Market Update

While there's always more to look at as the market is dynamic, my best guess right now is we are pretty much back to where we started, looking for a bounce as the market has clearly been bearish in movement and in tone and that's what markets do. Even in a raging bear market you'll typically have just about as many up days as down days, it's just how much each of them moves.

When I say we are pretty much back to where we started, that is an oversold bounce. That's also largely charts that are positive out to about 5 mins and charts that are negative 10 mins and beyond, again where we started with all of this.

Te market can't do this on its own, at least not until it can potentially trigger a short squeeze, so the levers are active as we expected, the only addition I'd add is the oil bounce which until recently was viewed as its own event, I think the broader Energy sector (not just oil, but drillers, explorers, transporters, storage, etc.) will contribute to the market bounce, but nothing has changed with the oil bounce either, it's still a bounce, it's not a trend change and at some point it will roll over again.

We are also back to using price strength/underlying weakness to our advantage with a number of trade set ups already put out and more as they become available. Finally I think to resolve the 5 min charts, just as I said earlier in the week, we'll need prices to move up. The question I have that we'll have to wait on an answer is whether or not the market aggressively sells any price strength as it has the last week or so.

Since things are fast moving, I'll have to add updates in sections or categories, first I'll add the charts of Index futures and the major averages, the timeframes I honk are the most important which have not changed 1-5min positive- 10 min and longer negative. Leading Indicators should turn negative or more negative in some cases, in to the bounce, the same as distribution should be more apparent as smart money HAS to sell in to price strength.

This is especially true right now as NANEX has made clear, the S&P E-,ini futures contract is at 3 year record low liquidity, that means any larger positions trying to be sold would essentially crash the market, there's no liquidity there to absorb such positions as SPX E-mini liquidity is at its lowest in 3 years right now. That also means, BEWARE OF VOLATILITY, it should reign supreme which makes it difficult to trade a bounce long as you should see sharp intraday moves down as well due to the liquidity issue.

I'm not as concerned about the 5 min SPY chart, I'm not done with looking at it, but it's not anything that would change any of my plans or the way I intend to use price strength/underlying weakness on a tactical basis to achieve longer term strategic goals.

The TICK chart is a horrible mess, probably indicative of liquidity problems exacerbating moves as there are quite a few -1500, several over +1200.

Here are the updated charts, you'll notice there are mostly short term chart changes (bounce) and a lot of charts look the same as you get in to the 5+ min range, some even in the 3 min range.

 SPY 2m

SPY 3m

 SPY 5m


SPY 15m

QQQ 2m

QQQ 3m

QQQ 5m

QQQ 10m

QQQ 15m

IWM 1m

IWM 2m

IWM 3m

IWM 5m

IWM 10m