Reminder of where we are

The Yen and $USD divergences continue to form even as the $USD/JPY has given up some ground, as I suspected and said, the pre-market positive divegrence was a very weak relative (weakest form) divergence.

This has created a true mini parabolic move in Index futures.

 Russell 2000 Futures which we already knew had a leading negative divegrence so it shouldn't be a surprise that this morning's typical retail-smacking games failed, but they did what they were meant to do (for a.m. trade) drag more bulls in to the mix, hand out bags for the bag holders.

Note price itself, this is why I never trust parabolic moves up or down, they almost always fail in spectacular fashion.

Part of this is likely some nervousness with the January F_O_M_C meeting minutes coming out in about an hour and a half, DON'T FORGET THAT WE ALMOST ALWAYS SEE A KNEE JERK MOVE ON F_E_D RELEASES AND THE KNEE JERK MOVE IS ALMOST ALWAYS WRONG.

This could also be the turn to the downside I've been expecting to bring us to the next, larger trend we have been expecting which I still think is likely headed to the SPX's  200-day as the first step.

However, whatever all of this and whatever we want to blame it on and whatever may come upon the release of the minutes, for the sake of cleaning up market correlated long positions and setting up the next trend (short) positions, I wanted to remind you of WHERE WE ARE IN THE MARKET RIGHT NOW....

This is the 15 min SPY, it went very negative late December/January and was followed by a move down, this is when our head fake position started forming with a range on the week starting Jan. 27th, then the head fake move below that well defined rectangle and continued accumulation as we formed a "W" base. The move up from there is a head fake in a way, but the true head fake was the set up just previous (that I just described) that pulled in all of the shorts and set a bear trap, that was the head fake move and as I said back before the first upside point accrued, "Don't expect anything other than distribution". We knew what the reason was for this move before it even began and the Leading negative 3C position during this rally shows very clearly what that reason was, to shift sentiment from bearish to wildly bullish, to create demand at higher prices in size that Wall St. can first sell in to (as they did accumulate a pretty large position starting Jan 27th) and then sell short in to (both a sale and a short sale are selling and register as distribution on 3C).

In other words, I'm showing you what I told you would happen January 31st and more specifically February 4th while everyone was still raging bears selling any rip or shorting it, this is the excerpt from Feb. 4th which you've seen, but I imagine you've felt exactly what I described, I have and I feel very confident in knowing this was going to happen and why, we are still creatures of emotion and this was an emotional attack to change dynamics, a like a wrestler or fighter that uses a smaller tactical blow to knock their opponent off balance to set up a larger strategic opportunity...

Tuesday February 4th

" When I said we expected a head fake move in my Friday post, "Come Monday", it was a head fake move to the downside, they need to be real, they need to be convincing, just as a bounce to the upside, I wouldn't expect a 1 or 2% move, I'd expect something that will fill my inbox with emails asking, "Are you sure the market is still bearish Brandt, this looks awfully bullish"."

That's exactly what this entire set up that started Jan 27th was meant to do. Like we always say, "Wall Street, doesn't do anything without a reason".

 I don't even have a chart long enough to show the full extent of this 4 hour leading negative divegrence, but you can clearly see that there has been an insane amount of deterioration since December, this is more than anything I've seen before, but if we look at the Dow 1929 daily chart at the top vs. now or the QQQ daily chart at the top of the Dot.com bubble vs now, both right now are significantly worse than the previous crashes so it's not surprising that I've never seen anything this extreme, we've never been in a similar situation and able to use 3C on intraday charts.


The 10 min IWM just to give you a feel for the underlying weakness in the rally, this is the distribution I thought we'd see because that's the only thing you'd expect to see when considering why this move was set up in the first place.

The longer term 4 hour chart for the IWM

The QQQ 30 min chart and intense leading negative divegrence in to a strong price rally, exactly what they needed to create, BELIEVABILITY" 

And the 4 hour QQQ.

Just remember where we are and what these charts look like, I am as I'm cleaning up certain longs, entering / holding certain short positions and creating dry powder for new opportunities.

You have to know where you are on a map to know where you are going and I wanted to remind you of where we are.