A.M. Update

Good morning, I hope you had a fantastic weekend and are ready for this holiday shortened trading week (Markets closed Friday in observance of Good Friday), which could introduce some volatility, especially with geo-political events in Ukraine coming to a boiling point again.

As of Friday in the EOD--- post what I saw was VERY simple, summed up as (actually verbatim)...

"Really simple bottom line, I think we have a base developing, not much has changed today perhaps due to options expiration, but there's still not enough for me to jump in yet and thus I'll wait it out and see what Monday brings."

To give you a VERY simple bird's eye view of the situation in which I believe we are building a larger "W" base that was started last Monday...

Last Monday/last week's "W" base is now looking more cohesive as 1 unit rather than 2 distinct events. We also see the typical shakeout or stop run of the double ("W") bottom base that is used so often as traders are so predictable in what they see as price patterns and how they respond, right now, this is probably one of the larger bits of evidence suggesting one base, the shakeout which would mean that it is close to completion,  however as of Friday afternoon I did NOT feel it was complete.

It's pretty simple to get a feel for what's coming simply by looking at the futures, but there are two stories, one of the base and one of it likely not being finished, thus we are still being a bit patient, we'll look at both.

  The VIX 5 min Futures look like there's some rotation out of safety and in to risk, although I think it's not quite done.

The 10/30 year Treasury futures have the same look on a 5 min chart.

The leading negative divergence on the 10 min / 10 year Treasury futures also looks like a rotation out of safety and toward risk on sentiment.

We'd need to see confirmation in risk assets like the Index futures.

The 5 min ES chart shows that confirmation with a leading positive divegrence in the area that would be considered the head fake/stop run of a double bottom or the larger "W" pattern, this is only the right side and to me looks like it's not finished and likely to come down a bit more to widen the foot-print which I'll show you on the opening indications below.

 ES 15 min chart also shows confirmation. I'm not cherry picking, I'm using ES as a proxy for all the Index Futures as they all look almost exactly alike and all tell the same story.

As far as opening indications, after a fairly flat overnight session partly in response to events in Ukraine as the government issued an ultimatum that has come and gone (for Monday morning) to pro-Russian armed separatists who have occupied government buildings in Eastern Ukraine, to disarm or face full scale Anti-Terrorist operations by the armed forces of the Ukraine, which obviously raises tensions with Russia and gives Russia a pretext to intervene as they'd likely have planned already being the Duma has adopted laws allowing Putin to protect ethnic Russians wherever they may be (as in the Ukraine).

I think the rest is simply what we were seeing late Friday as 3C signals tend to pick up where they left off on the next trading day...

The 1 min ES futures overnight were relatively flat and then got a push to the upside as some small 3C indications showed Friday, not nearly enough for me to enter a call position as I said above from Friday, however that early strength looks to be seeing 3C non-confirmnation which is what I suspected and the reason I decided more patience is probably the best course until we have solid short term signals.

As for the market averages, they too are showing the same which is what would be needed to develop that larger base/foot print on the right side of the "W" or small double bottom base.

 SPY 1 min showing no early confirmation of the gap up, this is what I suspected and the reason I felt it was too early Friday to enter calls or longs for a hitch-hiking trade (long).

The story is the same with the QQQ

And especially so for the IWM.

However looking a bit further our like the Index futures above...

 The SPY 5 min in the area of a "W" with a shakeout already complete, we do have two distinct positive divergences with VERY LITTLE distribution at the high between them suggesting one larger short term base.

On a SPY 10 min chart we have a reversal process of the larger "W" base, but the 10 min chart is not yet showing a divegrence that suggests it is a cohesive base, which I think is one of the prerequisites we'd be looking for before entering any trading positions (calls or leveraged longs would be my preference.)

So I think we just need a little time to let this business wrap up, for price to come down to the lower end of the most recent small base and widen the foot-print out a bit, I'd also look for a SMALL head fake move below support (if it develops at an obvious place like last week's lows) right before any upside move.