Market Update

There's remarkably very little underlying (3C) movement in the market averages after this morning's early ugliness and the pop to the upside of roughly 10 a.m. lows. The negative divergences intraday on that pop were at no other time than the European close, most started their divegrence about 30 minutes before and just shortly after the European close the averages topped for the day thus far and headed down a bit, 3 of the 4 averages look almost exactly the same intraday, the IWM being the only exception as it held up a bit better after the European close.

Still, since the 11:00 a.m. to 11:45 negative intraday divegrence sending the averages off their intraday highs, there has been very little movement in underlying trade.

Typically on an op-eex Friday most contracts are pretty well cleaned up by 2 p.m. and the op-ex pin starts to lift, price can do whatever it wants, but it tends to be the 3C indications the last 2 hours that give us the best forecast of what to expect the week ahead.

As the averages sit right now, they are all in good striking distance of a head fake move as they are near the top of the rounding over reversal process. For example...

 DIA and a head fake would be above the red trendlune.

IWM the same for a head fake move...

QQQ

And SPY.

I haven't noticed much movement in the watchlist stocks wither, whether this is op-ex action or just similar to the broad market is hard to tell, what is easy to tell is the damage on intermediate on long term charts (from about 5 min to 60 min) for this run is very much in line with a downside reversal next week which will most likely make it a very busy week as far as getting Trade Alerts out.

I still want to take a closer look at VIX futures which seem to be holding up very well, even though they'd be subject to a pullback on a head fake move which despite them looking as well as they do, this has kept me on the sidelines for the moment, as I don't like getting involved with VIX futures unless I see an instantaneous grand slam on the charts.

I want to take a closer look at Leading indicators, individual currencies and the carry pairs as well as treasuries, I'll let you know what I see and hopefully as we usually always post every Friday, we'll have some 3C indications for the Week Ahead although from a cycle/timing standpoint, we are near the end here, from the oversold breadth standpoint which was the biggest motivation and outlying indication for a bounce, we are back to acceptable/not deeply oversold levels.

The wild card next week is Thursday's ECB meeting and of course geopolitical tensions, which may precipitate some selling in to the close with a 3-day weekend, if 3C were to rise during that, we'd have a very good idea about the probability of a head fake move.

I will say, some of the largest tops like 2007, DID NOT have a head fake move associated with the reversal.

By the way, if you like Transports short in to some short term strength, make sure to keep them on your radar, they look like a very high probability trade.