Market Update

Friday's "Week Ahead" post was looking for early strength Monday/Monday morning, but there wasn't much behind it (recall the IWM 2 min chart) which is why I was talking about fading the parabolic move this morning. If you had some leverage on the IWM, it worked out good for a intraday trade.

The 50-bar 5 min chart/price crossover is a nice day trade or intraday trade, especially on a parabolic move.

SPY 50-bar 5 min. chart. Ideally there's a gap or a parabolic move (in either direction if you have additional evidence giving you the probability of a fade trade working...just some quick extra $). To the left there's a cross of price and the 5 min 50-bar that lasted the rest of the day, not a bad trade with some leverage on it, although I prefer to catch the cross below the average (or above if you are playing a long fade) up higher which usually means there's more of a reversal process allowing the moving average to catch up and be higher on the move I'm looking to fade. The yellow arrow show a higher m.a. cross, but it's not exactly the kind of move that is appealing as a fade trade given there wasn't much of a move up to fade, still it worked out ok. This is just a general intraday trade concept and the 50-bar 5 min is usually pretty good at identifying the moment the price move has not only stopped, but has a sufficiently large reversal process in place, with the cross under being the trigger that the reversal process or stage 3 in this case, is moving to stage 4 decline (the actual fade trade).

As for the averages, some of these are going to be a little old considering (like a 1 min chart) how long it takes to capture all of the charts and post them (I've purchased some software to cut down that time ...Dragon), but generally there's no practical difference in the signals since capture and if there is, I'll update the chart and make a note of it below. There are some EXCELLENT examples in which 3C depicts the 4 stage cycle. I've said this many times, these cycles work in just about any asset, any type of trading, and any timeframe from an intraday chart which we could show a cycle starting Friday afternoon as stage 1, this morning's parabolic move as stage 2, the lateral or rounding over as stage 3 and the retracement as stage 4. The same applies to a swing trade or even a primary bull market. If you know where you are, you have a good idea of where you are going next.

The NYSE TICK is also helpful in giving early warning when TICK breaks a trend that price hasn't yet as well as telling you good information on whether a move that hits extremes is a real move, a churning event or capitulation event, although you need to have some candlestick and volume analysis experience which I think most of you have and understand the relationship between reversal candles and increased volume.

NYSE TICK

The flat trend in any price environment that is rising and not flat is a giveaway or early warning. A break of a trend like you see to the right before price breaks the same trend is another. The extreme nearly -1300 TICK just after 12 pm happens to be where the SPY/IWM broke their 50-bar 5 min moving averages, big selling not at a capitulation bottom event, but at a break of a technical level as watched by traders-5 min 50-bar ma.


The Q's as a general example...

 Remember Friday, this is a minor late day divergence, but the bigger point is what happened today in to the NASDAQ 5000 move, a psychological magnet and a meaningful area for Wall St. to hit, this chart should give you an idea why.

Q's 2 min ...Friday in orange

Q's 3 min. 3C is telling a very different story than price at the intraday highs.

 The 5 min chart, even this small portion of last week's trade, already was giving the probabilities for this week as well as any early strength.

The QQQ 60 min chart is going the same, giving the probabilities of any upside move, thus they can become useful as tactical entries like AAPL or NFLX from last week.

IWM 1 min is still hanging in there, it had the strongest closing chart Friday of the averages.

 The 2 min chart you probably recall, again probabilities are set by the stronger chart, 2 min here.

 The trend of the IWM 3 min chart is showing the transition of the cycles from stage 2 mark-up to stage 3 top, this is for the smaller Jan29-2/2 cycle-stage 1).

 This is the IWM 5 min chart since the start of 2015, it shows this cycle in white (1/29-2/2 base or stage 1) and already is giving the probabilities of how this ends before the move even starts.

 The longer charts are also giving the probabilities, but not only for short term cycle resolution, but larger cycles such as the October lows (white) and the trend's increased pace since the start of the new year.

SPY 1 min intraday with Friday in yellow, not much has changed. The chart is still in leading negative position, in fact worse at this moment as price approaches $211.70.

 This 2 min SPY trend is a near picture perfect textbook example of the underlying trade confirming a cycle which is normally depicted through price and it's rate of change , volume, etc. So this chart gives an inside look that few people would have ever seen of the underlying trade during the 4 stages of a cycle.

Stage 1 accumulation/base, stage 2 Mark-up/participation, stage 3 distribution, stage 4 decline.

 Remember flat areas or quiet areas often have the strongest underlying trade. Think about VWAP and a specialist or market maker's need to fill at VWAP or better, that's likely a reason for these ranges more often than not.

 SPY 10 min again depicting a cycle in a way few people will ever see.

And longer term probabilities which influence nearly how every minor cycle will resolve.