Market Update-Charts...

First there's a clear change in 3C character of /TF (Russell 2000 futures) which were up overnight, but as we had forecast based on the concept that  3C divergences pick up where they left off the next day, even over a weekend, they'd come down in to the regular cash open as they did, without question of the concept.


So the first place the changes seem to be showing up (other than in the Crazy Ivan concept-which can be easily confused with additional market losses to come-that's the point of a head fake move) is the Russell 2000 futures themselves (/TF).

 Russell 2000's overnight gains pared on a 4 a.m. -9:30 a.m. negative divergence sending the Index future lower as forecast last Friday (Monday a.m. weakness).

 The IWM itself has joined in on the earliest time frames like this 1 min going from Friday''s negative which forecast early Monday weakness as you can see there was a negative 3C divergence on the open this morning sending prices lower and finally BELOW the 6 trading week IWM range, interesting timing given our theory about what comes next in the IWM, the day after the theory is put forward the IWM breaks a lateral /Flat trend of more than 6 trading weeks now!

Note the early relative positive divergence in the IWM. All new divergences will start on the fastest time frame such as this one has.

 The NYSE TICK data for today seems to show, as I mentioned earlier, a purposeful attempt to force the market and IWM in to a short term oversold condition as TICK levels of -1800, an extreme measure of intraday breadth decline,  where hit with only the most recent TICK trend just forming giving us an uptrend and thus far a move to the +750 TICK range.

The IWM breaking the 6 week trading range that as of Friday's close, over a period of 32 days or over 6 trading weeks, a move of a mere-0.14%, for all intents and purposes, a dead flat market and range.

 As posted this morning in, IWM Crazy Ivan  I warned to look out for,

"...you too should watch for a candle that refuses to hold its lows on heavy volume, something like a hammer on heavier volume as this would indicate a short term selling climax and the probability we are close to the second half of the Crazy Ivan, the upside breakout we have been expecting since late last week."

Looking at the 60 min chart above, we don't have a Hammer Candlestick, but we do have a Tweezer Bottom between the last two candles and rising volume on the first which is a function of stops being hit on the break below the range, but also a necessary thing and one of the components that allows a head fake move or a Crazy Ivan to take place.

The fact the next candle held support and put in a tweezer bottom thus far is exactly the kind of thing we were looking for.

 The IWM 5 min chart still remains overall positive, the best looking of the major averages and the range would be the most obvious reason why, just as it hit a multitude of stops on the downside which will give it upside momentum, the exact same concept, equal, but opposite will hold on an upside move above the range.

 The SPY 1 min is also showing a positive divergence this morning building, a larger relative positive divergence and an intraday leading positive.

 And the 2 min chart with a clear leading positive divergence intraday today along with a relative positive over a longer period.

The Q's are showing improvement from earlier charts as this 1 min is relative positive after the opening negative divergence we forecast to bring Monday morning weakness to the market.

 The 2 min chart also showing last week's distribution and a relative and leading positive divergence today. Major improvement for the Q's from this morning.

 The one asset I've been most interested in as there's no reason for HYG accumulation especially after last week's performance in High Yield credit, except the obvious and often seen short term manipulation scheme. HYG showing intraday positives starting...

And the 3 min positive, it is still weak at the 5 min chart which as of now is a function of the short term based move we are expecting, if the divergence grows larger, than we'll reassess the probabilities and any trade opportunities of note.

Meanwhile the 2nd of the 3 SPY Arbitrage Market Manipulation Levers, TLT is showing EXACTLY what we expected from the 30 year Treasury Bond futures, a negative divergence which sends yields higher and equities are pulled toward yields like a tractor beam.

TLT's 2 min leading negative divergence suggesting additional near term downside,  which is why I posted the TLT update Friday, Treasuries & Position Management TLT (20+ year Treasury Bond Fund) / TBT  not only for position management of our 2x long TLT (via TBT short), but for many of you in call option positions in TLT.

It would seem Friday's analysis was right on as far as taking profits on heavily leveraged positions like call options.

However on the less leveraged positions, this looks to be a move I'd have little trouble siting through without the threat of time decay and other option pricing inequalities.

 3 min TLT negative.

Yet the 5 min and longer term suggest additional upside and the trend is still intact (up) despite short term events, which also tells us any move above the IWM's upper range (head fake/ Crazy Ivan), would be temporary as TLT's longer term charts are positive, HYG's longer term negative as well as the averages, Leading indicators and on and on.

For now I'm maintaining short positions with the exception of the QQQ short position taken off the table Friday, Closing Dec. 20 QQQ $105 Puts  with a beautiful double, or 127% gain QQQ PUT P/L

I see IWM continuing to form the candlestick/volume patterns expected. This would be an EXCEPTIONALLY speculative long trade, not because I doubt the IWM can make the move expected, but because I don't trust it to hold, like I said, I've seen many morning gaps that take out multiple months of gains in a single morning and the gap is hard to protect against. It's not a matter of whether the piggy back trade will work, it's a matter of how long can you really trust it without the possibility if not probability that it turns to a huge loss on little notice.