Quick Market Update

There are some interesting things happening, they are right in line with the NFLX forward looking forecast (using NFLX as a proxy for the watchlist and market), you may recall NFLX's position entry (short) was not based on the charts, they are already there, it was based on the fact that the reversal process was not mature (Friday)...NFLX Trade Idea Follow Up and The Week Ahead so the lingering in the area (market) at pretty insignificant price action is really what was needed, TIME (to let the reversal process mature a bit more as a reversal in NFLX as of Friday would have been a "V" shaped event and those are not typical.

NFLX's price action today (recall it is looking like the top of a right shoulder) is exactly in line with what I was looking for in forward forecasting Friday...NFLX Trade Idea Follow Up

 The NFLX Head, neck-line and top of the right shoulder on a daily chart, note the last 3 candles (today, Friday and Thursday), the upside momentum has waned and the Doji's on the daily chart are indecision candles that open NFLX to a downside reversal. I'll only short a H&S top at 3 areas, the top of the head, the top of the right shoulder and after a break below the neckline and subsequent shakeout above the neckline as it starts to look like the right shoulder is now.

On a 15 min chart you can see the formation (rally from neckline) of the right shoulder and as I mentioned Friday, a reversal from Friday's close would have made a "V" shaped reversal, these are not typical, especially in widely traded, popular stocks like NFLX that have significant volume.

Today's price action thus far is perfect for the reversal process we are looking for, in addition the deterioration suggests that is exactly what we are seeing.

 DIA 1 min intraday "seems" to be in line, I think this is just intraday "steering currents" to keep us in the area, allow the reversal process to mature, but there's definitive additional deterioration as that's what we expect to see during a reversal process.

 DIA 2 min was already negative, it has turned sharply leading negative.

This is the 1 min positive from the IWM this morning and a leading negative, again this seems to be very much like steering currents, essentially keeping the averages in place to allow the reversal process to mature as it is pretty much market wide through multiple assets as of Friday's watchlists.

QQQ 2 min, the additional deterioration is clear, you'll see why in a moment.

SPY intraday 2 min

SPY 2 min trend.

TF/Russell 2000 futures 1 min intraday

 It's interesting to see the overnight action in Russell 2000 futures, as USD/JPY lifted Index futures since the open of trade for the new week, there has been a sharp leading negative (distribution) in TF, you can see how that resolved in price and the early morning intraday positive that is seen on the IWM chart is also seen on the futures.

 My custom TICK indicator went negative (intraday breadth), this has a lot to do with the failure of the short squeeze).

This is the Most Shorted Index (red) vs SPY (green). Friday we noticed the failure of the short squeeze, it has gotten worse today, thus the TICK index's poor breadth.

Friday I noted that other than the manipulative HYG (Credit) lever that is one of 3 main assets used as levers: HYG, VIX which closed green for the week last week and had the best week of the last 5 and TLT which I'll be updating soon.

High Yield Credit is one of the larger asset classes smart money trades to express a risk on position (like retail traders buying the momentum stocks), the divergence between High Yield Credit and stocks has been a defining feature since we moved above the multi-month range (SPX), only HYG had held up, but that's because it's used to move algos and fool them in to thinking there's a risk on atmosphere.

I pointed out Friday in The Week Ahead that High Yield Credit was NOT following along with the SPX/SPY/Market, but rather going the opposite direction as seen above.

Here's HYG which has taken a hit today making 2 week lows

 HYG was already showing distribution, today it has taken back all of the last 2 trading weeks which is inline with the support as a manipulation lever of the market.

 HYG 2 min dist.

HYG 3 min, we have migration of the negative divegrence.

And a VERY clear 30 min leading negative through the entirety of last week, juast like the averages, the importance of the distribution through last week is that's where the SPX was above the range and on a head fake move, we wouldn't expect to see any distribution until we were in the head fake range/area.

Last week (Daily Chart of SPX Above the range / Head Fake Area) , remember the averages showing clear negative divergences through the entirety of last week.

The SPX's daily candlesticks are showing a reversal process as well as upside momentum has transitioned in to lateral (reversal process) trade.

Note the SPX's ROC (Rate of Change) failing at the head fake zone (above the range's resistance).

So far, so good.