Several times over the last several trading days including yesterday, I noted the SPX futures had the best looking charts on a relative basis, then NQ and TF the worst looking.
Technically speaking from a bear trap perspective, although I prefer to have all of our ducks lined up which means clear leading divergence signals and the rest of the averages showing an imminent pivot , IWM/Russell 2000 looks very close to completing a bull trap which creates an immense amount of downside momentum with the general rule of thumb being, "Failed moves produce fast reversals" and a bull trap is a failed move. While a lot of things "could" happen like this morning's fundamental surprise of the Greek/EU news, I have to say from a charts' perspective, IWM/Russell 2000/TF looks about as bad as I could ask for considering I'm a fan of SRTY, 3x short IWM up here.
IWM has had a different look to it than the other averages, but the concept is the same.
You may recall the long range in IWM and our call for an upside /head fake breakout that wouldn't hold (to the left) and with the 2/2 base forming a hammer at support with the other averages basing at the same time, another small chop cycle was expected. The first yellow arrow is the breakout of the range which sets up the bull trap as bulls buy on a technical break above resistance, then in orange we have a great looking set of reversal candlesticks and this morning thus far we have a move back inside the range which should hit stops of new longs and create downside momentum if enough stops are hit. Once we are below the range, we are in the deep fear stage.
I'd say if we have similar signals in the other averages, Leading indicators cooperate and the levers like HYG continue to fail, this should be a nice area for a longer term trend position short.
From shortest to long time frames...
IWM 1 min
IWM 3 min leading negative especially since that strong damage done Friday.
The same is true of the 10 min chart.
The 15 min chart's leading negative divergence looks horrendous.
And the longer term trend...
30 min trend since the October bottom.
As for the Index futures /TF charts...
This morning's 1 min
The 7 min chart's I posted last night rolling over.
The larger 10 min trend clearly negative
And the 30 min
As well as the 60 min.
I really couldn't ask for better looking charts, we'll se what leading indicators and the other levers look like, but so far, so good.
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