Market Update

So far last week's (weekly Aug 8th) IWM $110.50 calls are at a gain of +14% and we haven't even moved out of the base/bounce area.

There's a much clearer indication of a short squeeze today and from the TICK data, I suspect the breadth charts are going to have improved from recent readings (only 20% of NYSE stocks above their 40-day moving average).

There's some confirmation and a little early short term intraday negatives, however I suspect whether you are long some short term trades like calls or waiting to enter some shorts on a bounce, it's just a matter of patience from here. For the most part any long trades you were going to enter should have been entered by now and as for the short trades/entries, I'd be patient and let this play out.

 The "W" base concept looks pretty much complete, so much for the pre-market Futures indications...

 This is the "W" base I was looking for to form, it's a bit bigger than initially anticipated, otherwise I would have opened some longer expiration IWM calls and might still make some changes there.

The DIA is nearly perfectly in line with the move off opening lows.

Remember yesterday the strong signals the last 2.5 hours of the day and heavier volume, I suspected last night the basing process was about done and ready to move to the bounce stage which we haven't officially entered.

 However with even 5 min charts like this DIA, I can't imagine we won't get a decent bounce to the upside from here.

IWM intraday looks good as does the trend for the base area.

This is a much longer 15 min chart so we do have a positive divegrence here out to at least 15 mins. suggesting a strong move still coming, but I doubt it lasts very long in duration.

Here's the QQQ 5 min divergence at the completed "W" base.

 intraday 1 min there's a little negative divegrence, but I don't expect this will do much other than cause some consolidation for a bit.

 This is a closer intraday look at the QQQ 1 min, still above yesterday's close.

And SPY after a strong intraday divergence yesterday afternoon bounced right off the a.m. lows from overnight futures.  This is what I often talk about regarding Wall St. set-up cycles, it didn't matter what futures were showing , it didn't matter that ITaly went in to its 3rd recession since Lehman, they set up the base, they are almost always going to see it through unless something big causes more of a threat of loss than what they've invested in to setting up the base (going short term long like us).

 The SPY has a positive all the way out to 60 min, this isn't a strong looking divergence by any means, but the fact it's so far out in such a short period tells me they put this together quickly and intend to see it through.

 As mentioned earlier, our MSI (Most Shorted Index) is leading the SPX as they are squeezed which should continue to lift stocks. This is why I thought the market was oversold, the number of stocks trading right below their 40/50-day moving averages is often a great momentum set-up for a quick reversal.

And looking at TICK data for today, there's almost nothing below -750, but quite a bit above +1250 and even +1500 so I do expect breadth charts will look a bit different by the close today.

If I see anything else that still looks like a high probability/low risk trade, I'll point it out, but the XLF reiteration this morning was probably one of the last as far as options go, although leveraged ETFs can still work pretty well.