Market Update

Interestingly, once again today the charts have been forecasting near term action near perfectly, this time less so on end of day/closing divergences and more so on internals.

From last night's, Daily Wrap

"While the Russell 2000 had no Dominant Relationship today, the rest of the majors did, the Dow with 14, the NDX100 with 52 and the SPX wwith 220, the relationship was Close Down/Volume Up. This is EXACTLY the same next day concept as the parabolic drop today on big volume, it typically signals the end of that move and the start of a relief bounce which I suspect we see tomorrow with distribution in to it.

The S&P sectors had 7 losers, 1 gainer and 1 flat. Utilities outperformed at +0.28% and Materials underperformed at -1.12%.

Of the 238 Morningstar groups, 107 closed green, the rest red.

What I like about these internals is that they are not extreme, they do point at a bounce, but not an extreme one which would fit with the 5 min charts falling apart in to some higher prices.

Additionally our SPX:RUT ratio was positive at he lows today with a small VIX Term Structure buy signal as well, very small."

The first paragraph in red is pretty much in line with what we are seeing on the charts thus far today.

The second red paragraph is interesting because as I posted this morning, we had a second signal, they are small, not like the October lows, but they seem to be pretty darn effective looking back historically and just since we've been using the new custom indicators.

I also included the charts just after 5 mins so you can see in terms of multiple timeframe analysis, what the market is set to do next and how the current cycle that reaches out to 5 min charts, is a means to the next cycle on the 10-15 min charts.

Every chart below is in line with our short term price expectations and what happens during those and what happens next (bounce, distribution in to the bounce destroying the 5 min charts and moving to a new low, thus the reason I want to be patient, wait for a bounce to sell/short in to and look for the next move lower although we haven't really ended the current move lower as of yet.

Backing up this theory are the typical market ramping levers and their multiple timeframe charts. Remember, the expectation is for a near term market bounce that will not hold and be sold in to. Here are 3 of the 4 levers...

HYG

 The intraday 1 min chart is starting to put in a positive divergence and a leading positive, this is one of the most often used market ramping levers.

There's nothing on HYG from 2 to 5 mins that is supportive, at 10 mins the larger picture/trend emerges, I trust I don't need to comment on the current divergence.

Remember this is multiple timeframe analysis.

VXX-short term VIX futures...

 intraday 1 min negative today...

And nothing to support a move beyond that as the 2 min is in line and not negative.

The 5 min is in line off a larger positive from last Thursday when we first spotted the unusual underlying activity (bearish).

TLT-20+ year Treasury Fund, which means a move lower= yields higher, stocks tend to follow yields.

TLT 1 min negative

However at 5 mins it is perfectly in line with the uptrend.

The TICK remains pretty negative today, but still mostly laterally trending.

QQQ 1 min intraday building a positive

There's also a small 2 min positive and...

Whether coincidental or not, a very small 5 min positive

The QQQ 10 min speaks for itself.

IWM 1 min positive, which also looks the best by the way.

The 2 and 3 mi charts have nothing positive going on and look like the above 3 min chart.

The 5 min is in negative position, but the 5 min chart is not completely used up, this is why we need higher prices, they won't sell in to lower prices.

 IWM 10 min speaks for itself, hopefully you understand why we want to sell/short in to any near term market upside as I have posted numerous set-ups recently.

 SPY 1 min

The 2 & 3 min charts, like IWM have nothing positive, thus implying a weak or rather barely supported bounce, it doesn't mean it will look weak, but it shouldn't be able to hold out long.

Again, coincidental or not, there's a small 5 min SPY positive.

The 15 min speaks for itself.

That's a lot of confirmation, which was built on last night's internals, hopefully you understand both our short term tactical plans and longer term strategic positioning.