Near Term Expectations...

While I think the concept of near term expectations with a bounce intraday to create a rounding top or other pattern that is part of reversal process which includes the 1-3 min charts going more negative and migrating to the 5 min chart as mentioned last night and turning it negative (the area where we should have the best short entries at the best price/least risk and best timing as well as excellent confirmation) is probably pretty well understood by now with indications like the $USD short term strength , Yen short term weakness, USD/JPY short term strength allowing the reversal process to play out  (all of which I have covered today and yesterday) which is about distribution in to higher or at least prices in the area from yesterday's intraday highs as it's very rare for smart money to sell in to weakness. By the time the market is showing weakness, smart money is already well positioned. This is one of the biggest Technical trading misconceptions, that large volume on a move down is smart money selling, that's smart money causing a selling panic, as you have seen over weeks, months and many of you even years, smart money is quiet about what they do , accumulating in to weakness and flat ranges that look dull or selling in to strength or top/ranges that look dull, but are actually extremely busy areas for underlying trade.

This is what we do, follow the footsteps of smart money, thus the reason we are in trades earlier, in position earlier and often selling or selling short in to price strength, but underlying equity weakness (smart money distribution) or vice versa, buying weakness, stop runs , etc. as smart money is accumulating in to that same weakness / stop runs, etc. They do it for several reasons, but not the least of which is the size they trade in.

If smart money sells in to strength in the size they trade in, they'd flood the market with supply sending prices deeply against their positions. If they were to buy in to price strength with the size they trade in, the supply demand structure would be severely tilted toward low supply and high demand causing them to pay up at very high prices, once again... against their position. They do the opposite which is what we are looking for today.

Hopefully these charts of the SPY will give you an expectation of "roughly" what to expect near term.

For a review of probabilities based on near term, intermediate term and macro trends, see this morning's A.M. Update gives a view of short term/intraday 1 min charts, intermediate 7 min charts and a brief review of the macro themes that are already in effect and are the highest probability outcome as well as being in line with other high probability outcomes such as leading indicators, divergences in credit, yields, market breadth, SKEW Index, etc.

 The SPY 1 min chart leading negative last week in to this week with a price decline of the near term distribution from late last week (this is more of a timing chart/timeframe for moves to occur).

You can see the positive divegrence at yesterday's opening and a.m. intraday lows (white arrow) and the negative divegrence in to price strength yesterday afternoon on a short squeeze which tells you something in itself, smart money is not going to pay up to buy stocks up 3+% on the day because of a short squeeze. The SS was used as a lever as market makers and specialists would have been at a loss with inventory near Friday's closing levels with the Chinese based tightening actions sending prices gapping lower yesterday, leaving the middle men who work for the larger forms like Goldman Sachs, Morgan Stanley, etc, at a loss. Thus the Short Squeeze allowed them to sell that inventory at similar price levels as Friday's close, not to accumulate those equities.

The 1 min chart is negative and has migrated already to longer charts.

 Here a closer view of the 2 min chart shows the early week weakness/negative divegrence leading to yesterday's gap down and early accumulation at the lows to support the market and keep it from falling further, then distribution in to the afternoon highs which was accomplished with some levers like HYG, but mostly via squeezing the Most Shorted Stocks. Today's smaller intraday positive is what I was talking about last night allowing smart money to finish the reversal process as we should see any price strength from here toward yesterday's closing highs distributed.

The stronger these short term 1-2 min divergences become, the further they migrate out to longer timeframes and since yesterday's early accumulation of the lows stretched out to a 5 min chart, that's the timeframe that must seen a negative divegrence through the process of 3C migration (distribution which is stronger) showing up on those 5 min charts.

 3 min SPY with the same weakness late last week in to Monday, the gap down and small accumulation to support the market, which also allows market makers, specialists, HFT's that might have been caught off guard to buy at the lows on the cheap and sell in to higher prices near Friday's close, sort of averaging down to get out of the higher priced inventory they were stuck with as of Monday morning's open, which can be a substantial loss.

Then distribution in to the intraday highs and today's smaller accumulation intraday to send prices higher to create or finish the reversal process/distribution.

This SPY 5 min chart shows the positive divergence at yesterday morning's gap down and in line on the short squeeze, this chart has already seen some deterioration, but as the 1-3 min  charts get worse, this 5 min chart should get worse and follow along the lines of the orange arrow, to a deep leading negative divegrence.

While I can't say exactly what the finished process will look like, I'd imagine it would look something along the lines of the SPX chart below...

The orange being price to come from where we are (thus higher prices in some assets to short into so long as there's clear signs of distribution in to higher prices, giving us an excellent entry, lower risk and ultimately better timing. While I'd expect a move that creates a broader "rounding top" between yesterday's highs and today's, there may be a head fake move to trap bulls above yesterday's highs as they will buy confirmation of a breakout above yesterday's highs, allowing smart money better short sale or sale points, then we should see price start to roll over and move to a lower low.

This is what the near term, intermediate and longer term charts are indicating as well as the charts we expected to move earlier this morning, long before they moved like USD/JPY which is finding a toe hold after last night's losses.

I'll let you know if I see anything that looks like a change in this thesis or anything telling us we are close and of course any assets that look like excellent set ups, as you know AAPL has been one I've been closely following as well as numerous others.

I hope this helps to lay out the concept of what I have been talking about since last night and clearly through today. Being forewarned is being able to take advantage of the situation and use it to your benefit.