Daily Wrap

This afternoon I laid out a theory in the "Strategic Update post", you can check it out. Basically the theory was the market's sort of dull performance may in fact be to keep shorts in place as the market "slow boils the frog" to launch a short squeeze at higher levels. This is exceptionally hard to prove, but it makes some sense.

For a second day we saw mediocre performance with the S&P up again just under 1% a,most exactly like yesterday, I don't believe in "coincidences" in the market and as you well know this was something that was already at my goat yesterday, a second day of it seemed to be beyond coincidence.

Anyone remember my email response from Saturday to a member as to what the catalysts may be, I said I thought the usual stuff, buyt F_E_D rumors wouldn't surprise me, yesterday we got even better, we had two known F_E_D hawks talking like doves, for a 2nd day in a row we had another F_E_D hawk, Lacker, doing the same. How did I know that last Saturday? Well I didn't, but looking at the way the market is set up, it seems to me that something more than just a short squeeze would be needed to change short term retail sentiment and I figured some dovish F_E_D rumors would do it, I didn't expect 3 hawks to come out in 2-days and sing the doe song!

As a reminder, here's the exact email question and answer from Saturday (almost 5-days ago)...

Member: "This suggests the bulk of the upside will have to come from a combination of upside biased HFT algos, short covering panics and, eventually, bulls jumping in long on the assumption the market has reversed. "

My Answer: "That's the obvious stuff, but I wouldn't be surprised if the F_E_D let a rumor slip, picked up by the WSJ that helps, remember they have a lot closer relationship than they disclose as evidenced by the minutes being emailed to 154 trading firms over a day early. They'd rather see them make money in the market than have to bail them out.

That's just one theory, but there could be numerous things along those lines."

And here we are 3 days in to the week with not one, not two, but 3 known F_E_D hawks, talking down the QE Tapering fears, essentially talking the market up!


As far as some risk assets HYG High Yield Corp. Credit showed almost tick for tick relative strength vs the SPX again today, the important thing is it's not leading negative. DHY / High Yield credit and the first of the credit assets to run scared because of its low liquidity was actually putting on a show today, even more so than yesterday... take a look.

 HY Credit was positive yesterday, but today this illiquid credit that I don't think anyone would bid up without a god reason, was indeed bid up today which to me (considering the liquidity risks) means that someone see the bigger picture (I'm not talking about the ultimate big picture as in the market crashing) the next tradable trend which I believe we have started already (up) although I never believe nor have a often seen a market just move in one direction. I think people have a misconception when you say, "I think the market is going to see a strong move up", they expect that every day, every hour the market will do nothing but rise, that's just not true. For instance lets just take a look at a STRONG down trend.

Even knowing at the time this was a horrible period with 90 year old investment houses failing and inter-bank liquidity completely seized up and adding to that the benefit of hindsight, I think at first glance no one would argue this was a nasty down trend and I think few would think that they would have been shaken out of their shorts.

 Late 2008 in the SPY/SPX, I think if you asked most people "What would you have done, knowing the period was horrible at the time, would you have held your short?" I think most people with the benefit of hindsight would have said without hesitation, "YES, of course! Look at that down trend, there's nor reason the let go of a short there!"

However when looked at in a moire realistic way, forget about intraday volatility that just scrapes away at your nerves, just looking at the daily trend, let me give you some facts and see if your answer would be the same...

During this period we had 16 down days and 14 up days, it would have hardly felt like a downtrend when you are living at the right edge of the chart not knowing what comes next. And as bad as the down move was, did you know there were 3 days of approx. +2% gains, 1 day of 3% gain, 3 days of nearly 4% gains and 1 day with a +14.5% gain? Not knowing what was coming the next day or the next few weeks, do you still think you'd have the nerves of steel to hold a short as you watched the market march higher all day for a 4% gain on the day or a 14.5% gain? Looking back in hind sight and putting yourself in the moment are two very different things.

This is what I mean when I say, "Wall Street will never make it easy", I think you need to have an edge that you trust to get you through those 3 and 4% up days.

 As for sentiment, even though the EOD saw Street sentiment fade toward the EOD//close, it is still in an overall, very powerful place suggesting a strong move if you can live through the volatility.

