Market Update

For the Week Ahead, it may be a bit too early.

The theme I see today is yesterday's accumulation is making good right now, but only after the options expiration pin which we always say lasts until about 2 p.m., let go exactly at 2 p.m.

In the 2-3 min area there are some interesting positive divergences. On several charts there are 10-15 min positive divergences, but they lack the migration and consistiency of migration , such as the 5 min charts before then or 10 min charts before them have no connection so for now, I have to look at it as a possibility, but until/unless there's migration from 2-3 min charts and bridging the gap at 5 and some 10 min charts, I can't take them too seriously, especially as most accumulation for a Window Dressing based bounce would start in earnest on the first day of the new quarter which is next wednesday. Furthermore, the "potential" base area, yesterday in most cases, is far too narrow to support a move that would be giving signals on a 15 min chart, so it's interesting, but I'm not counting that in my analysis . The 30-60 min and 2-4 hour charts are very clear, they have a nasty downside warnings which again is why we use short term price strength to set up tactical entries in to the best looking set ups, HLF was a perfect example as it was the most difficult trade to enter emotionally as it had its biggest 1-day move ever which we shorted in to, but for the right reasons and that position, entered at the right time with the right tactical set up is at a gain of +32% (short) with no leverage of any kind.

First my custom SPY/TICK Indicator, which has been telling the same story since yesterday with the same expectations for today's price movement as we had yesterday and particularly last night based on breadth and especially the Dominant Price/Volume Relationship which has been deadly accurate which should tell you something about the role volume is going to increasingly play in analysis as the Bernanke Put is nearly completely out of the market.

 The DIA like almost every other average shows the 1 min which is for intraday movement and before QE., was VERY useful to track market maker/specialist movements which it's starting to do again as the influence of POMO is felt less and less.

 The 2 min chart, like most shows the accumulation at yesterday's lows and the afternoon and that has just been added to today.

 The 3 min chart showing the same accumulation from yesterday and then a price pin from the open to 2 p.m. exactly before price takes of as we suspected and as is the norm, however,  the 3C data the last 2 hours is the most important and can contradict price movement.

 DIA 15 min with a pretty clean chart, more so than most, but the 5 and 10 min charts have no bridge to this chart whatsoever, still it shows last week's upside head fake move distribution and the decline from that so there may be something there. The distribution signals that we got for yesterday late Wednesday were mostly on 2-3 and some 5 min charts allowing us to predict downside for yesterday with the expectation of some upside to come back in to the market after that move was donee. The point is, while I suspect those signals were market makers and specialists adjusting inventory getting ready to liquidate the 4 trader's accounts that the European hedge fund BlueCrest initiated, those signals were not long enough to make it to the longer charts before the actual decline the next day which is why I suspect there's some strangeness in the 10-15 min chart space.

 What I do know for sure is the longest trends have the least noise and are the highest probability so this DIA 60 min is telling me which way I want to align the bulk of my longer term or core positions.

As for the Q's the same thing intraday, confirmation almost all day, not much else.

On a trend basis on the same chart, yesterday's accumulation is clear, it seems it just waited for the op-ex pin to end today before making good on that gas in the tank.

Note the rounding reversal process, proportional, yet still not very large, especially not large enough to support a 15 min positive divegrence.

 QQQ 5 min with distribution through stage 3 and at the head fake move last week with an interesting leading position divegrence.

The longer term chart of course is an easy interpretation and I just marked on the bottom where breadth turned uglier than normal at July 1 and then really bad forcing what I considered an oversold breadth bounce late July, which was the August cycle and of course as you have seen, breadth is even worse now than it was at the end of July in to the base that created the August bounce/cycle.

 If you build something higher yet have less structure to support it, what do you think the effect will be once some winds start blowing and stressing the structure? Breadth is the same concept.

 SPY 1 min in line like everything else intraday...

2 min chart's accumulation of yesterday's lows...

 The 3 min chart which despite some of the interesting 15 min charts, is probably what I consider to be the strongest chart at the moment that is confirmed.

Here at 10 mins. things look positive, but also a little funny, again I have a feeling it had something to do with the speed of yesterday's decline and not making it out to the further timeframes.

And of course the 60 min chart once again telling me how I want to be positioned strategically as this is the strongest, cleanest trend with the least noise.

 I saved the IWM for the last because it has the most strangeness in its charts. ! min intraday is in line like everything else, not surprising.

The 1 min trend is not surprising with accumulation yesterday like everything else.

The migration to a 2 min chart is not surprising...

Nor to a 3 min chart, this all makes sense and is in line with the SPY.

At 10 min, this is the closest I get to trusting longer term intermediate charts like 10-15 min, it does have a positive divegrence and the timeframe alone means it's pretty serious short term.

 It's this 15 min chart I have a problem trusting, although it may be reflecting the proper bias, the divegrence itself looks to be an anomaly.

 As I said below, it's the bridge between the 1-3 min positives and these 10-15 min charts that don't look right in the first place. This 5 min IWM chart fits fine with the 1, 2 and 3 min charts, it hasn't seen migration of the divegrence and I wouldn't expect it to on 1 day of accumulation, this is believable, however it has no migration or link to the 10-15 min charts which is why, for now I have to consider them an anomaly.

The 60 min chart is completely trustworthy as it reflects the same as every other averages.

I'll see if I can find anything else as well as a look in to futures.