Early Indications

Yesterday we didn't get a bounce along the lines of the Nikkei 225 dead cat bounce expected and forecast Sunday night, that came overnight, the market this morning in early indications looks like that bounce, although not a technical dead cat, considering the SPX has been in a 3 point closing range for 6 days, it's something akin and thus far, it seems we have distribution in to it as we'd expect of a dead cat bounce. Also keep an eye on BABA which I'll be covering as the Channel Buster looks to be making its way through BABA as expected. First though...

 DIA 1 min not confirming, but more importantly.

The 2 min is showing distribution which makes sense with a dead bounce (I removed cat from the equation for obvious reasons).

The IWM with a late day 1 min positive and gap up, but...

 distribution already on the 2 min chart...


This is the trend for IWM...

QQQ with a positive toward the close on the 1 min and signs of distribution.

 And stronger signs on the 2 min chart already for this particular move, for now I'll call it a dead bounce. This may be exactly the kind of move to enter the positions mentioned in the early update as it is following Sunday night's forecast with distribution.

 SPY 1 min

And the 2 min distribution (also on the 1 min).

The TICK chart is confirming there's no breadth to this move as there's no up channel and no readings above +750, in fact there are more readings below - 750, again pointing to distribution.

As for futures, they are either showing distribution or in line...

ES/SPX intraday showing distribution.

TF/Russell 2000 showing distribution

NQ/NDX showing in line status.

As for the SPX, with 6 days of range, I'd expect some kind of head fake move before a move down , especially after Icahn's comments last night. Retail sentiment is at bullish extremes, this would keep it there, while a sharp move lower locking in longs is what I'd expect from here.

As for FAZ as a proxy, I said yesterday I'd be looking for hints of accumulation on the earliest timeframes since they are already in place everywhere else, the same concept as the A.M. Update.

FAZ now with the early signs not there yesterday I said I'd be looking for today as a market proxy.

It's still early and I'd give this a little more time as a lot can happen, but if the trend continues toward distribution, this would be the last place I'd load up the truch for a downturn and I expect a sharp down turn. Nikkei 225 futures and USD/JPY should also be important today, I'd be looking for deterioration in both.