market stays flat, middlemen fill and complete institutional orders in a stable VWAP environment and traders get bored and caught off guard before the market moves in a direction that gets traders' attention and calls them to action and then drops the floor out from under them-we've seen it too many times, but at this size it suggests quite a move to the downside.

All of the things we look for in this scenario have either come about or are in the process as slow as that may seem and the dull rangebound market makes it seem even slower. However we made some good progress today in Credit which we've been waiting for nearly a week, currencies, Yields have been working in our favor, and several other indications.

As another indication of how flat the market is, the Dominant Price/Volume relationship today, THERE WASN'T ONE-not even close. I think we'll see a dominant P/V relationship just before we turn, but I could be wrong, I just have a gut feeling.

The rotation from the IWM (yesterday's top performer) to the Q's (yesterday's worst performer) today as predicted last night just as the night before as the IWM was predicted to be a top performer and QQQ to be weak, was right on. Now though this rotation is getting messy, there's less and less in the way of short term bullish signals to make those kinds of predictions-at least today. We actually saw that start yesterday as the IWM looked strong Monday and the QQQ was stronger last night in 3C trade, but nowhere near as strong as the IWM signal Monday.

To give you some kind of idea of where the averages should be heading (each is a little different right now, but the larger theme is the same), take a look at the Q's.

 The least influential chart, the 1 min intraday shows the QQQ looking pretty good yesterday and staying in line with price today, no short term negatives there which is in my opinion, due to AAPL.

 At the slightly more important and longer 2 min chart, at "A" we see the weakness that allowed us to predict Tuesday's price weakness and at "B" we see the 3C positive divergence that allowed us to predict today's better relative performance.

 However as pointed out last night, the QQQ positive divergence Tuesday didn't go beyond the 2 min chart whereas the IWM positive the day before was out to the 5 min chart, so we are seeing even rotational strength evaporate. The 3 min chart not only stayed negative, it went in to a deeper leading negative divergence which is not unexpected considering price was moving up, price strength is used to sell in to or short in to.

 The 5 min chart on the QQQ is negative at the end of day, I'm sure the weakness here is coming from the 3 min chart, "migration of the divergence", basically the divergence or underlying trade getting stronger (heavier distribution), so I expect that will be a theme that continues in to tomorrow.

The 15 min chart has been leading negative ever since trend 1 started and that was part of the reason we were able to predict it, the market needed strength to sell in to and they did so as you can see on this influential 15 min chart. In my view, when the 5 min chart deteriorates like the 3 min chart before it and spreads to the 10 min chart, we'll have essentially a Full House of negative divergences with every timeframe negative, this has typically been a good timing signal.

With Leading Indicators turning negative and picking up momentum, the timing is just about right.

I'm almost wondering if there's an earnings event forthcoming that will be used as the catalyst. Don't confuse a negative earnings event as being the reason the market tipped, but Wall St. likes to keep people ignorant and the Financial media makes a living off it. You can see on the charts why the market will crumble, it was set in motion long before any catalyst, but try explaining that on a 15 second radio/news spot. See if CNBC tells you the truth about how rigged the market is. It's easier just to say, XYZ's earnings sent the market plummeting today.

So perhaps we ought to be on the lookout for a possible earnings play among one of the heavy hitters due to report, see if we can't find a leak.

Other than that, I would just continue to look at your shopping list, any quick spring cleaning you might have to do on a moment's notice and above all, be patient. I suspect AMZN will be a decent example of why we are patient. For those of you who have been here since Q1 of 2012, you know what patience did for us, BIDU was one of the best examples, but of all 9 core shorts, nearly every one was entered within a few percent of the top, every single one was green and by late May (in some cases only a month), every core short had a double digit return-all of that was patience.

Just as a very quick example of why patience and to let you chew over how Wall Street works and how we use what we know to our advantage, here's a quick look at the BIDU entry.

