In yesterday's early Broad Market Update I showed 2 charts that were boxing in the market in a negative way, the roof which limits how far price can carry and that was represented by the SPY 15 min chart, which has been in effect since and well before the momentum caused by the Crazy Ivan slingshotting off the previous week's bear flag, which is what we expected, a downside break to suck in shorts and an upside move to cause them to cover in a squeeze which would provide upside momentum, albeit limited as it's really nothing more than a tactical strategy of using Technical Analysis concepts that retail traders follow and using it against them, there's no real demand or fundamental reason for the market to move unless you consider a short squeeze something sustainable and bullish for the market on a longer term basis, I call it smoke and mirrors.
The 15 min chart from that post yesterday morning looked like this.
The 3 min chart is the one that has negative migration, meaning as price has moved up off the Crazy Ivan sling shot around the bear flag, there has been a steady flow of distribution in to the move, as this gets stronger it moves to longer term timeframes.
As of yesterday morning, the only two charts that needed to see migration to link the divergences and create a rock (the 3 min chart turning more and more negative) and a hard place (the immovable 15 min chart's wall) were the 5 and 10 min charts which looked like this yesterday morning in the post linked above....
As of this morning, both have locked in their divergences as the 3 min chart has migrated to both the 5 and 10 min charts which now look like this...
As I explained the scenario above in yesterday's post, Broad Market Update
"The SPY 10-min. I think as the 3 min chart continues to deteriorate, the 5 and 10 will see migration and that's essentially the key to timing."
The other concept is that of 3C picking up where it left off.
In yesterday afternoon's post, A FEW EOD Charts... I had said,
"First, here's how we ended the day, typically the market will pick back up the next day where 3C left off...
There were varying degrees of negative divegrences in the averages, interestingly quite a few picked up in to the close where VIX was used to lift the market even though spot VIIX closed green today, up 1.76%"
You can click the link and see the first 4 charts and see what the charts looked like for the major averages at the EOD...all negative in to the close and here's how we picked up from those divergences at the close yesterday (which is a concept that holds up over weekends and even holiday weekends on the 3C charts of the averages and equities...
SPY 1 min
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