HIO shows something very similar, both in the trend and EOD today. I'd suspect that tomorrow will see some downside moves to shakeout those who feel confident in a move higher (as few as that may be) and give confidence to the perma-bears.

Interestingly, on an intraday basis (Yields are still positively dislocated from the SPX when looking at a slightly longer term along the lines of a move up represented by 30 min positive divergence in the Index futures) Yields came down before closing early and not too long after the market came down in to the EOD, I do think this had a lot more to do with psychological warfare being waged at SPX $1600, but TLT is a known SPY arbitrage asset used for short term manipulation.

There it is, Yields intraday as a magnet would suggest we see downside early tomorrow or at least early tomorrow and maybe them some. I'm not going to get in to TLT here tonight, this deserves a post of its own.

Commodities didn't work with the SPX again this week, but rather (unlike the SPX) followed their legacy arbitrage correlation with the $USD, the SPX is actually stronger than the $USD correlation would normally allow for, take that, take sentiment above, take HY credit, especially HY (illiquid) leading positive and you have some very bullish undertones in the market and seemingly institutional money aware of what to expect which thus far has been the same as what we've expected and as for the 3 F_E_D hawks, turned Doves this week so far, again as I made clear on Saturday in my expectations for this week, I DON'T THINK THERE ARE ANY COINCIDENCES AT WORK HERE!

I mentioned above the possibility or even probability of some downside tomorrow, but at the same time I've shown you several assets above that argue for a bigger move, just like the 2008 chart I showed you (the downtrend), nothing is as easy as it sounds, it takes faith and faith is only differentiated from hope by objective data.

Take VXX for instance, short term as in perhaps tomorrow, we have an intraday positive building, since the market moves opposite the VXX, that would suggest that VXX moves up and the market down.

 VXX 2 min leading positive this afternoon, but remember this is only a 2 min chart, still enough to move the market tomorrow in a way that might make you doubt your data and probabilities,  but if you go to where the stronger probabilities are (just like the 30 min positive Index futures across the board and consider Credit above, and the other things I've pointed out so far, then...

This 10 min leading negative of VXX would suggest the highest probability trade here would be to sell short VXX or buy puts in to any short term strength as this chart makes clear a leading negative 10 min (institutional timeframe) divergence that fits well with all of the other information we have. These are hard moves to make, selling short in to strength, but we need to look past intraday action, we need to look at data objectively and put emotions aside, the hard trades to enter are often the best performers.

As far as confirmation in the SPY, take a look.

 The 2 min chart, like VXX is not exceptionally strong in its negative posture, but it's enough for a short term move which could be part of the day, maybe the entire day, but again if we come bask to the higher probabilities and in this case I could go to 5 or 10 min charts, but I don't have to...

A simple 3 min chart, stronger than a 2 minute shows a strong relative positive and leading positive divergence with NO DAMAGE done to it today at all, suggesting whatever short term weakness may be there, is capped at a very weak 2 min chart (at least in the context of the overall data we have).

Take the Q's as a confirming example...

 The 2 min QQQ again has a negative divegrence at the EOD, it's probably enough to have an effect on the market tomorrow, but once again, I don't have to go far to see where the probabilities are (just like that SPY downtrend I showed you, you can think of these 2 min charts as the chop up and down, but the main trend of a loss of -26% in the example above is on the higher probability charts and again I don't have to go far to find it.

Another 3 min chart leading positive at a new leading high!

I said I didn't need to, but I can go to a longer chart like 5 min and see very strong probabilities, so as I have said before, you have to be careful when you watch the market all day, every day ,not to "GET LOST IN THE LINES", in other words, get so emotional about intraday and day to day volatility that you miss where the trade is like the -26% move down in that short period of 2008.

Tonight's Dominant Price/Volume Relationship in all four major averages (this is the relationship between price and volume for all of the component stocks that make up and average like the Dow-30 or NASDAQ 100-NOT the average's price and volume itself) is in line with what we see on the 2-min charts, the Dominant (meaning overwhelmingly obvious) relationship in all 4 averages is the most bearish for the short term (as in the next day), of the 4 possible outcomes, the dominant relationship for all 4 averages is Price Up / Volume Down.  More often than not, this is one of the best indications of a 1-day overbought market, I use overbought very loosely because the price/volume relationship is a lot more elegant than a simple "overbought/oversold.

