I'm going to try to cover as many bases as I can here with regard to multiple timeframe analysis, but a large portion of that was just covered with the Index futures. I've added volume analysis because I see more and more it's making a comeback now that the artificial market that was buoyed by QE is fading and real issues which will include valuations are starting to make a come back. It turns out, HFT trading didn't change the market as much as we may have thought. It also turns out that roughly a 1/3rd of traders know nothing about volume analysis and probably 50-75% of the rest have the wrong ideas about volume analysis which have been put forward by Technical Analysis gurus who have misunderstood what they were actually seeing , being able to see underlying trade gives you a different perspective.
For example, large volume is assumed to be smart money selling and it's generally on declines, we have seen smart money is in long before a stock moves up and they are out long before it moves down, these guys don't show they hand they are playing unless it benefits them to do so, T.A. oversimplified everything which has always been the attraction of Technical Analysis, laziness.
For the most part, I don't want to enter anything short here because I don't want to chase. We added a lot of positions last week and the week before, those are for now, but if we do get a short term oversold condition and bounce, that's when I want to enter any additional positions. Chasing here just puts the position at a lot more risk in case there's a bounce which there will almost always be, that's just the nature of the market so I certainly wouldn't want to be run out shortly after entering because of chasing. That doesn't mean there aren't opportunities available still.
This is the SPY 1 min, I had to roll it forward enough to cut out the big opening volume spike which was dwarfing everything else because I want to see volume in the area and if it picks up, you'll see why below. So far, we are pretty much in line. Since the capture the chart is slightly stronger, there's slightly more volume as well.
The 2 min SPY had already been divergent so it's just making good and catching down to 3C here.
There's not much improvement since the capture, just kind of flat. For the most part, these shorter timeframe charts are really only of use to me for tactical additions, AAPL is one I closed half of the put position on a move that was a bit to parabolic, good thing this morning with the addition to the Dow news, but I had every intention of adding back the half taken off the table on a bounce so these shorter term charts are what I'll be looking at to make the decision of when and where with regard to AAPL as well as the broad market and other assets.
The SPY 10 min chart is seeing a worsening leading negative divergence and the SPY is stating to catch down to that reality, however I added volume and I think you'll see what I am hoping, that heavy volume is not smart money capitulating, in fact the opposite, it's more often than not a transition point as it was to the left at the market's 2015 range lows. Note what has happened to volume since the February rally, it has fallen completely off, does that wreak of demand?
This 30 min 3C chart is showing what I expected from before the moment prices even started to move up in early February, that the move we be used as a distribution area.
However, once again, check the volume trends. Do you see the spikes in volume in to the lows as well as the falling off in to the highs? Although we can and do see churning events at market highs in which volume is huge, usually on a candlestick with a long upper wick, higher prices being rejected, that's a bearish sign.
SPY 2 hour and the relative positive at the October low, also note the price lows and volume surges in white. Finally on a leading basis but via relative analysis, check the SPY's price at the red arrows vs 3C's position relative to the former 3C position to the left.
The Q's intraday have seen volume increase, once again I had to roll the chart forward a bit to get away from the opening volume spike so I can clearly see volume now as it was badly skewed.
This 1 min QQQ chart has improved quite a bit intraday so I'd expect it bounced intraday, that's when I want to start considering any positions on the short side , not down here once the risk is too large and the pricing is at its worst.
Volume just adds to the case on intraday lows if it increases substantially, but you can see the volume trend in to the lows.
On a 5 min QQQ, note volume builds at lows, this holds true for intraday , daily, weekly, monthly charts, otherwise, the Q's are in line with 3C.
Again another 10 min chart leading lower, eventually the q's will catch down to that reality (I don't mean eventually as in one day, I mean very soon, we are just at a level that's a bit oversold on an intraday basis and that's useful to pro traders, notice I said "traders", not investors.
QQQ 30 min, I think you can draw your own conclusions, however the 3C chart is not scaled as low as it should be, the first divergence to the far left was right along the same area as price when it occurred so the actual reading would be significantly lower right now.
Once again, note the volume tends to the left and the unhealthy volume trend in to the advance.
This didn't matter during QE, only balance sheet expansion mattered, it's starting to matter again, do yourself a favor and pick up the basics, it will serve you well.
QQQ 4 hour
IWM 1 min intraday. The current 3C chart isn't much better than what you see intraday, but volume has picked up so that's a warning of an intraday trend change.
The 10 min chart again has been right on since late last week and price has been catching down to it.
This 30 min chart should be pretty clear, this is another one of those charts that gives me peace of mind, the ability to sleep at night and know my positions will be fine.
And the longer 2 hour, the same effect.
I'll be looking for assets that are trade-set-up worthy. Other than that, I'd say probably by 2 p.m. the market will try to bounce off the lows, I'll be keeping tabs and update you on any changes, but that's what I suspect for what would be trend change #1 of the day.
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