Market Update: On Track, But Not There Yet

One more update before I switch layouts to Leading Indicators.

One of the ways I judge where we are when we are close to target expectations (in this case for the bounce off the base we tracked since Aug 1 when some core short positions were temporarily closed in with expectations of adding them back at higher prices like the gains preserved in XLF on the Aug 1 closure which would have seen 8% drawdown, instead those assets were put to use in some short term call trades and allowing me to preserve FAZ profits as well as get an entry at least 8% better) is by reviewing my watchlists, if I see there's a trend among the watchlist components of being very close or at reversal entries/exits, I know that we are very near the pivot which in this case will be up a bit from here and reverse to the downside. The IWM/Russell 2000 should make a new lower low from the Right Shoulder (H&S Top) decline from 7/3/2014 with the practical head (H&S rarely look like the textbook in the real world which is why volume analysis of the price pattern is crucial) around 3/14/14.

 SPY intraday distribution continues today at a much sharper pace than last week.

The 2 min SPY gives you an idea of that pace as there's a relative negative divegrence from the 3C high as accumulation is at its highest at the end stage of the base before stage 2 breakout. Subsequent 3C readings in a healthy rally/bounce would make higher highs with price, these did not right off the bat, but did have a predictable pace of deterioration or essentially distribution in to higher prices where asset managers will try to get the best exits/entries.

Today's new leading negative low has an increased ROC on the downside.
 

This is the SPY 5 min chart intraday, remember that the 5 min chart is the first or fastest timeframe in which we observe intraday institutional action being taken,

Here's the trend of the 5 min chart from the distribution that led to the decline that led to a deeply oversold breadth reading of only 20% of NYSE stocks still above their 40 day moving average, in a healthy bull market this would be in the 80% range and climbing with price, maybe dipping to 50% on a stronger decline/correction.

You can see the base area as well as the 3C trend since.

We still haven't moved the initial/strongest base divergence (positive) which I anticipate seeing this week.

The Q's 2 min intraday showing a clear distribution event for shorter term action as the target/psychological level of $4000 (NDX100) which was expected, was breached.

The $IWM 1 min with earlier distribution, but improving a bit late in the day which makes sense as it has been the biggest under performer and had not even reached our minimum target until today.

 NQ/NASDAQ futures intraday decline in 3C, make sure to compare to TF/Russell 2000 and IWM intraday above.

 NDX-100 has met our expected psychological target/magnet of $4000.

 Note the intraday TF/ Russell 2000 futures have late day improvement like the IWM, again the R2K barely hit our minimum target so it has the most catching up to do.

These 3 moving averages (50/100/200) all provided resistance and were our MINIMUM upside target (above them), that didn't even happen until today while other averages past minimum targets last week.

ES and other Index futures are negative on the bellwether 5 min futures chart, but things are even worse, although 5 min is about all I need to start entering trades.

 Like VIX futures being positive on the 15 min chart, Index futures are leading negative which is good multiple asset confirmation as well as multiple timeframe confirmation.

15 min Leading positive VIX futures as protection is bought as we near the end of the bounce.

 We also see multiple asset confirmation in VIX short term futures with a leading positive divegrence today, but that support zone is a major target as it's too obvious, for a downside head fake which means the market should see the polar opposite with a head fake move to the upside, something we see about 80% of the time just before a pivot target/reversal.

VIX 3 min was also leading positive at a predictable rate, today's move though has an increased ROC, "Changes in character lead to changes in trends".

The MSI which was lagging as the Most Shorted Stocks underperformed the broad market rather than squeezed also saw a slight improvement as the IWM/TF/Russell 2000 intraday charts improve a little EOD as it is still the laggard.

High Yield Credit (HYG) sees a very strong distribution trend recently, but today especially.

As posted Friday, I suspected we'd have a couple more days of bounce and then a reversal process at which time shorts should be lined up well.