 We saw this large triangle, it proceeded an uptrend, but it's too big to be a consolidation, these are almost always tops, however technical traders see them as continuation patterns. We already knew there was distribution by the time the triangle was nearly complete so we expected a breakout to bring in the longs, at that point we had our strategic view, we just needed our tactical entry or execution of the trade.

Another smaller triangle formed, this one was a bullish consolidation/continuation, but we still could see distribution in 3C, technical traders would absolutely buy the breakout and they did, it may not look like much, but volume was up a good 50% on the breakout, that's what smart money uses to sell short in to and that's what we did, we phased in at two entry points in yellow at the very top as distribution signals got worse and rode BIDU down for a quick 30% gain from late April to early June.

Take a look at the technical patterns, all patterns technical traders are very familiar with. Look at the way Wall St. used these bullish patterns against technical traders and why? Smart money trades in size, they need the demand and higher prices to get their position in place. Everything that was done in BIDU was done to accommodate Wall Street's position, right down to the bulltrap/head fake move that gave the downside reversal extra momentum. Patience is what made that trade possible, successful and with minimal risk.

You can learn a lot by just paying attention to their habits, the things they do over and over and the way they use TA against retail traders.

If anything interesting pops up in futures, I'll be sure to let you know.

Trend #1, A Local, Support and Resistance and the True Nature of the Market

 I'm going to discuss briefly the Technical Analysis community's definition of support and resistance and my definition which I believe is shared by others as well as a few other random thoughts.

 Earlier today we heard from a former NYSE floor trader (a "Local") that there were buy stops in an area and then he said he had a typo and gave another area, this is another subject as the areas he gave make no sense, but I did notice his use of Technical-like views of support and resistance.

He said there were "buy stops" in the $1462.50-$1468 area. Many traders will tell you exactly where resistance is, where the pivots are, "R2" or "S1" exactly. I don't really care at all what these numbers are, I care that I know where retail will be moved to action and where Wall Street will look to move the market in order to achieve that end, so when I posted this local's depth of the book I didn't even think to check out the areas he mentioned until after the market closed.

When I checked them out I saw that those levels could not be "buy stop" areas that are packed with orders because a buy stop is above the current price, it's like buying a breakout or buying above a significant technical area, not below so maybe we'll get some clarification on that.

 Here's a chart of that area, you will probably recognize it as an important area for us recently.

Trend #1 which we forecasted over a week in advance as being a strong move to the upside, so strong in fact that whatever we might think to be reasonable, it would likely far surpass that area and the Russell 2000 made an all time new high so we were right. The other thing was that this trend #1 would be much shorter in duration and likely intensity compared to trend #2 which is a move down.  Trend #1 started on 12/31/12 and has run over 5% in the SPX.

Now note the area this local mentioned today, the top of the second day of trend #1 and the former intraday high of the range which may be familiar as it is also January 4th.

Now you may recall me laying out all of the things I wanted to see to time a reversal call, they included the SPX and NDX futures going negative on the 5 and 15 min charts which happened, Leading Indicators to go negative-which is happening and very specifically, a move above the 1/4 highs as "I don't believe we will see any 3C movement until we cross above that level".

On Jan. 10th of last week we crossed above that level, in essence we crossed above the range highs which would trigger some demand from retail and allow institutional money (consider them "Big money") the demand they need to sell and sell short without knocking the market down. As soon as we crossed that level we started getting 3C negative divergences in the short timeframes as the long timeframes were already very negative and hey have grown worse since.

I called out a specific area because I know that is exactly what technical traders are looking for, I also know Wall Street will take price to that level because they need the demand of retail traders (almost all of which are technical) so they can move in or out of positions. In the end it is the retail trader who bought above that level who gets left holding the bag.

However as far as "TRUE" support ad resistance go, they have very little to do with exact numbers like that, they are psychologically created levels and mass psychology is what turns them in to "areas" rather than levels to the exact penny.

