Market is Weakening On Track

I'm just finishing the final captures for a major market update, that will be out in about 20 minutes.

This morning as we expected as of the close Friday based on how the 3C charts closed for each of the averages, we are not only seeing relative weakness from the SPY and QQQ vs the IWM as suggested late Friday, but also there was weakness starting to develop intraday in the IWM late Friday which I suspected would carry through today and continue to manifest.

I just watched the market or at least the IWM go from up +.52% with the SPY and QQQ less than half that, to the IWM closing in on flat for the day while the SPY and QQQ are near the same.

The thing I'm most interested in are the levers that gave the market the initial spark on Wednesday (F_O_M_C) which allowed the small cap (Russell 2000) short squeeze to take over (this was from last Monday/Tuesday's head fake below the 6 week range in the IWM). Those levers gave the initial spark, you may remember as of last Monday and Tuesday the leading indicators/Levers to ramp the market, were giving us positive signals which is one of several ways we confirmed the theory set forth Friday the 12th about not only a break out above the range,  but a false breakout or head fake and subsequently the evidence was already there for the Crazy Ivan as well that gave the market the bear trap to create the strongest small cap short squeeze in 3 years.

Note all of the volatility, the week before was the worst week for the market in 3 years (DOW-SPX 2.5 years), the Russell 2000 short squeeze was the strongest in 3 years, the 3-day move since the F_O_M_C (which if you believe this move was because of the F_O_M_C, you missed about 40 posts and 4 days of evidence before hand forecasting this move) was the strongest in 3 years. Market breadth is the worst it has been in at least 7 years if not more. Do you think this insane volatility is normal or that it will simmer down?

In any case, the idea of the move above the IWM's 6 week range was that of a head fake move, I've already shown you the clearest evidence of that Friday where we can see both the break down below the 6 week range accumulated creating a bear trap and subsequent short squeeze or record proportions (
3 years), which just goes to show you how effective head fake moves are) and the distribution starting almost immediately after the F_O_M_C meeting.

I won't ruin the rest of the signs and signals, they are coming in the next post, but today's early market weakness is not anything of special note, it's the bigger picture, the indicators and the levers that got us here, what has happened since the F_O_M_C.

I believe this may very well be a Santa Claus rally FAIL which would cause even stronger downside momentum because so many traders believe that it's a virtual certainty and the market has given them additional conditioning to believe such, which was part of my Mass Psychology analysis on Friday, December 12th when the head fake move above the IWM's flat 6 trading week range was first suggested with the outcome of that head fake move (down) the end to the means.

I'll have the post out ASAP, but what I'm trying to tell you is beyond this morning's weakness, something much bigger is taking shape and it is exactly as we expected it would be way back on December 12th when initially forecast.

Just a few minutes and you'll see with your own eyes.