Market Update

I just wanted to mention something first before the update. I've had numerous employees or people under my management for years, I know that generally speaking when they are quiet or "not around", they're off smoking in a broom closet or on their phone around the backside of the building.

With me, when I'm quiet (posting) it means I'm busier than usual, tearing through charts, brainstorming, etc. The truth is I can't make a cup of coffee without bringing a laptop with me and those of you who know Andrea ( a few of you) can ask her, when she gets home, other than a brief "hello, how was your day", we don't talk or do anything until I've finished my day as I want to devote all of my energy to the work without distraction and when it's done, I devote all of my energy to Andrea without distraction.

In any case, I know I've been a bit quiet today, so although I know a lot of you know this, I just wanted to be clear that my eye is on the market all of the time.

OK, now that I got that out of the way... Yesterday I posted this article, Market Expectations and Volatilty and I hope you had or will have a chance to read it.

The important part right now for me is "The right tool for the job". One of the charts that is screaming and the kind of chart that I never ignore as these signals are not usual is the ES/SPX futures 60 min.

I couldn't get the entire cycle from 1/29 on the chart's histor, but it starts at 2/4 which is close and I think the signal is very clear. Over the past couple of days since the UVXY long on Monday, I've had to make decisions about whether the position should be closed and re-entered taking a 6% gain the first day and nearly an 8% gain yesterday (the second day). 

What I was trying to get across in that article is = the fact there's going to be volatility in a market always, there are going to be false moves or the jiggles always, but it's important to match your trade and trade plan with the trend or signal you are following, for me this is a bearish trend signals so I don't want to be trading in and out of positions on a daily basis and I don't want to worry too much about any intraday or day to day volatility as I know it's going to be there and increase. I think that's one of the keys to successful trading, as you know I don't endorse ay one particular style, it's what fits you , but I do endorse that whatever that style is, you plan your trade and trade your plan. I have no intention of getting kicked out of a trend position based on this chart over an intraday move or a 1-day move.

We expected early strength in the week (Monday) and weakness to follow, I would have made a big mistake to close a short position on Monday's action considering the above chart. This goes for intraday trading as well or any kind, match the tool (trade) to the job (the environment and timeframe).

As for the market update, the last post with a signal was a very clear one, thus I posted it. Two big mistakes I have made and I suspect most traders, are 1) Trying to force information out of an indicator when it's not there. Just be patient, it will show.

2) Trying to force a trade when the edge is not there. I know this better than most as I gave up a 6 figure a year job to trade, which did not go over with my wife at the time who came from a country in which you work at the same company your entire life, you keep your head down and collect your pension 20 or 30 years later, you don't give up that security to trade for a living with no other income coming in and the "cushion" going in to the trading account.

She would ask every day when she got home from work, "Did you make money today?"and there was no good answer, if it was "no", then the "How long are you going to do this conversation started and if it was yes, the response was, "Oh that's good considering you didn't make any money yesterday".

In other words there was no winning, but it caused me to make some silly trades, to try to force something to happen when I should have been patient. After we separated, I started trading my own way without the pressure and things were immensely better.

Again, right tool for the job and don't force it, that goes for swinging for the fences trying to make up a loss. If you are in a hole, STOP DIGGING! We trade on an edge, not on a roll of the dice that means take emotion, take ego out of it.

That said, this is what the market update is looking like thus far since the last update with a negative divergence.

 SPY intraday trend since last Friday when we expected some early in the week strength and mostly decline through the rest of the week, you can see how 1 day, even intraday trade on Monday "could" have scared me out of positions that were/are longer term in nature, as far as that 1-day goes, it's noise vs the trend above on that 60 min ES chart.

Right now the SPY is a hair from a new leading negative divergence.

QQQ also showing Monday and the 3C and market trend lower this week so far. There will be jiggles like Monday, that was part of the point of yesterday's post, put them in context with your trade and trade plan.  Turn off CNBC which just made my "Moment in time " memory for this market, just like the 2007 push of the book "Dow 20,000", I'll get to that later.

Intraday QQQ, you can see it's very close to a new leading negative divergence. I posted the last divergence because it was already at an edge, we are not quite there,, but very close intraday.

IWM intraday, again you can see why I posted the earlier negative divegrence, as for now, close, but not quite there. The 60 min ES chart tells me the probabilities are highly in favor of "we will get there".

And the IWM trend view, again the action leading in to Friday was negative, the bounce on Monday for all intents and purposes, noise for my longer term trend perspective and as you can see, just a hair for a new leading negative low.