BABA Moving in the Right Direction

I would not say that BABA has put in a "screaming, chart popping" confirmation/accumulation divergence yet, but when an issue does exactly what you expect based on the charts as BABA has done since yesterday's, Trade Set-Up: BABA you are already at an advantage from a probabilities perspective. Our concepts which are based on years of 3C and price observation suggested this was the most likely outcome for a trade set up, for most people that would be enough. We go the extra step of making sure our expectations are being confirmed which allows us to see if our theory was correct before ever entering the trade, we can still walk away (from this position) with nothing wagered, nothing lost.

Here's where we are so far, we have made progress...

 As to looking for an intraday "Flameout" or selling event (short term capitulation), this 60 min chart of BABA shows a bullish near-Hammer candlestick. Technically speaking the lower wick should be 2x longer than the real body of the candle, we fall a bit short, but remember what the candlestick is telling us psychologically, (it's not about the technicals, the technicals if read correctly are telling us what is going on psychologically, thus technical patterns don't have to be textbook if they meet the criteria of the psychological signal) lower prices have been tested and thus far rejected. The large volume are the stops hit, someone is on the other side of that trade.

A 10 min chart also gives us an interesting "Flameout" again at the white arrow with another stubby hammer on volume.

The 1 min 3C chart which is the one I want to see positive and not just a little, but unambiguously, has put in a relative positive divergence which is the first step hinting that the shares that were stopped out were accumulated/being accumulated.

To see a relative divergence look at the higher price level at "A" and where 3C is at "A" and then the lower price level at "B" with a higher 3C signal at "B" indicating there has been more money flow in to lower prices. This is the WEAKEST signal we could possibly have and still be turning positive, but all new signals (this is new by virtue of the 1 min chart reset on this morning's move lower) have to start at the earliest chart and migrate to longer term chart timeframes as the divergence gains strength. We are looking for that process to become evident and pop off the chart so it is very visible and no need for A/B comparisons.

 As of now, the 2 min chart is in line, I'd like to see migration of the divergence and the 2 min chart to go positive.

REMEMBER THE REVERSAL PROCESS.  From here it could be a rounding bottom, a "W" shaped bottom or even a new move below the intraday lows serving as a short term head fake indicating the move down is ready to reverse back to the upside as a head fake move is our best price-based timing indication.

Also of you have been watching, the early weakness we expected this morning from yesterday's late afternoon analysis is starting to give way as intraday breadth is improving on the NYSE TICK as the channel is seeing a break toward the upside meaning more stocks are ticking up than previously/earlier.