Market Update

It looks like the IWM has hit the initial stop level, right at a psychological number, $117.50 which is right about at the lows of the first breakout day of 12/18 at $117.47.

 IWM daily chart has now completed the Crazy Ivan shakeout, both sides of the range have been shaken out with head fake moves.

More importantly, the initial stops for the bull trap have been hit at $117.50.

This is the IWM intraday, note the large volume spike at the white arrow, that's the stops being taken out at the $117.50 level. This essentially completes the first and second half of the forecast and moves us in to the 3rd.

Intraday breadth has shown a lot of selling with numerous pokes below -1250 and one near -1600, which is extreme.

However, the chances of an oversold corrective bounce , like a vent valve letting out excess pressure, is becoming more likely and we are getting much better evidence of this than what was available this morning which was virtually nothing. Again, I can go either way, we haven't even scratched the surface of projected near term downside to say nothing of a bear market and my personal account is up +3.25% today so if we don't bounce, letting the shorts that are in position continue to work, works for me. If we do bounce, that's added opportunity which also works for me.

As an example, 

 For the SPY, the 2-5 min charts (2 min above) have intraday positive divergences in them, this is the near term bounce scenario built from late last week and today on a short term  oversold basis.

However the probabilities remain with the 10+ minute charts, I don't think I need to point out the negative divergence or the fact that these are much stronger divergences. This is why I have said, if we get a bounce, it's an opportunity we can use to our advantage and I'll show you one particular asset that is primed for a great entry on a bounce. If no bounce, then no harm, no foul and the shorts continue working.

I had captured this 15 min SPY by accident, but figured I'd add it as well so you can see the highest probability despite any near term moves, thus those near term moves if they materialize, like a bounce, are a great opportunity for short entries, add to positions or exiting longs.

 The QQQ (1 min) shows the same thing as SPY in the intraday 1-5 min charts and...

The same thing in the 10+ min charts, clearly negative, this is and has been the direction of highest probability (DOWN).

The IWM 3 min also shows a positive divergence being created, but yet again...

The much stronger probabilities are to the downside (15 min negative).

So any short term strength in price on an oversold bounce would make for an excellent entry, letting the trade come to you, rather than chasing . I suppose if you have the risk tolerance and the ability to keep your eye on the market all day, an upside bounce could be traded, but I prefer just letting things sit as they are, sticking with probabilities and if we get the bounce the intraday charts are suggesting, use that to our benefit as the stronger/big picture probabilities are firmly stacked against the market and in this way the trade comes to us with very little risk and we stay on the side of probabilities.

As I said, in the next post I'll show you a group that is primed for just such an entry.