Just like it took some time yesterday and this morning to build the market averages' positive divergences and more time to build HYG's, the distribution process in to higher prices has already started, I believe the technical break above the SPX's downtrend channel where volume rises is where bulls stepped in making it possible for distribution to start, as I said, START...
WE are not where we need to be yet and I wouldn't even dream of expecting it this early, but we are on the right track.
This is the SPY 5 min divergence (positive) and it's in line so this would have to turn negative before we'd start considering this to be running out of gas.
Here's the minimum target to get bulls involved, a technical price channel or downtrend broken out of and volume picks up on the breakout meaning the bulls we expected to be lured in to the market on a break above that channel, have been.
Wall Street doesn't do anything without a reason.
On the breakout, the SPY 1 min chart (new divergences always start on the fastest timeframes and migrate to longer ones as they get stronger), is already showing distribution in to higher prices, that doesn't mean the process is over, it's really just starting, but things can move very fast and we still have the probability of a knee jerk reaction to the F_O_M_C which we suspected yesterday, but Jon Hilsenrath of the WSJ made it a higher probability today when he said that the "Considerable Time" language the market is so worried about, WON'T BE REMOVED tomorrow.
The SPY 2 min is already seeing migration so this is a good start.
The 3 min chart is in line, migration or a stronger distribution process will show up on the 3 min chart next.
QQQ 1 min is also showing initial distribution starting on the move higher.
The 2 min chart is seeing some migration as there's a relative negative divergence in place.
The IWM 1 min looks pretty bad, although this is only a 1 min chart, it still has work to do, but it looks like they are moving quickly there.
For now the 2 min IWM is still in line with the price move.
HYG is already showing signs of distribution and as I said last week (Friday), IO expect HYG will be the first to give out and continue to lead the market.
HYG's 2 min is just starting to see some negative migration from the 1 min chart, but remember, this is the main line of support for the market as you saw earlier.
The intraday TICK trends are obvious, there's some softness right now, but nothing horrible, just softness.
The NYSE TICK shows a strong move in the +1250 area, but it can't form an uptrend channel and the recent TICK data can't hit the top of the channel, that's likely the softness mentioned above as divergences are kicking in.
Unbelievably there was no short squeeze from the Most Shorted Index! I suspect that there are no weak hand shorts left, in other words those that are left are strong hands, institutional money and won't be squeezed,
still I'm amazed to see so little movement in the MSI.
I have a few more Leading Indicators and Futures to check, but so far, we are on track and have the move that we expected for this week started and the distribution in to this move we expected for this week also started.
This should provide some good opportunities, although I'm not going to make too many moves unless I just can't ignore the chart any longer, until we see if we get a knee jerk bounce from the F_O_M_C tomorrow, I suspect and have suspected we will.
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