Quick Market Update

There's some slight improvement in the averages, a corrective bounce would not be surprising at all after Wednesday's late day and yesterday's early action. As mentioned last night, there was a longer lower candle wick on higher volume, the art of reading volume has been lost in a sea of new indicators, but it remains one of the most useful, subtle forms of market analysis. 

If I could only choose two conventional indicators (not including custom indicators like 3C, MoneyStream, TSV, etc), I would choose Candlestick (analysis) and Volume. Unfortunately, so much about reading volume, dominant price/volume relationships, etc. has been lost to the point that technical traders can't figure out what is a legitimate price pattern and what is not simply because they don't know anything about the volume confirmation that gives you this information.

If you look at this Daily chart of the SPY (and remember the concepts for volume analysis are fractal as well so they can be used on a daily chart, a 5-day chart or a 5 min chart and tell you the same things), you'll see white and orange arrows.

The white arrows are a form of short term capitulation, you'll notice volume is higher on those days than the preceding day and in all cases there's a bullish candlestick, either having a small body that often means momentum on a move has run out or a long candle wick on the bottom which means lower prices were rejected intraday and the increase in volume is like the macro concept of capitulation, a selling climax and often marks a short term bottom or reversal point.

The orange candles have higher volume as well than the preceding day, but the candles are bearish in that they have large bodies and very small candlestick wicks. In each case, the white arrows/candles were a short term bottom or reversal point, this is what I was pointing out about yesterday's candlestick, although not a bullish hammer, the psychology of the longer lower wick is the same, lower prices were rejected on higher volume.

As for the signals, also as mentioned yesterday we saw 1 and 2 min 3C signals go negative in to the close, that is being repaired a little this morning.

This is the DIA, 3C just took a swan dive before prices followed, but yesterday found some short term support and accumulated a little, the EOD negative divegrence is at the red arrow to the right and this morning there's a slightly more bullish tone, it's easier to see on the other averages.

Take the 1 min SPY this morning...

Or the 1 min QQQ which is probably the best performer thus far as 3C goes intraday.

There's not much to see in intraday Index futures, but NQ (NASDAQ 100 Futures) are showing a similar positive divegrence intraday. This is not a significant signal by itself, but may lead to additional movement or migration.

The green arrow is just a point of reference, that's the 9:30 open.

Still, not much going on, but this is typical for Friday's since weekly options have grown in popularity.