A.M. Update

I hope everyone had a great Christmas holiday and are bright-eyed and bushy-tailed for the New Year, it promises to be an interesting one, I suspect some things that no one alive has seen.

Forgive the later than usual A.M. Update, but there were a few things I wanted to look in to a bit more closely and see the cash open.

Since mid-December my theory has been a Crazy Ivan shakeout using the IWM as a blueprint because of its 6 week range and the ability of small caps to ignite a short squeeze as well as the most important part, the 6 week range that didn't move more than -0.10% over the entire period, a very obvious range in a well known asset makes head fake moves which occur anyway about 80% of the time before a reversal, no matter the asset, no matter the time period, more likely as the more obvious support/resistance are, the more orders that will be lined up at them, making them easy pickings and strategically very valuable for smart money's large position sizes that are like a trans-Atlantic Oil freighter that needs a mile to come to a full stop vs. our smaller orders that can be executed in a single trade, making us more like jet-skis as far as maneuverability vs institutional money, not to get off track, but head fake moves have a lot to do with this fact.

The Crazy Ivan has so far played out both below and above the range with confirming signals at each that they were and are head fake moves. Last week I picked up on the later stages of my theory which included the Santa Claus Rally that every trader just seems to expect as a God-given right, few would ever consider it "might not happen", but my theory was that it would start sucking in more longs in to the head-fake's bear trap and then shutting the door by letting the Santa Rally fail, creating the same downside momentum as the 15th and 16th did when they set a bear trap moving below the IWM 6 week range. Not only does the Santa Claus rally (the last week between Christmas and the New Year) play prominently in to the equation, but the January effect which would be effected negatively by a failed Santa Rally and finally quarter's and year's end Window Dressing, the Art of Looking Smart, but as I noted Friday, it was the last day to get trades in with the T+3 settlement rule, (Trade plus 3 days to settle), so with that deadline passing as of Friday's close, the only real Window Dressing left is just performance for end of year for the averages, yet again if you are already set up to take advantage of a move down, there's no better place than after you've started to suck in more longs just as the upside head fake move is designed to do above the 6 week range and then let it fail, the supply/demand dynamic does the rest in creating momentum on the reversal.



As for the 3C charts, intraday for the Index futures this morning just before the open...

 ES since the futures week opened last night, which looked dull to me, has been in line with a decline since approximately just after the European open this morning, probably somewhat related to Greek Exit news as the third presidential and final presidential election failed to procure enough votes bringing the country to snap elections in which the radical left, anti-bailout Syriza party is likely to take home more than enough votes to cause a Greek exit from the Eurozone causing all kinds of pandemonium and chaos, especially for the banks and the guarantors of the numerous bailouts Greece has received already, but I don't think it's quite the issue YET, that it's being made out to be which is partly why I wanted to see the open.

ES has mostly been in line on the overnight session from lateral to decline. The opening pop higher in parabolic style has no Index future 3C support, , however opening lows did take out all of Friday's lows which is what I suspected gave ES/SPX the energy for the opening parabolic move higher, there's no support for this move in futures. The NYSE TICK barely broke 500.

This morning's cash open parabolic pop, you know I never trust parabolic moves, but the open below many of the averages' lows such as DIA which took out all of Friday's , Wednesday's and most of Tuesday's lows, provided a BTD opportunity, maybe some short squeeze, but no real buying as TICK breadth is as anemic as you can get, +500? That's like a dead flat range's reading.

 NQ had an interesting 1 min overnight chart, negative in to the European open and a decline as short term 3C forecast in to or just after the European open, but with a small relative positive divergence in to the US Cash open. Again, very small, I didn't want to make any forecasts on such a small divergence when it could turn in to many things, but I suspect a quick BTD trap.

As I have made very clear, I think the initial move on Friday for the first day of the Santa Rally (which is what we forecast, an initial strong looking move in to the expected rally), will end with the rally failing and the long time anticipated and expected rally , as sure as the sun will come up tomorrow, catches too many on the wrong side of the trade, this is the easiest way to fool the greatest number of traders at any one time which is what the market is all about.

TF 1 min futures also had a positive divergence so whoever was behind the cash open- parabolic move, this was laid out many hours ago. Although once again, there's not enough support here for anything more than a pop and a FAIL.

As for the 5 min charts which have been all over the place...

ES is about in line. I am starting to think this cycle since we first put it forward December 12th and saw the first initial reactions on December 15th and 16th, is actually much bigger than a 5 min chart and it "may" be helpful with timing, but it has little to do anymore with confirmation, much stronger, longer charts have now taken that over, which is also in line with our theory as we are not expecting a market correction or pullback, but something much larger.

 TF 5 min has remained clearly negative.

As NQ has bounced between in line short term and negative (leading here) which is another reason I suspect this morning's move was one of the early games most pro traders try to avoid by not trading until 10:30-11 a.m.

As for the 7 min charts, I think they are still important...

 NQ 7 min remains in a clear , large negative divergence.

As does TF.

As for ES, this is where I think the longer term charts are not only more important, but showing the picture of what is going on more clearly.

 The ES 15m leading negative divergence, but in the area of the head fake move above the IWM''s range, it becomes more clear on the stronger, more important longer term charts.

 Here's our entire forecast, from December 12th (Friday) in which the head fake move above the IWM's 6 week range was first put out as theory with evidence coming that day and the next Monday/Tuesday on the 15th and 16th.

Although the accumulation period for the move up is not as apparent as the left side of the chart is somewhat cut off, the distribution period above the range is VERY obvious.

And the stronger underlying flow of the 60 min chart shows roughly where the range would be on the SPX/ES futures (yellow and the move below the range (first half of the Crazy Ivan shakeout) with accumulation (white) of the new shorts entering causing the biggest "Most Shorted Index" squeeze in 3 years) as we move above the range, the second half of the Crazy Ivan is confirmed with clear distribution/negative 3C divergence (red) showing the second head fake and the momentum builder for the downside reversal. Everything is in place including the Santa rally with Window Dressing effectively over because of the T+3 Rule.

Additionally, although USD/JPY which has been a magnet for ES/SPX futures may not look like it's doing anything interesting...

 Just look at the carry pair, USD/JPY in terms of our cycle, December 12th the theory is put forward based on some signals and Mass Psychology, the 15th and 16th we have further evidence making the theory an almost certainty and with the move above the IWM's range, since we have been flat as I pointed out Friday, the USD/JPY as well.

I have suspected since years ago that they Yen would strengthen and the USD/JPY would crumble as a real downside move of consequence begins.

Interestingly...

 The $USDX 15 min futures are leading negative in this flat range for USD/JPY which is where we see the heaviest 3C activity. in flat ranges where none expect it. This would pressure the USD down and the carry pair.

The stronger $USDX 30 min chart shows the EXACT same divergences as the major averages, accumulation on the initial break below the range on 12/15 and 12/16 and distribution ABOVE the range since, just as this $USDX 30 min chart shows, but that's only one half of the FX pair.

The Yen futures confirm...

 The 15 min /6j (Yen futures) positive although this is not the really impressive part.

The 60 min positive after a pullback from the first initial move up. This would mean a stronger Yen/weaker $USD relatively and a falling USD/JPY which is one of the 4 levers the market has used to push this head fake above the range through as we anticipated and posted before the move even started.

I think what will be important are individual assets confirming, Industry groups and the 3C charts of the averages as the futures are clearly showing what we expected to see when this theory was first put forth over 2 weeks ago.

So far everything forecast from December 12th has come to pass with confirmation of what we expected to see come next. I'd be taking this opportunity very seriously.