Market Update

Just as I posted earlier in the Opening Indications post this morning (30-60 min charts), it seems the market's bounce caused by last Monday's mini-selling climax or mini capitulation (deep parabolic drop on very high volume), which caused us to expect a bounce/correction by 10:30 a.m. that Monday morning, is causing a very similar theme with weakness in to later last week after the initial bounce got some legs under it early in the week and again later in the week weakness,  just like the theme of weakness the week of Black Friday in to the end of the week as Black Friday sentiment no longer needed the same level of protection (market protection really-before the biggest shopping day of the year) has played out again leaving what looks like a bear flag.

Of course this isn't a true bear flag, but the concept of correcting against the preceding trend (the parabolic drop in Sunday night futures and early Monday morning last week) is the same as a bear flag, a parallelogram that corrects against the preceding trend and creates what looks like a bear flag.

In most cases on the shorter charts of the averages, the same weakness is seen in to that flag, with the exception of the IWM which is closer to inline, although the Russell 2000 Index futures do show weakness like EQ and NQ when looking at that entire area with a 30-60 min 3C chart.

So as to this morning thus far, while I don't suspect many will view this pattern as a bear flag and thus a head fake move on it is less probable, there's still a similar flag-like channel,, which may very well cause a head fake or volatility around it before moving lower which I think index futures clearly show to be the highest probability without even considering everything else like Leading Indicators, breadth, etc.

Hopefully these charts aren't too different from their capture time, if so I'll update any changes in the very short term charts.

 Intraday there hasn't been much excitement although the 1intraday SPY is starting to show some weakness in the area after a gap fill on a very small positive divegrence on the open

Intraday breadth via NYSE TICK has been pretty boring and mellow this morning except on the open which it saw readings of about -1000 and now there seems to be a channel forming that is heading in to the -1000 area, before that it was just kind of random chop which is part of a.m. trade and why I like to wait for the early games that tend to be played in a.m. trade to subside .

 NYSE TICK this morning from -1000 on the open to random and now more of a downtrend channel hitting the -1000 area .

This is my custom TICK/SPY indicator showing the entire flag area since Monday's drop (last Monday) and the flag getting some feet under it and then deteriorating again as you can see it is starting to in the area.

This is not a real bear flag as mentioned, but the consolidation effect after Monday's deep drop is similar, of course technical traders would expect a real bear flag to break lower which would likely cause some upward volatility in price on a head fake move before dropping, but I doubt many are looking at this as a bear flag-like pattern,

Remember where all of this sits in the larger picture, right on top of a Broadening top's upper SPY trend line, a perfect head fake area and we already have 5 points of contact as well, in certain cases like the RUT, a shakeout move already in place (October lows).

The 3 min SPY showing the deep drop last Monday and some accumulation for the bounce later in the day at #2 and since the deterioration of that trend at #3 as price starts to fall out of the channel.

 The larger 5 min chart has a better view of the entire area since the support the market received the week of and leading up to Black Friday (blue) as well as last week (yellow). Note the 3C trend is very negative through the entire area, there were a lot of levers the first week, many broke down last week (HYG, etc.).

 QQQ 1 min intraday today saw weakness in to Friday and a gap down this morning, again with a small positive divegrence on the open leading to a gap fill (today in green). Right now there's a little positive divegrence in the Q's intraday 1 min. I'll be watching AAPL as I'd still like to see that trade set up on a move higher, but its charts continue to deteriorate.

 QQQ 3 min with the Black Friday head fake move in to distribution leading to Monday's decline, creating what "would" be the flag pole in a bear flag and the following parallelogram correction or "flag" with weakness in to late last week, but nothing much more than in line even at the best part of the week early in the corrective bounce.

 QQQ flag-like pattern, again low in the channel, I'd be looking for price volatility and shakeouts in both directions before this breaks to the downside seriously, they'll try to shakeout and confuse as many as possible around this clear channel.

 And the QQQ trend through the flag area, in line with 3C confirming early in the week on a strong 10 min chart which turned sour later in the week.

This is the IWM's flag-like pattern. Volume looks like a flag, but that may just be random.

 Intraday 1 min this initial negative divegrence this morning has grown worse since the capture, now looking like this...

We have both a larger relative negative from Friday in to this morning and a leading negative intraday sending the IWM lower which should see migration of the divegrence (strengthening of the negative divegrence) being the IWM has held up (in line with 3C most of the week) best not only in relative performance as we predicted last Monday with the additional prediction of the Q's having the worst relative performance last week due to no positive divergence after the oversold event...

 This was the close up of the first IWM 1 min earlier and the most recent update just above, but as you can see it was already negative and looking to move lower as it has above.

The 3 min chart I suspect will start to look worse, note that it has been in line with 3C confirmation of the price trend for a good portion of last week, only recently showing 3C weakness, I expect this weakness to grow as the shorter timeframes get uglier and migrate to the longer ones like the 3 min and beyond.

And the 5 min IWM showing the weakness in to Black Friday leading to last Monday's weakness and a positive divegrence (the reason we expected relative out-performance in IWM last week) and again, I suspect we will see a negative divegrence on this chart soon, which will be much better timing for any short positions which I decided to be patient with late last week as I wanted to see additional weakness market wide including specifically the IWM.

I'll have some more updates on the way...