Market Update: DIVERGENCE BETWEEN THE AVERAGES AND INDEX FUTURES

In my last market update,  Market Bounce Update I said,

"TICK data a slight intraday pullback or consolidation. I'll be taking a look around to see if there's anything that is worth the risk Beyond the positions that are already open."

 This is the TICK Channel I was looking at when I made those comments around 12 and as you can see things have turned down sINCE.

 The intraday two-minute SPY with a small negative divergence along the lines of a pullback or consolidation as mentioned in the 12 PM update.

 The intraday one minute IWM confirms the same

 And VXX (short termVIX futures) which trades opposite of the market, is giving an intraday positive which confirms the two charts above.

This looks like a normal intraday divergence, It doesn't look like anything that will affect our bounce scenario.

In fact...

 The SPY five minute chart is still positive as is the 10 minute chart showing earlier

 The IWM 10 minute chart still has a sharp leading positive divergence.

 And the five minute VXX has a negative divergence that confirms the two charts above and our bounce scenario.

 As far as the downside risk and the highest outcome probability (the big picture)...

 SPY 30 min

 Nothing has changed, IWM 15 minutes leading negative at the April Head fake move

VXX 15 minute leading positive confirming the charts above.

So far everything seems to make sense, yet I have had this gut feeling to keep Long risk minimal.

As I showed last night, the one thing we were looking for to tell us that the April cycle had transitioned into a much more bearish market condition were the 7, 10 and 15 minute charts which were positive at the beginning of April when we made our forecast and have since turned negative as we were expecting and watching for during the April cycle.

I showed these charts last night, all of them negative.

 The one minute ES chart is in line with the intraday charts above with a slight negative divergence intraday which does not raise any questions. However...

When looking at the SPX E-mini futures, I am surprised we don't see some slight positive divergence in line with D5 and 10 minute market averages. This is the ES five minute chart which is in-line with the downtrend.

The ES seven minute chart shows the same condition.

 As does the ES 10 minute chart


 And the ES 15 minute chart.

 And the ES 30 minute chart is exactly where it should be considering our near-term trend expectations and what comes after.

I find it strange that the 5-10 min charts don't have even the slightest positive divergence like the market averages we have seen today.

Perhaps this changes, perhaps it doesn't. The one thing I keep thinking about is the fact that few retail traders are trading E-mini contracts. In other words my suspicion is the pros are not taking on any long risk but are more than willing to sell into it which has been the exact same position I have taken. Maybe I am projecting my personal feelings regarding long risk, but I can't argue with the charts above.

I'm going to check leading indicators and see if anything there gives any additional information. Remember though, I am only expecting an oversold bounce. Perhaps I am correct in assuming professional traders are not taking on long risk as is so far evidenced by the index futures.

Food for thought