A.M. Indications

If you caught yesterday's A FEW EOD CHARTS then you have a very good idea of what we expected for this week from last Friday's Market Update and Some Probabilities.

While we didn't hit every single move right on, we did get all of the moves expected and the overall theme of why there was a bear flag, why a Crazy Ivan shakeout would be used and to what effect, were all right on. The main point of last night's post is to show that this super mini cycle or expectations for this week and the reasons for them have been fulfilled or are in the very tail end of being fulfilled.

Last night's post put's it together more completely than I can here so if you missed it, you might want to read it real quick, again this is the post, A FEW EOD CHARTS and after understanding what we were looking for and why and how that has come to pass, the charts below and the Futures update that I'm posting next will make a lot more sense. The bottom line is it's time to start looking for those shorts that we were looking to short in to price strength on a Crazy Ivan head fake move of a bear flag which would have been a VERY simple affair if the concepts of Technical Analysis weren't used against traders every day. Monday or Tuesday of this week, the bear flag would have made a new leg lower and that's it as far as what Technical traders would be looking for. We had signals that told us it was a bit more complicated than that, but in the end the result is the same, it just gives us opportunities. Most of our opportunities that are low risk and high probability will be found at the top or bottom of a pivot.

Here are the charts for the averages this morning, the post is only half complete though as far as what I'm trying to demonstrate. With the addition of the Futures Update next, the picture emerges more clearly. You can't understand the real importance and meaning of these posts without understanding several of yesterday's as well: Definitive Change in Character , SPY Arb, USD/JPY, VIX Futures , Almost Forgot... , Closing TBT (long) For now , Market is Losing It's Levers , TBT / TLT Follow Up and SPY Arbitrage and A FEW EOD CHARTS

Charts...

 DIA 1 min pretty much in line which is not surprising on an options expiration Friday as they typically steer price to the level of maximum pain, the area where the most (dollar value) amount of options will expire worthless, so we rarely see big divergences intraday until after 2 p.m., but these have to be viewed from the forest perspective, not the trees.

 DIA 1 min trend, note where the area of the bear flag from last week was, even though there wasn't a true technical bear flag in all of the averages, it has been the key to all of the action this week.

 The 5 min charts were largely positive very short term last Friday, this is why I said that while a Crazy Ivan shakeout was a good probability, a move above the bear flag was the highest probability, a Crazy Ivan shakeout would just make the move above the bear flag more effective as its purpose is to add momentum to the move.

The fact the 5 min charts are in this kind of shape tells us a bit about where we are in the process from the bear flag, essentially everything we were looking for has competed and the reason for the move was distribution in to higher prices, perhaps a head fake move above the multi-month SPX range/top as that's a very large range and a very significant reversal to the downside in the most watched asset in the market, all things that increase the probability of a head fake move.

 IWM 1 min today, in line, but again it must be viewed in context.

IWM 1 min, note the positive divegrence at the bear flag from last week, if this were a true Technical Analysis bear flag, there would be distribution in the consolidation/continuation pattern, this is partly why we were forecasting a move above the flag this week.

 IWM 10 min shows what has been done with higher prices this week, the bear flag was only the mechanism or set up to get those higher prices.

 QQQ 1 min intraday, it's a little lagging compared to the other averages as far as 3C, but close to in line today.

Again, the perspective/context of the VERY same chart gives you much different information starting at the bear flag and then the move above confirming that this set up was exactly for what we expected, distribution.

 QQQ 5 min tells you what was done with those higher prices from the bear flag of last week. I don't think I need to draw in the divegrence here.

 SPY 1 min intraday, there's also a ROC loss in price momentum, look for a flat range. Yesterday several of you scalped the Q's, it was a tough trade the first half of the day, but our signals were good for a decline in to the close and from those of you I've heard back from, you made at least something on the scalp, I think it's great that you kept emotions in check and went with the objective data in the face of deceiving price action.

SPY trend of what was done with higher prices, this is where the bear flag and Crazy ivan were most evident.

Futures update coming