Market Update

So far everything we saw last week and especially Friday with The Week Ahead post and confirmed with Friday's after hours, Important Market Update , appears to be working out.  By now, the Dominant Price/Volume Relationship Scan should have proven its worth as a forward looking leading indicator as it has been spot on every time we've had a dominant P/V relationship among the component stocks that make up each of the averages.

While the Most Shorted Index continues to languish, the averages themselves have worked all day toward a short term positive divegrence and HYG has repaired itself. If HYG had more beta or a more liquid options chain, I'd probably take a call position (weekly expiration, likely next Friday as I prefer a lot of time) out, but it doesn't have the kind of leverage ability that I prefer.

As for the averages and a call position or day trade, knowing the probabilities for a short term trade and having a high probability low risk entry are two different things,. Being any such trade would be very speculative, I'd want a reduced premium with a sharp intraday move below today's intraday lows with confirmed 3C positive divergences on that move and I'd likely use calls to get the kind of leverage needed to make the trade worthwhile. beyond that, I'm not moving any of my core short positions, they can handle any short term possible draw down from an oversold bounce and they are aligned with highest probabilities, with breadth as bad as it is, the market becomes as unpredictable as that pier with the rotten pilings supporting it.

So far...

 SPY has a 1-day positive put to about 10 min, not particularly sharp, but it has progressed.

 The Q's are at about 5 min, note the pullback around 2 p.m. and the accumulation of it. This is the kind of move I was talking about above, but sharper, the kind that moves sentiment and gets longs scared.

 IWM's divergence has made it to about the 10 min chart today, I marked where the divegrence first started, so we should at least hit $115.50 as that's the minimum 3C forecast where the divergence first started.

 The DIA has a 15 min chart that has already put in some work, although it saw very sharp distribution, we're still only looking for a near term move that changes sentiment and gets bulls buying and the SPX's downtrend I've pointed out would be the most obvious target, although the head fake move we have waited for for sometime could be hit if the F_O_M_C initial knee jerk were to the upside, remember the initial knee jerk is almost always the wrong direction and is faded.

 The Custom SPY/TICK plot shows the improvement in breadth today, especially from Friday.

The NYSE TICK intraday has a wider channel now, although in yellow it is threatening to move lower which I'd like to see both for our bounce  and entries in trade set ups and for any potential short term day trade or short swing long (call options).

Note breadth isn't that much improved with very few spikes > +1000 so I'm not sure how much the EOD breadth charts will have moved after being slaughtered Friday.

I'm going to update Leading Indicators next before the EOD just so we have a more solid feel for what's happening.