As far as Precious metals go, a strong divergence doesn't just fade away that easy, just like a 4% move up in the 20098 SPY downtrend didn't change anything in the trend, I don't think last night's move in precious metals as China opened will have any lasting effect on the expected trend and outcome for Silver and gold (SLV and GLD). For example...

 This is the Silver 5 min 3C futures, very positive on today's move

And the longer term or highest probabilities on a 30 min Silver futures is pretty clear as well, this is why I don't panic over a move like last night's.

 This is the Gold 5 min futures, it looks almost exactly the same as Silver's.

And the 30 min gold futures, it's not just the quality of the divergence, it's the confirmation between the two assets as it remains the same (both positive) as it was Tuesday.

As for tonight,  the Nikkei futures look strong, however the 3C charts in the 1 and 5 min timeframes aren't supporting price so I don't know if the Nikkei will end the day on a solid note, I personally wouldn't put money on it because that's not where the short term edge is.

This is only a 1 min chart, but as I said, the 5 min isn't backing price either.

Of course it's very early in the night and a lot can happen, but the divergence on the 1 min chart in the Nikkei futures have been right on, both positive and negative so despite price seeing a parabolic move up right now, this isn't the edge that we look for, this is the kind of position that we pass up (unless this were to change and give us a real solid edge).

ES has a similar negative 1 and 5 min, as does NQ and TF (the 1 min in this case is much worse than the 5 min, the Nikkei they are about the same). However where it really counts at the 30 and now even the 60 min charts, all Index futures are still on very solid footing, there has been no damage whatsoever to those charts and for me, that's all I care about in the current positions and even more as a means to an end, the BIG PICTURE, setting up shorts for a primary trend down.

That's going to do it for tonight, I'll be back in the a.m. to check the futures, we'll see if there are any overnight surprises, with volatility as high as it is, I wouldn't be the least bit surprised. It's the 30/60 min charts that are the anchor that relieves me of surprises.

Psychological Warfare

There are 3 types of market analysis, Technical, Fundamental and Mass Psychology with the latter being the least understood and perhaps the most important.

I often say if you want to work in the market as a trader, don't take economic at college, that's all  theoretical garbage and they are the only group with a worse track record than the weather man.

Tell me, what do you see on this chart that has to do with mass psychology?

What do you see that would keep a short in place and give them hope? What has the market been doing all day and what changed that in the last few minutes?

Let me give you a hint. When you go to the store or shop anywhere, EVEN GARAGE SALES...

 (Believe it or not I took a 2 week course in Baltimore on the entire subject of sales from what color scheme businesses use, such as fast food- Red and Yellow, red is the first color your eyes focus on and yellow is associated with hunger. Now thing, McDonalds, Burger Kind and Wendy's all use what two colors?)

What are the last two digits of nearly every price tag? They are 99, whether $1.99 or $199,999 (house price). It really makes a difference.

So what's the important number near the close on this chart that fits with my earlier post, "Strategic Update"?

All of the Index Futures have that 1 min negative still

As doe the averages, the QQQ is the only one to really look mostly in line as if it could keep on going, but I suspect this is as my theory laid out a few posts ago, the moderation that makes shorts happy at the EOD, keeps the gain there, but nothing that is shocking-currently at +1.08%.

AAPL Charts

Here are the charts....

 1 min AAPL intraday

2 min trend

Close up intraday of the 2 min chart, there was a slight move below recent support, stops or orders were hit as volume spiked up and 2C gained ground in the area.

5 min trend, the divergences loo squashed because of the volume pane open.

 Close up of recent 5 min action, the break below the psychological $400 level seems to have been a key area for positive divergences, you'll see toward the end.

 10 min overall trend is actually quite clear, negative at the counter trend bounces and positive in to the move below 2 triangles and $400.

As we made that move under $400, the longer charts went positive, there are few charts positive in the 30+ min. area.

 I noted the 60 min going positive yesterday, today it added to it and...

