Market Update

Here are the charts I promised...

Thus far there are several leading indicators or correlated assets that are in support including HYG, although it's looking weak so I wouldn't be surprised if a bounce like this opened volatility up and the market fell hard from here. Yields are also running higher today in support of an intraday bounce, I probably don't need to tell you the negative pressure they are exerting on any chart longer than today's intraday. Pro sentiment indicators are in a helpful spot for an intraday bounce as well.

One thing to be on the lookout for is just like a large stage 4 cycle, CAPITULATION which would be represented by a large volume spike or larger than normal for the area and typically a large negative TICK reading, that would represent a short term selling event or exhaustion event and open the door to a bounce. We may already have that, just recently in fact.

 SPY 1 min improving today over yesterday.

SPY 3 min local divergences and more improvement today.

SPY 5 min. While a strong chart, it's a small divergence on it.

QQQ 2 min is starting to lead in a way that's more impressive than anything from yesterday.

QQQ 3 min is in a relative divegrence, it's the weakest divergence form, but it is migrating to a longer chart.

QQQ 5 min also shows a relative positive divergence.

 DIA witha  relative positive

DIA 5 min with distribution in to the F_O_M_C knee jerk and a 5 min positive.

IWM 2 min positive

and 3 min relative positive.

As I said yesterday, this is NOT an impressive divegrence, but internals are in the right spot to allow for a bounce and there are other indications that are supportive such as HY Credit and Yields as mentioned above.

TICK was just reaching an extreme, although minor at -1000 just a bit ago, now...

We have a reading probably close to a real extreme of -1500 which could be enough to represent short term capitulation and allow a bounce to start as seller s would be exhausted for the moment.

The custom SPY TICK indicator shows the recent trend since the F_O_M_CC, more and more stocks are selling off as can be seen.

This jump in volume on the SPY is all it really takes, a noticable increase, it doesn't have t be a huge spike that everyone sees, in fact the best signals are the ones few people see as they look for things that hit them over the head, the same things everyone else sees which is really no edge at all.

In any case, watch volume as well especially with candlesticks.

In my view, I would not try to play this on the long side unless there was a signal so amazing that it couldn't be ignored and I doubt this is that kind of bounce. I would use any price strength to sell in to, this is the closest to a win/win scenario without introducing needless risk.

Remember it's early in the day, a trend change often follows the European close which just took place.