Put yourself in this situation...

You have a trading account that was hit hard in 2007-2008, you maybe took some money out of your HELOC before they cut it off and you're trying to make this money back to send your kids to college. Since 2009 the F_E_D has been very accommodative and it' been pretty easy to make money being long. Rumors are the F_E_D is going to ease and do more QE, you see a higher high in price (first white arrow) and then a higher low and you bull that pullback (second white arrow from the left), then price makes another higher high and pulls back for another higher low which you go all in with your entire account, your HELOC money, you're swinging for the fences trying to make those losses back.

Then, the market fails to make a higher high and it moves down more than 17%, the media is talking about the 20% hogwash they always do and you are margined and maxed to the teeth. Your wife or husband is mad at you for risking and losing all this money AGAIN! It looks like you'll never have the money to send your kids to college, but then something happens and price moves up toward the area in which you bought and then starts to rollover, all you can think about is another bear market starting so you sell at a slight loss rather than the nearly 20% loss you had only a few days earlier.

This is the real emotional situation, when magnified by the masses becomes "Mass psychology" and this is what creates support and resistance zones or areas. If you think you're going to lose your money, the last thing you care about is trying to get out at resistance of $1266.88, you just want a chance to get out without the huge loss. That what creates support and resistance and why they are areas and not exact numbers. I won't deny that many traders place orders and stops right at exact support and resistance and it's really easy for the market to pick those off, but in a non-manipulated, real world situation, the truth of the matter is the market is one big emotional mess.

Some would say  "Supply and Demand" move the market, I'd say it's really emotions, specifically Fear and Greed and if you wonder which one is stronger, I give you this last chart to ponder.

A nice healthy bull market doubles the SPX in 5 years to the month. A bear market erases all of those gains and then some in 15 months with most of the damage occurring in 8 months.

Quick Update

Turn your head for a few minutes to look at some other assets and things move fast.

The ES negative divergence intraday never got better so we are seeing downside from that now; NASDAQ future are still trading in line even with a little downside.

The SPY has a sharp 1 and 2 min intraday negative divergence, the 3 min is still in line.

The QQQ as you might expect is nearly perfectly in line on the 1 and 2 min charts, you may recall that the QQQ didn't go out as far in its positive divergence yesterday like the IWM did the day before, so at 3 min , 5 10 and 15 min (all intraday views) we have a negative divergences.

The IWM still isn't giving us much to go with, the overall disposition of all the charts is in negative territory, it saw a lot of damage yesterday, but beyond that, it almost seems like it's just going to loiter around this area for a bit.

The DIA has had the most consistent signals that are what I'd call in line, today is probably one of the first days they have seen some more damage.

Without really taking a longer look at not only the signals, but potential areas of interest (price patterns, support/resistance, etc.) it's difficult to say what is going to happen next because this is one of the rare occasions that there's actual rotation among the averages.

Just off the top of my head I'm thinking tomorrow the Q's may start to rotate out possibly later in the day and the SPX rotate in.

I'll let you know if I see more before the close.

GS

I had a few questions about GS and how they are doing today on their earnings beat/run.

If I were long GS right now I'd consider taking some off the table, that is not the same as a short call. It looks to me like GS may linger around this area for a little bit, maybe a day, maybe more, it will depend on how the charts continue to develop, but it seems clear that as we approach the end of day, some traders with larger positions are taking some profits. GS also looks like it may have been a decent earnings play, there's definitely something before earnings, I haven't looked at all of the charts so I don't know if I'd call an earnings trade as they are wildcards and need a much higher bar of evidence.

 3 min near term looks like NYSE specialists or maybe even some HFTs were accumulating stock (inventory) of GS prior to earnings, right now there's some lighter distribution or what I'd call profit taking at the red arrow.