Unbelievably to me, we even have a 2 hour positive chart now as AAPL is in a flat range, EXACTLY where I was telling you yesterday to "Be Careful", this is where institutional money is quietly at work .

Still LOVING AAPL Long- at least for a TRADE

Here are the charts, if I could add or needed to fill out a long (I have an open call and open long equity position) I would.

Take a look, I'll get charts up ASAP, but it has now added the 2 hour timeframe to its positives.

Strategic Update

This is one of the Tweets that is right about what I was saying yesterday about longs being frustrated, shorts being frustrated.

By the way, I do think the market is coming down intraday, ES and others really look very clear about that.

First let me show you the CONTEXT chart, now Capital Context admits openly that they re-weight their ES model whenever the feel it is needed, I believe they do their SPY Arbitrage every day in the morning.

Remember last week when the ES model was +70 points above ES and then all of the sudden it was 10 points or so the next day and ES hasn't moved, but what did change was the Carry trades that are part of their model, the USD/.JPY flipped 180 degrees on the F_O_M_C day. Since then, the $USD correlation with the market has changed AGAIN! Yes, Again so I think they'll have to readjust the model again as the market is moving with the $USD unlike the last several days!!! It's crazy.

There may be an $AUD/JPY correlation, there was yesterday, but the JPY doesn't look right for it today, it must be driving them insane.

Take a look at ES and 3C, this is where I think we have some stability, some consistiency.

 3C on the 1 min Es chart (SPX futures) as reported in the last 1 or 2 posts is suggesting strongly that ES pulls back intraday. This "could" be because the $AUD is down and market participants saw the $AUD/JPY correlation yesterday and expect the same today, but that's just conjecture, all we know is three's a solid 1 min negative divergence.

 There's no damage at all on the 5 min chart, it's in line and looks like whatever pullback could come from the chart above, it's noise, it's throwing traders off, but it's not serious.

The 15 min chart is leading positive at the perfect area, this Inverse H&S-like price pattern. This suggests the 5 min will stay strong, prices will ultimately move strongly to high levels that are being telegraphed here.

The 30 min chart is just as positive, you've seen it many times and below the 60 min chart is really giving this a lot of credibility.

60 min ES leading positive divergence, and all of the Index averages show the same so there's excellent confirmation.

Some other assets and indicators....

 Again like the last 3 days, commodities are not in sync with the SPX, however, they are in sync with the correlation we expected to see this week with the Dollar.

Commodities in brown and the $USD in green, so commodities are acting like they should, the market is not following the correlation anymore, although it was nearly perfectly late last week and at the start of this week.

This is the $AUD, yesterday, remember I said yesterday the market followed the AUD/JPY? You can see that here.

Today the $AUD is nose diving, this is why I wondered if traders are lightening up on their long intraday positions, thus the ES 1 min 3C divergence because they see the AUD today and recall it's near perfect correlation with the SPX yesterday.

 The $USD vs the SPX in green, the correlation (Legacy or normal USD correlation) that we saw late last week when there was a flip and early this week has flipped AGAIN and the SPX is moving WITH the $USD, how weird, yet commodities are not.

And the FXY isn't in the right position TODAY for the same AUD/JPY correlation. 

This has to be driving FX traders, arbitrage traders and Capital Context nuts.

Some more assets....

 This is the NYSE TICK, recall yesterday, the day I called "Pause", "Stuck", etc, the day that seemed to be purposefully controlled and not allowed to pop like it seemed to want to, even though it had a respectable finish near 1%.

The TICK chart yesterday was somewhat dull, today it's nearly absolutely trend-less.

ONCE AGAIN, I GET THE SAME FEELING AS YESTERDAY, THERE'S A SPECIFIC EFFORT TO KEEP THE MARKET AT A CERTAIN LEVEL AND THAT IS TO SAY, NOT TO PUSH IT HIGHER, BUT TO CONTROL IT FROM MOVING TO MUCH HIGHER.  

Try to recall the flatness/trend-less chart and what I just said.

 Short term Yields vs the SPX saw reversion to the mean again today like yesterday at the green box, the red yields tend to pull the market toward them.

