I've already set up my short positions for the next leg, today's move above the rounding top already looks like the Chimney/head fake of a reversal process, the move itself has to be convincing, head fake moves are not half hearted efforts as they need to swing emotion and sentiment. When a strong trendline breaks from a rally like the one off the mid-October lows and starts to round over, traders are going to start to become skeptical, I believe that's one of several reasons we see head fake moves just before a reversal whether to the upside or downside, there are numerous other reasons that have more to do with logistics and momentum that you can find linked on the member's site at the top right, "Understanding the Head Fake Move " parts 1 and 2.
In any case, here's a quick look at NASDAQ Index futures...
NQ/ NASDAQ Futures 1 min intraday leading negative in to the move, that's the confirmation we look for in a head fake move, distribution in to the move (or in the case of a downside head fake move , take UNG for example, accumulation in to a move lower).
I was a bit concerned earlier about yesterday's HYG divergence that was still hanging around today, it's only on 1-2 min charts and stops at 3 min so I'm not that concerned about it, but it did help do today what it was trying to do yesterday.
SPY in green intraday today vs HYG in red, note HYG momentum intraday vs SPY.
However we still have strong negative divergences and last Friday in the Week Ahead post, the main theme for the week was down, since then , since Sunday's open of Futures, the divergence has only grown stronger (negative).
NQ 15 min, again leading negative and stronger since Friday's close in to this week.
It's anyone's guess what the F_O_M_C brings tomorrow and what the knee jerk reaction is or if there is one (typically there is at least 80% of the time, but not always).
It seems to me this rally which we first theorized based on Window Dressing in late September (the last week) and saw build through the first couple of trading weeks in to mid-October, was timed to get off right down to the "Chimney" before the F_O_M_C which is tomorrow.
I'm going to open a normal size QQQ November 22nd Put position here.
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