Market Update

I almost have to laugh at the brazenness of the Greek government, but it's actually nice to see David stand up to Goliath.

After the Euro-group/Germany rejected the Greek proposal for a 6 month bridge loan earlier today, the Greeks came back with an ultimatum of their own, "Either accept or reject our proposal", the thing is, just hours ago it was rejected, that's what's kind of entertaining about this new Greek government, what's even funnier is to watch the market respond to the news which I don't think will be well received by the Germans, especially considering that folding here could embolden countless other far left anti-establishment groups across the EU, something I think many people don't give enough credit in the decision making process, the EU can't afford to look like they are being pushed around by the "Beggar".

In any case, here's the morning update/charts, as ridiculous as the Greek ultimatum is, although done for a specific theatrical and negotiating purpose (We won't give any ground, but if we do, you better take it because that's all you're going to get), just as ridiculous is the market's pop on the news. As Goldman has said in analysis, they are now in the very red danger zone (every player in this drama).

 The SPY intraday chart shows no support for the move off the Greek Ultimatum to the EU.

This is the rounding top/reversal process area for the SPY, one of the common price patterns for such a reversal is what we call the "Igloo with a chimney", which is a rounding top and to the right of the chart, a small failed breakout from the rounding top forming a chimney looking pattern as drawn in above, this chimney is the best timing indicator for a reversal in the reversal process, it's where I'd enter put positions, not just shorts. 

Sometimes we don't get them, but they are just as common at bottoms (mirror opposite) as they are at tops, for instance,

 Here are a couple of rounding bottom/tops in the SPX's 2015 range, the first two were just rounding, no chimney, the 3rd, the base to the current cycle, has the chimney or what is otherwise a stop-run head fake move and it happens just before the reversal process turns to a reversal.

It's a fairly common pattern, but whether we get it or to what extent is really up in the air. IF we do get it, that's the kind of move and discount on puts as well as timing, I like to use for option entries (puts) just because of the discount from the move and because of its timing qualities which are important to me in option positions.

 The Q's this morning, also not seeing any support.

And what "may" be considered a Chimney" on a rounding top, it's a bit small, but the question is whether it's effective, usually volume will tell us that. I don't see a very effective volume spike, meaning traders fell for it as of yet.

Here's a better example of a larger one off the August cycle in to the October lows, the head fake/rounding top, igloo/chimney was in September.

That one we knew was coming and made for an excellent short entry or puts.

Here's IWM this morning, very little to no support.

And since the cycle from 2/2 started, here's the IWM's reversal process.