However if we adjust the zoom to its proper scale...

The SPY still has quite a bit of upside before it meets up with yields and this usually happens.

This is suggesting that the ES charts as well as the other Index futures are indeed correct about a strong move to the upside.

Take a look at HYG- High Yield Corporate Credit, "Credit leads, stocks follow...", HYG is in very good position for the market to move higher near term, it is SUPPORTIVE.

The less liquid High Yield Credit is the first to run scared because of low liquidity, but even it (as you see has led the market to the left and in the market's base area)  is making a leading positive divergence, it can easily be said that High Yield Credit is supportive of the market right now AND AS SMART MONEY ALMOST EXCLUSIVELY ARE THE ONES TRADING CREDIT, IT'S ALMOST AN ENDORSEMENT FROM SMART MONEY THAT THE MARKET HEADS HIGHER.

3C HAS THE SIGNALS THAT SAYS SMART MONEY HAS PREPARED FOR A MARKET MOVE HIGHER.

There are plenty of signals above.

Now listen to the "Sample" sentiment from StockTwits....

"I am back to my stupid ways. I am now 70% invested as of Monday. Only problem is they are all shorts and the market is ramping. I have IWM 91 Puts for Aug. I effed it up again. A week late on my trades."

Ok so as we knew before, longs and shorts are frustrated.

Now finally, these are the closest thing we have to Institutional Sentiment indicators.

As you see the first in blue vs the green SPX led the market down to the left and went positive right around the start of this pattern I showed earlier when talking about where 3C will usually go to vs where a divergence starts.

It is also leading the SPX today, so this is telling us that in addition to credit, Index futures and everything else, even their sentiment is expecting more upside!

Now this is our second version of institutional sentiment, it is a good indication because it is NOT correlated to any other asset, just what they feel about risk.

It too led the market lower to the left, it too went positive at the start of the price pattern and it too IS LEADING THE MARKET, IN FACT AT A NEW LEADING POSITIVE HIGH!

So, this is my theory.

Shorts are frustrated, but they are obviously in the market.

Look at Monday's recovery, it wasn't threatening to shorts, yesterday's near 1% gain was up, but not threatening to shorts.

My gut feeling is that this is a "Boiling the Frog" scenario.

They say as an analogy that if you want to boil a frog, if you throw it in boiling water it will jump right out, but if you start it out at room temperature and slowly increase the heat in small increments, sooner or later, the frog will stay put and you will have boiled the frog.

It seems to me to be the same way with the market.

If you are Wall St. and counting on a short squeeze to help propel the markets higher, do you want that squeeze to fire off at SPX $1575 or at SPX $1625?

So perhaps what I noticed yesterday and most of today is the market being moved up, but not enough to make the retail frogs fearful and jump out of the pot. However as soon as they have the market in a higher place, they unleash the market and let the short squeeze start 50 points higher.

Everything I've seen seems to at least make this plausible if not offer confirmation.

That's what I think is happening.

Market Update

I'm going to try to explain the strategic thought, the theory I had earlier, but in the next post. For now, here's ES 1 min, it's 2 p.m., I think it's highly likely the market comes down from here, being 2 p.m., there's still time for that to happen and a closing ramp.

ES as well as others are intraday negatively divergence, don't jump to conclusions beyond that though, I'll explain in the next post which I'm working on already.

Quick Update

All of the Index futures and a lot of the averages look like that intraday pullback is coming, actually there it is in the IWM any way, what the QQQ does will be interesting.

The key here to my theory is to verify accumulation in to a move down, it doesn't need to be really strong, in fact I wouldn't expect it to be.

I'm almost there.

Sentiment Update (Retail)

These updates are based on watching the stream (Twitter/StockTwits) and getting a feel for sentiment the same as one gets a feel for market action. Yesterday I showed the price action on a chart and showed how it would frustrate both shorts and longs, that's their job, to make as many people wrong at any one time as they can.


"Shorts are ANGRY, Longs are Selling"

"Sold all my trading longs this AM. Flipped short"

That update being said, I do have an interesting theory, it started based on yesterday's odd price action, remember I likened it to a "PAUSE", not even a consolidation, but literally like a book mark or a pause.

