Market Update:Process

This is the follow up to the last post, Process Has Begun... with charts.

As I was trying to get across, the two bounces from this year both had a purpose, in fact the biggest one which was the February cycle, we called the purpose in advance of even having any charts suggesting a bounce. There was a range that was very obvious, it was in the most watched asset/market average and we were able to forecast the probability of such a bounce taking place before we had any proof it would based on the concepts and based on the fact that there was a reason for such a bounce.

The second was much less of a good reason, more a conceptual effect that was a lot of the F_E_D knee jerk concept. I would say the first had a mission, the second was a reaction to something we have noticed over the years.

I'd call this bounce something different and did early on in the initial stages of a gut feeling something was coming again before we even had evidence, but in this case it's not a bounce on a mission to accomplish a goal, but in my view a more "NORMAL" counter trend bounce that we would see in any chart of nearly any asset over the last 100 years of charting. The volatility increase I expect to see in not caused by the bounce, it's not even an effect of the bounce, the bounce and whatever move it makes is an effect of the increasing volatility which is part of stage transition (in to DECLINE which has already started).

The point simply being, this in my view (and I'm consistent about this because I held this belief on March 10th when I first had a gut feeling and closed the March AAPL/QQQ puts) is a normal market correction enhanced a bit by increasing volatility, but it's very different than the last bounce or the first one of the year which had a very specific mission  that we could call well before it even started.

One of the things I have had to wait for today are the intraday 3C charts to reset and stoop reflecting data from Friday's close and reset to where we are now which takes some time, but it looks like that has not only begun, but is already showing us the process in action which is what we need to call an area of where we might be most interested in particular assets at the best timing we can get.

Looking at the afternoon NYSE TICK Index with SPY in red, you can see they were roughly in line until about 1 p.m. or so intraday, then TICK fell off and wasn't /isn't making the sronger intraday breadth readings that should be seen following the red SPY.

 This is the 1 min SPY somewhat in context from Friday's scale. You may recall earlier today I said there's no upside confirmation of price which is obvious here as the fastest chart (1 min intraday) "could" confirm higher prices by making a higher high, which it does not, but this is background information, the specific intraday information is below when I zoom today's 3C chart in to price on an intraday basis.

 Note on an intraday basis 3C moving with SPY in green until just after 1 p.m. like TICK which deteriorates at that time and suddenly the 3C chart is leading negative intraday.

This would be an early implication of distribution in to higher prices, the very theme we have been calling for since the first gut feeling of a bounce to come. This would also be very early in the process compared to past bounces that were on a particular mission with a goal , this looks much more like a corrective bounce of a short term oversold condition which we confirmed last week in market breadth.

The QQQ2 min

 This chart shows support for the base that was created in support of a bounce and as of Friday, the very short term signals were for price to make a stronger "W" base that could sustain a bounce longer, that didn't happen today, but again it's what the chart has shown since the reset as we are seeing a deeper leading negative divegrence to the far right suggesting higher prices are being sold/sold short as anticipated and again, very early in to the bounce which fits with a correctional bounce rather than a bull trap, head fake bounce.

 A closer look at the QQQ chart intraday, I don't think I even need to point it out, but to the right side of the chart, 3C is falling hard on higher QQQ prices.

 The 2 min chart is likely seeing some migration, although not leading like the 1 min chart yet as it takes a stronger divegrence to migrate to longer timeframes,  there's no hint of any support at all.

 IWM 1 min with support for a bounce/base at the white area, a small negative Friday suggesting early weakness to finish the base area with a "W" base which can hold up longer.

 If you didn't already see it on the chart above, here's the intraday view of IWM 1 min, a clear falling off of 3C intraday in to higher prices as expected.

The 2 min chart intraday may not be as obvious, but there is migration coming across to the longer timeframe meaning a stronger developing negative divegrence.

More to follow...