On a 5 min chart, which is a big jump in underlying activity from a 3 min chart, there's signs of what would be the first timeframe where we see institutional activity and those are leading positive divergent signals, also profit taking in to the close. Remember they have large positions, they can't take profits in one trade/order, they have to slide out in to demand with a series of smaller orders unless they want to have a predatory HFT pin them and front run the spread.

AAPL Update/Trade Management

So it just occurred to me that I was interested whether our earlier call yesterday on AAPL would mesh with DeMark's call on CNBC last night, apparently it did; which makes me thing about our trend #2 (big move down) and how we are looking for certain things to happen and they are happening and DeMark's prediction or Indication that the US market is right at a top, it's just a matter of a short period of time (maybe days), which is about what we have been looking at so Leading Indicators, etc could move to where we want them.

Interesting. AAPL is up almost 5% today and you know I only like options for very high probability, short duration trades!

AAPL charts...

 This is AAPL's 15 min chart, this is a longer discussion, whether we are at this trade or not, but if we were, I'd drop the options (leverage) and be looking for a pullback to buy the stock itself and maybe juice the returns a bit with short term options trades. We're not there yet.

 As I said last night, there were hints of a positive 1 day divergence all the way out to the 10 min chart, there it is. Also AAPL gaps tend to be excellent to sell in to as you can see to the left, immediate distribution on that larger gap.


 The 5 min chart is really what turned me on AAPL yesterday, no problems here so as far as this chart is concerned, AAPL still has more to go on the upside.


 Very short term, intraday 1 min we do see a negative divergence, this is almost certainly short term traders taking profits. At some point this may lead to a consolidation or correction, but it's no threat to this move yet.

We know the 1 min is no threat because the distribution is light, if it were any heavier it would show up on this 2 min chart so AAPL looks to still be long and strong.

AMZN Follow Up

This is why patience pays. It looks like we will probably have a chance to establish the AMZN short or add to or filling out phased in positions; at better prices.


I'm not posting the longer term charts that are negative and that's here the high probabilities are, that's strategic, we've established that, we are now looking at tactical, actual entry so that's what we'll look at.

Again, full disclosure, I have a higher tolerance for risk than most, but I also try to follow strict risk management rules even with that higher tolerance. I would have no problem shorting AMZN right here, we're just looking for the best price, the least risk and best timing.

Take a look...

 The AMZN5 min negative leading divergence is basically our target, we want the intraday 1-3 min charts to go negative and lead negative like this, that's when we are most likely at the highest area we can enter AMZN short.

 The 1 min chart went negative at the head fake break out highs as the longer charts (higher probabilities) suggested would happen. Since then on the correction to the downside (and remember, every time we cross above or below that area, there's money for Wall St. to make on orders to buy, sell, short or but to cover) we have a weak relative positive divergence and AMZN is turning up intraday from there.

 The 2 min chart is leading a bit intraday and we want to se this go negative in to higher AMZN prices.

The 3 min chart is where AMZN is about in line. Two things could happen, "if" the 1 and 2 min/ intraday positives were strong enough they could swing this 3 min chart from in line to positive. The second is that the 1 and 2 min charts are as strong as they will be and just deteriorate from here, that would take the 3 min chart from in line to a more negative position and possibly make the 5 min worse giving us a more hollow shell in AMZN's price, a better short entry.

Quick Market Update-Futures

This makes total sense considering the NASDAQ's position and AAPL, etc.

 SPX futures intraday in to the highs are at several negative divergences.

NASDAQ Futures are in line.

No surprise there at all.

As for the averages, as expected the SPY is negative intraday and the QQQ is perfectly in line with price. The DIA is getting ugly intraday and will probably see downside soon. The IWM still hasn't moved at all.

Leading Indicators Confirming

You know when you hear someone say, "My life s going exactly according to plan"? Yeah, I have no idea what they are talking about or what that feels like either, but as far as the market, Leading Indicators were moving in the right direction, now they are getting in to meaningful areas rather than just moving "in the right direction".

I won't go through all of them, but just the important ones that are moving, you know about the others.

