Market Update

Generally speaking, once Wall St. has committed to a cycle, even a small , normal bounce, they tend to stick with it unless things have really come unwound, margin calls, Carry trade unwinds, just seeing too much risk.

In any case, the very short term oversold condition continued this morning as we can see by the intraday NYSE TICK Index.

This morning's TICK hit extremes of more than -1250. This would seem to confirm the bearish bias the market has short term, but in fact it is already oversold on a short term daily basis so this is just more capitulation or short term selling climax opening the door to a bounce.

The question is., "Do they still have the will and is there enough gas in the tank?"

Looking at Index futures since we can see what's happened since the overnight session...

 ES 1 min positive from earlier this morning, I suspect this was on the rumors and news that 2 high up rebel leaders were killed.

NQ/NASDAQ futures show the same thing and intraday both are in line confirming price action thus far which has obviously been recovering.

 TF / Russell 2000 futures had one of the most difficult positive divergences to confirm over the last couple of days so it's not a surprise that it's not a great looking chart, but still in line with price action both up and down.

 ES 5 mins still has a relative positive divegrence, not as strong for obvious reasons, but still there for the time.

NQ 5 min (NASDAQ futures) show a clear negative divegrence before the steep drop yesterday and a positive divegrence today that looks a bit stronger than ES, although I wouldn't make too much out of that.

And TF 5 min (Russell 2000 futures) has the same negative divergence in to yesterday and a relative positive in to today.

I think the cash market averages are where we'll likely get the best signals right now.

Using the SPY as an example...

 SPY 1 min intraday is in line and better, actually leading

This is the trend or bigger picture of the same chart, the positive divergence is still intact in the SPY which is why I think it shows better relative performance on any bounce.

At the 3 min chart there's a relative positive divegrence and today it is leading a bit.

I don't see this as a base yet or at least not one that could hold much, it would seem to me if there was to be a bounce here, more lateral basing work intraday would have to be done. The "V" shaped reversals , even for a short term bounce, just aren't reliable.

Don't forget though what the big picture is and the dominant 3C trend...

 This is a strong 30 min 3C SP{Y chart, as I have been saying, nearly any and all upside has been used to sell in to by smart money. This is why I want to use any price strength / bounce to sell in to strength or short, but not to go long as I have maintained and you can see now, for good reason.

As for the Q's and IWM, they have scattered charts, this definitely isn't the best organized bounce attempt, but as you see above on the 1 min IWM, it is leading and take with the 5 min futures charts, there's still a decent chance for a volatile bounce. The volatility is a market message as to what's to come on the downside as the market is looking more and more like the examples I cited Tuesday as far as volatility needing to pick up before real, strong downside moves occur and stick.

This is the QQQ 5 min chart, you can see the strong leading negative divegrence at the top of the last bounce leading to this decline. I'd look at this market as in decline, any bounce a counter trend bounce.

That being said, the 5 min positive to the far right is still intact which is pretty impressive considering what the market has been through the last couple of days.

However, I suspect this morning gave us short term selling capitulation or a flameout on the downside opening the door to a bounce.

So far it still looks like it will happen, I just would expect more basing to be needed to support it.