Scenario

This is a possible scenario I've come up with for today's intraday trade based on the charts we have now. I started considering this based on the USD/JPY overnight action... why save it for now? Here's a scenario...

First let me show you the QQQ, we have been watching this deteriorate and it's in unrecoverable position, but this is what we expected from a head fake move as well so it shouldn't be a surprise.


Obviously intraday charts can change quickly, but this is what I think is a reasonable scenario and I want to let you know because it allows you to consider how you might want to use it to your advantage, I'll tell you at the end how I'd be looking to use it.

First the QQQ

 The 30 min charts I thought might hold up positive are just destroyed as you see, this is the distribution that will move the market lower just like...

This 30 min accumulation moved it higher, of course there was a lot of volatility at the trend pivot, they rarely are a clean break.

This would be a clean break in the QQQ, just looking at it you can see most charts don't look that way, there's more volatility in them, especially at trend pivots.

 As far as all the intraday chart like 1 min they were negative and in line, this is at reversion. From here on an intraday basis, the Q's could make a lateral price move (with the broad market) that allows enough intraday accumulation for a intraday pop higher from here. I think the minutes sealed the fate of this last trend so it's not anything I'm concerned about, but it may be something I can use.

 I'm just showing these other charts so you can see how thorough the damage is... 3 min QQQ

 5 min QQQ

 15 min QQQ and you saw the 30 min at the top.

If the market can put together an intraday base (don't forget about the op-ex pin tomorrow as well), then we could see a psychological game played, even though the minutes destroyed market hopes as they brought up a rate hike way before anyone expected them to, retail follows price, that's all they know and thus this can act as another small trap.

With the SPX so close to resistance, a pop above will change retail's sentiment to bullish as it is a breakout above resistance, many of them will buy it and that creates the trap as you can see above, the destruction in the charts is complete, however intraday, that makes sense especially looking at the QQQ price trend I drew above.

The USD/JPY would play a large role and I think it already is as the approximate 10 point loss in ES overnight was saved by a reversal just before Europe opened to send the FX pair back above $102 and UIndex futures reclaimed the lost ground from overnight.

 USD/JPY 1 min is already negative and we are already seeing some downside volatility, but this divergennce should be bigger to really break the Carry trade, to do that it needs the Yen to develop a bigger positive divegrence and the $USD to develop a bigger negative divegrence, that all is just a matter of time, that's it.

 Yen 1 min positive already is causing trouble in USD/JPY since the open, but this base is just one sharp "V", it needs to broaden out to do real damage to the USD/JPY and the market.

The same concept is true of the $USD, just it needs a larger top/negative divegrence.

While all of this is building, the market is not usually going to just sit in one place so why not hit buy limits just above on the SPX in the mean time, it only helps as a head fake with downside momentum once the USD/JPY is ready to break down.

The way I'd use this is in assets like GLD I mentioned yesterday, I wanted to short them in to strength, if the SPX does what I am proposing, that strength in price in GLD should appear allowing me to enter the position that I refused to chase lower yesterday.

There are plenty of other assets tat the same concept can be applied to.

That's a plausible scenario and a way to use it to your advantage, I'll keep an eye on the way things develop and what assets might make some of the better positions.