Early Update

This morning's intraday chart mix between the Index futures is not all that surprising given the mix in the Dominant Price/Volume Relationship last night with two different dominant relationships and one that wasn't even close to a dominant relationship, but rather almost split equally between the four possibilities, which was the Russell 2000 as has been the norm in that Index for the past month or so which is strange.

On the open we saw a short term capitulation selling event with the NYSE TICK hitting -1500 and volume swelling as well, typically a good indication of an intraday low for the moment any way.

 TICK opening at -1500

SPY 15 min intraday volume spike on the open, indicative of a short term selling event or exhaustion event, not surprising given the overnight action.

Interestingly yesterday not only the internals, but Leading Indicators and 3C charts all pointed to unusual weakness so early in a bounce, but as I have repeated several times, this is not the same market as a year ago or even a month ago. The bounce expected is not one of the typical ones in which we can see what it's job and target are such as the February cycle to take out a very clear range/resistance area in the market from early 2015, but rather a more "normal" counter trend, corrective bounce to alleviate a deeply oversold condition that was developing in breath although using the conventional definition and conventional indicators that define oversold, you probably wouldn't have seen the same thing.

Although ES's 1 min chart looks pretty decent for something like a gap fill...

the other index futures don't look as good as you saw earlier this morning.

Furthermore, the weakness seen yesterday and wrapped in the Daily Wrap extends well beyond a simple 1 min chart, although it is not all that common for a 1 min chart's weakness to hold through the entire overnight session, I think maybe the point is the weakness was beyond just a 1 min chart which you might think of as a short term tactical timeframe and any thing longer being a strategic timeframe, obviously the longer the timeframe the more important the big picture implications are.

Ironically as the EUR/USD and USD/JPY have had a LOT to do with price movement, last night I had put in a section just before the gold analysis in the Daily Wrap that covered the 3 short term to intermediate term timeframes in FX including EUR/USD and USD/JPY. This also included a longer primary trend view, but I found it had about 20 charts and 4 different trends that were opposing for the $USD vs the Euro or Yen and really after reading it, almost had me confused, so I took the section out as it was more than half of last night's post and to me I didn't think many people would even get through it much less have a clear understanding of it, but the bottom line was I expected some very short term strength in FX that would help the Index futures followed by a larger turn down which would be comparable to the end of the bounce and a move to lower lows for this leg of the cycle, followed by a carry trade unwind in which correlations between $USD based pairs and the market would start to break down as the bigger theme would be a carry trade unwind which is not good for the market at all as the carry leverage that is being unwound means all of the equity positions bought using the leverage of a carry trade would have to be unwound as well. 

You see, even a brief synopsis of the charts is a bit confusing, had you seen how long this piece was, I think it was better that I took it out, but the point is that it was spot on with the daily and overnight action as forecast and the longer term forecasts beyond that should hold as well. 

Again, slight strength or support for the market if the $USD breaks lower as shown in the A.M. Update today, but I expect a primary trend bounce in the $USD after it made its first primary trend pullback after quite a bit of strength for quite a long time. After that, I expect another move lower as this is what the F_E_D will push for and the $USD has already shown signs of breaking that former primary uptrend, it's at that point that I think the unwind of the carry trade really accelerates.

As seen above, the 1 min ES chart looks better than the others. but they are at least in line for the most part, maybe a touch better intraday, it's the damage that occurred yesterday and migrated to longer term timeframes that grabbed my attention,

 ES 5 min chart already leading negative and almost all of the damage done this week, which we are only in to the second day.

The same is seen on the ES 7 min chart, the damage is from this week, not last.

And as far out at some 10 and even 15 min charts like this TF 10 min chart above, again the damage was done yesterday/overnight.

There's still what I would call, "Some gas in the tank", it's just a change of market character that needs to be adjusted to as changes in character lead to changes in trends and you may find things that worked well for you over the last several years or even months may now be much different as things change, I suspect volatility ids larger, the market has a more defined trend of fear which can see some fast and large drops that flame out and bounce often, thus I like to stay with a trend trade without too much leverage so I can ride out the bumpy road, but still stay in the road of the trend. Remember in a typical bear market trend, which I'm not saying we are in yet, but I do believe we are clearly moving toward it, you'll have about just as many up days as down days, the down days will just have a lot more volatility to the downside, thus it's not the same as the market you may have grown use to in which the market moves in one direction with few corrections until it turns, this would be a lot more corrections, but a deeper, longer trend if you can ride out those corrections, which for the most part is pretty easy if you understand what they are.

Nows not a bad time to look at primary downtrends and see what they look like.