I want to gather a little more data in L.I.'s and the Bellwether stocks to see if this trend is there like I see it in other places and then I'll share the theory with you if I find it to be credible, right now I think it is and even the sentiment update above helps to establish the probabilities.

Quick Update

This market and gaps is just so predictable and its a shame, ever since HFT entered the market, Ggaps are almost always filled and its a shame because certain gaps like break-away and exhaustion gaps were very useful, not to mention things like Island tops, etc.

In any case we have largely a gap fill, there doesn't seem to be much more to it than that. The DIA and IWM continue to improve, the Q's are in line intraday and haven't made any effort to fill their gap, the SPY I would say is slightly improved in that at least it's in line with the recent small turn up around 12 pm.

The R2K Futures, TF, are seeing a strong leading positive signal, it keeps getting stronger, here it is.

TF R2K 1 min leading positive

ES is improving a bit, but not what I'd call positive viewed on its own. Strangely just as the IWM and TF (both R2K) are the strongest and looking good, NQ which is the NASDAQ 100 futures are almost perfectly in line, just like the QQQ chart. I don't see that too often, but I'd call it good confirmation.

The TICK is just starting to form an up-trend channel, it will be useful to keep an eye on.

VXX overall looks very much in line with the market going higher, almost all timeframes are in line with that concept, however there is 1, a 3 min that still has maintained, which doesn't suggest any strong probabilities at this point, but it leaves the door open for a correction in the market again until that chart disappears, but we are really getting fussy with this. The 15, 30, 60 min charts of the futures I showed last night are really the big story, all of the other details I think just contribute to high blood pressure if you get too wrapped up in every intraday move while volatility throughout the market is this high.

I sid we'd look at TLT and we will, it's very interesting.

For now my general feeling is that some more consolidation behavior is probable and during that, I'd like to see the positive divergence develop strongly in to that side-way range.

Here's the intraday IWM, compare to TF (R2K futures above), but my main point is the consolidation and longer timeframes seeing divergences like the IWM's 1 and 2 min for today during its pullback.

IWM 1 min, the divergence should keep moving up, but they aren;t typically going to accumulate prices moving up, thus the range with prices falling down to the lower area where the divergence continues to build, that's what I'm looking for, at least for at least until maybe 2 pm as of this point.

Quick Update

The DIA and IWM are now starting to go positive from the a.m. pullback toward the gaps, the index futures are not there yet, except TF (R2K futures) are showing a positive signal.

I'd say the IWM has the strongest signal so far, which is still an early signal, although it's also found on the 2 min chart as well. That happens to be the same average as TF in the Index futures (Russell 2000).

I'll keep an eye on them, but nothing so far seems out of place, a gap up, a gap fill, pretty standard. NYSR 1 min TICK is very helpful right now for determining the change in character that will precede a change in trend (intraday pullback).

Initial Read on the PM Complex

The initial read is actually rather surprising. I guess we shouldn't forget this move occurred during the light volume overnight session.

I'll show you the opening indications in GLD, SLV and GDX as well as the charts for Gold and Silver E-mini futures.

As far as reasons, I don't know, I mentioned it could be an effort to raise capital by Chinese banks facing liquidity shortages that are spiraling out of control for the same reason they did in 2008, the overnight lending between banks absolutely comes to a grinding halt when you don't know if the counter-party (the other bank you are lending to ) is a "Bad bank", so the banks just stop lending to every other bank. Thus it's the  PBoC who becomes the liquidity provider of last resort, however just last week they were trying to drain liquidity out of the system as they have been doing all year to sop op the QE hot money that was flowing in from the US, but more so from Japan recently, so they can try to keep a lid on inflation (mainly housing) - recall they even put in housing curbs to keep citizens from becoming real-estate speculators. In any case it was interesting to recall that the liquidity draining operation from last week failed, I wrote about it at the time, now we know why.

The Rupee hitting all time new lows against the USD (and gold is traded worldwide in USD's except for a few experimental markets) and I think we all know how much gold India as a culture alone, absorbs.

