Market Update

I'm not putting out too much today because I don't want to bombard you with the same charts with little actionable information.

As long as the 10-15 min positive divergences (even 60 min for the SPY) remain in place, I don't want to enter any short term short trades, the near term probabilities just don't favor a short term short trade.

However, until the intraday 1-5 min charts have done their work and put in clear divergences that look solid, I would not enter a short term long position either...The 3C charts have not put in a strong positive divergence in those timeframes and you can see the result, the market continues to pullback.

There are several changes,  none of which are emergencies, but I thought I should at least let you know where we stand.

 IWM 1 min has two areas of small positive divergences, this is nothing I'd even day trade from, but it looks to be the start of the process which we had none of yesterday.

 The IWM 5 min chart is still pretty far from any kind of positive divegrence I'd require to enter a trade, but it has put in a relative positive today which again is more than what we had yesterday. Again I can't stress enough how backwards people have it in thinking that the market moving down means large institutional selling, this is where and when they often accumulate as more supply becomes available at cheaper levels.

 This is my X-Over Screen to avoid false moving average signals or whipsaws, but in this case I'm using it on a 15 min chart to look for early signs of changes in character, whether the 10/22 bar price moving averages, my custom indicator (yellow) moving above or close to its 22 bar (blue) moving average or RSI.

With this chart I'm trying to give you an idea of what a reversal process would look like if the market just went up from here, it would be very "V" shaped and you don't see this often. If you look at enough charts you'll see there tends to be proportionality and symmetry in the reversal process.

 QQQ 1 min has moved more to a lateral "W" pattern which is interesting, it may try to make an afternoon run from here as there's also a relative positive divegrence (Weaker form), but I wouldn't buy this, the probabilities just aren't there.

 From where we are now in the pullback of yesterday and today, I'd expect a reversal process somewhere along the lines of what I drew in.

 Remember the QQQ 1 min intraday positive which is used mostly for intraday moves (above), here I'm just demonstrating that none of that 1 min strength has migrated to a 2 min chart, thus I don't see any reasonably strong probabilities for a long trade.

The SPY 2 min is still in leading negative position, however the rate of change in 3C since today (right of the vertical line) has improved. A leading positive move above the red trendline would start to show some more serious underlying trade.

 The SPY 5 min is very similar.

As for Index futures...

 The NQ and TF 1 min charts are showing some recent positives that may be a cluster of buying, it's not a trend, but it does make some sense when looking at the TICK chart.

 I usually align my trades with at least a 5 min futures chart, these tell me that we aren't done on the downside and reversal process as they are in leading negative position, but intraday there is improvement which is the first step in changing the leading negative position.

 R2K 5 min Futures also tell me the probabilities are for more pullback, remember Friday I had even thought a move below the week-plus long base (head fake) was reasonable, although not highly probable.

And the NASDAQ futures 5 min chart.

With all of these looking the way they do, I would not enter a long position in market averages or most any stock as they mostly move directionally with the averages.

The TICK intraday is showing some heavier selling with -1000 and -1250 readings pretty common in the afternoon which makes supply available to be accumulated.

Thus far there's really not a lot to do, the core short positions are in place and are working, they are aligned with the trend of highest probabilities (primary trend). As I said, while there are 10-15 min positives over that week-plus base area, a "trading" short doesn't make a lot of sense here, you'd be chasing. If the market just falls apart from where we are, that's why the core shorts are in place. beyond that, the near term probabilities are for this pullback to finish up giving us a chance to enter some smaller/speculative longs and in to a larger position trade short entry on a bounce.

Until there are strong signals for any of the above trades, I'd just stay patient and for now at least, let the core/position shorts work.