Market Update

I can't say today's action thus far is much of a surprise, I also wouldn't get too hasty in jumping the gun,  as I've said many times before, the one lesson I've had to lear and re-larn is what seems to be reasonable in terms of time and targets can usually be multiplied by 2 or 3, market moves generally aren't reasonable, they are extreme and they are that way for a reason.

I still need to look at several other indications  including leading indicators and the charts of several Leading indicators and the market levers.

To give you a general idea of today's market action, it isn't too far off if at all from Friday's "Week Ahead forecast with morning weakness even though Index futures pre-market didn't reflect that, the 3C concept of picking up where it left off, even over a long weekend came in to play as we have seen so many times before. Later morning/ear;y afternoon strength picked up a bit and the R2K led the averages as expected and finally, the thing I'm really looking at this week is the bounce cycle to go negative enough that the base area is taken out beyond repair.

Here are some examples...

 As we have been pretty much non-stop talking about since before the base of the 14-16th formed, we'd almost certainly need to see higher prices before we saw negative divergences/distribution. The previous cycle that came from an oversold condition around Jan. 6th saw strong selling much faster than I'd normally anticipate. Remember the F_O_M_C meeting starts tomorrow and the policy announcement is Wednesday. While there hasn't been much communicating a rate hike in Q1, in fact the earliest has been Q2, Bullard last week was very hawkish and you might almost say that he was essentially saying were should be raising rates now, I don't think the market has discounted a January rate hike, it doesn't "seem" like the economic data would be in line with a Q1 rate hike. The closest thing to guidance from Yellen was a "couple" of meetings for a rate hike and defined a couple as two, that wouldn't suggest a rate hike this week either, but it's a wild card. We have found some apparent leaks before, I'll obviously be on the look out for them now.

This is the 1 min IWM, the white trend line is Friday's close so you can see the IWM did offer higher prices that could be sold in to and that intraday 1 min chart doesn't look great here.

 Nor does the IWM 2 min with Friday's weakness at #1 which was the basis of "The Week Ahead" post, the early a.m. weakness on the open followed by strength intraday and that continued divergence at #3.

IWM 3 min chart makes the trend a bit more clear, highlighted below on the time scale are Friday and today.

The IWM had the largest positive divegrence reaching out to the longest charts, this is the 10 min from the accumulation/base to in line on the move higher and a negative divegrence clearly forming on a strong timeframe.

QQQ 1 min with Friday's afternoon weakness, early a.m. weakness on the open and an intraday positive lifting prices to Friday's close (yellow arrows and light blue trendline) as well as a negative divegrence on the only cross above Friday's close as of the time of this capture.

 IWM 3 min from the base area on the 16th, pretty much in line on the way up and recent negative divergences that may just have something to do with one of the area we expected to see a clean break out above on this mini cycle...

The bearish descending triangle that most technical traders see as a bearish consolidation/continuation price pattern. If there weren't so many "Buy the dippers" out there, I'd say this was setup as a head fake using T.A. against traders, even though technically this is not a true descending triangle.

 QQQ 5 min with the first base and attempt from earlier in January with the sudden and sharp failure starting on the 8th and the next cycle at the 14th-16th with a 5 min relative negative divegrence, but it's clean. You can also see why I think patience here is probably the best course until this chart is just jumping off the screen.

 And at the next rend in multiple timeframe analysis, the 10 min which has been part of why I have expected this bounce to ultimately fail, the 10 min has been negative throughout this entire chart and is very close to posting a new leading negative low.

 The SPY daily chart with the head fake moves ABOVE the Broadening top price formation that we expected and the same descending triangle breakout that we also forecast in advance.

SPY 1 min intraday has added to Friday's negative divegrence in the afternoon, even though the SPY didn't move very far today above Friday's close.

 SPY 5 min with the earlier January cycle/base/bounce attempt and the second base/bounce with what is now becoming a more serious leading negative divergence.

 And the SPY chart's positive made it out to 10 min, so I'd like to see this chart jump off the screen with a leading negative before taking any action, the leading negative divegrence in place from Friday and today is pretty clean considering we were seeing in line/confirmation signals before that.

 And the 15 min SPY chart , also near a new leading negative low.

This is today's intraday TICK as of the capture just after 3 pm, you can see the trend changes in breadth.

I need to look at Leading Indicators and several other assets, but I'd say patience is still probably the best course and we seem to be making the steady progress expected, if not occasionally seeing some heavier than usual distribution.