Market Update

Just like the last two trades, closing the core shorts for a quick long trade on 10/1 with 3x leveraged longs and closing those out on Oct. 3rd and re-entering the 3x long shorts which are at a gain since, I'm looking in some odd spots including the 2 and 3x leveraged long and short ETFs of the averages as they often give signals earlier and stronger.

I'm seeing a little bit of accumulation in certain areas today, at intraday lows in fact, but it's not nearly enough to cause me to take any action or close our shorts even on a trading basis, but it is something. I think market breadth will tell us something more about what's happening at this level.

Here are some charts and examples, I'll have some updates on some other assets like Gold and MCP shortly.

 There were two base patterns mentioned last night, a "W" or double bottom (mini) where price comes down to last week's lows, likely hits stops below it and that's the base or an Inverse H&S -looking base, although it will NOT be as effective as a real Inverse H&S bottom.

The most important thing when dealing with H&S tops and even more so, bases, is volume confirmation. A large H&S top developed in 2010 and had traders going short, but they didn't bother to verify it being a real H&S rather than a random pattern. Volume did not confirm the H&S top and a lot of shorts were squeezed as price moved higher. A real Inverse H&S bottom needs volume confirmation even more so than a H&S top, it may be one of the most important volume confirmation price patterns.

If confirmed, they can be a real strong bottom.

This is a custom cumulative volume indicator I create to quickly judge the volume pattern. We should see increasing volume on the advances and decreasing volume on the declines and especially at the head and to the right as it gets more and more important. This is the EXACT OPPOSITE, it's decreased volume on the advances and increased volume on the declines, BUT, it looks like an inverse H&S base and as most traders don't bother to confirm, they can probably get away with it.

What's the difference if both will bounce? The quality of the bounce as one is created from human psychology and real market demand and supply, the other is a ginger bread house created by short term market manipulation.

 Intraday breadth at least saw an uptrend today and hit above +1000.

The longer term TICK shows the trend changing slightly, still early.

As for what I've seen today thus far...

 SPY isn't doing a whole lot intraday

The 3x long, UPRO doesn't look all that good either, perhaps we are moving to last week's lows...

The 3X short SPY, SPXU on the other hand still looks strong intraday so I have no reason at all to close any short positions.

The QQQ do show a little something at or near intraday lows.

 The 3x leveraged QQQ long, TQQQ also shows some action at intraday lows so something appears to be going on, although very early in the process.

The IWM also shows an afternoon positive divegrence at a pivot low...

However if you go out to 3 mins, you can see there's no migration of the divergence, there's still a lot of work that needs to be done before we can call this a base. If anything, the chart above confirms I should continue to hold the 3x short IWM, SRTY even if I were only using it on a trading basis and not as a longer term position.

URTY, 3x long IWM just confirms the same thing.

And SRTY, the 3x short IWM, also confirms the same with a strong intraday chart.

So there's some movement, but nowhere near enough to take action other than manage the current open short positions.

As for the bigger picture, even if we do get a decent bounce off the ground, look at this SRTY 15 min chart, you'd be well justified in just sitting through the bounce and holding the 3x leveraged short, it has a very strong chart and the probabilities favor that the IWM moves lower, no matter how much we may bounce.