Market Update

Here's where we are in the staging process, "you have to know where you are to know where you're going" and this concept works on 5 min charts, 1 day charts or weekly charts.

We have the stage 1 bottom/base,  as we've seen consistently, bottom/bases in this kind or size move are always much together than the stage 3 top which is usually 2x as big. You can see the stage 2 mark-up trend line and when price's ROC started peeling away and moving sideways or the rounding top (sometimes a double top).

I hear "Blow-off top" a lot, and I've spent years studying all kinds of market bottoms and tops and sometimes there are sharp dips before a base breaks out which we'd call a head fake move, there's a small one below the red trendline on this chart. Sometimes there's a near steeple parabolic move at tops which I'd consider to be more of the blow-off top. Most of the time there's an "Igloo " rounding top with a "Chimney", a small area popping above the rounding top and that's the head fake move for a top reversal that's so common.

There's a question as to whether we get that or not, I've felt pretty strongly we would, but I've also seen a lot of weakness, a lot of leading indicators that have called every move in this cycle a week in advance like HYG just breaking down. Over night the Index futures absolutely ignored a cary trade (USD/JPY ) ramp to new highs. I really don't know whether the market gives it to us or not, I just know that a lot of the "Trade Set-ups" I've put out are primed for such moves, just a few minutes ago a couple I put out in the last 2 days gave me price alerts on the upside as expected and hoped for, they can do it without the market, but it's a lot easier with the market.

This being an op-ex Friday, the max-pain pin (yes, even on weeklies) is typically released around 2 p.m. and price acts a lot different than it did for the day up to that point.

Here's what I have in the averages, I'm not overly impressed with the signals and chances for a market head fake move based on them...

 This is about all the IWM has on the 1 min and most of it is from late yesterday.

 Looking at the 5 min, it is in leading negative position, but does have a relative positive divegrence that could be enough for a little head fake move,  but the concept of a head fake move is that it has to be convincing as it's job is to get buyers buying and they need to be motivated so a half hearted attempt is just as good as no attempt at all. If volume doesn't surge on the move, it's pretty much useless.

 QQQ 1 min, again the divergence was started yesterday afternoon and it has built on this morning.

However there's not much more than that, mush on 2 and 3 min charts and the 5 min is in leading negative position.

 SPY 1 min, again from yesterday and in line today, but this isn't much and pretty much used up.

The 3 min shows the same divegrence, it looks smaller her because the 3 min is a stronger timeframe and it is smaller, but still in line, again for the size of the divergence, it's pretty close to used up.

 SPY 5 min is in line with a slight leading position so maybe this adds some more in to the EOD and we have a green close and the SPX gets to keep 2000 over the weekend, but without coming back down and widening a base, I don't see much there.

HYG's initial divegrence failed and it moved to new cycle lows, there's a very small 2 min in place now.

However looking at the entire cycle as HYG has led the market, this 5 min chart doesn't look like anything more than bet on the downside so if the Carry trade levers aren't working and HYG just doesn't have it, I'm not sure how the market gets there.

HYG 30 min at new leading negative lows for the hear and the cycle accumulation, this is going to make a lower low and the market won't be far behind.

Intraday we have the TICK trend, it's getting a little sloppy here.

The Most Shorted Index is lagging badly, bellwethers like PCLN have broken below their 200-day m.a. today, it's just ugly.

The point I guess is look at the candidates that look like they can come to you, FSLR, SCTY, etc. and more I'm adding as I find them looking ready. I think these can get us where we want to be with positioning regardless of what the market does as long as they get to it before the market turns to stage 4 decline, then it's going to be hard to find anything moving up and  as of last night, breadth already turned down so I don't think it's long and I really don't think it matters if the market makes a head fake move or not other than entering some market ETFs or maybe some Puts.

I think keeping your eye on the ball, the bigger picture is getting increasingly more important right now.

PErsonally my positions are set except for a FAZ add to that I need to fill out, otherwise I'm set for the next cycle and I really don't think it's corrective. Look for an average like the Russell 2000 to break to it's neckline support around $1085 and it will happen a lot faster than the market has moved the last two weeks.