Market Update

This market is getting more and more complicated intraday or on a very short term basis, the early strength for the week. Beyond that, it looks pretty simple. I think we'll find some answers in the AAPL update coming up.

As for the market.

 The earlier SPY pullback to make a bit of a wider base than just what we saw late Friday still looks like it "should" occur, nut we may simply be seeing this week's early strength right now seeing distribution in to it already with some differences in relative performance expectations between the major averages, it wouldn't be the first time we've seen them diverge.

The 5 min SPY looks like it has the gas in the tank for the "early week strength", however I have to wonder more and more whether that 1 min negative that I thought was going to build a little stronger base, isn't just simply distribution in to today's gains thus far, if so, SPY is now looking the weakest in underlying trade.

 The Q's pulled back a bit, probably not enough to make that much difference to a base, but they maintain a much more positive tone intraday than the SPY, I'd assume this is because of AAPL and the watch today.

And the IWM has seen significant intraday improvement today whereas it has been the laggard coming in to today's open, a spot the SPY seems to be taking over.

Interestingly, VXX which trades opposite the market therefore it's signals would have the opposite meaning (i.e.- a positive VXX signal would be negative for the market), had been looking like a pullback as you can see from the red arrow, however on that pullback today, we are already seeing some positive action forming intraday which would fit with SPY 1 min deterioration, suggesting there's no larger base coming, this is the early strength and it will not build anything larger than what's already in place. I'll continue to monitor these to answer that question, but I'm leaning more toward that outcome.

The divergence here (positive that is forming) is not enough to suggest this is over, it's enough to suggest that the early strength is not waiting on any additional basing and has already begun and has already begun to see the distribution that will end it, with obvious differences in the underlying strength of the 3C charts among the various averages, SPY now looking the worst, QQQ and IWM looking the best.

On this 2 min VXX chart, the pullback signal from Friday is seeing a small positive that I believe is building and migrating from the 1 min chart above, in other words, the positive divegrence here is gaining some strength, although still early.

The larger base to the left is more indicative of the transition in the market from stage 3 top to stage 4 decline or in VXX stage 1 base to stage 2 mark up.

 AGain, the larger signal is the white box on the 5 min VXX, leading positive divegrence, the shorter term/weaker intraday signal or market early strength is the red divergence from late last week, part of our forecast.

Taking a closer look at the 5 min VXX chart we can a range that's pretty clear, a head fake move below the range would be what we'd normally assume to be the highest probability before even seeing a 3C chart, this would fit with early week market strength as well as the head fake concept of running VXX stops and creating a bear trap that forces a short squeeze as VXX continues stage 2 which it already started and the market resumes stage 4 decline which it has already started.

I don't see any imminent reversal at the moment, but the process may be further along than I originally assumed this morning.