Quick Wrap

Today was one of the more frustrating days I can remember as the market has been so clear, we've been able to predict ranges, head fakes, next day direction and trade off that with things like GLD calls or Puts and it has all been very accurate, EVEN TODAY'S "W" pattern. However once that "W" was in, it's just like the market stopped and in this area, going blind is not something I fancy.

In any case, underlying momentum did pick up in to the close, pros have always traded the close for the most part, but it seems today that they were totally absent once the "W" bottom was in until just before the close.

 IWM intraday was in line moving lower until just before the close and 3C moved pretty strongly for the timespan and pulled price right back up.

 I mentioned earlier today that an intraday pullback looked highly probable, you can see it here on the NASDAQ 1 min futures, it actually took a while as price stayed flat, but just before the close...

The chart started moving up pretty quick, still an intraday move, but movement and held the NASDAQ futures together as they were just starting to come undone.

As far as the VIX... I had been hoping the VIX would be up early today on weak 3C signals to short VXX, it didn't give the kind of signals I needed early, but later...

 intraday VIX futures started leading positive, I thought it was a bit strange, then suddenly 3C turned down and pinned them in place.

I THINK THE MOVEMENT END OF DAY WAS ALL ABOUT WHERE THE MARKET CLOSED, IT SEEMS THEY HAD A CLOSE IN MIND AND WEREN'T GOING TO LET THINGS MOVE AWAT FROM THAT CLOSE. If you think about it, that is seemingly a pretty good explanation for why they were active just before the close.

The VIX futures 5 min chart is in horrible shape, I can't imagine the VXX doesn't see downside, we also have the sell signal in VXX that I showed last night.

The daily chart didn't give the exact candle I was looking for, if smart money didn't step in at the end of the day the close would have looked a lot worse, in any case we did get a decent close.

 With today's close we still have a Harami (bullish) upside reversal in place, in fact a double and both are hammers which are bullish reversal candles by themselves.

Just as important...

We did get the exact "W" base we were expecting since it became clear early yesterday a wide "U" was out of the question. Just to be able to predict this base, we needed and gad good signals, I don't imagine much has changed.

As far as what I said about going back to basics, we use to use 3C for broader moves, we didn't have the kind of detail we have now so most moves would be along the lines of a swing trade, it wasn't very often we'd take 1 or 2-day option trades, we just didn't have that kind of clarity until later, but what we did have were clear trends that were very effective. Here are some of the ones I was looking at this afternoon.

 IWM 15 min positive divergence which incidentally starts right at the 27th, the Friday before we had predicted a lateral range that would be used for accumulation. This is the kind of signal we'd trade long, it's not only long enough for a significant move, but strong enough as well.

 The QQQ is positive at the exact same area and a 30 min divergence, this is a very large divergence, not a corrective bounce of a day or two.

The SPY has the same 30 min positive divegrence and at the exact same area. Anything at 15 mins or above we'd always trade as a swing trade.

Also we have the SPX E-mini futures 60 min chart also giving a strong leading positive divegrence and once again, at the exact same place, starting Jan 27th on every chart.


As far as the big picture (and this is why I want to be careful in taking on any more long exposure that aren't throwing unbelievable signals)...

The 4 hour SPY 3C chart is in horrible shape, the top is clear and I do think that is the actual top you are looking at. The signal 3C is giving is one that pulls the market toward it so I fully expect the market to be moving in to stage 4 decline.

I'll check other indications, but to me it seemed like there was a close they were going for and were just waiting for that to finish up and when it was threatened a bit intraday, they seemed to step in to make sure it wasn't. Perhaps that's why the market felt like it was on hold today, because it's essentially at the starting line for the upside bounce, perhaps the Nikkei 225 will move first, it has had much better character in price recently and the 3C divergences were there calling for such.