The point of this post is that risk assets are diverging with the SPX, this fits well with the negative divergences and other information and confirmations that we have, it's making our outlook and positioning even higher probabilities and giving us the movement we normally see that makes it a lot easier to say, "This is the spot! Load up the truck!"

 Commodities as a risk asset should follow the SPX (SPX is always in green and is the comparison symbol unless otherwise noted). When risk assets don't move together there's a problem and the move in the market is suspect.

In this case, the EUR/USD is changing and losing the head of steam it had that was supportive of the market, commodities are more closely following that relationship as that is what they are base and priced on.

 Here's the Euro vs the SPX, note the negative divergence in the Euro, which means the SPX/market is moving AGAINST its natural correlation, that happens when there's manipulation and usually in a case like this, they'd be using higher prices to sell in to which is what we have been and still are seeing.

 This is the $USD vs the SPX, at the yellow arrows this is the proper correlation, they trade opposite each other, but look at the last 2 days as both move up together, this is more evidence the SPX and market are moving up totally against their normal legacy arbitrage correlations and more evidence of price manipulation, setting up trend 2 (down), but trend 2 should be much, much bigger so the set up is not a day long as we have seen. I still think when it breaks, it breaks faster than any reversal we have seen since the last flash crash.

 Finally High Yield Corporate Credit is not jst negative and divergent vs the SPX if you look close, now it's showing a clear divergence, remember I said it would start out slow and gain momentum just like the 3C negative divergences last week starting on 1/10? Look at today's trade!

 This is what it looks like with less of my scribbling.

Junk Credit is doing the same.

Things are going according to plan

AAPL Closed Position

This is a partial close, as I said I'd leave some open.

They were opened yesterday at $25.70 and just closed at $35.90 for a 39.7% 1 day gain which is really nothing as I have already seen some member emails that were making +300% on weeklies earlier today at lower prices.

Closing some AAPL calls from yesterday

This is more or less profit taking, the volatility should be pretty decent and that should give a pretty decent price. I'd keep some of the position open as there are still some good signals which I'll update shortly and I believe the Q's need AAPL to get near that resistance level.

Intraday Update

Before I switch my template, I'm going to give you a written intraday update.

The DIA is right around the resistance level mentioned in the last post. The 1 min chart on this last run since about 1 pm, is negative right now, it hasn't quite turned the 2 min chart yet. The 3 and 5 min charts are already in a negative position and they'd need the 1 min to actually strengthen, migrate to re-inforce the 2 min and then still have enough strength to move the 3 and 5 min charts just to be in local confirmation, I doubt that happens, but we let the market tell us.

The SPY intraday is similar except the 1 min is still in line with price, stronger. The 5 min chart is leading negative which will be a problem for the SPY to maintain this move, it did cross resistance though and set off some orders.

The QQQ is one of the averages furthest from it's resistance target, it also has the strongest 1 and 2 min charts. The 3 is negative, but with the way the 1 and 2 look, they might flip the 3 min, in other words, this move looks more sustainable than the others, it has more short term (intraday) support.

IWM IWM daily is forming some kind of doji, an indecision candle. The short term intraday charts saw a LOT of damage done yesterday, but thus far intraday today they are sticking with price which is also apathetic.


It seems the market is taking a shot at the levels mentioned before, the Q's have the furthest to go.

That may make it worthwhile to wait a little bit on filling out short positions.

Market Update

First as far as skin deep predictions go, the rotation between the IWM and QQQ this week thus far has been flawless, even last night's call was the Q's would outperform the IWM, but they weren't quite as strong as the IWM was as of Monday's signals and thus yesterday's percentage gain. So far the Q's are up +.39 and the IWM down -.29 (at the time of this writing).

The market is definitely getting more complicated now at least when looking for the best spot to enter shorts/ exit longs. If we simplify things, the market is very simple, the probabilities are heavily skewed toward the downside which is in line with Trend #2.

