Market Update

I've been quiet the last hour or so because I've been going over numerous charts, I'm hoping the last hour is going to clear some things up.

The QQQ "seems" like a good example for one side of the data.

 This is the 1 min intraday chart in confirmation now of the gap fill, but this seems to be very weak underlying movement pushing it because you don't need to go far to see distribution in to this move.

The 2 min chart shows distribution in to this move.

This would be the equivalent of a market maker working the bid/ask and price higher, but selling in to that move higher.

 At 10 mins we have a nice positive divegrence through the entire range this week, the 3 and 5 min charts between the 2 min above this chart and the 10 min are both negative, not as negative as the 2 min and the 5 min is not as negative as the 3 min so it's migration of the divergence with the strongest intraday negative at 2 mins, then 3 min and then 5 mins.

The overall trend for the week's range is leading positive on the 10 min chart as this is much too strong a chart to register intraday distribution.

However it is interesting that there would be intraday distribution unless THE MARKET WERE PLANNING A HEAD FAKE MOVE BELOW THE RANGE BEFORE A MOVE HIGHER WHICH IS NEARLY STANDARD PRACTICE (4 OUT OF 5 TIMES WE SEE A HEAD FAKE MOVE OR STOP RUN IN THIS CASE AND ESPECIALLY WHEN THE RANGE IS SO DEFINED).

The 30 min QQQ is also positive during this range so it looks like a very strong accumulation period has taken place, but I suspect a move Monday below the support of this week's range to run stops BEFORE a move higher.

There are a lot of charts going a lot of different ways so I feel less sure about the head fake move and timing than I did last Friday when predicting a range and accumulation of that range.

However, from a market behavior / Concept point of view only, a stop run as I've drawn on the chart above is pretty standard practice before an upside reversal, in fact if you've read my two articles, "Understanding the Head Fake Move" that are linked on the right side of the members' site, you'll understand exactly why we see these head fakes so often (about 80% of the time).

There are some other charts that don't quite fit with this scenario, but the last two hours is where we get the most reliable data on Friday and some of those charts are changing fast (during these last two hours).

One area that I've seen and am on the verge of taking a call position out on is GLD, you recall yesterday I just closed a GLD Put opened the day before on market strength, if GLD is looking like a good call position right now, that would suggest GLD strength Monday and market weakness and that market weakness could be the head fake move drawn in above.

I'm going to keep looking at these charts and try to keep up with them and maybe even get a trade or two out if we start to see things lining up a bit better.

I also noticed HY Credit is not buying today's gap fill, but it's not deteriorating either, to me that would suggest the probability of a head fake move as well. Yields are moving up, but underperforming while the VXX's correlation is out performing, both of those would also suggest a market move lower Monday which would very likely be the head fake move we see right before a reversal (up).


The Yen futures so far are negative across the board, this is one area that doesn't agree with the above theory, however the $USD futures are broken up and not consistent like the Yen futures. I'm wondering if the Yen futures will flip before the close.

Also the 5 min Index futures charts should be very strong right now if a breakout move were coming Monday, they are not, in fact while they are not negative, they are lagging enough that the head fake move would make more sense as they could accumulate that move like AAPL did with stops under $495 today and those charts would be positive by the end of Monday in time for a breakout move as early as Tuesday.

Let me see what else I can find.