And There It Is!

I find the timing absolutely ironic given Tuesday's Daily Wrap comments which were reposted yesterday here, Pre-Daily Wrap and yesterday's very strange behavior as chronicled in this post, Unusual Market Activity-I Wonder Why...

I've speculated on this concept which we see at least 80% of the time in any asset in any time frame before a significant reversal in an average market, the head fake concept. I cannot stress enough how important it is to read the two posts / articles, "Understanding the Head Fake Move" which are always linked at the top right corner of the members site. Once you understand this concept, you understand how Wall Street uses technical analysis against traders and how you can use it to your advantage.

The more obvious the technical level or obstacle such as SPX resistance at the March trendline or NASDAQ March 10, 2000 closing highs and the more visible the asset, the higher probability of a head fake move before a significant reversal whether up or down (USO recently pulled a head fake move on the downside of its 2015 base, a stop run, before its most recent leg up). As you know I typically approximate this concept to be in force 80% of the time before a significant reversal which is the basis of the "Igloo/Chimney" price pattern and that is on an average, ordinary vanilla asset in any timeframe. In this particular situation, how much more so should the concept hold true?

In any case, the goal is to move in emotion which moves price. It's what smart money is doing with that price move that we are most interested in. I think we've made the case, especially through 2015, as to how this resolves. Which also means I am about to be extremely busy so please have some patience with emails,  I will get to them ASAP,  but I have to consider the broader group of members first. Now the work begins.

 The NASDAQ composite on a daily chart surpassing the February 10,  2000 closing highs. The intraday highs we're made on the same date at $5132.52. This is obviously the kind of trigger that retail traders will chase which is what we have been talking about as far as expectations for the last week.

 The SPX daily chart with the March trendline acting as resistance, Which is also become very visible within the last week and it's move above that trendline is expected on a head fake move.

 I pointed out the Dow Bear flag-like price pattern, I don't know that it matters very much but you can see two levels that would be of interest.

 This is the NYSE intraday TICK chart (the number of advancing issues minus the number of declining issues). Note the extreme reading of +1750 and then falling back into the trend around a very mediocre 250, this on no news whatsoever. 

What looked like was going to be the sponsor of a head fake breakout, The USD/ JPY has given up more.

I'm going to check leading indicators as well as futures and update you as I believe to be useful, otherwise we are looking for the hallmark of a head fake move which is distribution,. This also means a number of watchlist assets and trade set ups, so I will be very busy. As I've said the last few days, I'd rather just get on with it and get to our pivot point rather than watch this market just bounce off resistance when we know what the probabilities were. Remember this is an exercise in emotional extremes. You've probably seen more than once that your emotions are one of the best reverse indicators. However I will try to give you the evidence as I find it that confirms this very common manipulation of technical traders, beyond what we've already established.