Here's a simplified example.

Looking at the 60 min SPY (one of the strongest 3C signals), price is around the same area as September after QE3 was announced, 3C is at the deepest leading negative divergence on the chart.

When I talk about 3C analysis and the near term action is ambiguous, I always say the same thing, "Go out to the longer term charts, that's where you'll find the trend and the highest probabilities".

I sometimes wonder whether we should apply that concept to positioning, things are getting complicated as we get closer to the end of trend # 1 and to add to that complication the market is fractured and moving in different directions rather than the typical risk on/risk off relationship; for example the performance of the QQQ and IWM yesterday and then today. It was easy to predict the last couple of days and may be easy to predict as the signals develop with trade as the day goes on, but we are really starting to get in to micro-management and there's a very thin line between the best entry and getting lost in the lines.

If it's just me, I'd probably be at about 75% of my intended short position, but we have so many members and some trading in options and weekly options need the closest point I can provide.

I think overall it's pretty safe to add and fill out shorts in the area as long as you have decent risk management and are using it.

Now here's what I have, it may have already changed as things are moving fast and it's more complicated than usual because we can't look at analysis as "The Market", it's the NASDAQ, the S&P, the Dow, the IWM, Sectors, etc. Then there's the AAPL chart, AAPL accounts for nearly 20% of the NASDAQ 100, how can the NASDAQ fall with AAPL having strong signals? It can, it's just more difficult.

Starting with the NASDAQ/QQQ (This may be a little confusing a each average is different and approached a bit differently-just remember that the longer timeframe the divergence, the stronger it is, the intraday movement is found mostly on the 1-3 min charts and new divergences start on the fastest chart (1 min) and if they are strong enough they move or migrate to longer timeframes, where they eventually stop tells us how strong the divergence is).

 QQQ long term 15 min chart since the trend #1 pop higher has not only been range bounce which is a common area for distribution, it is showing the signals of distribution with a strong and deep leading negative 3C divergence. The thing I see in the QQQ is a trend line/resistance that has money above it in the way of the bid/ask spread, volume rebates, short term market maker trading, setting up larger positions, all the head fake things, etc. So I'd think the highest behavioral probability is a move above that range like the IWM did yesterday which creates the momentum for a downside reversal with a bull trap and then the downside reversal-ironically it's very similar to the AMZN analysis and situation we just looked at.

Probabilities though for the larger move are very negative.

 Looking at the 15 min chart closer on more of an intraday basis, we see where the Q's were weak earlier in the week with a negative divergence at the highs, then a small positive at the lows and an in line status. I'd think the 5 min, then 10 min would go negative and then finally the 15 min on an intraday chart like this goes negative and that's a good signal, especially if we get the move mentioned above, first.


 The QQQ 5 min is in line right now so I don't think it's quite ready to turn the 15 min chart negative, this makes some sense as the AAPL positive divergences were so strong, yesterday I even said I thought we were seeing positive QQQ signals short term (1 day) because of the positives in AAPL.

 Now the 3 min QQQ is negative as of this capture, if it gets worse it moves to the 5 min, then to the 10 and then finally the 15 min at the top and we are ready to break, Since this chart was captured, this divergence is a little worse.

Bottom line, I don't think the Q's are quite ready as AAPL is probably a big part of the reason. Whether that should dissuade you from entering a short you may like such as QID or SQQQ, I can't say as it depends on your risk tolerance and patience. I'd want to have a good chunk of that position already in place, as far as filling it out, if I had the time (which I don't), I'd probably try to wait a bit, not only for potential better prices, but whenever your money is in the market it i at risk no matter what the probabilities are, the only time it's not at risk is when it's out of the market so there's that and there's the fact that most days are noise days that do nothing to contribute to the trend, for the trade they are dead or wasted days.

Now the IWM.