There's the chance as well that these may have been aggravating factors in something that is otherwise totally unrelated. As we know and see very often, a shakeout move is often the last thing we see before a reversal, I was going to mention that in yesterday's post, however I got sidetracked and started talking about the range instead as I had been talking a lot about the range yesterday and how you have to be careful that you aren't lulled in to complacency because of, well "boredom:.

In any case, so far the results are a little surprising, unless of course that is a head fake move, then they'd be right on track.

 GLD 60 min with a clear support zone, that makes running stops more attractive because they congregate just below the support TRENDLINE, I use the word trendline specifically to point out that retail traders view support and resistance in terms of exact numbers, thus we see large volume spikes on a break of support by a penny or two (for instance if that support line were exactly at $130.00, most stops would be around $129.90 to $129.99- they take support/resistance that literally). This makes it very easy for Wall St. to shakeout traders, especially when they place orders on the books with their brokers rather than mental as almost anyone with decent software knows exactly where all the orders are.

* Think about what creates support and resistance (outside of market manipulation), put yourself in the shoes emotionally of a trader in a position with a break of support/resistance and think about how you'd react when you get close to being able to get out of a position at break-even after having been down. Would you hold out for $130.00 exactly or if things started getting a little shaky at 129.90 would you just get out there and then? For most its the latter, that's why true support/resistance is an area, not an exact number.

 All cumulative indicators float on the chart unlike oscillators, not just 3C, but any cumulative indicator so it makes it hard to properly scale the indicator with price, but that doesn't matter for signals, all that matters is the relationship between price and 3C, it doesn't matter if price is above or below as that can all be changed as a function of zoom. What matters is price making a new low and 3C making a higher low, that's a divergence no matter how the chart is scaled.

The point is this morning in GLD on the fastest timeframe of 1 min, there's no downside confirmation, that would happen almost immediately on the open, it didn't, that's telling us something, thus far (although we need some longer term charts to catch up to today's trade), it looks like it's telling us this is a shakeout move, whether intentional or not, that's the way its being dealt with.

GLD- The 2 min chart is very hard to scale too, but the signal is the exact same on a chart that would have moved by now if it was to confirm the downside, thus it still looks like a shakeout and again, if not an intentional one, it seems it is being handled as one.

 GLD 3 min is confirming as well. It's a little early to go too much further past this timeframe until the longer charts have a chance to catch up to the new day's trade.

Silver looks amazingly similar.

 SLV 60 min chart and support, nearly exactly the same as GLD, to the left there's churning which is a form of distribution, you can tell by the long upper candle wick, the lack of any price movement and huge volume, it is most often associated with the handing off of shares from strong hands to weak hands.

 SLV 1 min, again difficult to scale, but the signal remains the same as GLD.

 SLV 2 min, again the same

SLV 3 min, again nearly exactly the same, these are not two ETFs with the same underlying asset, these are two different assets, although both PMs, the signals being so similar is good confirmation.

GDX-Gold Miners

 The 1 min in GDX, but I wanted to show you NUGT because these are the ones that will move because of the leverage, leveraged ETFs are often good leading indicators for the underlying asset.

 NUGT 1 min confirms the drop, it's in line right now

However the 2 min chart is not doing the same, that's not an error, it just shows the depth of underlying trade, I'd interpret this as retail giving out quickly and stronger hands staying on board.

It's way too early to tell anything about the open with a 10-min chart, but I wanted to show the support area and the break. If the 10 min chart looks like this at the end of the day, I'd say we have a very high probability shakeout, again whether intentional or not, but with such defined support intentional would not be surprising at all.

Gold and Silver E-mini Futures (YG and SI respectively).

 GLD 1 min with a positive at the 5:30 a.m. lows shown in the last post and since the capture, in line.

YG 5 min with a clearer trend

YG 30 min This is the big picture, the move overnight is emotional, it's strong, but it doesn't look very important in the big picture, if it is a shakeout move it is important form a timing sense for the big picture.

 SI 1 min, very similar to YG at 5:30 lows

SI 5 min not looking like sellers were dominating the underlying action; the support issue is the same here as GLD/SLV/GDX

SI 30 min, again along the lines of the Index futures

I'll keep following all 3 assets and see if the longer term charts also confirm the shorter term charts for today specifically.