Market Update

The decline since approximately 11:50 this morning to present, looks like the kind of short term head fake move for a small divergence of this size (Monday and a little today) that you'd expect to see right before an upside reversal or the corrective move expected early this week based on the deep oversold breadth condition. Usually I'd use such a move to add to the IWM call position opened yesterday , however it has been hard to verify as a head fake move, there's actually some damage with most averages in line or following price. One thing of note expected this week was for HYG to break down and ultimately lead the market lower, it did break down since yesterday's close and has kept losing ground, in fact recently the SPX has been tracking nearly tick for tick with HYG.

I'd still like to see a corrective bounce get off the ground for short set up entries, it may just be too early to say what this is, the failed divegrence I warned Friday would be very dangerous for the market or perhaps the head fake move as the divegrence is about as big as expected Friday.

 These charts are difficult because they are so short term they move fast. The intraday TICK is in slightly better condition and above the downtrend line which was hitting some serious lows in the -1300 area.

The August Cycle's SPY/TICK shows the deterioration in to the head fake move and it continuing on a larger basis which is the dominant theme as this is a move from stage 3 top to stage 4 decline.

Very short term intraday 1 min it looks like a failed test of yesterday's close started the selling as it makes a local new TICK low.

This is why I can't confirm this as a stop run/head fake move because 3C is in line and confirming the price action thus far.

There has been some damage to the longer term 5 min IWM chart on this last move as well.

The Q's are holding up a bit better, AAPL likely has something to do with that.

 And a not so impressive QQQ 5 min chart has maintained its position through this little decline.

 Note the SPY intraday is perfectly in line as well

And so far the 5 min chart is holding up, this is the thing that has me thinking this may be the head fake move that starts the correction from yesterday's positive divegrence we expected for the early part of the  week.

 HYG however is pressuring the market, it's stages are complete, it is in decline even with the support for last week's head fake move. HYG has gapped down today and continued lower which is exactly as expected, HYG leads the market lower as it has led the market for 2 months now.

 HYG in red vs SPX since yesterday's close, however...

A closer look at more recent trade today shows the SPY tick for tick following HYG lower.

I still suspect this is a head fake move, although I obviously have thought the potential for no divegrence or a failed divegrence this week is high and very dangerous for the market.

I'll give it a bit more time to see if it confirms as a head fake move which would or should get the oversold corrective bounce underway.