 The daily IWM did cross above resistance yesterday and so far today it's putting in a bearish downside reversal candlestick patter, Harami. If it stays that way near the close and volume exceeds yesterday's, it's a high probability reversal, but they carry no target-it could be a day or the final reversal. As for the break through resistance, it's not only the Q's that haven't made it, it's the SPY and I'd say the Dow as well.

 Here's the Q's under that resistance level.

 IWM 10 min chart since trend 1 started and since we got the move above SPX Jan 4 highs on Jan 10th, we find the leading negative signal expected. Intraday note it is negative unlike the QQQ.

 The IWM 5 min in in line earlier today and slightly positive at this capture, right now it's slightly more positive, the intraday 1-3 min charts are meaningless right now.

SPY

 Since the November 16th cycle lows that started this entire move and especially since the pop of expected trend #1, the 15 min leading negative divergence is huge, as I pointed out in the post the other day, "Nerve Racking", this is a huge divergence and we've seen bad breaks in the market on much less.


 The 10 min chart here also is more or less in line like we have seen above, now if I zoom out and show you the trend, it's more like the 15 min chart above, it's horrible in a deep leading negative divergence, but we are trying to look at near term trade, we already know what the longer term probabilities are.

The difference is between strategic views which are set and tactical action which is what we are looking at.

 SPY 2 min chart doesn't look good here, it's leading negative and despite some intraday improvement, it remains leading negative. It needs to migrate to make it to the 10 min.

 SPY 5 min is leading negative, as of this moment the SPY is moving up (1:35) and this chart is still leading negative, so that's good, that' telling us that any strength is being sold or sold short.

DIA

 It's also ironic in the URRE post we talked about wedges and how they have been manipulated to shake traders out, like this ascending bearish wedge that is expected to break down at the apex and retrace its base, but instead it runs a head fake, knocking out all of the shorts, moving up, suckering in longs and then trapping them-but the bigger picture is what I said before, they build tops so they are still bearish, they just don't act like Technical Analysis says they should.

The other point is the SPY has an area of resistance it could break through locally and a much bigger target which I doubt, but it is worth pointing out around $136.

DIA

 Long term 15 min is leading negative, the intraday 15 min was in line, it's now moving negative.

 This 10 min chart also looks more negative since its capture-kthis is likely some Dow rotation like the IWM/QQQ.

 The 5 min chart is negative and that is what has changed and migrated to the 10 min above making it more negative than it was at capture.

 This is all hardly a surprise as the 3 min chart was leading negative, so this is an example of a negative divergence strong enough to migrate to the 5 min and now the 10 min charts.

I'd like to look at leading indicators too before I make any big decisions today.

AMZN Update

AMZN is a partial (short) position that were we waiting for a set up to take place that consisted of a break above $269 first since that was clear resistance as well as a new high.

The Jan 14th AMZN update lays out the scenario pretty well.

In essence we are looking for the move above $269 to be revealed as a head fake move and use that price strength to add to the short (which was a phased in position from the start).

 The yellow arrow would be the head fake move, of course a move below that former resistance would help create a bull trap.

I think we had (before the move up) and have enough evidence to say it's a very high probability head fake / Bull trap move. I'd like to look at adding, but I first want to take a look at the broader market and leading indicators again as I'd prefer all were in line. I will say as I often do, if I was forced to make a decision right now about adding to the AMZN short or missing out totally, I'd add right now, but that's not the case or situation, but I think it helps give you an idea of how I feel about it.

 30 min was negative before the move even came about, that's why we were waiting for the breakout and the clear resistance zone made the breakout move an almost certainty.

 The 10 min chart is negative in to the breakout as well, there is a little area (white) that I'd like to look at closer and see if anything evolves from there as far as timing and possibly a better entry.


The 5 min chart looks pretty ugly as do all of the intraday 1-3 min timeframes, none seem to support that 10 min chart, but like I said, I'd prefer a market update and another look at leading indicators before filling out the position there.